IN THE PIPELINE: Cell Phones That Won't Let You Hide
By DONNA FUSCALDO
Of DOW JONES NEWSWIRES
NEW YORK -- Getting lost may be impossible when the next generation of semiconductors finds its way into cell phones.
Called Assisted GPS, these chips will allow cell phone users to accurately locate other wireless yappers, whether they're on a street corner or in an office building. The technology will also let retailers send targeted sales coupons to cell phone users as they pass specific stores.
Unlike older generations of global positioning system, or GPS, chips, the new semiconductors are more effective because they can work indoors. Plus, the chips draw less power, which makes them ideal for cell phones.
GPS is a satellite-based radio navigation system originally created by the U.S. military. In the mid-1990's GPS started to find its way into automobiles, for such things as digital maps and directions. Today GPS is being built into everything from handheld devices to backpacks. It's been used to track trucks and parolees.
In the past GPS technology lost its signal in buildings, where there wasn't a direct line of sight to the satellite. But by using a combination of a GPS chip and software that receives information from the wireless network and sends it back to the phone, companies like Qualcomm Inc. (QCOM ), Motorola Inc. (MOT), privately held SiRF Technology Inc. and Global Locate Inc. have come up with ways to overcome those limitations.
Currently, the adoption of GPS chips in cell phones is being driven by a Federal Communications Commission mandate called E911, which requires all wireless carriers to upgrade their equipment to enable the tracking of emergency cellphone calls by the end of 2005.
Although wireless carriers have other options to meet the mandate, such as a network-based system which uses cell towers to home in on individual cell phones, GPS chips are expected to gain traction because of their accuracy.
According to market research firm Cahners In-Stat Group, in 2003 there will be 11.1 million GPS enabled handsets in the U.S., compared with 54.3 million network-enabled phones. In 2006, GPS equipped phones will increase to 77.5 million, while network-based phones will climb to 63.7 million.
Wireless phone carriers, including Verizon Wireless and Sprint PCS Group (PCS), which use a wireless technology standard developed by Qualcomm, are using a Qualcomm GPS chip. Its appeal: the GPS technology is integrated into the main chipset, reducing the cost of incorporating a stand-alone GPS chip.
Other carriers like AT&T Wireless Services Inc. (AWE), Cingular Wireless and T-Mobile, a unit of Deutsche Telekom AG (DT), which use a wireless technology standard developed in Europe, have been using network-based technology, which doesn't require a significant upgrade of the handsets.
The GPS chips for the European standard are not integrated into the current chipsets and would cost the carriers up to an extra $10 per handset.
The network approach may be cheaper, but it has limitations.
Ken Hyers, an analyst at Cahners In-Stat, said the network-based technology isn't always precise in certain situations, like in rural areas where the cell towers are more widely spaced, which may cause carriers using the Europe standard to take a closer look at GPS chips as an alternative.
Spokeswomen at AT&T Wireless and T-Mobile said the companies are currently moving ahead with network-based technology for their E911 rollouts, but continue to monitor other technologies including GPS. Officials at Cingular did not return calls seeking comment.
Today Qualcomm is the leader in chips for such carriers as Verizon and Sprint. SiRF and Global Locate are attacking the rest of the pie. Both companies are optimistic that carriers will at the very least investigate their technology and hopefully jump on the GPS bandwagon.
"A lot of people said GPS is more expensive (than the network approach) but that is not true," said Frank van Diggelen, vice president of product management and marketing at Global Locate. "If you're doing it off a network you have to go out and build out the infrastructure and it still doesn't work in rural areas."
According to Global Locate's Chief Executive Scott Pomerantz, it will cost carriers anywhere from $20 to $100 for the network equipment, while Global Locate can put its chips in a phone for under $10. And once the chips are integrated with the main chipset, it will cost half of that, he said.
GPS Chips Beyond Cell Phones
If the carriers on the European standard adopt the chip-based approach, market research firm Gartner Inc. expects all new phones that work on the European standard to be GPS enabled by the end of 2004. Meanwhile, all new Qualcomm-based phones are expected to contain a GPS chip by the end of 2003, according to Gartner.
SiRF and Global Locate, both of San Jose, Calif., are not only going after the cellphone markets, however. They see GPS chips becoming a mainstay in PDAs and mobile computers as well. It's a vision shared by Intel Corp. (INTC), which invested in SiRF in October of 2000.
"Adding GPS capabilities, such as those offered by SiRF, can make cell phones and other computing/communications devices more valuable and useful to consumers," said Intel spokesman Robert Manetta. "We invested as a way to help drive demand for these computing and communications products."
Even though the E911 mandate has been the initial driver of GPS in cellphones, industry watchers and executives at the chip companies predict even greater adoption once consumer and corporate services surrounding location-based technology are rolled out.
"The E911 mandate has dictated that there will be location-based services out there," said Marc Prioleau, director of marketing at SiRF. "Once carriers have the infrastructure to know the location (of cell phone users) they can add commercial services."
Location-based services, which include locating a friend or lost child, or receiving targeted sales pitches via a cell phone, has been a catch phrase for some years now, but never took hold because of the absence of devices.
But with carriers required to have a portion of their phones equipped with a tracking feature by the end of the year, many expect to see some location based services by next year.
Cahners In-Stat predicts that carriers' revenue from location-based services in the U.S. will be $11 million in 2003, and climb to $167 million by 2006.
In order for the services to enjoy widespread adoption, however, Stan Bruederle, an analyst at Gartner Dataquest, said companies will have to offer services that have real value.
"The things that people have come up with are not that compelling to consumers," said the analyst. Bruederle predicts location services won't be around until 2004 or 2005.
But even if companies offer services that consumers deem worthwhile, there surely will be privacy concerns that could temper growth.
"People will be perfectly happy to have GPS built in when they dial 911," said Allen Leibovitch, an analyst at IDC. "The question is will consumers want the cell phone to know where they are at all times."
-By Donna Fuscaldo; Dow Jones Newswires; 201-938-5253; donna.fuscaldo@dowjones.com
Updated November 12, 2002 11:00 a.m. EST |
