October 16, 2001 1:15 PM PDT
Ring tone firms see U.S. as next frontier
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The blitz in the next few weeks will include some of the biggest names in the ring tone business, an industry that generated $300 million last year in Japan alone. The concept: For as little as 99 cents, cell phone owners can replace their standard ring selection with snippets of tens of thousands of different songs.
The companies involved include Monstermob, Kiwee, based in France, and CellCast, which is among the biggest ring tone sellers in Asia.
Nearly all of these companies will be first setting their sights on Cingular Wireless users, millions of which own phones that have the software needed to download ring tones, industry watchers say. AT&T Wireless subscribers will also be targeted, according to those familiar with the companies' plans.
The upcoming expansion could prove to be a crucial, large-scale test of whether the United States' 123.2 million wireless subscribers will ever take to using Web-enabled phones for commerce, analysts say.
If the ring tone companies are successful, it could be a key step in getting Americans used to downloading other things like songs, videos or games onto their phones, said Keith Waryas, a wireless analyst at IDC.
Mobile phone carriers have made a multibillion-dollar bet that their customers will want to do something with their phones other that just talk. Verizon Wireless, AT&T Wireless and others have spent billions of dollars building new networks not only to improve voice quality, but also to make it easier to surf the Web or use a phone's Internet connection to buy goods online.
The extra minutes of airtime spent getting a sports score or tracking a stock is one of the new revenue sources carriers are hoping for. But so far, they have not had much luck. A recent survey by consultancy A.T. Kearney suggests that while Americans are using cell phones to send each other short text messages, the number of people using a cell phones' Web connection to buy things is plummeting.
In Europe and Asia, cell phones are the primary way to surf the Internet or send text messages. But in the United States, PCs are king. PCs usually stay in one place, while a cell phone accompanies its owner nearly everywhere he or she goes.
"Handsets are an extremely personal device over there," Waryas said. "Here, it hasn't reached that level yet; wireless is still an alternative form of communication, not the primary form of communication."
But the European and Asian companies are coming to the United States anyway. Carl Gunell, president of Telemedia Development in Costa Mesa, Calif., has been readying several of the ring tone companies for a U.S. market just introduced to downloadable ring tones this year.
Gunell says a European market that once saw some companies selling 80,000 to 90,000 ring tones a day has fallen flat in recent months. It is still a huge moneymaking proposition, he said, but the companies need to find a new marketplace.
He said these ring tone companies have also begun to note that U.S. carriers are starting to sell more phones capable of sending and receiving short text messages, which is the primary way ring tones are delivered to cell phones.
