Wanted: Multimedia Handsets Consumer Desires Meet Operators Arpu Needs

Multimedia has become the term of the day as wireless service has expanded beyond voice to include a variety of communication, data, and entertainment services. The "phone" has expanded into a multi-use device that changes its utility based on use. The result is a momentous transition in the wireless industry:

• Voice services are maturing and suffering under increasing price pressure.
• Operators are leveraging data services to sustain revenue growth and offset declining voice ARPU (Average Revenue per User).
• Handset manufacturers race to support industry demand for increasingly feature-rich multimedia handsets, while controlling handset cost and power consumption.

"Wanted: Multimedia Handsets-Consumer Desires Meet Operators ARPU Needs" provides research, analysis and forecasts for multimedia handsets and handsets with multimedia specific features such as music phones, phones with touch screens, camera phones, mobile TV handsets, radio phones, and phones with a host of alternative connectivity options. The report begins by looking at the wireless industry trends that are driving the need for feature rich handsets. It then looks at basic multimedia handsets and their growth. It turns its attention to feature rich multimedia handsets, including the technology driving them, unit forecasts and revenue outlook. Finally, it examines and forecasts handsets with specific multimedia features.

Voice commoditization and falling voice ARPU are driving a shift in wireless operators to focus on data revenue models and services. The shift to data revenue is among several key trends in the wireless industry:

• Development of mobile premium content, including mobile music, games, video and TV
• An array of new data applications, including location-based services, mobile banking, mobile wallets, and enterprise productivity applications.
• Broadening of business models and market participants
• Mobile advertising emerges
• Loosening of operator-centric walled gardens
• Off-deck content growth and distribution
• Convergence with Internet/IP applications brings new market participants and a shifting competitive landscape.
• Convergence with an array of new networks & connectivity

These trends are driving a momentous transition in the wireless industry. The "phone" has expanded into a multi-use device that changes its utility based on use. Handset manufacturers are racing to support industry demand for increasingly feature-rich multimedia handsets, while controlling handset cost and power consumption.

By the strictest definition, all handsets would be "multimedia" as they handle both audio (voice) and text (SMS) communication. When we refer to multimedia handsets though, we are really referring to enhanced entertainment features that migrate the handset from being a simple communication device to one that provides personalization and entertainment. For a handset to be considered "multimedia," it is required to meet three basic criteria: an image sensor, enhanced audio support, and video playback. In 2007, 60% of handsets will have basic multimedia functionality. By 2011, almost 9 of 10 handsets will have multimedia basic functionality.

The technology enabling a basic set of features is as impressive Across the range of implementations and target segments, there is an on-going trade-off of features versus power and cost. The technology providers include ARM, Broadcom, CEVA, Freescale, Neomagic, Qualcomm, ST Microelectronics, Texas Instruments Incorporated, ViMicro, Vivace Semiconductor and Zoran .

The requirements for today's multimedia handsets, also referred to as feature rich multimedia handsets, not only involve improving the features themselves but also secondary hardware improvements to enable optimal performance. Today's multimedia handsets need to have at least 1 megapixal image capture, MP3 audio, video Playback, Java, USB, Bluetooth, 16-bit screen color, QVGA resolution, WAP and MMS.

The major carriers are driving several major themes in today's multimedia handset market. The first trend is exclusive handsets. The second trend is form over function. The third trend is a blurring of the lines between multimedia handsets and smart phones.

The distinction between main stream feature phones and the high end phones does not result from adding additional features. It simply involves making the existing features better. The key features that we characterized high end multimedia functionality are as follows:

• Image Sensor-Needs to be at least 3 megapixel
• Video-The handset needs to be capable of both play and record
• Screen Colors-The screen needs to have 18 bit color (262k)