Smartphones move out of their niche

Smartphones move out of their niche

Updated 11/27/2006 7:50 AM ET

The Nokia E62 smartphone  sells for as little as $100 with a service contract.

The Nokia E62 smartphone sells for as little as $100 with a service contract.

— Computerlike "smart" cellphones are starting to go mainstream, creating opportunities for the wireless industry.

shoppers are expected to drive the number of smartphones sold this year
to 81 million, says wireless analyst Todd Kort at researcher Gartner.
They’ll make up about 8% of the overall cellphone market, an increase
from about 6% a year ago, Kort says.

Smartphone sales in the first half this year jumped 50% from 2005, researcher In-Stat says.

Unlike regular cellphones, smartphones have a PC-like operating system and download and run computer programs. Most include advanced data features such as e-mail, instant messaging and word processing. Some, such as the Palm Treo and Samsung BlackJack, have small typewriter-style keyboards.

Smartphones used to be niche products. They were bulky and cost about $500, says tech analyst Ross Rubin at researcher NPD.

But now design and price "are becoming consumer-friendly," says Nokia spokesman Keith Nowak. Nokia’s new, slim E62 smartphone sells for as little as $100 with a service contract. That type of product should help the market grow, Rubin says.

The industry certainly hopes so. Carriers like smartphones because they encourage users to buy data services, which usually range from about $10 to $50 extra a month.

Handset makers like smartphones because they don’t always cut into sales of other products. Business smartphone users are three times as likely to have a second cellphone than are regular users, says wireless analyst Bill Hughes at In-Stat.

That helps explain the flood of recent smartphone announcements. Palm, Samsung, Motorola and Nokia are among companies that recently launched products. Motorola this month announced plans to acquire Good Technology, a company that makes wireless e-mail software for many smartphones. Nokia this year acquired its own e-mail company, Intellisync.

The surge in interest means it will be easier to find advanced phones. But it may also create confusion.

Many smartphone users never download outside programs, Gartner’s Kort says. Such users might be better served by less-expensive regular phones, he says. Many now have data features such as e-mail once common only on smartphones.

Shoppers might also have a hard time choosing between smartphones and personal digital assistants (PDAs), because they share many features. But PDAs, such as many BlackBerry models, are designed to be used primarily for data. They are best for professionals who write a lot of e-mail on the road, Kort says.

Posted 11/26/2006 9:48 PM ET


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