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Cell phones becoming multimedia devices

SAN FRANCISCO, March 3 (Reuters) - In a few years, for many users, the least important feature of a cell phone will be making phone calls.

Cellular networks are changing in the United States and cellular phones are changing with them, becoming multimedia terminals capable of playing music and video and a host of other things that were all but unthinkable five years ago.

But as cell phones become more than just -- well, phones -- manufacturers and content companies say it is inevitable that a new class of devices emerge that focus on media first.

"I think the market is going to evolve where you have the full range of products and the blur between the consumer electronics device and the mobile handset will increase," Tony Thornley, chief operating officer of wireless technology company Qualcomm Inc. (QCOM.O: Quote, Profile, Research) , said at the Reuters Technology Summit in San Francisco this week.

For the most part, handsets in the United States today come in either "flip" or "candy bar" styles, with relatively smaller screens and no dedicated media buttons.

But in markets like Korea, where networks are more advanced and entertainment on mobile phones is entrenched, there are phones with TV-friendly screens that can rotate sideways, phones that look more like Apple Computer Inc's(AAPL.O: Quote, Profile, Research) iPod music player than a calling device and phones easily mistaken for a digital camera.

Many countries have high-speed networks capable of broadcasting data at speeds comparable to the broadband Internet connections people have at home. Such networks are just getting started in the United States, where the question is not if things change, but how quickly.

"For sure there's going to be television sets in cell phones, for sure," Michael Marks, chief executive of contract manufacturer Flextronics International Ltd. (FLEX.O: Quote, Profile, Research) , said at the Reuters summit.

He sees the phone function becoming a "throw-away" for many high-end handsets.

CHICKEN VS. EGG

As with any case in technology where both the platform and the content are changing, the question is which will come first -- advanced mobile media or phones designed for it.

"There is not a killer (application) for mobile right now," said Christopher Payne, head of MSN Search for Microsoft Corp. (MSFT.O: Quote, Profile, Research) "In order to have the killer (application), the thing people really go crazy over, I think you have to have both" device and application.

That killer application could be Internet search capability, which would likely suit Microsoft's renewed ambitions in that market. Or it could be video gaming, already a $2 billion market on handsets worldwide and growing at a steady clip.

"Wireless devices, phones in and of themselves, will probably break down into different categories," said John Batter, general manager of EA Mobile, the wireless division of top video game publisher Electronic Arts Inc. (ERTS.O: Quote, Profile, Research)

"You'll probably have ... a phone is a phone is a phone. Then you'll have sort of media-enabled devices, great for downloading video, playing some level of games. Then there's a high-end device with a great screen, really optimized for gaming," Batter said.

Whatever happens, one thing is clear -- multimedia makes good money for the wireless carriers, and they are eager to build a business sooner rather than later.

"We want to make it to where 50 to 60 percent of people in the next two years have multimedia capability," said Len Lauer, chief operating officer of Sprint Corp. (FON.N: Quote, Profile, Research)

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