Phones get smart

Smartphones combine portability of handheld with funcitonality of computer

Jan. 23, 2007
By JOSEPH M. DELEON News-Post Staff
jdeleon@fredericknewspost.com

FREDERICK — Glen Baker, product manager for Cingular Wireless' northeast division, uses a Cingular 8525 smartphone to keep on top of work.
But when he learned the Discovery Channel would broadcast a week of shark-related programming, he didn't want to miss a minute.
He tuned in on his smartphone while on the job.
“Here I was at work watching Shark Week, it was great,” Baker said. “TV is being incorporated more and more into these devices.”
Smartphones combine the portability of a mobile phone with the functionality of a handheld computer. They are common business tools, but are also turning into portable entertainment centers.
That means more people are buying smartphones than ever, pushing sales to record highs.
Manufacturer sales to dealers are projected to pass $19 billion this year, up almost 36 percent from about $14.3 billion in 2005, according to the Consumer Electronics Association.
“The average price of phones is on the rise,” said Steve Koenig, industry analyst for the CEA. “Part of that is the influence of more smartphones selling.”
The retail sale of smartphones increased 230 percent from 216,000 in January 2006 to 715,000 in October, according to market research firm the NPD Group. Smartphone quarterly sales increased from about 2 percent in the first quarter of 2006 to more than 6 percent in the fourth quarter.
The capabilities and reliability of smartphones have increased dramatically in the past few years, Koenig said. That has encouraged more carriers to support advanced features, such as mobile phone video streaming, and more retailers to carry a wider range of phones.
Of the more than 40 models Cingular carries, about a quarter are smartphones.
“In today's society, we lead increasingly itinerant lives and we need to stay in touch,” Baker said. “Instead of lugging around a laptop to a hotspot, you can carry around a smartphone.”
Nancy Ford, marketing director for Cingular Wireless' northeast division, said another reason smartphones are selling is because they are easier to use and look great.
In the past, smartphone users had to rely on computer experts to set up e-mail accounts and calendar settings, she said. And they were big and bulky.
“Now smartphones are sleek and sexy, something (consumers) want to have and want to be seen using, plus they're easier to set up,” Ford said. “You're not tied to checking e-mail from the computer, now you can do it on the go.”

Business or pleasure
Easier-to-use smartphones are good news for small business owners who don't have an in-house computer department. Many business users install complex programs for virtually any industry.
“While companies may be buying these phones for their fleets of people, your real estate agent is a small business person who doesn't have a staff of IT people to rely on,” Ford said. “They may be a one man show, but they can still compete with companies that are larger with a smartphone.”
For example, real estate agents can now open a key box with a signal from a smartphone and some medical professionals use software to manage patient care while on the road. The software helps users research drugs, analyze test results and earn continuing education credits, among other things.
These are just some of the smartphone programs that can be bought and downloaded from Handango.com , a provider of mobile phone content.
While many people use smartphones to connect to the office while on the road, an increasing number are taking advantage of their ability to manage their personal schedule, stream video and download music.
Baker described his sister as a technophobic soccer mom who uses a smartphone to keep track of her five children.
“She uses the e-mail application to monitor the kids, set up her calendar to keep up with their schedule and have access to directions on Google maps,” Baker said. “You're also looking at consumer-oriented things like camera capabilities; soccer moms can take a picture of little Johnny hitting a goal and e-mail it to dad back at the office in real-time.”
Koenig is not convinced average users are contributing much to the increase in smartphone sales. When it comes to electronics, Consumer Electronics Association research shows consumers are most concerned about price.
“Think of a soccer mom, that's a family with a budget,” he said. “People coughing up $299 just to sync a calendar is a bit much, so for the time being the average consumer will go with the handset that's free.”
While carriers have been pushing media-enabled mobile phones that can stream video and download music, Koenig believes the release of Windows Vista will help bring smartphones to consumers.
A part of Bill Gates' presentation on Windows Vista last week at the Consumer Electronics Show in Las Vegas focused on smartphone connectivity.
“That's a trend in our industry to have greater connection of devices,” Koenig said. “That might spur broad market adoption, but the price point may be an issue.”

Future
Over the next few years, carriers will expand networks that can handle significantly more data, audio and video streaming, Koenig said. In the long run, most new mobile phones will be classified as smartphones.
“We call them the Swiss Army knife of the consumer electronics industry,” Koenig said. “The line has already blurred between PDAs and smartphones, so I think the lines will continue to blur between handsets and smartphones as connectivity improves.”
As those lines blur, retailers seem destined to bombard smartphone users with ads.
People who play games on mobile phones seem willing to watch an ad in exchange for free or discounted video games, Koenig said. Ad-supported Internet access, streaming video, music and text messaging are gaining popularity.
“There is definitely a growing segment of consumers out there who are willing to tolerate ads in exchange for services,” Koenig said.
Such services are popular with carriers because they give customers a taste of content they wouldn't ordinarily be able to enjoy. Carriers hope users will be willing to pay to skip the ads to stream music or watch news clips without interruption.
“Consider FM and satellite radio — it's free as long as you have a tuner and as long as you can tolerate the ads,” Koenig said. “But if you pay $13 a month, you have access to 60 channels of music.”
Consumers won't just spend money on phone services, they'll actually use smartphones instead of credit cards to pay for goods and services.
“It could be that our handsets are enabled with a code or PIN that you just put in when you want to pay for transactions,” he said. “It's just like a speed pass.”
That technology is still a few years away. Security issues need to be worked out and a universal standard needs to be adopted, but retailers have a bigger problem.
Enough consumers have to own the technology before it will be profitable for retailers to install the checkout equipment.