Father’s Day is one of the few times each year when I can get my children away from their friends and out on a long hike with their dear old dad.
Or so I thought …
After two hours of hiking up a steep goat trail, we were finally enjoying a jaw-dropping panoramic view of the mountain ranges — named Bob Marshall, Swan, and Salish. But the peaceful scenery was suddenly interrupted by a ringing noise.
I couldn’t believe my ears! It was the cell phone that I had tucked into my backpack. Worse yet, I answered it and the call was some pimple-faced boy (who really gets on my nerves) calling for my daughter.
Now, I know technology is improving. But I was amazed that my phone was getting reception despite our remote location.
Even more surprising are the other impressive feats that cell phones are now performing. I think these new tricks are going to amount to big business for wireless companies. Consider …
A New Type of
“Pay Phone”
The cell phone’s original purpose was making phone calls on the go. But now, wireless companies are positioning cell phones as a way for customers to spend money on the go. Here are seven of the latest cell phone tricks …
The cell for text messaging: Newer cell phones allow you to communicate without even talking, by sending short typed messages between mobile phones.
Teenagers around the world have been celebrating this technology, because it has allowed them to talk freely, even within earshot of their parents.
But text messaging is more than just a teen dream. It’s great for trading short notes and updates. In fact, the practice has grown so rapidly that more than one-third of cell phone users now regularly send and receive text messages.
According to the wireless industry association CTIA, 9.8 billion messages were sent in December 2005, over quadruple the 2.1 billion in the same month two years earlier.
At an average cost of a dime per message, that’s a lot of extra cash for mobile phone companies!
The cell as a credit card: In Europe and Asia, many consumers are already using their cell phones like credit cards — making purchases from vending machines, paying for taxi fares, and buying fast food meals.
Japan is among the leaders. It has about 30,000 vending machines, taxis, and convenience stores with specialized infrared readers that can process financial transactions over cell phones. And that number is expected to triple by the end of this year!
My take: In the very near future, cell phone companies will start raking in millions in credit card processing fees, just like Visa and Mastercard do now.
Of course, that’s just the tip of the technology iceberg …
The cell for Internet shopping: If you travel to Asia, you’ll see hordes of people pointing their cell phones at billboards in train and bus stations.
They aren’t crazy — they’re using their phones to read bar codes, which contain links to Internet sites. The sites then load right into a cell phone’s web browser, letting the user get more information or buy related items.
For example, you could point your phone at a concert poster and instantly research ticket prices, buy seats, or purchase the band’s album.
The cell for gambling: In Japan, if someone gives you a hot tip on a horse race, you can now place a bet right from your cell phone. The country permits both on-site and off-track betting from cell phones.
Don’t laugh: Mobile betting is taking off. On April 12, at one of Japan’s three largest races, $74.5 million in bets were placed over cell phones!
The cell for stock trading: And trading stocks is another hot wireless business overseas. Experts estimate that a whopping 20% to 30% of all stock trades in Asia are done via cell phone.
If you think about how hard companies like E-Trade, Charles Schwab, and Merrill Lynch fight to get your brokerage business, you’ll get an idea of just how lucrative a wireless brokerage business really is.
The cell for babysitting: Consider this scenario: When a child returns home, he can just point his cell phone at a reader — the phone will open the door and automatically send an e-mail to his parent reporting his arrival.
How much would you pay for that security if you were a working parent? A lot, I bet!
Here’s how it works: The newest cell phones come with special embedded circuitry. Once programmed, these circuits allow your cell phone to be used like an electronic “key.” The technology is called Near Field Communications (NFC), and I think it will prove extremely popular with parents because of the peace of mind it can provide.
[Editor’s note: For more details, read Tony’s special report on Near Field Communications.]
The cell for TV and video: Cell phones have been on the path to becoming entertainment devices for some time now. For years, people have been playing solitaire and other games on their phones.
And more recently, they’ve also been able to store and listen to their favorite music right from their phones.
Now, in Japan, the newest phones offer free TV viewing. All it takes is a cell phone equipped with a special receiver. You can watch seven popular channels wherever you are.
If you live in Japan, you can even use cell phones’ new video capabilities to teleconference with your peers.
These Tricks Mean
Big Business in
Asia and the U.S.
By now, you’re probably wondering why you haven’t seen a lot of this stuff in the U.S. Well, I hate to say it, but we’ve fallen behind Europe and Asia when it comes to wireless innovation.
However, that doesn’t mean the U.S. is devoid of wireless investment opportunities. If anything, more complicated cell phones are good news for U.S. companies.
|
Important U.S. Wireless Companies
|
| Anadigics |
| CalAmp |
| Freescale Semiconductor |
| Openwave Systems |
| Powerwave Technologies |
| Qualcomm |
| RF Micro Devices |
| Texas Instruments |
| TriQuint Semiconductor |
| Skyworks Solutions |
Fact: The more complex cell phone components are generally being made here in the U.S. This includes circuit boards (the “brains”), chips, software, radio frequency amplifiers, digital signal processor chips, and memory.
On the other hand, the simpler cell phone components are mostly being manufactured in Asia. These parts include antennas, speakers, microphones, batteries, LCD screens, plastic casings, and keypads. Many of these manufacturers are the “pick and shovel” suppliers. (For more details see my report “Cheap Insurance and Greener Pastures.”)
And beyond just the hardware, many wireless companies stand to benefit from all the new services I described to you. Think about all the paid subscriptions and fees … the potential partnerships with retailers … the advertising dollars. A lot of money will be made in the coming years.
Bottom line: Every wireless company has its own business dynamics. But given the rapid technological advances happening in the space, many companies will have their day in the sun.
In this case, the more important decision isn’t whether to invest in Asian or domestic wireless companies. Rather, just make sure it’s a solid company. If you don’t, you could be ignoring one of the most exciting opportunities of this new century.
Best wishes,
Tony
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About MONEY AND MARKETS
MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Colleen Collins, Amber Dakar, Ekaterina Evseeva, Monica Lewman-Garcia, Wendy Montes de Oca, Jennifer Moran, Red Morgan, and Julie Trudeau.
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