Yesterday I wrote that the introduction of Sharp's two megapixel camera phone in Japan wasn't as significant as the debut of a one megapixel handset. Daniel Scuka, the founder and now business development manager for Wireless Watch Japan, that published the article about the handset), posted some interesting comments about the value of two megapixel devices. He also sent me some follow-up comments.
In his first comments on this Weblog, Daniel says the significance of two megapixel camera phones is important because they:
* Generate greater revenues for cellular operators by transmitting more packets
* Encourage the use of cellular phones as digital cameras, sparking "convergence"
* Stimulate the use of new ways to transfer photos, such as through photo kiosks and other printing services
A total package strategy
I e-mailed a few questions about the Japanese camera phone environment to Daniel and he was kind enough to send me two e-mails in reply. Here are his valuable comments (and my questions):
Question: If the photos aren't transmitted over the air, is there much money for the cellular operators?
"Yes, this point is valid. I spoke with the head of NTT DoCoMo Europe in November, and he stated that the camera is now 'just a sales feature;' i.e., photo transmission contributes little to packet revenues. In fact, in June 2003, DoCoMo had some 15 million camera phones in use on 2G; there were 45 million photo transmissions.
"Thus, the average user sent just three photos. (Figures from DoCoMo IR staff via CSFB telecoms analyst.)
"However, by August - September 2003, camera phones comprised 42% of the overall DoCoMo fleet (2G & 3G combined). Their IR staff reported (claimed??) that these users were generating 1.5 to 3 times more packet usage than non-camera phone users. Your speculation as to why that boost exists is as good as mine.
"I think it comes from cam phone users likely being all-round heavy users --> they are early adopters who select cool new (and highly functional) cam phones and use Java, Web, email, and all other data features much more than average.
"In other words, it's a mistake to consider individual handset features individually; the mobile Internets that the Japan carriers have set up are a 'total experience' -- and the handsets, onboard features (cameras, etc.), network features, data downloads, application downloads, and voice and data billing discounts together comprise a complete envelope.
"Those who embrace any one portion also (more or less) embrace the complete package -- and the carriers are laughing all the way to the bank."
Question: Do you know what is the highest resolution photo a Japanese carrier will permit to be transmitted via its cellular network?
"It's a real dog's breakfast: it varies depending on the carrier, whether you're using a 2G or 3G handset, whether it's still or video, and whose handset you're using. For example, on DoCoMo 3G (W-CDMA), the limit for movie mail ("i-motion mail") is 100KB (~30 secs.) at approx. 15 fps and and 100 X 120 pixels.
"Still images on DoCoMo 3G are limited to 100 KB: http://foma.nttdocomo.co.jp/english/service/comini_03b.html"
Japanese cellular environment
"Japan carriers also have the lowest churn in the world --> typically under 2% per year.
"The ultra-cool camera phones are doubtless a key part of customer loyalty. Adding a camera is a small price to pay compared to the total ARPU if they get (or lose) a customer to competitors!!!
"For example, Vodafone only put out a few new models in the past 6 months and their net monthly adds have hit rock bottom. DoCoMo has fielded 10 or 11 new 505i and 505iS beauts and are rolling in new subs."
"Again, it's the overall service envelope that is important."
Looking at the U.S. market
Daniel's comments bring home some interesting and useful points. For example, just because a cellular operator offers a one or two megapixel camera phone doesn't mean the operator has to allow subscribers to transmit the higher resolution photos over the network.
Also, the camera is one part of an overall package. Personally, I believe cellular phones in the U.S. will become indispensable devices for both business applications and pleasure. We're seeing in Japan -- and I believe we'll see in the U.S. -- that the "Swiss Army Knife" approach of offering lots of capabilities (within reasons) can succeed with the tech-savvy and the youth.
Old fart business people can stick with their black StarTACs!
Youth, the Internet and entertainment will prevail
Certainly the vast majority of U.S. subscribers are still trying to understand how to transfer their address books into their phones, let alone exploring the various GPRS and 1xRTT data options. It's not easy to convince many subscribers to purchase fancy new phones. After all, many think, "I just want to make a phone call!"
However, slowly but surely, the American "Internet Generation" will embrace -- and demand -- that their phones offer all the Internet and entertainment functionality they can get.
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