Innovation, Upheaval Rule Smartphone Market

Upstart and established manufacturers, some targeting new sets of customers, are on the march. Meantime, prepare for a shakeout among operating systems.

Samsung F700
Samsung F700
A thin smartphone with a slide-out keyboard, as well as a touch-screen keyboard similar to Apple's forthcoming iPhone.
What many of these new devices have in common is that they run on either the Windows Mobile (updated to version 6 last month), Symbian, or Mobile Linux operating system. Given the rumored acquisition of Treo maker Palm, which hasn't updated its native operating system in years, and the fact that BlackBerry runs on what's essentially a closed hardware-plus-software system (though RIM execs beg to differ), the broadening of the smartphone category to include more devices running on so-called open-standards operating systems means that the days of proprietary platforms are numbered.

About 75 million smartphones were sold worldwide last year, according to Gartner, of which some 51.7 million run on Symbian, which dominates outside the United States and which released the latest version of its operating system, version 9.5, last week.

Gartner analyst Todd Kort sees sales of Treos--including devices that run on the native Palm OS and ones that run on Windows Mobile--peaking in the next year, while Windows Mobile devices gain a larger and larger share of the market. Total BlackBerry subscribers, meanwhile, will go from about 7 million at the end of 2006 to around 8.5 million in 2007--impressive growth, but nothing like the near-doubling (from 2.5 million to 4.9 million) that RIM recorded in fiscal 2006.

Helio Ocean
Helio Ocean
Trendy, large-screen device that reveals a numeric keypad when slid up and a full keyboard when slid sideways. Due later this year.
In other words, Treos and BlackBerrys aren't going away. But they'll be marginalized as companies that are more standards-oriented grab market share--including Nokia, the world's No. 1 handset maker, which didn't debut any smartphones at CTIA but has put out an extensive line under the E-series moniker.

Trendiness aside, the flourishing of nonproprietary operating systems is good news for business technology managers, many of whom have shied away from buying BlackBerrys and Treos in bulk, treating smartphones the same way they do cell phones--letting approved employees buy and expense them. While it's unlikely we'll see companies buying thousands of smartphones this year, many of the industry executives at the CTIA show last week called for a "rationalization" of mobility purchasing.

Even though smartphones are becoming more essential for business users, said In-Stat analyst Bill Hughes, "corporate payment of wireless bills is completely irrational." Companies should just foot the bill: Smartphones have become far too valuable, and too reasonably priced, to be limited to the executive suite, Hughes said at CTIA's Smartphone Summit.

Agreeing with that assessment is one former U.S. employee: George H.W. Bush. During his keynote address at CTIA, Bush senior said, "This hour I'll be up here is about the longest I ever go without using my BlackBerry."