Wireless Sector Pins Hopes on Shutterbugs

Meanwhile, Sony Ericsson has launched a handful of phones that accept attachable cameras over the past two years, and intends to deliver a high-priced model with a built-in camera in the first quarter of next year.

Carriers Eye Sales

Wireless carriers also hope to get a revenue boost from the new devices, as customers need high-speed data networks to send and receive pictures on their handsets. Next to downloadable games, photo messaging may be the best way for carriers to raise their average revenue-per-user figures, analysts say. Carriers have spent billions upgrading aging networks to be able to deliver high-speed wireless data services, but subscribers have been indifferent to the services thus far.

"If there are devices bred to best enable users to access or utilize applications, like camera phones and multimedia messaging, then it could translate to replacement [handset sales] and eventually [higher] data traffic," said Bryan Prohm, an analyst at Gartner Dataquest. He added that significant revenue won't appear until 2004, when the cost of components and handsets drops.

The trend also could give a lift to the downtrodden semiconductor industry. OmniVision Technologies(OVTI - Cramer's Take - Stockpickr), which specializes in low-powered camera chips, saw its sales to phone manufacturers triple in the third quarter compared with the second quarter of this year. OmniVision supplies a range of companies, including Motorola, Sony Ericsson, Samsung and Kyocera.

Semiconductor giants such as Micron Technology(MU - Cramer's Take - Stockpickr), Agilent Technologies(A - Cramer's Take - Stockpickr) and Toshiba also are looking to offset declining chip sales with the camera-phone ramp-up. Micron was so enamored of the emerging camera-phone market that it purchased camera-chip designer Photobit in late 2001. Photobit's founders were former NASA engineers who pioneered a manufacturing process that helped chipmakers create inexpensive, low-powered imaging sensors used in camera phones.