Subject: [NEXTEL-1] Cell phone marketers tap teens as the next frontier

From: Marcel <[email-masked]>
Date: Thu, 20 Feb 2003 01:16:50 -0500

Cell phone marketers tap teens as the next frontier
February 17, 2003
By Noreen O'Leary

Nokia launched a new phone called the N-Gage earlier this
month aimed at a lucrative target. The wireless giant created a
hybrid phone that doubles as a gaming device and an MP3
player to capture the imaginations—and the growing spending
power—of teenagers. Quick to understand and embrace new
technology, teens are the cellular industry's fastest-growing
user segment.

It was a marketplace waiting to happen. As far back as the pink
Princess phones of the '50s, teens and telephony have been
inseparable. Until recently, expensive contracts and parental
reluctance have kept wireless marketers focused on adults
and business users. But growth within that segment has
stagnated over the past few years. At the same time, parents
who previously regarded cell phones as too costly and too
disruptive in classrooms now see them as providing
reassuring communication in troubling times.

"The age of entry into this category has dropped to early high
school, around 13," says Michael Wood, vp of Teenage
Research Unlimited in Northbrook, Ill. "It originated with things
like Columbine, 9/11, child abductions, the sniper attacks, all
of which is creating a desire in America to be able to get in
touch with family members. Adults are already equipped with
that mechanism; now they want their kids to be, too."

If the more sophisticated European cell phone industry is any
indication, the teen category was ready to be tapped even
without those frightening events. In Europe, 60 to 85 percent of
those between 13 and 24 own cell phones, compared with
only 25 percent of that age group in the United States,
according to Virgin Mobile's Warren, N.J., office. But by 2006,
Nextel Communications in Reston, Va., expects 74 percent of
U.S. teens and college students will have cell phones and
wireless devices. To make sure that happens, marketers are
introducing new products, pricing and service plans.

Nokia's N-Gage console will let mobile gamers—a.k.a.
teens—play individually or against other mobile phone users.
The service, which Nokia is co-developing with T-Mobile
International, will provide fingertip access to favorites from
Sega of America and other game publishers. Nokia, a Finnish
company whose U.S. operations are based in Irving, Texas,
plans to start shipping the device by the fourth quarter.

Tantalizing figures point to bright prospects for companies
targeting teens. The market for color-decorated faceplates,
favored chiefly by teens, has already swelled to $1.7 billion
annually. Ring-tone sales—users pay to replace tinny
preprogrammed tones with their favorite tunes—were expected
to hit $1.5 billion in Europe last year, according to Strand
Consult, a Danish firm. In November, Sony Music
Entertainment acquired the wireless entertainment company
Run Tones and set up the Mobile Products Group to add new
wireless products and services to existing offerings like ring
tones and album previews.

The popularity of faceplates and tunes underscores the
difference between young people and adults as cell phone
users. Teens use their phones as fashion accessories, style
statements, expressions of personality and badges of
independence that are second only to a driver's license. While
their parents look to phones for communication and
convenience—which led to PDA innovations from Palm and
BlackBerry—teens see them more as entertainment tools.

That preference is behind sweeping changes in product
development, creating convergence between the worlds of
entertainment and mobile communication. In addition to
specialized ring tones, cell phone companies are developing
units with built-in MP3 players, digital cameras and
downloadable games.

In the upcoming quarter, Wildseed, a Kirkland, Wash.-based
startup led by a former Microsoft executive, plans to unveil an
innovative wireless revamp that targets teens. Wildseed's
Smart Skins are removable faceplates with software that
programs the phone to carry theme-related ring tones, screen
savers, games, Web links, and design and color details. A
Britney Spears phone, for example, would have a picture of
Spears on the faceplate, offer her songs as options for the ring
tone, use pictures of her as a screen saver and provide Web
links to her favorite sites, which would be easily accessible via
the phone. Following the Swatch model, Smart Skins will be
priced competitively to encourage teens to buy several models
to suit their changing moods.

"We've built the mechanism for packaging software for phones
in a consumer-friendly way," says G. Eric Engstrom, who
co-invented the technology that inspired Microsoft's Xbox. "It
allows us to be more targeted in what we can offer. The user
can refresh the theme of his or her phone just by changing the
Smart Skin. Smart Skins can be manufactured and on the
shelves within a matter of weeks. So the choices will change
along with current trends and lifestyles."

Might a Britney fan's Smart Skin phone be inundated with
promotions from concert promoters, record companies and
the Spears fan club?

"We don't want to encourage spam, particularly to minors,"
says Cindy Smith, vp of marketing for Wildseed. "We've spoken
to people—like the record labels—about this. Obviously you
have a consumer who's receptive to that information and wants
to know about it. But we prefer the Amazon model, where they'll
say, 'If you like this, you'll like that.' "

Carriers have also been aggressive in cultivating younger
users. Last year the U.K.'s Virgin Mobile, in partnership with
Sprint PCS in Overland Park, Kan., moved into the U.S., wooing
teens with a straightforward pay-as-you-go, no-credit-check,
no-contract plan. "No one has ever paid attention to kids
before, and calling plans are complicated and prohibitively
expensive," says Vince Engel, executive creative director at
Virgin Mobile agency Leagas Delaney in San Francisco.

"One of our young art directors signed up for a $29 [cellular
contract] plan, and when he got his first bill, it was $58," notes
Engel. "We found that teen users are becoming very skeptical
of these plans. With Virgin, it's simple. They buy a phone and
know how many minutes they have upfront and know it's up to
them to add minutes."

Virgin includes targeted applications such as a "rescue ring,"
which users can deploy to get out of such awkward situations
as a bad date.

In November, Boost Mobile in Irvine, Calif., joined the
pay-as-you-go chase for teen customers. In association with
business phone provider Nextel and Motorola, Boost offers
service that includes a walkie-talkie option for its most
price-sensitive subscribers. Participants get unlimited use for
$1 a day, with a range of about 250 miles. Boost's founders,
who launched the company two years ago in Australia,
describe themselves as "a collection of surfers, skaters,
boarders, motocross freaks, DJs, clubbers and techies."

Company CEO and founder Peter Adderton says he wants
Boost to become the Pepsi or Coke of the wireless world.
"Mobile phones are the central hub of an active lifestyle," he
says. "The first thing a kid does when he wakes up is he rings
friends to say, 'We're going skating or boarding.' Voicemail
becomes the hub of their social life. In a club when they can't
hear because of the music, they send text messages."

American companies have traditionally viewed prepaid plans
solely as an option for consumers with credit problems,
preferring to keep customers locked into long-term contracts.
Now American companies are using family-enticement plans
to lure both parents and their kids. Sprint, for example, is
offering a "500 minutes to share" two-year contract and
throwing in two free phones to new subscribers.

Carriers are also providing incentives to teen consumers
through exclusive-content agreements. Befitting its rock 'n' roll
image, Virgin Mobile has teamed with MTV Networks to allow
its users to interact with MTV programs—for example, to vote
on songs they want to hear on the network. Plans for an
MTV-branded phone are also in the works.

Verizon, which has become aggressive in its game offerings,
has introduced three games based on The Lord of the Rings
movies. AT&T Wireless, teaming up with American Idol,
encourages teens to use their cell phones to text-message
votes and other opinions to the show. In return they get free
behind-the-scenes text messages about the show.

In the ad campaign supporting the American Idol promotion,
AT&T Wireless urges fans to text-message their friends about
the program. Text messaging has proved wildly popular
among European and Asian teens, who have created their own
abbreviated language for the purpose. The practice is
becoming popular here as more teens get phones and use
text-messaging as a lower-cost alternative to voice
communications. Almost 100 million messages are now sent
each month in America compared with 1.4 billion a month in a
country like the U.K., which has a substantially smaller user
base. But the Wireless World Forum, a London-based
research firm that focuses on telecommunications, expects
North America to catch up and pass the 1 billion-a-month mark
by 2004.

Given the difficulty of pecking out messages on tiny phone
keypads, it's not likely adults will become a big part of that
phenomenon. But as with so many things associated with
teens and their trend-driven lifestyles, it's hard to forecast how
many of the current product innovations will be assimilated into
the general population.

"With things like cameras in cell phones, the jury is still out on
whether it will just be a novelty, like a modern-day Polaroid,"
says Scott Foreman, group account director on T-Mobile at
Publicis, Seattle. "In the future, I think we'll have more of these
things as standard options. But I think content is still king, and
that's where future development lies."

http://www.adweek.com/aw/magazine/article_display.jsp?vnu_content_id=1818786
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