August 15, 2002 11:48 AM PDT

Nextel gets hip to youth market

Nextel Communications on Thursday joined a growing number of wireless carriers catering to teenagers and young adults.

In a departure from the company's usual focus, it announced plans to launch "Boost Mobile" phones and services for younger customers. The company is known mainly for its "Direct Connect" walkie-talkie style phones and its business clientele.

"Nextel has so far made a conscious effort not to market to teens," said Nextel Communications Executive Vice President Tom Kelly. "But now we see tremendous potential (in that age group)."

Nextel intends to begin selling six new pre-paid phone plans in September, starting in California and Nevada. Plans for a nationwide service depends on how the plans are received in test markets, the company said in a statement. Along with being pre-paid, other features considered teen-friendly include color screens and games, the company said.

Cell phone service providers have been increasingly targeting 18 to 25 year olds, seen as the most lucrative wireless market for the next several years. Carriers believe that most adults inclined to buy a cell phone already have done so, while less than 20 percent of all teenagers and college students own their own phones, according to analyst estimates.

Market research firm The Yankee Group believes that 74 percent of those between the ages of 18 and 25 will own phones by 2006, the largest percentage of any other market segment owning cell phones by that time. Researcher Cahners In-Stat believes there will be 43 million wireless youth subscribers by the end of the decade.

Virgin Mobile, a joint venture between Sprint PCS and Virgin Group, has jumped into the market, selling phones ranging in price from $99 to $199. The phones offer teen-friendly features, such as a variety of ring tones and the ability to store hundreds of phone numbers.

Similar to Sprint PCS, Nextel has teamed with an outside firm and created a joint venture to handle much of the marketing and sales and to design the phones and features. The Nextel joint venture, Boost Mobile, brings Boost, an Irvine, Calif.-based company specializing in selling wireless devices, to the 18-to-25-year-old market.

The prices of Nextel's phones and services will be revealed in September, Kelly said.

 

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