Big Changes Ahead for Smart Phone Market

News Analysis: New applications, slim form factors, and better pricing plans will broaden the appeal of the devices, analysts say.

According to industry analysts, significant changes in smart phones should result in a shift in the market from traditional business users and early technology adopters to a broader consumer base. Easier-to-use applications, slimmer, sleeker form factors, and better pricing plans will help expand the appeal and aid in changing the perception of these devices as toys for geeks only.

"Whats different this year is the proliferation of devices," said Charles Golvin, Principal an analyst at Forrester Research. "There are many more. A year ago it was a Treo and a couple of Windows Mobile devices and a BlackBerry; now there are a whole range of devices," he said. Golvin noted that in the last few months the market has seen the introduction of Motorolas Q, Research In Motions BlackBerry Pearl, Samsungs BlackJack and the Cingular 8525 PDA.

/zimages/3/28571.gifClick here to read more about the Samsung BlackJack.

"There are more people who want e-mail on their phone and who want messaging," Golvin added, "so the idea of a keyboard appeals to them." Golvin also said that the reason he expects smart phone sales to increase significantly this year is about more than just more choices. "The faster networks have a big impact," he said. "The experience of doing some of the richer applications with the faster networks makes the experience a lot better," he said.

"The carriers are trying to be all things to all people," said Bill Ho, an analyst with Current Analysis. He said that to some extent, this means that the smart phones being introduced now are still aimed at corporate users, although he noted that this is changing. "The BlackJack is … video and music capable," Ho noted.

Avi Greengart, also from Current Analysis, said that the devices being offered by the carriers are moving the smart phone market to a broader range of consumers. "The key changes were seeing are moves toward thin and low cost," Greengart said. "We are seeing a raft of $200, super-thin QWERTY smart phones. That would include Motorola Q, the BlackJack, the Palm Treo 680 and HTC Dash from T-Mobile."

Greengart noted that each of the new devices has some sort of broadband communications available. "Youre not only getting a thin profile, but youre getting advanced technology," he said.

However, Greengart said that the higher speeds and the flexibility are only part of the reason for the recent growth in smart phone popularity. "The other thing is that these devices, particularly the super-thin ones, are so much more attractive than the clunky ones of the past," he said.

Of course the pace of smart phone introductions has had a lot to do with the growth of the market. Cingular in particular has been bringing out a broad range of new devices aimed at nearly every conceivable niche. And the pace of Cingular introductions continues, despite the fact that many observers suggest that the mix of devices has settled for the year. The carrier announced Nov. 30 the availability of the BlackBerry Pearl. The Pearl had previously been available exclusively from T-Mobile.

Cingular has had a string of introductions of small, low-cost smart phones stretching back to September, including the 3125 and Nokia E62, announced in September, and the BlackJack, the 8525 and the Treo 680.

Cathy Quaciari, director of Business Devices for Cingular, said that while the size and speed of the devices is important, so are the applications available for them. "The BlackJack is a great example," she said. "Not only is it a great tool for keeping up with your productivity, but its spectacularly rich in its ability to deliver video and music."

Whats really happening is a convergence of the right devices, the right applications, and the right communications environment, analysts said. Quaciari agreed, "Its all one thing. You cant buy these devices and try to sell them to customers without making sure theres an ecosystem around them. Its all about what theyre going to do with the device," she said.

Despite the current strength of the smart phone market, its clear that theres more to come. "Were pretty excited about where the market is going," said Mike Selman, T-Mobiles director of marketing for Converged Devices, "The folks that are buying the Pearl and the Dash are different from what weve had in the past."

"Im anxious to see how people are using these devices," Selman said. He noted that the new users arent just looking at their corporate e-mail, theyre using the devices for personal communications as well. "Were seeing people tap into their unchecked e-mail, turning away from a have to to a want to," he said. "We call it that shot of oxygen. Getting that e-mail or that text message can sometimes make your day," he said.

Overall, the industry analysts think that the holiday season looks very strong for smart phones. "This is really about broadening the market," Greengart said, noting that all of the major carriers are focused on one thing—getting new users online to do more, access more data, and in turn, raise the revenue that the carriers get for that extra use.

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Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...