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Thursday, September 21, 2006

Will Cellphones Get Too Crowded? (NOK)(MOT)(MSFT)(GOOG)(YHOO

Nokia, which makes more cell handsets than any company on the planet, announced that it will run the new Microsoft Search Live function on some of its phones. The problem is that the phones already run Yahoo! search.

One of the largest questions cell companies have to face is the trade-off between simplicity and function, the issues between cost and utility.

Motorola's RAZR phone is one of the hot sellers now, but new handsets come out from Nokia, Samsung, and Sony Ericsson almost every week.

High-end, expensive phones can play video, take pictures, surf the web, and do laundry. But, does the typical users in either the developing world or places like Japan and the US want all of this? Certainly having a number of different search functions on phones may be a zero sum game. But, Yahoo!, Google, and MSN have to play it so none of them fall behind is share on new platforms. Eventually, each net enabled phone will probably load all of them.

Will consumers begin to recoil from the number of features, functions, and rising costs of handsets? Probably, but the when and why are still open.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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