UPDATE 1-Phones for outsmarting snoopers get pitched to mass market
* Interest in mobile encryption sparked by privacy fears
* "Mobile security management" market seen worth $1 bln by 2015
* Blackphone unveiled at Mobile World Congress
* Deutsche Telekom prepares to launch its own encryption app
By Harro Ten Wolde
BARCELONA, Feb 24 (Reuters) - Following the U.S. snooping revelations, there is a growing interest in a range of mobile phone products with one central selling point: privacy.
The latest contender is the Blackphone, which runs on a customised version of Google's Android software and encrypts texts, voice calls and video chats was launched in the Spanish Pavilion at the annual Mobile World Congress industry fair in Barcelona on Monday.
It aims to tap into the market for so-called mobile security management (MSM) products which was estimated to be worth $560 million in 2013 and is expected to nearly double in size to $1 billion a year by 2015, according to ABI Research.
Separately Deutsche Telekom said it is also preparing to launch a smartphone app that encrypts voice and text messages, making it the first major network operator with a mass market-compatible product that will be rolled out to all its users.
Edward Snowden set off a global furore when he told newspapers last year the U.S. National Security Agency (NSA) was mining the personal data of users of firms such as Google , Facebook and Skype under its Prism programme.
The former NSA contractor, who faces spying charges at home and has temporary asylum in Russia, also suggested the United States had monitored the phone conversations of some 35 world leaders, including Germany's Angela Merkel, adding to concerns over privacy.
Swisscom said last week it has seen a tripling of downloads for its secure messaging service iO, which encrypts chats and calls and stores all its data in Switzerland. Swiss mobile messaging services myENIGMA and Threema also encrypt users' exchanges.
The Blackphone, which chose Switzerland as its home base because privacy there is a constitutional right, is the result of cooperation between U.S. security software company Silent Circle and Spanish handset maker GeeksPhone.
The device will retail for $629 including a two-year subscription to the Silent Circle encryption service, which normally costs $120 a year, as well as a one-year subscription for three other parties.
"We are aiming to sell hundreds of thousands devices," Blackphone's managing director Toby Weir-Jones told reporters. "This is a phone for everyone - whether you are an executive who likes to bring his device to work or you are a privacy-minded citizen who just wants to make sure that the internet is not looking over your shoulder."
Meanwhile the Deutsche Telekom cloud-based app service, which will be officially unveiled at the CeBIT trade fair in Hanover next month, will be run with Germany's Sichere Mobile Kommunikation mbH (GSMK), a provider of encrypted phone services and devices.
GSMK, which has seen the number of customer inquiries it receives rise fivefold since the Snowden leaks, has long been offering phones with encryption services to governments and firms willing to fork out 1,300-2,500 euros per handset.
However, such new offerings as the Deutsche Telekom app and the Blackphone mean such secure communications are ready to reach the mass market, although both sides of a call have to be using the same service to get full encryption.
Deutsche Telekom has already launched its SiMKo 3-Smartphone, an adapted version of Samsung's Galaxy, which encrypts e-mails, contact data, appointments, text messages, photos, audio recording and voice conversations.
The open-source Guardian Project is another service offering free applications for secure communication over smartphones and tablets.
It aims to help campaign groups and journalists to communicate in hostile environments with its Tor version for Android having been downloaded 2 million times so far, said project founder Nathan Freitas.
With its app, users can gain access to internet services such as Twitter or Facebook without passing through any government-controlled servers. Most recently it saw interest in its software rise in the Ukraine, Turkey, Vietnam and Venezuela.
"Every time when there is a crisis, you see an increase in people talking about our software," Freitas said.
Still, it is almost impossible to ensure total privacy, security experts say. Every phone with a radio can be traced and followed. And metadata, information about who calls who, can be as valuable as the content of conversations.
"I know it is a habit hard to unlearn, but it is better to leave your mobile at home, if you want to remain unnoticed," Freitas said.
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