May 17, 2004 5:07 AM PDT

Samsung to unveil satellite TV for phones

SEOUL, South Korea--Coming to cell phones soon: reality shows and cartoons.

Samsung plans to release a phone that can receive satellite TV signals and launch a service package that lets customers receive up to 40 stations. The company expects to launch both the service and the handset, called the Digital Multimedia Broadcasting (DMB) phone, in the third quarter.

The phone and service at first will be available only in South Korea, but the company often brings phones to other markets after assessing domestic sales, Ike Chung, vice president of mobile sales and marketing for Samsung, said in an interview here. He added that Samsung developed the chip that makes the DMB service possible.

Chung also said that another product--a phone with a built-in BlackBerry device--will come out in the fourth quarter.

A number of phone manufacturers already sell handsets that can receive and send personal video and TV broadcasts over the cellular network. South Korean carriers, for example, have been able to deliver full programs across cellular networks since 2002. With that method, however, cost is a major problem.

"Watching a 90-minute soccer game costs about $260," said Sauk-Hun Song, principal analyst at research company Gartner.

Carriers offering DMB service will likely charge a more affordable flat rate for it, he said, adding that SK Telecom, a local carrier, is expected to launch a DMB satellite soon.

Samsung came out with a phone last year that can receive TV signals from terrestrial stations, but that means of transmission limits the range and scope of programming.

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Song, nonetheless, indicated that the market for TV phones may remain small for a while because of potential problems with overall quality and screen size.

TV phones are part of an overall effort on Samsung's part to capture more of the high end of the market.

The company's shipments, in terms of overall units sold worldwide, are growing at around 30 percent annually. Samsung estimates that it will ship 80 million to 85 million phones in 2004, up from 55.7 million in 2003, Chung said. Samsung shipped 20.1 million phones in the first quarter of this year, up from 15.5 million during the same period last year. Camera phones accounted for about 19 percent of the company's shipments in 2003.

Chung noted that sales of high-end phones have begun to accelerate in the often tough U.S. market.

"Even in the U.S. and Canada, people prefer compact-size phones," he said. "The change is happening. It started at the end of last year. The change is quite drastic."

In earlier years, he said, the joke for many Asian manufacturers was that a typical U.S. phones was "like a brick...You could use it as a weapon."

The company is concentrating on three types of high-end phones: multimedia phones that can serve almost as entertainment centers, phones that can double as PDAs (personal digital assistants), and "PDA lite" phones that contain the key ingredients of PDAs, like calendars, but without the same girth.

The laundry list of features that a multimedia phone might contain remains difficult to assess. One idea Chung tossed out involves putting enough storage on a phone so that it can serve as a home stereo unit. People could simply pop the phone into a cradle and their digital music vault could be played through speakers in the home.

Phones could also become terminals for buying entertainment. "Video on demand, audio on demand will be the killer (apps) for the phone," he said.

Additionally, Wi-Fi will likely be a popular addition for transmitting data because the cost of getting large files will be lower than through cellular networks, he said.

Sources close to the company also stated that Samsung will release a game phone with 1.2GB of storage and a battery with a long run time. Chung wouldn't confirm that but said the "use of memory is increasing dramatically."

 

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