The humble cell phone ain't what it used to be--nor will it long be what it is now. Phones are getting smarter and more versatile, even as they become dirt-cheap. Sony Ericsson's Cherie Gary talked recently about what's coming up for the gadget that more and more people can't live without.

At this point, I would think that most everyone who wants a cell phone has one, yet phone sales are at all-time highs. Why are phone enhancements, some seemingly superficial, prompting so many people to upgrade?

Today's handsets are becoming more feature-packed and user-friendly than most of us could have imagined just a few years ago. I know that it's a cliché to say that the best is yet to come, but in wireless, that's accurate.

A number of trends contribute to a strong replacement market. Carriers are rolling out different promotions and offers to encourage customers to upgrade their handsets, try out new multimedia messaging services and get hooked on content downloads.

Still, color screens and camera phones remain another reason consumers choose to upgrade. Even as camera phones become more ubiquitous, newer models are ramping up the quality of the photos they take.

And just as the color screen was an eye-popping improvement to the mobile handset a few years ago, 3-D capability is expected to prompt handset upgrades as mobile gaming usage increases.

The market share for smart phones increased by almost half this year. Will they make PDAs a thing of the past, or will there still be a place for those as well?

Like most, we think standalone PDAs without connectivity options are on the wane, because PDA functionality is increasingly being incorporated into a host of smart phones. According to In-Stat/MDR, about 170 million smart phones have been sold globally. But beyond smart phones, even the moderate segment of Sony Ericsson cell phones today have some PDA functionality.

A number of smart phones, including Sony Ericsson's, use the Symbian operating system. Could you explain what that is and what makes it so attractive to phone makers?

Symbian is a software licensing company that develops and supplies the advanced, open, standard operating system for data-enabled mobile phones.

What makes it so attractive is that it was designed specifically for the mobile world. Mobile phone manufacturers, network operators, and software developers are assured that they're working with an industry-standard, open operating system that allows customization and is focused on the mass market driving the wireless community.

Sony Ericsson has put a lot into display technologies for its phones and other handheld devices, such as organic light-emitting diode initiatives. Why the focus on display quality?

Now that camera phones are becoming common, consumers are demanding better quality for their graphics. Additionally, a wide range of new content is now available on the market. Take gaming--by the end of the year Sony Ericsson will offer more than 30 3-D games on our mobile phones.

We're now reading about phones in the works that will provide HDTV reception. What are some other futuristic features we can look forward to in the next year or two?

In an age in which every new wireless technology seems to suffer from too much hype, hearing something referred to as "the most important" wireless technology of the year--like Wi-Fi and HDTV reception--raises some red flags. We can't discuss future products, but we are watching technologies like Wi-Fi very closely, and when the market is ready, we will bring a device to market. Today Wi-Fi drains the battery very quickly, so it's not ready for the consumer mass market. In terms of real-time TV being broadcast on mobile phones, the chips that will be required for that are not available yet, so we anticipate it may be 2007 or later before you start seeing true TV in phones.

As for the future, imaging is still an exciting area. While most manufacturers, including Sony Ericsson, are launching megapixel cameras now, higher-quality photos mean more memory is needed to store the photos. If you start taking photos with a 3-megapixel camera phone for example, you could quickly discover you'll run out of memory on the handset.

The same issue arises as more data of any kind is kept on mobile phones, especially smart phones that replace PDAs, digital music players and small computers. Phones will be used to store company documents, music files, video, photos, and charts, among other things.

Storing large amounts of data creates a problem for a mobile phone, even though its onboard memory is ever-expanding. Enter the flash memory card, the plug-in cards associated with digital cameras and other memory-intensive electronic devices. We are already using external memory today in the P910 and S710.

Games and ring tones were the hot mobile content of 2004. What will phone users be downloading next year?

3-D gaming will be big next year. IDC recently predicted that by 2006 the wireless gaming sector will generate $1 billion in revenue in the United States alone. 3-D gaming is a really exciting area, and we continue to focus resources on both gaming and other forms of entertainment on mobile phones.

What will happen with phone price points in 2005? Will the more bare-bones models go down in price while early adopters chase the more feature-rich models?

Sony Ericsson will continue to offer a full product portfolio of handsets and PC cards that meet all segments of the market. Different from the global marketplace, U.S. carriers are among the few in the world that still subsidize handsets, so most consumers never see the "true" price of their mobile phone. At the same time, operators continue to offer new pricing plans to entice customers to chat it up. Some have discounted international rates, while others are trying to make wireless/wireline bundles more attractive, and often a phone is part of the deal.

What's next from a broader development perspective? Further refinements to existing hardware, or whole new types of phones?

In 2005, we anticipate the arrival of Edge release 4. This technology is a software upgrade for most Edge networks, as well as for devices such as the Sony Ericsson Z500a which is a Class 10 device, and the new S710, a "jackknife" concept. The biggest benefit of release 4 is lower latency, which makes Edge work better with VPNs as well as multiplayer games. That improvement will make Edge attractive to more business users.

Meanwhile, you can expect a wider rollout of the universal mobile telecommunications system (UMTS). It's already available on 50 networks in 19 countries, including the United States. And in 2006, some carriers plan to launch high-speed downlink packet access (HSDPA), which lets users download data at average rates between 550 kilobits per second and 1.1Mbps, with peaks of up to 14.4Mbps.

Phones have to keep up with these network upgrades, so you can look forward to much more powerful devices in the future.