Sascha Segan

SASCHA SEGAN

Spoiling the Smartphone Party

If the furious arrival of the BlackBerry Storm has shown anything, it’s just how fast, and how far, the Apple iPhone has pushed the smartphone industry forward. Although they are locked in fierce competition, manufacturers also seem to be working together to create the next great generation of smartphones.

Unfortunately, the looming financial crisis, and wireless carriers’ pricing strategies, could limit the appeal of smartphones in the months to come.

Right now, smartphones are selling like mad in the U.S. market, where sales jumped 84 percent between 2007 and 2008, according to NPD, the market-research firm.

Smartphones now constitute 19 percent of the handsets sold in the U.S., NPD says. And technologically, at least, the news keeps getting better.

Now, the last two pieces of the puzzle started by the iPhone’s launch are falling into place: RIM’s BlackBerry Storm and Nokia’s 5800. RIM, the handheld world’s most passionate proponent of keyboards, solved the “How the heck do I feel a touch keyboard?” problem with its touch-click keyboard design. (You can read about my initial hands-on experience with the Storm at go.pcmag.com/storm9530.) Nokia, an 800-pound gorilla in Europe, took on the mobile-content question and decided to sit on the record labels until they gave up unlimited, free music for phones.

These announcements followed the launch by HTC and Google of the T-Mobile G1, which is basically a less expensive, less totalitarian version of the iPhone.

This is one of those happy situations where everybody seems to be doing R&D on some different aspect of smartphone design or service. Apple is the user interface king. RIM knows about keyboards and corporate manageability. Nokia is trying to turn itself into “a services company,” so it’s creating a new model for delivering mobile content to subscribers. HTC has always been a great commoditizer, bringing high-end concepts to a range of carriers, form factors, and price brackets. And Google likes it when things cost as close to zero dollars as possible.

Now everybody is going to build on everybody else’s advances. The result: In

2009, smartphones are going to be cheaper. They’re going to be easier to use. We’re going to have tactile touch screens, great media capabilities, and lots and lots of cool third-party software. Customers and providers will benefi t.

RIM, Nokia, and HTC must be writing love notes to Steve Jobs for helping them out like this. By making exclusive deals with carriers, Apple left lots of room in the market for competitors to flourish. Here in the U.S., Apple aligned itself with AT&T, which created massive pressure for the other three carriers to come up with something as cool as the iPhone. Verizon (serious, controlling, known for quality) went to RIM (serious, controlling, known for quality). And T-Mobile (cheap and cheerful) met with Google (free and cheerful).

Sprint seems to have thrown its lot in with Windows Mobile, with the HTC Touch Pro. But the Touch Pro doesn’t really add much to the conversation, largely because Windows Mobile looks like last year’s OS. Its last major upgrade, version 6.0, arrived in February 2007. Though it’s had a minor update since then and device manufacturers keep putting new skins on the OS so it looks fresh, Microsoft needs to overhaul the whole thing soon if it wants to be any sort of leader.

Unfortunately, the relentless march of smartphones may be stopped by the prices of wireless carriers’ data plans. If Americans tighten their belts during a 2009 recession, people will be looking very closely at their monthly bills. Data-plan prices are coming down, but probably not fast enough to help people move over from voice phones.

AT&T’s standard smartphone data plan dropped from $45 to $30 recently, and Verizon’s dropped from $45 to $40. But those lower prices still represent a big chunk of change to add to your phone bill in tough economic times.

And in some cases, data-plan prices are actually rising! Case in point: the T-Mobile G1. Earlier T-Mobile smartphones worked with a $19.99-per-month data plan, but the G1 has a new, $24.99-per-month plan. Then there’s the iPhone, whose plan went from $20 to $30 with the transition to 3G.

I know the fi nancial crisis has made me hyper-aware of my monthly bills. I’d even be willing to spend more up front so I’m not on the hook for higher monthly bills from here to eternity.

But the cell-phone carriers don’t seem to understand that situation. Now that the phone manufacturers have fi nally gotten things moving, it would be a pity if the smartphone revolution ended up being derailed because wireless carriers want a bigger slice of Americans’ shrinking monthly pie.

The relentless march of smartphones may be stopped by the prices of wireless carriers’ data plans. Prices are coming down, but probably not fast enough.

STAY PHONE-SMART Keep up with the latest on smartphones by reading Sascha’s column at go.pcmag.com/segan.