Wireless fair set to stage mobile Web battle

( Reuters ) - Cell phone makers, telecoms carriers and Internet groups are squaring up for a fight for dominance of the mobile Internet, finally ready for market after years of promises and hundreds of billions in investments.

Wireless broadband is coming of age, making rivals of companies such as Nokia Oyj, Google Inc, Microsoft Corp and Apple Inc, who previously could afford to coexist relatively peacefully.

Mobile networks are now capable of delivering the Internet as smoothly to a mobile phone as to a PC, with the clunky handsets, stuttering downloads and network jams of the recent past almost forgotten in many developed markets.

And the scramble to capitalize on that opportunity will loom over all other business at next week's Mobile World Congress.

"Web, Web, Web - if you ain't walking onto the stand hand in hand with a Web guy you ain't no one," said Ben Wood, chief analyst at UK-based telecoms and IT research firm CCS Insight.

The outcome of the struggle to win the mobile Web will not only be crucial for the combatants but will decide how the mobile Web is experienced by billions of people.

At the fair, visitors will be on alert for sightings of prototypes of the Gphone - phones built on a Google open software platform that will help it loosen up the market and extend its online advertising power into mobile search ads.

Chip designer ARM Holdings Plc, for one, will show Google's so-called Android platform in action at the four-day fair that starts in Barcelona on Monday, a source close to the company has told Reuters.

Google rival Yahoo's alternative strategy of refining its mobile search and teaming up with operators to make it more visible to consumers, will also come under scrutiny, especially as it mulls a $45 billion bid from Microsoft.

Nokia is expected to give more details of its own push into Internet services, including gaming and music and video sharing offerings that it started to roll out last week.

"I've heard people say many times that this is the year the mobile Web's going to happen ... but this year I'm getting a different feeling," said Paul Nerger, an executive at dotMobi, which registers mobile domains and helps build mobile sites.

"It's a question of when we get to critical mass. I think it's this year."

While interlopers like Google muscle in on mobile services, traditional service providers, the telecoms carriers, risk being left behind despite having funded the networks that are now coming to maturity and making the mobile Web a reality.

Hundreds of billions of dollars spent on third-generation (3G) license auctions at the start of the century left the likes of Deutsche Telekom AG and France Telecom hobbled by debt and nervous about future grand ventures.

Some, like Japan's NTT DoCoMo Inc and U.S.-based Sprint Nextel Corp, have been quick to offer music or video services but most - especially in Europe - have been preoccupied with stemming fixed-line customer losses.

Their difficulties have led them to resort to cost-saving measures such as sharing networks, creating problems for their network infrastructure suppliers -- a situation which has been exacerbated in recent months by fears of a U.S. recession.

John Chambers, chief executive of networking equipment group Cisco Systems Inc, has twice spooked investors by warning of a slowdown in orders from the U.S. and Europe, most recently this week, sparking a tech stock selloff.

Alcatel-Lucent was the latest to confirm the gloomy outlook of infrastructure vendors, saying on Friday it saw flat markets all year or slight growth at best.

"I don't think it's just a blip," said Margaret Rice-Jones, chief executive of network consultancy Aircom. "I do think a fundamental shift has occurred in the industry."

Handset makers know they are not immune either, as shown by Nokia's change of direction despite its 40 percent market share.

Citigroup analysts, in a report this week on the potential impact of a recession on U.S. cellphone makers, said unit sales could fall 5 percent this year in a worst-case scenario where U.S. economic weakness spreads to Europe and Asia-Pacific.

"Bottom line, no vendor is immune from a recession," they wrote, though their base assumption was for 10 percent growth.

As the need to distinguish their products becomes more urgent, smaller cellphone makers, in particular, are expected to show bigger ranges of fashion phones next week, experimenting with fabric or metal and with increasingly high specifications.

Apple, which only launches new products at its own events, will not take part in the fair, but many attempts to replicate the iPhone's most desirable feature - its highly responsive touch-screen interface - are expected.

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