For Web Phones, the Future Is Calling

For years, tech wizards have predicted the demise of the personal computer as the dominant Internet connection. The Palm hand-held computer and other “information appliances” were the heirs apparent, but a sluggish roll-out of such devices and limited public acceptance have defied overly optimistic marketers.

Now the cellular phone has emerged as the new favorite to become the most common and accessible tool for online communication and commerce.

Internet phones have so far attracted only a handful of users. But industry experts estimate that this year nearly 100 million phones with Web access and e-mail features will be sold worldwide--about 12 times the number of hand-held computers.

By 2002, Internet cell phones could eclipse the number of online PCs, said Iain Gillott, an analyst with International Data Corp. in Framingham, Mass. “The majority of Internet access will shift so that it is through wireless [connections],” he said.

The prediction is already a reality for John Pultorak, a caterer in Orange. He uses a Sprint PCS phone for Internet access about 500 minutes a month while on the road or at banquet sites, reading e-mail and checking weather conditions or sports scores.

“Much of my business is generated from my Web site and transacted over the Internet. The phone gives me the freedom of not being chained to my business,” he said. “[When] someone stole my phone and I was without it for five days, I thought I’d have to commit to therapy.”

Increasingly frenetic and mobile lifestyles, combined with the complexity of the PC, its buggy unreliability and cost, mean that a large proportion of consumers will never buy one, analysts say. If so, Pultorak is on the leading edge of a massive surge to more convenient online devices with which makers of laptop PCs, hand-held computers, phones and pagers are all grappling.

But even hand-held computer companies admit they’ve already lost the wireless war to cell phones. At a recent panel discussion on the future of wireless devices, Jeff Hawkins, co-developer of the Palm Pilot and founder of the hand-held device company Handspring, and Palm President Alan Kessler disagreed only about which cell phone features would become universally adopted--Web surfing, e-mail, instant messaging, shopping or something yet to come.

To be sure, grandiose predictions of ubiquitous Internet phones require technical solutions to daunting problems, starting with the unreliability of cellular reception and the online claustrophobia of facing a screen the size of a couple of postage stamps.

Even enthusiasts such as Pultorak use the phone only for simple tasks. For anything beyond a quick information fix or e-mail, he uses his cell phone as a wireless modem for his laptop computer.

Robb First, a Cleveland, Ohio, entrepreneur, recently became addicted to the wireless Web. But exasperating reception problems he encountered when traveling between his printing and novelty-design businesses have dampened his enthusiasm.

Even when successfully connected, First prefers a Palm over a phone. “There’s no quick way to browse the Web on a phone beyond your bookmarks,” he said.

And consider the effort required for the simple text entry on a wireless phone of “Hi there”--it must be keyed in as 44,444,0,8,44,33,777,33.

To solve this problem, Handspring’s Hawkins favors text messaging based on a handwriting-recognition system, as used by the Palm. Pultorak suggests a separate keyboard. But those solutions would diminish the phone’s size and portability advantages.

The problem suggests an opening for “voice portals.” A number of companies, such as Tellme Networks, a start-up backed by AT&T;, offer Web services activated by voice commands sent over the phone.

And Web companies such as Yahoo and Yodlee, the latter of which consolidates clients’ personal financial accounts, are gradually reducing the number of buttons required to buy products or check bank balances.

A Stripped-Down Internet Experience

However usability is improved, mobile Internet devices will only dimly reflect today’s PC-centric Web, said Naveen Jain, founder of InfoSpace, a provider of mobile payment systems, e-mail, search and shopping applications.

Indeed, wireless Internet companies may need to separate themselves from PC-oriented Web companies now addicted to glitzy graphics, as they adopt a minimalist, pragmatic style.

Most Web surfers who use a PC now search for all manner of information. But that’s the last thing most people would want on a cell phone, which analysts see as a device for information that is personalized, and fast: How much? Where? What flight? When? Can I book it?

Yahoo has deployed a team of engineers to adapt its offerings for the very small screen. So far, e-mail, stock and sports updates and driving directions are drawing the most interest.

Simplified controls, localized shopping and entertainment information and smart systems that anticipate a customer’s needs can make the wireless Internet more enticing, analysts say.

With cell-phone access, users could find eateries on the go or instantly do price comparisons for stores in the same mall.

But such improvements may be hampered by the Balkanization of Internet airspace. Carriers use incompatible network technologies--one reason most U.S. cell phones won’t work in Paris or Berlin. Even in the United States, three different systems are in place--one reason a Sprint phone might operate with crystalline clarity where an AT&T; phone can’t find a signal.

Standardized networks with blanket cell-phone coverage may be five or more years away, though service will improve sooner in the most lucrative urban areas, said Mark Zohar, a wireless analyst for Forrester Research in Cambridge, Mass.

A higher priority for carriers is the roll-out of third-generation--or 3G--networks in a few years. (Analog cell phones were 1G, and today’s digital phones are 2G).

3G will be the first “high-bandwidth” mobile system. Much the way cable modem systems vastly speed up wired Web connections, 3G networks would pump data to cell phones 200 times faster than today. This could bring CD-quality audio, videoconferencing, color and always-on service--instead of dialing in, turn on the phone and you’re online.

Zohar agrees that for the most logical mobile applications--brief text messaging and localized Web access--today’s systems will be more than adequate if they are easy, reliable and personal.

But as personalization matures, the Web’s unavoidable downside emerges: invasions of privacy. Phone carriers already gather personal data that most Web sites do not have--including addresses and phone numbers. Locator signals that control for roaming charges also identify the caller’s physical location. Global-positioning satellite technology could soon become precise enough to beep shoppers as they walk by a store selling, say, cool new cell phones.

Or how about an alert when you pass close to another user who fits your pre-specified romantic profile? Such services are already up and running in Finland and Sweden.

Closer to home, Cybiko, a combination walkie-talkie and hand-held computer, advertises matchmaking features for use at school or while cruising the mall.

Teens--and predators--might find the $129 device a bargain. The youth market that drives such social applications will become increasingly important, analysts say.

Wireless Craze Grips Japan

Nowhere is this trend more apparent than in Japan--which has leaped ahead in the wireless Internet realm. In just 16 months, 8.4 million people have subscribed to I-Mode, a cell phone-based Internet service of NTT DoCoMo, the wireless subsidiary of Japanese telecom giant Nippon Telegraph & Telephone.

At that jaw-dropping rate, I-Mode subscribers may exceed the number of wired PCs in Japan before the service is 2 years old.

The I-Mode’s instant popularity stems from a surprising application for a phone: text chat. The messaging craze among Japanese teens, who send hundreds of millions of short missives monthly, reflects the same stream-of-consciousness dialogue and flirting that has drawn millions of U.S. teens to Internet chat rooms.

Vapid? Perhaps, but also fun, as is downloading the I-Mode daily cartoon. I-Mode also offers more practical, if less popular, Web services such as weather reports, train schedules and stock quotes.

In Japan, cell-phone reception towers are more densely packed for better reception. Japanese phones therefore require little battery power for transmission, so although smaller than U.S. phones, they boast larger screens that make text messaging more practical. Text chat is also taking off in a big way in India and Scandinavia.

“The wireless Internet in the U.S. is the second coming of the Internet. In other places it’s the first coming,” Gillott said.

He predicts that cell-phone messaging in the U.S. “will be as big as instant messaging is on the Web today.” America Online, Yahoo and others are moving aggressively to graft wildly popular buddy lists onto cell phones.

But such social uses also come at a social price. Ordinary cell phones have already been banned as obnoxious irritants in many restaurants and other public places. And drivers yakking on the phone may seem a modest risk factor compared with drive-by Web surfers.

So the biggest challenge may be making the Internet phone fun and useful without creating yet another hazard of modern living.

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The Internet Meets the Cell Phone

More sophisticated cellular phones with Internet connections may soon rival personal computers as the most popular route to the Web. In Japan, cell phones already are a primary connection to the Internet.

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Sources: Forrester Research, International Data Corp., DataQuest, NTT DoCoMo

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Staff writer Joseph Menn contributed to this report.