According to research firm Informa Telecoms and Media, the battle now will be persuading users to upgrade their phones regularly.
New services such as mobile TV will compete with improved cameras, more memory and cutting-edge design.
But the long-awaited switch to 3G could be some time off, the report said.
The report predicts that only a quarter of all mobile phones sold by 2008 will be 3G – which might not be quite the news operators, desperate to recoup the money they spent on third-generation networks, wanted to hear.
Matt
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