Profiting on Tweens' Cell Chats

Telecoms and toy makers are creating tailored gadgets and features to capture the pre-teen segment. The wireless market for this set could double by 2010

Think there are huge numbers of young people chatting with friends and texting messages on cell phones now? Just wait. The wireless market for "tweens" -- children between the ages of 8 and 12 -- has the potential to double by 2010, according to the Yankee Group, an industry researcher. This market currently has 5.3 million wireless users, accounting for 2.6% of all wireless subscribers. Wireless providers and others see a huge, untapped opportunity.

Of course, the growth in the overall wireless market over the past several years has been nothing short of phenomenal. In the eight years from 1997 to 2004, the number of wireless subscribers in the U.S. more than tripled, from 55.2 million to 180.5 million.

But outfits with skin in the wireless game are looking for more. One group they think has strong potential: tweens. Among members of this group, 27% have cell phones -- a penetration that is almost one-third of the overall wireless industry average as of yearend 2005.


  That number has certainly caught the attention of the top four national wireless carriers: Cingular Wireless, jointly owned by AT&T (T) and BellSouth (BLS) (the companies recently announced a merger agreement); Verizon Wireless, co-owned by Verizon Communications (VZ) and Vodafone (VOD); Sprint PCS (S); and T-Mobile USA, owned by Deutsche Telecom (DT). These four carriers accounted for about 90% of the top 10 companies' subscribers in the quarter ending June 30, 2005, and 92% of all net subscriber additions in the June quarter.

With overall market saturation, companies are now targeting what they see as the underpenetrated tween market segment. And while it's no surprise that the likes of Verizon and Cingular are in the fray, some names outside the telecom arena are making their mark. Disney (DIS) and Hasbro (HAS) are among the companies designing cellular phones, tailoring plans, and introducing electronic gadgets that are kid- and parent-friendly.

The Firefly, which is offered by Cingular, is a smaller phone that comes with five large buttons instead of the usual numerical keypad. It only makes and receives calls, and has no text messaging or other special features. Disney and Hasbro are also adapting cell phones to meet kids' needs. Disney, in a deal with Sprint, plans to offer wireless services directed at 8- to 12-year-olds, with its Disney Mobile phone.


  Hasbro's new Chatnow Two-Way Radio Communicator is equipped with an integrated digital camera and text-messaging functions. It sells in both clamshell-style and slide-style mobile-phone designs. The two-way radio communicator allows tweens to be in touch with their friends and family within a two-mile range without paying for air time or signing a calling-plan contract.

Will the new offerings make a splash? With the major wireless players hungry for growth -- and toy and entertainment giants eager to find new ways of connecting with tech-savvy kids -- there's a good chance that more and more youngsters will be packing the ubiquitous devices in their knapsacks.

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