The future is upwardly mobile

Consumers will benefit from the fight to unseat today's smartphone champs.

The Apple iPhone is one of the leading smartphone designs.

Reading the tea leaves in today's smartphone industry is little more than a guessing game, but there are several indications of where the hottest mobile market may be heading.

As far back as five years ago, the smartphone was considered to be a high-end handset used only by upper management types. Today, it is tough walking down the street of any urban centre without running into someone using an Android or iPhone. And sales are booming. According to IDC, a technology consultancy, smartphone shipments in the first half of this year grew by 50.4 per cent, 10 per cent higher than its forecast, compared with the same period last year. More than 63 million handsets were sold in the second quarter compared with 41.9 million in the same period last year.

The rise of smartphones is ultimately the result of their capabilities. They do more than just make calls. Today's major models have become mini computers, and they have boosted the fortunes of companies such as Apple, Research In Motion (RIM), Google, HTC, Samsung and Nokia, which launched three new smartphones this week. But what will the smartphone market look like in the next few years? Will Apple's iPhone maintain its position as the hottest handset in the world or will it be trumped by a surprisingly innovative product from Nokia?

Or will RIM's BlackBerry finally lose its reputation as a Wall Street-centric device and convince Main Street that the handset is actually as much fun to use as anything else on the market. Finally, can Samsung produce a smartphone that will be able to connect with its line-up of electronic products aimed at the living rooms of tomorrow? While the answers are not set in stone, looking around today's technology world, it is possible to glean an idea of things to come.

Right now, the smartphone market is Apple's to lose. The iPhone has become the third-highest selling smartphone in the world and the second in North America after only three years, says Neil Mawston, the director of the global wireless practice for Strategy Analytics, a telecommunications consultancy based in the UK. Led by Steve Jobs, its co-founder and chief executive, Apple came out of nowhere and disrupted the market through a combination of standout design, an innovative operating system and new consumer services such as App Store. But that pedestal is starting to look shaky.

Mr Mawston says Apple will be knocked off its perch if its rivals can deliver a revolutionary input mechanism that looks different and takes the user experience beyond a touchscreen device and into potentially more intuitive areas such as gesture controls. "The high-end handset industry has shifted over the past 30 years from soft keypads to clickable keypads to hard-QWERTY keyboards to virtual touchscreen-QWERTY keyboards, and the industry is waiting to see what new design comes next," he says.

Apple also has the distinction of being an expensive device. Because RIM, of BlackBerry fame, and Nokia are successfully releasing cheaper smartphones with affordable monthly data plans, Apple's growth could weaken if the company does not target emerging markets, says Kevin Restivo, the senior mobility analyst at IDC. "Apple always had premium products with people with lots of disposable income, but there is a finite definition of ways that Apple can grow," Mr Restivo says. "There's going to have to be new frontiers that Apple is going to have to tackle."

To take market share from BlackBerry, Apple and Android, a rival operating system designed by Google, have to introduce features such as robust security to make business people happy, Mr Restivo says. IDC recently issued a report that suggests Apple's market share will decline nearly 26 per cent between this year and 2014 as more users opt for devices using the Android operating system. Expected surges from technology such as Microsoft's upcoming Windows Phone 7 operating system and Nokia devices will be a factor, the IDC report suggests.

"To keep sustained growth rates the way they are, those two camps are having to go into less familiar territory, such as the business world," Mr Restivo says. Likewise, RIM will have to make serious moves into the consumer segment. While it has already had success with its Pearl and Storm models, the latest upgrade to its operating system has not exactly been embraced. The company also has security issues with authorities in India, Saudi Arabia and the UAE.

Mr Restivo and Mr Mawston agree that RIM has to introduce better touchscreen devices to meet the demand created by the iPhone and Android devices. RIM is "missing out on hundreds of millions of dollars of revenue every quarter", Mr Mawston says. The tablet-computer market could also offer signs of things to come. To compete with Apple's successful iPad, RIM is preparing to launch its own tablet, the BlackPad, which is reported to supplement its BlackBerry service with messaging and internet features. Samsung, Nokia, HTC and Android also have released or are developing tablet computers.

The tablet is generally designed as a replacement for the laptop, but it can also spearhead computer makers' entry into the living room of tomorrow, with its network of connected devices. "The consumer electronics game is as much of the same market as the smartphone market," Mr Restivo says. [e-mail]