From the November 2004 issue of Entrepreneur

Whenever you see a movie from the late '80s or early '90s, something always stands out: The cell phones are gigantic. Compare one of those toaster-size devices to the svelte flip phone that's in your pocket, and you're amazed at how far they've come.

Today, we have cameras, PDA hybrids, extensive phone books, internet access, ring tones that sound like songs on the radio, and entertainment applications all built into our cell phones. So what will the future of mobile phones bring? Rather than trying to figure out what phones will look like in a decade (they'll probably be implantable), we wanted to take a peek into the next few years.

By the time you're ready to upgrade your current phone, the capabilities could be very different. One thing holding back the hardware is the limitation of current batteries. Battery technology just doesn't move that fast. Expect slow capacity gains, but also expect to keep a charger handy as more and more power-hungry features are built in.

A couple of years ago, everybody was breathless at the thought of 3G broadband services coming to U.S. cell phones. So far, 3G isn't coming down like a tidal wave so much as a trickle. But the good news is that it's finally arriving. Early adopters take note: Major cities like Dallas, Phoenix, San Francisco and Seattle will be the first to benefit.

AT&T Wireless' service allows data transfer at speeds of about 320Kbps with streaming video and audio available. Verizon Wireless' network, currently running in San Diego and Washington, DC, goes up to 500Kbps. Look for Nextel and Sprint to make progress on their versions before year's end. Entrepreneurs in smaller markets will have to wait a bit for services to become available.

Peter Skarzynski, senior vice president of wireless terminals at Samsung Telecommunications America, points to Korea as an example of where cell phone services in the United States will eventually end up, albeit a few years behind. "Next year, you'll start seeing things [in Korea] like video on demand, and things like m-commerce [mobile commerce] the year after," he explains. Megapixel camera-phones are new on the U.S. market, and 2- and 3-megapixel versions are on the horizon. Videophones will become increasingly popular as services such as news feeds catch up. Skarzynski expects wide-based broadband to be a reality by the 2006-07 time frame. Then you can start thinking about videoconferencing on your cell phone.

Location-based services are another matter. With E911 requirements being met and GPS services hitting the mainstream, getting directions or even location-based marketing offers could become commonplace. But, once again, don't hold your breath. The phones will be ready before the services themselves are. "There are lots of capabilities in our phones still to be tapped," says Skarzynski.

Work is underway to meld two of the most popular wireless technologies: cell phones and Wi-Fi. Currently, the carriers are trying to figure out how to handle the handoff between the two to allow for a seamless experience. The phone hardware will be out widely in the first part of 2005, with manufacturers like Hewlett-Packard, Motorola, NEC, Nokia and Samsung all onboard. For businesses equipped with Wi-Fi and VoIP, this could be a big step to reducing phone bills. Imagine walking into your office and having your mobile phone automatically switch your call over to your VoIP network.

But the news on the mobile phone front isn't exactly all sweetness and light. Viruses and worms are setting off warning buzzers across the industry. Though they are concerns, most users don't need to worry much, says Muzib Khan, vice president of product management and engineering wireless terminals division with Samsung Telecommunications America in Richardson, Texas. "You could cause trouble by buying or downloading uncertified applications," he says. Entrepreneurs need to stay on top of security issues in much the same way they take steps to protect desktop computers with anti-virus software, firewalls and employee training. The same will apply as issues of cell phone spam and telemarketing crop up.

Put it all together, and here's what your future mobile phone might be like: You're out at a coffeehouse for lunch, checking your calendar and e-mail while listening to a streaming MP3. An impromptu videoconference call comes in-you work out the details of a sales contract with your mobile sales representative. You then take an old-fashioned telephone call from a client, and it hands you over to your VoIP system as you step back into the office. Expect many challenges as these innovations hit the market over the next few years, but the upshot will be more flexibility for mobile entrepreneurs.