Social Phones Offer Shortcuts to the Web

Mobile-phone makers are building social networking software right into the central controls of their newest handsets to win over the swath of consumers who spend nary a minute disconnected.

Microsoft's (MSFT) new Kin phones, due to arrive in May, stream social networking updates from sites like Facebook onto the phones' home screens, and let users post pictures to the Web by dragging them onto a special area of the Kin's screen. Microsoft Kin marketing director John Starkweather says the company and partners Verizon Wireless and Sharp plan to market the phones as aggressively as AT&T (T) and Apple (AAPL) flogged the iPhone when it made its debut. "You'll see a significant marketing campaign that'll rival, in the U.S., anybody," he says.

Nokia (NOK) on Apr. 13 announced three social networking handsets due in the third quarter that it says make posting to Twitter as easy as sending a text message. One of the phones, the C3, lets users update their Facebook status and post photos and comments to the site with a few clicks of a button. "We are looking to merge your phone with the social network," says marketing director Mark Thomas.

Motorola (MOT) sells four phones with social networking capabilities that can merge users' address books with their Facebook, MySpace (NWS), and Twitter contacts, and display texts, e-mails, and social network messages in a single in-box. Motorola plans to include similar social networking features in "most of our [upcoming] phones," corporate vice-president Rick Osterloh says, since the capability appeals to buyers of many ages.

Best-Seller Potential

Phone makers and retailers say these "social phones" could be their next best sellers as they tap into consumers' desire to stay constantly connected to friends on the Web. "The stars are starting to align here," says Scott Anderson, a senior director in charge of mobile-phone sales at Best Buy (BBY), which plans to carry the Kin. "The best-selling handsets [today] have the best social networking on them."

At a time when handset makers are getting whacked by the iPhone—Apple reported on Apr. 20 that sales more than doubled to 8.75 million units in its fiscal second quarter—social networking features could make their products more compelling. Nokia on Apr. 22 reported first-quarter earnings that fell short of analysts' expectations as the company cut prices to compete with Apple and other vendors.

To be sure, millions of consumers tap into Facebook and other social networks through apps that they download onto their iPhones, BlackBerrys (RIMM), and Google (GOOG) Android-powered phones. And Apple announced Apr. 8 that the test version of its upcoming iPhone OS 4.0 operating system includes software called Game Center that lets developers create apps with social gaming aspects.

Yet as consumers do more of their computing on the go, including visiting social networks to keep up with friends, social phones ensure they don't miss a beat by pushing comments, status updates, recently posted pictures, and other information front and center without requiring users to visit a Web site or fire up an app.

Socializing on the Move

More than 17% of U.S. mobile subscribers accessed a social networking site or blog from their phone from November to January, and mobile social networking is the fastest-growing activity on handsets, according to market researcher ComScore (SCOR). A 2009 study of 800 U.S. teens by the Pew Internet & American Life Project released Apr. 20 showed that 23% have accessed social networks from their cell phones, and 64% of teens with multimedia-capable phones have shared cell-phone photos with friends.

Bringing social networking into phones' controls offers an economic incentive for wireless carriers, too. Consumers who weave social networking into the fabric of their everyday phone usage can ease the burden on carriers' networks since they've been given an alternative to launching a mobile browser or app. About 20% of smartphone-generated network traffic comes from social networking use, estimates independent wireless consultant Chetan Sharma. When users visit Facebook's Web site from their phones, downloading the page layout onto a device consumes more network capacity than simply plucking data from the site and displaying it on a phone as text, Sharma says.

Social network-oriented phones are gaining popularity overseas as well. INQ Mobile, a subsidiary of telco Hutchison Whampoa, in March said it would start selling social phones in India that receive Facebook updates, tweets, and instant messages on their home screens. Similar phones will come to the U.S. and China in 2011, says CEO Frank Meeehan.

Ken Dulaney, a vice-president at market researcher Gartner (IT), says social phones may primarily attract young consumers. "This is what kids want to move to next," he says.

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