Smart seems to be the latest, most overused word in the technology space—smart phones (the s-phone?), smart grid, smart everything. We’re seeing many new smart mobile products lately, and they’re having a huge impact on the cellular networks. That’s both good news and bad news. Cellular carriers love the extra phone and data sales but hate the excessive loads of video and other services on their networks. What to do?

Overall, mobile consumer electronics devices are forecast to increase by a factor of 55 from 2008 to 2014, says ABI Research. The category includes e-book readers, personal navigation devices (PNDs), digital cameras and camcorders, personal media players (MP3, etc.), and mobile gaming devices.

As for cell phones, growth is also up. ABI Research recently summed up 2009 sales for mobile handsets, saying that the year closed out with 336.5 million shipments in the fourth quarter. That puts the total for the year of about 1.153 billion units, which is down 4.5% from last year but overall not bad for a down year that ended pretty well indeed. The forecast is for 1.2 billion handsets this year.

Nokia still leads the world in handsets with a 37.7% market share (Fig. 1). Samsung was gung ho this year and upped its share to 20.5%, taking second place easily. LG captured the third spot with 10.1%. Sony Ericsson came in fourth with 4.3%, and Motorola slipped to fifth place with 3.6% despite the great success of its Droid and Cliq. HTC brought up the rear but is doing well, and with some new handsets on the horizon, it could also see its share rise. ABI Research has detailed reports on all of this data, so if you need the detailed breakdown, check out www.abiresearch.com.

The Flood Of Smart Phones

2009 was a banner year for smart phones, with lots of new models. More significantly, the public is finally accepting them in a big way. Apple’s iPhone 3GS is a significant improvement over its predecessor. I even upgraded my own original iPhone to the 3GS. Its speed makes e-mail and Web browsing a far better experience. The touch keyboard is still a challenge and the small screen is not optimum for some uses, but I’m used to it by now.

Wirefly, the Internet’s leading online retailer of cell phones, reported its top 10 sellers for the year. Samsung had three representatives—the Impression, which was the number one bestseller, the Mythic, and the Highlight (Fig. 2). BlackBerry also did well with its Bold 9700, Curve 8330, and Curve 8900.

The Motorola Droid was number four and brought many new subscribers to Verizon in competition with the iPhone. It is a fitting rival. The LG enV3 and Chocolate Touch were also on the list, as well as HTC’s Hero based on Google’s Android. Nokia’s N900 was a big hit too, just not in the U.S.

Let’s not forget the phone that caused the most excitement, the Google Nexus One. It does everything the iPhone does, and it has a cool user interface. It’s hard to say how it will fare, though it’s surely a great iPhone competitor. Garmin Asus also will introduce its G60 Android nuviphone at Mobile World Congress in Barcelona this month. It’s a 3G touchscreen phone like all the others with a camera, Web browsing, and Gmail. But its key feature is Garmin’s superior GPS navigation software. The phone focuses on navigation and local search of people, restaurants, hotels, and other locations of interest.

Other smart phones will come along this year. It looks like the smart phone is quickly replacing the so-called mid-range feature phone. Pretty soon we will just have the low-end phones and the smart phones, but even the low-end phones will do e-mail and texting and have a camera. What else do you really need these days if you’re not a road warrior? I predict that the iPhone will continue to be the top seller and the handset to beat. It is a great product, and Apple’s cachet and more than 100,000 apps will keep it in first place for the time being.

Speaking of apps, asknet Inc. recently surveyed smart-phone users in Boston and San Francisco about apps on their cell phones. About 45% of users have never bought an app, 38% were frustrated by the high cost of the apps, and 29% said they were afraid to enter their credit card number into a cell phone. The apps most likely to be downloaded are music and business-related software—so much for all the hype about apps.

More Mobile Movements

The other big trend was the surprising netbook spurt. Laptop manufacturers were horrified at first that they would lose business, but all of them joined the fray and profited. Recent market data indicates that the netbook movement is flattening out at about 11% of the overall laptop business. It’s a great new mobile niche.

And then there’s the tablet trend. January’s 2010 International Consumer Electronics Show (CES) in Las Vegas revealed new touchscreen tablets from Lenovo, Dell, and HP. Some of these are pretty cool, especially the Lenovo IdeaPad U1, which has a detachable keyboard (Fig. 3). But the real tablet to beat is the new Apple iPad (Fig. 4). It has it all. Tablets of the past have done poorly, but this new movement looks like a winner with Apple probably leading the pack, as usual. HP is using the term slate to describe its devices, but who really knows what a slate is today anyway?

Network Impact

The whole smart-phone movement is finally revealing the weakness of the networks. They do fine with voice, texting, and minimum data, but the blizzard of smart phones is causing real problems. New York City and San Francisco have had their problems with outages and lack of speedy service. Too many iPhones, BlackBerries, and other devices are hogging the cell sites with video, e-mail, and whatever.

I witnessed such outages myself at CES. I had the feeling that at any given time, one-third to one-half of those 112,000 attendees were on the phone talking, texting, or getting e-mails. I have never seen cell-phone rudeness to this degree before. At times, I couldn’t get a call through as the network was overloaded. Expect more outages to come in high-density user areas as the smart phone becomes the de facto handset of the masses.

However, the carriers are fully aware of the problem. With AT&T activating more than 10 million iPhones in 2009 alone, the carriers created the problem for themselves. AT&T plans to invest upward of $19 billion this year to upgrade its cell sites with 3G and its backhaul with fiber. That will really help. Verizon is also in the upgrade mode despite recent losses and layoffs. As the legacy landline business continues to decline, Verizon and AT&T are looking to wireless data services to stem the tide of continuing cancellations of traditional phones. We may even see Verizon be the first to launch 4G Long Term Evolution (LTE) in the U.S.

One possible source of relief may come from the increased presence of the fastest version of Wi-Fi, designated 802.11n, in smart phones. It was only present in less than 1% of phones last year, but ABI Research expects that to increase to 87% by 2014. That should really ease the data downloads on the cellular networks if users take that route instead of the cellular network to access the video and other data services they want.

It’s exciting times for the cellular business, and the new technology will continue to drive its growth. The next new thing, the tablet, is here now and will have an additional impact on the wireless business if it is the success that Apple and other companies hope. And by the way, Mobile World Congress will be held February 14-17 in Barcelona again. We will be reporting on the show. Watch for some additional major announcements to come.