Wireless

Was 2009 the year of the smartphone? Or will it be 2010? Either way, a new Forrester report confirmed a surge in smartphone ownership last year and expects more growth and more competition this year.

Around 17 percent of mobile phone subscribers now own smartphones, up from 11 percent at the end of 2008 and 7 percent at the end of 2007. Those numbers are even more impressive than they sound, Forrester said Monday, because new technologies typically enjoy a growth spurt in their first year and then trail off in subsequent years. Smartphones are doing the reverse.

In 2009, Research In Motion's BlackBerry was still king of the smartphone castle, at least in terms of market share. Though the iPhone may get all the buzz, Forrester points out that RIM kept up its two-to-one advantage over Apple throughout the year. The sustained popularity of the BlackBerry may stem from its price, availability from a range of carriers, and its full QWERTY keyboard, Forrester said.

To clarify which devices Forrester is discussing here, the market researcher pegs a smartphone as a mobile phone or connected handheld device running a high-level operating system, such as iPhone OS, BlackBerry OS, Windows Mobile, PalmOS, WebOS, Symbian, or any Linux variant, including Android.

Forrester also looked at quick messaging devices such as the LG Xenon and Samsung Magnet. Sometimes lumped in with smartphones, quick messaging devices typically sport a keyboard, a touchscreen, or both, but they run proprietary software instead of a standard smartphone OS. Fifteen percent of adult subscribers owned one at the end of 2009, versus 9 percent in 2008.

Though acknowledging that 2009 was a banner year for smartphones--an opinion shared by CNET--Forrester believes 2010 will truly be the year for this device.

As more carriers hit the market with Google Android devices, both handset maker Nokia and mobile OS maker Microsoft will need to beef up their products to keep their customers happy. Of course, rumors also abound about the Apple iPhone jumping ship from AT&T to another provider, such as Verizon Wireless. Google is also set to unveil its own smartphone on Tuesday.

(Credit: eMarketer.com)

Data from a new report shows that the iPhone may finally have a true competitor with Android phone users' profile appearing very much alike that of iPhone users'.

According to eMarketer.com, the marketing intelligence firm comScore found that 37 percent of U.S. mobile users had heard of Android in November 2009, up from 22 percent in August, and "likely due to the Verizon Droid ad campaign." More interestingly, "17 percent of mobile users in the market for a new smartphone in the next three months planned to buy an Android phone compared with 20 percent who would pick up an iPhone."

The report also shows that usage patterns for Android and iPhone owners were very similar in terms of media consumption, Web browser, and application usage, but e-mail usage on Android devices oddly tracked behind that of other platforms. This is likely because of the immaturity of the e-mail application that ships with Android and not a change in use patterns.

This news obviously keeps the iPhone in the dominant position, but shows that other smartphones finally present a real challenge. It's notable because BlackBerry and iPhone users have always seemed worlds apart, whereas Android users seem to be using their devices at parity with the iPhone crowd.

The fact that the Droid runs on Verizon instead of AT&T no doubt helps with data usage, though only time will tell if Verizon can handle the traffic or if T-mobile can handle the pressure of a huge influx of new Google Nexus One phones running Android.

AT&T has resumed selling iPhones through its Web site to New York City customers, with no indication as to what prompted the halt.

Over the holiday weekend, New Yorkers who tried to order an iPhone through AT&T's Web site were left out in the cold. Making matters worse, explanations ranged from network congestion problems to online fraud to this fine example of corporate-speak: "We periodically modify our promotions and distribution channels."

But at some point on Monday, sales could once again be processed for New York City ZIP codes through AT&T's site. An AT&T representative did not immediately respond to a request for clarification on what knocked out online iPhone sales for Gothamites.

Update at 1:50 p.m. PST December 28: AT&T has resumed sales.

AT&T has stopped selling the Apple iPhone in the New York metropolitan area through its Web site, perhaps due to data congestion, credit card fraud, or routine sales strategy changes, depending on whom you believe.

Online sales of the phone were apparently suspended Sunday. Prospective customers attempting to buy an iPhone through the Web site and using a New York area ZIP code get a message saying, "We're sorry, there are no Packages & Deals available at this time. Please check back later." However, changing ZIP codes to other U.S. metro areas yields a bevy of iPhone choices.

An AT&T representative's statement to CNET suggested that the move to not offer any iPhones online to buyers in the Big Apple was a routine strategic decision.

"We periodically modify our promotions and distribution channels," said Fletcher Cook, an AT&T spokesman.

However, customer service representatives, who are likely not authorized to comment officially for the company, painted divergent pictures.

One customer service representative hinted that data congestion may be the reason for the suspension, telling The Consumerist that "New York is not ready for the iPhone. You don't have enough towers to handle the phone."

In light of AT&T's tarnished reputation for its 3G service, this is certainly a plausible explanation. For more than a year, iPhone users have complained about dropped calls and poor service on the 3G network. The problems appear to be particularly acute in densely populated urban areas, such as New York and San Francisco.

However, another representative suggested that credit card fraud is responsible. Sales were suspended due to "increased fraudulent activity in that area when ordering the iPhone," the other representative told the Gearlog blog. However, the iPhone is apparently still for sale at Apple stores in the New York area.

No word on what the nature of the alleged fraud may be, but as others have certainly pondered, isn't online fraud as likely to happen in Dallas, Seattle, or San Francisco?

New data on the top 10 mobile phones puts Apple on top due to the sheer number of iPhone owners. But both Research In Motion and LG actually control more market share because they sell multiple, popular models.

Nielsen's data on the top 10 phones in use in the U.S. from January through October shows Apple with 4 percent market share, RIM with 6.3 percent, and LG with 6.4 percent. But the trio lead a very fragmented market. In fact, the top 10 phones account for just over 20 percent of the total devices in use.

With an estimated 271 million U.S. mobile subscribers at the end of 2008, accounting for about 88 percent of the U.S. population, even 1 percent market share is significant.

RIM BlackBerry devices and LG handsets--voluminous in offering compared with the singular iPhone also have the benefit of longer time on the market and of promotion by the carriers that don't have the iPhone. LG is the No. 3 handset maker behind Nokia and Samsung. RIM and Apple have nowhere the number of models offered by the top three handset makers, yet they enjoy a stronger market share.

The Nielsen data shows both the opportunity and the challenge of creating the next big thing in mobile devices. Just a few years ago, Motorola's Razr was the belle of the ball, and RIM was firmly fixed as an enterprise device. However, the convergence of voice, e-mail, and browsing, as well as new 3G networks, brought the smartphone to the forefront and helped push both RIM and Apple to the top.

All hope is not lost for currently less popular handset makers, as the market can very quickly change dramatically.

Indeed, there is a big challenge under way from Android-based phones such as the Droid that could thrust laggards such as Motorola back into the spotlight, provided that Google doesn't stomp all over the developer community that has been building up around the new mobile operating system.

And mobile phones are not just for those on the run. Nielsen's Convergence Audit (PDF), an annual survey on voice, video, and data products, "shows a rise in households who have 'cut the cord' by trading their traditional landlines for wireless cellular services and an increase in mobile media device usage among a diverse set of households."

In the second quarter, the report said, 21 percent of households were using wireless cellular service only--compared with 18 percent a year earlier. "This increase comes from...households who have dropped their landlines as well as from young adults that started new households with just a wireless phone service," the report said.

Odds are that these percentages will continue to climb as young mobile users reach adulthood and as adults look to their mobile devices to do more than just make calls.

The quality and speed of the browser is an essential feature for smartphones these days. And it's here that the BlackBerry Storm 2 has some catching up to do vis-a-vis rivals such as the iPhone 3GS.

The Storm 2 is an underrated smartphone in many respects. The interface is clean and easy to navigate, the standard software feature set competitive, and the ability to integrate all email accounts into one screen convenient.

But unbelievably--to me, at least--RIM failed to improve the browser on the Storm 2. Or let me put it this way: RIM failed to make perceptible improvements. (See RIM statement below.)

This is no small oversight. The key reason why the Motorola Droid has been a hit is because it couples a big screen with a high-quality, fast browser--making it the only premium smartphone to date in the U.S. to approach the status of the iPhone.

Which brings us to the gold standard of smartphone browsers: the Safari browser on the iPhone 3GS. This is nothing short of phenomenal. It's the closest a smartphone user can get to the full-fledged browsing on a laptop.

And the browser will only become more important as the smartphone screen size creep continues, from the 3.5-inch diagonal screen on the iPhone 3GS to the 3.7-inch screen on the Droid to the 4.1-inch display on the Toshiba TG01 (sold in Europe).

So, what was RIM thinking? The Storm 2's browser (like its predecessor's--which I had previously been using) can be glacially slow when loading Web sites. So slow that many Storm users opt for downloading the Opera Mini or Bolt browsers. But these browsers have shortcomings of their own, so they don't necessarily serve as satisfactory replacements for the Storm's built-in browser. (The Bolt browser does not zoom and Opera Mini--though blazingly fast--has trouble rendering some Web sites.)

As shown in the embedded videos, which demonstrate the load times for the CNET News page and the zoom features of the two phones, respectively, the iPhone 3GS (bottom) beats the Storm handily.

It is important to note that the Storm 2's built-in browser will speed up significantly if you turn off (uncheck) "Support javascript" in the "Browser Configuration" settings. And in the side-by-side page load-time comparisons with the iPhone 3GS (embedded videos), support for javascript is turned off.

But RIM needs to hurry up and match the competition. A fast, high-quality browser is ... Read More

Many people I know are frightfully attached to their iPhones. They treat them as if they were a peculiar and exotic lover, one they can hardly believe they have managed to seduce.

The finely calibrated minds at Strand Consult have taken this analysis to a particularly simple conclusion: iPhone users are, the consultants say, really quite nuts.

The Strand thinkers released an opinion entitled "How will psychologists describe the iPhone syndrome in the future?." It focuses on the sorts of people who buy into Apple's great success.

Here's a flavor of the somewhat-skeptical nature of Strand's feelings: "Apple has launched a beautiful phone with a fantastic user interface that has had a number of technological shortcomings that many iPhone users have accepted and defended, despite those shortcomings resulting in limitations in iPhone users' daily lives."

The consultants' likening of iPhone buyers to kidnapped hostages may raise more than the eyebrows of many an Apple fanboy (fanperson?). Indeed, it already has the Mac world aflutter.

Is this evidence of an iPhone hypnotising a user?

(Credit: CC Gonzalo Baeza Hernandez/Flickr)

"When we examine the iPhone users' arguments defending the iPhone, it reminds us of the famous Stockholm Syndrome--a term invented by psychologists after a hostage drama in Stockholm. Here, hostages reacted to the psychological pressure they were experiencing by defending the people that had held them hostage for six days," Strand declared.

The implication is surely that Apple has mugged millions of people with its beauty, dragged them off to a very dark cellar in some barren land, turned them into slightly bonkers Barbarellas, and then recruited them as soldiers for the cause.

This is the sort of thing of which the Church of Scientology is normally accused. But for some strange reason, it's a rather chilling but pleasant shower to read something that isn't mere worship.

Strand claims that it closely analyzes the financials of mobile operators. And if you also happen to order its wonderfully free report "The Moment of Truth, a portrait of the iPhone," you will discover the 10 great myths about the iPhone. Here are just two: it doesn't attract new business for operators, and it is not a technologically advanced mobile phone.

I know you'll be rushing to read these fine tracts, and I feel sure that a couple of you might wish to drop Strand Consult a note. To encourage you a little, I'll warn you that Strand also seems to believe that some of you Apple customers are, well, liars.

The consultants put it quite sweetly: "In reality, the iPhone is surrounded by a multitude of people, media, and companies that are happy to bend the truth to defend the product they have purchased from Apple."

Apple customers are liars? The media too? Surely not.

AT&T 3G wireless customers in San Francisco had problems making calls, sending and receiving text messages, and accessing data on Friday evening.

AT&T spokesman Mark Siegel said that starting at about 4 p.m. PT on Friday afternoon, AT&T experienced a hardware issue in San Francisco that disrupted its 3G wireless network within the city. The hardware issue, which he did not elaborate on, was fixed by around 6:15 p.m. PT. And the 3G network has been working fine ever since, he said.

The problem did not affect AT&T's older and slower networks that use 2.5G EDGE or GSM technologies. This means that even though 3G service was disrupted, most customers' devices were able to switch to the slower networks to make calls and to send and receive data. Still, Siegel noted that AT&T detected that customers were having trouble accessing the 3G network, and the company quickly figured out the problem and resolved the issue within hours.

Even though their phones were likely switching over to AT&T's slower technology, many AT&T customers still noticed the issues, with many people reporting having problems with their 3G service on Twitter. Some of these customers said they were unable to access voice, data, or SMS messages at all.

Truth be told, the service disruption in San Francisco was not a really big deal. It affected a handful of customers. But at this point, any network problems, particularly in tech-savvy areas of the country such as San Francisco, only flames the fire of criticism that is heating up around AT&T's 3G service.

The disruption comes at a time when AT&T's reputation for 3G service is already tarnished. For more than a year, iPhone users have complained about dropped calls and poor service on the 3G network. The problems appear to be particularly acute in densely populated urban areas, such as New York and San Francisco.

Last week, Ralph de la Vega, head of AT&T's wireless business, admitted that AT&T is having problems in these cities. He said the company is working on resolving the issues.

De la Vega also admitted that AT&T is struggling to keep up with demand for data on its 3G network. And he alluded to adopting new "incentives" to encourage wireless customers to use less data.

Verizon Wireless, AT&T's biggest competitor, sees AT&T's problems as a golden marketing opportunity. And the carrier started running advertisements recently that highlight AT&T's lack of 3G coverage in some parts of the country. AT&T sued Verizon last month over the ads, accusing Verizon of misleading consumers.

AT&T has dropped its lawsuit, but the publicity around the tiff has likely not endeared AT&T to its customers, nor has it painted the company in a favorable light to anyone considering becoming an AT&T customer.

Meanwhile, AT&T claims in its own ads that it has the fastest 3G wireless network, a notion Verizon disputes. Earlier this year, Verizon also filed a lawsuit against AT&T claiming that the company was not being truthful in its advertising. But Verizon has also decided to dismiss its complaint.

The biggest problem for AT&T is that it is the only carrier in the United States that offers the most data-friendly and data-hungry mobile phone on the market: the iPhone. Analysts say users of the Apple smartphone consume five to seven times more data per month than other wireless subscribers.

AT&T has been upgrading its network to add capacity to keep up with demand, but for many consumers, the upgrades have not solved their service problems. AT&T recognizes more needs to be done. It has launched a new application for the iPhone that lets users report service problems. And the company is urging the Federal Communications Commission to find more wireless spectrum to auction off. But these solutions will take years to implement.

In the meantime, AT&T is faced with a major dilemma. It must continue to market the iPhone and all its bandwidth-hungry applications in order to continue growing its subscriber base, but it also needs to curb data usage until its network can handle the additional load.

In short, AT&T is in an impossible situation. If it backs off on its marketing, it risks losing Wall Street's confidence. If it continues to add new iPhone users, and its service suffers for it, it risks alienating its customers. And then the company may find itself spending the next several years repairing a severely damaged reputation.