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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: John Biddle who wrote (30873)	1/7/2003 10:58:21 PM
From: John Biddle	Read Replies (1) \| Respond to of 197305

Why the Smartphone Is Not Catching On Tue Jan 7, 1:09 PM ET Kimberly Hill, Wireless.NewsFactor.com story.news.yahoo.com Though there has been a lot of carefully constructed industry excitement over smartphones -- devices that combine calling capabilities with functions like calendar management and Web browsing -- this new wireless category has not taken off like other mobile-equipment niches. And it is not likely to soar anytime in the near future. Smartphones seem to be stuck in limbo -- a middle ground that users just have no interest in traversing, according to Deloitte Consulting partner Mark Peacock. For his colleagues, as well as the executives he works with in a consulting capacity, there are no compelling business reasons to convert to smartphones, he told NewsFactor. Nor is there any motivation to do the sometimes-complex data transfer necessary to load numerous contacts and appointments onto their phones. "The incremental benefit is just not worth the effort," Peacock said. Missing Audience Consumers are not jumping on the smartphone bandwagon either, for a variety of reasons. One problem is that wireless carriers have not yet marketed sufficiently interesting applications. "People don't really want to sit down and browse the Web on their phones," Aberdeen Group analyst Isaac Ro told NewsFactor. Early mainstays of advanced cellular services -- news and stock quotes -- simply do not attract consumers or businesspeople in numbers sufficient to approach critical mass. Consumers may be more drawn by applications just starting to hit the mainstream, according to Ro. Games and image messaging, he said, "are the types of interesting things we're just starting to see now." Seeking the Balance Point When carriers discover the right combination of services for consumers or business users, they had better be ready to offer smartphones at an attractive price point, both Peacock and Ro agreed. "We've gone through a lot of version one devices," said Ro, referring to cumbersome equipment like the Handspring (Nasdaq: HAND - news) VisorPhone, which utilizes the PDA's expansion slot to add mobile phone capabilities. "Version two and three devices are making themselves more compelling, and the price is not quite as outrageous," he pointed out. The Handspring Treo, along with the Kyocera (NYSE: KYO - news) phone-PDA hybrid, are examples in this category. The threshold for U.S. consumers considering a change of mobile equipment seems to be US$100, Peacock said. Thus, whether they offer contract-signing incentives or price reductions as marketing lures, wireless carriers will have to find a way to stay on the right side of this perceived price barrier. Jump-Starting the Market The infrastructure issue also continues to plague the U.S. mobile equipment market. Motorola (NYSE: MOT - news) is working with wireless carriers to deliver the functionality that users want, vice president Leslie Dance told NewsFactor -- but that means working within the network operators' technical constraints. In the end, smartphone devices may take hold in the United States precisely because they emulate the gadgets that consumers in other countries can use on 3G mobile architectures. Network limitations may be the catalyst for smartphone acceptance, Gartner vice president Ken Dulaney told NewsFactor. Microsoft's (Nasdaq: MSFT - news) smartphone, which recently launched in the United Kingdom, is selling well. "I would expect that when that product comes to the U.S.," Ro said, "it will serve as a spark."