Watch the kids. They'll show you the next big trend in technology. In Paris, head for the Champs Elysees after dark. Up and down the boulevard, you'll see kids with cell phones in their hands--not at their ears--so they can type messages. These terse messages, limited to just 160 characters, have been flitting from cell phone to cell phone since the early 1990s. If that was the Stone Age of wireless-phone technology, the past 12 months have ushered in the renaissance. Worldwide, transmissions of wireless blurbs surged from 3 billion messages a month last January to 16 billion by December.
Funny thing, though: This craze is taking off just as financial markets wallow in a crisis of confidence. A year ago, investors were smitten with the mobile Web. With fully half of Western Europeans packing a cell phone, the wireless Net seemed a cinch. Then came Europe's Wireless Application Protocol (WAP) service. This dreadful system was plagued by slow, pricey dial-up connections. Now, investors are galloping in retreat from the sky-high costs of its speedy successor, called the Third Generation (3G), which kicks off in some countries this year.
3G JITTERS. Western Europe's capital markets are being drained to the tune of $225 billion for 3G licenses and networks. With phone-company stocks continuing to dive, central banks in France and Britain are warning lenders and investors not to sit on too much telco paper. Admits France Telecom Chairman Michel Bon: "All of us are speaking enthusiastically about [3G], but we are not able, really, to describe what the usage will be."
These 3G jitters would ease a bit if financiers would just look outside. The nub of wisdom, especially in the U.S., is that people won't pay for data connections over cell phones. Screens are too tiny; keyboards too primitive. Yet in the next 24 hours, people will bat out half a billion messages on those crummy keyboards and read them on those puny screens. They'll pay an average of 10 cents for each message. That comes to a total of $50 million--for just one day's worth of mobile data services. The point isn't that phone companies could finance their 3G investments on the back of short messages. That would be like building an autobahn for roller skaters. But as 3G services start to roll out, there will be at least one sizzling application.
Data messaging via cell phone has three virtues. First, it's simple to use; you'll probably never need a manual. Second, it's reliable. Send a message, whether to report that your train is late or that Lisbon's roses call to mind your lover's scent, and the text will arrive promptly. Finally, it saves money. A wireless data message costs a fraction as much as a voice call, making it popular among cash-strapped kids--and in developing countries such as the Philippines.
WHERE TO? Cheap, functional, easy: sounds like a winning formula. It has already proved so for the mobile Net's main pioneer, Japan's NTT DoCoMo Inc. But in the rest of the world, the mobile Net has been--you guessed it--pricey, maddeningly complex, and near useless. Short messages may have alleviated a bit of the revenues crunch. But phone companies have long viewed such pager-style notes as a vestige of the past, not a route to tomorrow's mobile multimedia.
Where can the success of short messages lead? One clever step up is adding a digital camera to the handset and turning the text into a postcard caption. This enables users to take a picture--a new puppy, the dorky guy in the next cubicle, or whatever--and zap it and a message to a friend. If people spend a dime on 25 words of text, it's conceivable that they'll pay four times that much to send an instant postcard. Or if not, chances are some scrappy upstart will try to kick-start the market by offering postcards for a dime. In any case, messaging will be an honest-to-goodness business--perhaps the main one on the early mobile Web. Once users feel comfortable with wireless e-mail, they'll be a softer sell for zippier wireless services, from videoconferencing to on-the-fly e-commerce. At last, they'll associate no-wire handsets with a data service that really works.