Nextel Communications Inc. of Reston yesterday introduced its Internet-ready phone, one month ahead of schedule and ahead of the pack of telecommunications rivals.
Nextel does not plan to launch Internet services until later this year, probably by late fall. But executives hope to whet consumers' appetite for mobile Internet access by first selling the i1000plus phones -- which are projected to retail for $299. Nextel plans to offer the service in six test markets, including Washington.
"We fully expect Nextel will be the first company . . . to have Internet-based wireless services available to their subscribers," said Jeffrey Hines, managing director at DeutscheBanc Alex. Brown in New York.
An investment last month of $600 million from Microsoft Corp., which gives the software giant a 4.25 percent ownership stake in Nextel, will be used primarily for expanding the cellular company's digital network.
Microsoft's Web site will serve as the portal for Nextel's Internet customers. From there, customers will be able to purchase Nextel services, access corporate intranets and databases, send and receive e-mail, and use customized applications developed by Nextel, Microsoft and other partners.
Analysts said being first to market is critical because this arena is hotly competitive, yet one warned that Nextel must be able to deliver a fully supported product soon.
"I think it's a little bit of a risk to introduce the phone when the service isn't ready," said Mark Lowenstein, an analyst with the Yankee Group in Boston. But, he added, "there's so much momentum in the marketplace today that I think any competitive edge helps."
Indeed, even if Nextel beats its rivals with its wireless Internet services, the company won't be alone for long, analysts said.
Most analysts agree that Nextel's business customers are ideal candidates for the Internet-ready phone.
However, "the whole mobile data play is still fraught with risk," Lowenstein said.
The challenge for Nextel, then, will be to prove to its customers that its online offerings are critical to their ability to function, analysts said.
"It is not a simplistic education process," said Peter Bernstein of Infonautics Consulting Inc. of Ramsey, N.J. He noted that Nextel's success will depend in part on content -- how well it can work with customers to provide customized applications.
Rick Rice, owner of TeleTalk, a wireless reseller in Falls Church, said at least 20 percent to 30 percent of his customers have asked about phones with Internet capabilities, "and that's with no one even knowing [whether] it was available," he said. Rice said he sells thousands of cellular phones a month, including Nextel's Motorola phones and the Nokia phones for AT&T.