New cell phones are talking trash

Soon at the 7-Eleven you'll be able to buy a Slurpee along with a cell phone that'll work for 60 minutes of outgoing calls--then die. Plus, US$10 paper phones are on the horizon.
Written by Ben Charny, Contributor
"Talk, then toss" is becoming a mantra in a small corner of the mobile phone industry.

A new breed of wireless handsets, expected to hit the market later this year, is low-cost, extremely easy to use and disposable.

Several handset makers are challenging the notion that mobile phones should offer an ever-growing list of functions--such as mobile Internet browsing and MP3 players--and are developing stripped-down phones they believe will appeal to a broader audience.

Even as US wireless penetration rates increase, handset sales have slowed and analysts say future customers will be unwilling to pay upward of US$300 for a cell phone.

In mid-October, Southern California phone maker Hop-On Wireless says it plans to sell a phone for US$30 that can be thrown away or recycled. Chief executive Peter Michaels says more than 1 million phones will be shipped and available in stores including Walgreen's, Target, Kmart and 7-Eleven.

The phone allows 60 minutes of talk time, offering the user only the ability to make outgoing calls, but not receive them. The handset has just two buttons--"talk" and "end"--and is powered by voice-activated dialing.

Another company, Dieceland Technologies in Cliffside Park, NJ, has won several patents for a phone made of paper that will cost about US$10. The product is still in development, but the company has signed a distribution deal with GE Capital, the investment arm of General Electric.

More talk-and-toss phones are likely to follow. At Hebrew University in Jerusalem, researcher Andrew Shipway was awarded the college's annual Kaye Prize for Innovations and Inventions for his idea to print circuit boards on paper.

If these low-cost phones reach the market, they could serve as inexpensive promotional items. Hop-On Wireless plans to sell space on the phones to advertisers, for example.

Robin Hearn, an analyst at market research firm Ovum, said the talk-and-toss phones may prove to be a big experiment in order to raise the number of people using cell phones from the roughly 40 percent in the United States to about 70 percent, which is seen in Europe.

That means no longer targeting only early adopters or businesspeople, he said. Instead, teenagers, senior citizens and other demographic groups have begun to buy.

Feeling naked?
But when it comes to teenagers, these stripped-down phones may not sell well, Hearn said. "It's just not cool," he said.

Also standing between these phones and ubiquity are the service providers, such as Sprint PCS and Verizon Wireless, which likely would generate limited revenue from low-cost, disposable phones.

"This will be a kind of testing ground for the United States because it's not a terribly high-value market," Hearn said.

Sprint PCS, for example, has no plans to get into the throwaway phone business, said spokesman Dan Wilinsky.

"These are not like instant cameras," Wilinsky said. "A lot of people feel naked without their phones. The proposition we've seen out there is that the phone is your friend. It's an essential ally. You don't throw out your friend."

But there is clearly a market.

The handset industry's largest players, such as Nokia and Motorola, say the same high-end phones they had high hopes for aren't selling, creating an opening for the likes of Dieceland and Hop-On.

"Handset manufacturers were hoping that consumers would continually trade up to the high-end, feature-filled phones," said Jupiter Research wireless analyst Joe Laszlo. "But it turns out (consumers) are looking for less-expensive phones now."

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