Price Isn't Everything
By Mike Masnick, Thu Jun 02 23:30:00 GMT 2005

One thing that's held back many 3G offerings was that the handsets were expensive. While some have said that as handset prices drop 3G will take off, it's going to take more than that.

It may sound a bit self-serving for someone at Motorola to point out that lower handset prices aren't everything -- as keeping handset prices high seems like a good way to boost margins. However, it's still somewhat surprising to see a handset maker express caution over the size of the 3G market, when so many investors seem to be banking on the ability of handset makers to sell replacement handsets into this market in order to keep growing.

The truth is, though, that the point he's making is true. 3G phones do need to get cheaper for wider adoption -- but, as NTT DoCoMo, 3 UK and others learned in launching 3G services, it takes a lot more than that. If the phones are too big or ugly, or the battery life just isn't there, people are going to wonder what kind of "upgrade" 3G phones really are. People still see mobile phones as communications devices and fashion items, and anything that comes in the way of that will be seen as a downgrade, not an upgrade.

More importantly, though, people still need to be convinced as to why 3G services are any better than what they already have. While people within the industry just accept the idea that 3G is better than 2G or 2.5G systems, most people really don't understand the difference, and without clear examples of the value of such systems, it's not going to matter how cheap (or how sleek) the new handsets are, if the reason for moving to 3G aren't clear.