LAS VEGAS--AT&T execs said there is big opportunity in selling mid-range phones to consumers who think smartphones are too expensive and too complicated.
Executives talked about this new cell phone category they call "quick messaging devices" on Wednesday at an event at the CTIA tradeshow here.
What is a quick-messaging phone? Think the LG Neon and Samsung Propel. These are phones that don't have the processing power and functionality found in most smartphones, but they still offer data services, such as messaging, e-mail, and Web access. Most of these phones also have QWERTY keypads and/or a touch screens, but they often cost customers less than typical smartphones.
Growth in smartphones has been through the roof in the last couple of years, as devices like the iPhone and BlackBerry are subsidized to price points palatable to the mass market. But AT&T executives said Wednesday that smartphones are not for every consumer. And the company sees a huge market for smartphone-lite devices.
David Christopher, chief marketing officer for AT&T's wireless unit, said that about 35 percent of the handsets AT&T sold in the fourth quarter were smartphones.
"What about the other 65 percent of phones we sell?" he asked. Good question. Christopher said that increasingly the company is selling more of mid-tier messaging phones for customers who want some smartphone features but not all the bells and whistles.
"Smartphones are overwhelming for some people," he said. "So in quick messaging phones we don't try to do everything. "
The problem is that no one has done a very good job of providing mobile applications for these phones, Christopher said. AT&T said it's trying to fix that problem by encouraging app developers to write for the BREW platform from Qualcomm. Other carriers, such as Sprint Nextel ,are partnering with app store companies, like GetJar, which offer applications for these phones.
Meanwhile, AT&T is also focusing on adding some key features to this class of phone that provides the most popular and useful functions in a smartphone at a much lower price and with far fewer confusing extras.
Adding to its existing list of devices in this category, the company launched four new quick-messaging devices at CTIA.
The Samsung Strivehas a vertical sliding keyboard. It's the least expensive of these new devices at $19.99 with a two-year contract after a $50 rebate. The Samsung Sunburst is a GPS-enabled device that is $39.99 with a two-year agreement. The other two phones are not on the market yet and pricing is not yet available. The Pantech Link, which will hit store shelves in a few weeks, has a full keyboard, while the Pantech Pursuit has a full touch screen and vertical keyboard. It will be out this summer and will come with the ability to geotag.
These phones will be among the first handsets to take advantage of new services and applications AT&T has developed especially for this category. For example, AT&T has enhanced messaging for these devices. Instead of offering simple text messaging, the company has added the ability to thread messages to follow a conversation as well as group messaging that lets subscribers "reply all" to messages. The next-generation messaging functionality also allows people to embed multimedia such as pictures into regular text messages.
Christopher noted that these functions have been available for some time on smartphones, but they haven't been available for lower-end messaging phones.
In addition to the messaging, AT&T has also launched several services that are hosted on AT&T servers and can be accessed via the Internet. It's launched the AT&T address book, which allows users to manage their address books from a PC and sync their phones to backup address information. This means that when a phone is lost, stolen or damaged, all the address information isn't lost too. This offering will come free to subscribers of quick messaging devices, Christopher said.
AT&T has also launched an Internet-based service to help these subscribers manage and store their photos. Customers can upload photos to a server in AT&T's network where it's stored in a personal "locker." The photos can also be uploaded directly to social networking sites. AT&T will charge 35 cents per photo upload and $10 a month to upload up to 50 photos.
And finally, the company announced Wednesday a new music service that integrates several functions that could be found in multiple music applications into a single service. For example, the music service allows people to identify songs or artists as you would with applications, such as Shazaam, by holding the device up to a radio. Users can also add artists and music directly to a streaming radio playlist, as well as preview, purchase and download songs right from a single application. This service costs an additional $6.99 a month.
AT&T requires its quick messaging phones have some kind of data plan. Subscribers must spend $20 a month on top of their voice service for either a texting or a data plan or any combination of plans. AT&T offers texting plans for either $5, $15, or $20 a month. And its data plan costs $15 for unlimited access on quick-messaging devices only.
AT&T also requires smartphone subscribers sign up for a data plan, which costs $30 a month.
Factor in the extra cost of the photo sharing and music services, and subscribers could actually spend more on their monthly service than a smartphone subscriber using an iPhone. iPhone subscribers can pay a yearly fee to have their contacts, photos, and iTunes music backed up in the Internet-cloud using a service sold by Apple.
The quick-messaging data plan costs $20, plus $10 for the photo service, plus another $7 a month for the music service, which adds up to $37 a month.
It's clear that AT&T wants to encourage customers to purchase data plans, since pricing pressure is making it difficult for carriers to make money on voice services. But Christopher said he is confident that this class of handset will appeal to a large group of customers.
"I absolutely think there is a market for these phones," he said. "These phones are a lot less complicated than smartphones. They cost much less than the smartphones and the data plans are less expensive. And there are a lot of people out there, who are interested in that."