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Your Lapel Is Ringing

By Olga Kharif Over the years, the cell phone has gone through a transformation even a chameleon would envy. In the 1970s, cell phones the size of lunch boxes seemed amazingly clever. Since then, the device has shrunk, becoming rounder and sporting every imaginable color. Now, chic designs can be sleek as roadsters or menacing as winged predators.

Now, get ready for another big makeover: In the coming year, you'll see cell phones that are cleverly disguised in watches, bracelets, jacket lapels, backpacks -- any imaginable place that will make gabbing a fashion statement (see accompanying Photo Essay for examples of several wearable devices discussed here). In the past year, European and Asian consumers have had a taste of wrist watches, pendants, and powder cases -- all doubling as cell phones. Such wearable devices already account for between 1% and 5% of all cell phones sold worldwide, says analyst Michael King of consultancy Gartner. U.S. consumers, always behind the Old World in most things wireless, have been left out.

Now that's changing. Wearable cell phones will start making their way into the U.S. over the next 12 months -- and by 2007, 20% of U.S. cell-phone users will likely be donning haute couture phones, says King.

RACE TO BE FIRST. That number might seem huge, but it's not unreasonable: A phone stitched into clothing or wrapped around a wrist could allow women to forego a purse. Doctors who on call would no longer forget their mobiles on restaurant tables. And plumbers or other workmen will be able to talk with bosses while fixing pipes or laying asphalt. "I think it's going to be the most common cell-phone shape in the future," says Joe Dvorak, a Motorola (MOT) visionary and key member of its technical staff.

All this is gaining the attention of cell-phone makers, who are scrambling to distinguish their offerings from the crowd. "Whoever gets there first will get a tremendous amount of revenue," says Bryce Rutter, CEO of St. Louis (Mo.)-based Metaphase Design Group, which specializes in the ergonomics and design of handheld gadgets. While some major cell-phone makers, including Motorola, have yet to move beyond prototypes and trials, others are hungrily eyeing the market.

Much of the action is in Asia. That's where watchmakers Seiko and Fossil (FOSL) sell a small number of watch-phone combos. When Japanese wireless service provider NTT DoCoMo (DCM) introduced a wrist-watch phone from Seiko last May, it sold out its inventory of 1,000, priced at more than $300 each, within 20 minutes. Cell-phone maker Samsung has begun selling its own wrist-watch phone in Asia.

LOCATION, LOCATION. Even California startups see the most immediate opportunity in that part of the world. Pleasanton-based NetworkAnatomy, which makes eight-pound wearable communications systems for soldiers and firemen, has developed a prototype of a wristwatch cell phone for people who value reliability above all else. Weighing less than 32 grams (1.1 ounces), the watch is made of Kevlar-type material and works on regular wireless and satellite networks. So when a wireless network fails, its wearer can still make calls, says NetworkAnatomy CEO Doug Linman.

The phone also will have a personal alarm feature. If a wearer squeezes the phone's band, it would automatically dial 911 and provide authorities with the user's exact location, thanks to built-in global positioning system capability. The device, likely to become available in Asia before yearend, will be priced between $400 and $600. Linman expects it to make its way onto the U.S. market by 2006.

In Europe, the approach is slightly different. Chipmaker Infineon (IFX) has developed special ways of integrating fiber with electronics -- and its knowhow has become part of a snowboarding jacket that features a woven-in MP3 player, keyboard, and Bluetooth headset (the microphone is integrated into the jacket's collar) that can communicate with a phone in the wearer's hand or pocket. The jacket, priced at 499 euros (around $600 at current exchange rates), will hit European stores by early September.

JAWBONING. For all this activity abroad, many major cell-phone makers are hesitating, in part because they believe today's wearable designs are far from optimal. Most of the first-generation wrist-watch cell phones have to be slipped off the hand if the user plans to make a lengthy call. And some of the face plates and interfaces can be tricky on such small surfaces.

That could change soon. NTT DoCoMo, a pioneer in wireless services, is developing a technology called FingerWhisper that uses a hand's bone structure to make a wrist watch phone easier to manage and operate. Here's how it works: When a call arrives, the phone sends vibrations through the bones in the index finger. When the finger is slipped into the ear canal, those vibrations turn into voice. The technology also would allow users to dial phone numbers or send text messages by tapping their palms in certain ways. And the technology doesn't seem to pose any health risks, says a DoCoMo spokesperson.

NetworkAnatomy is taking the idea of bone vibrations a step further. It sees people using an "ear bud" separate from its wristwatch phone. The bud would use vibrations running along the jaw to transmit the caller's voice to the listener, says Linman.

PHONE FLOPS. An alternative to these Star Trek-like technologies is voice recognition. Motorola has developed something it calls the SmartButton. The user pins the device onto a lapel, then taps on it and, using voice commands, dials a number and holds a conversation. The button forwards requests to the phone, which is somewhere nearby. Motorola also is looking at flexible phones that don't poke wearers when they take a seat.

Still, a wearable phone isn't on Motorola's immediate roadmap. Part of the challenge is making a device that's easy and economical to manufacture. And some wearable phones have flopped. A spokesperson of cell-phone maker Sony-Ericsson says, "While interesting to look at, most wearable phones typically aren't that easy to use and really haven't done that well in the real world."

Still, many wearables just entering the market will avoid some of the pitfalls of the past. Nokia (NOK), for one, plans to begin selling its Imagewear line of digital necklaces and chokers in the U.S. at the end of June. The necklaces' medallions will store and display up to eight photos, snapped by a Nokia camera phone and uploaded into the necklace wirelessly via Bluetooth. "Products like this show off our vision," says Frank Nuovo, chief designer of Nokia's mobile phones.

This trickle of wearable cell phones could quickly turn into a gushing stream -- and many electronics companies, chipmakers, and startups are betting that the technological tide will carry them into the next stage of cell-phone evolution. Kharif covers technology for BusinessWeek Online in Portland, Ore.

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