September 28, 2007 4:00 AM PDT

Bringing smart phones to the masses

Smart phones, or phones that enable Web access and e-mail, are heading for the mass market.

Palm's new $99.99 Centro, the sleeker, hipper update to the business-centric Treo, is the latest example of a phone that provides all the data-centric features of a business device with the price point and design of a consumer phone.

"What we've known as the smart-phone market is quickly becoming just the cell phone market," said Iain Gillott, founder of iGillottResearch. "These phones used to cost $500 and $600. Some still do, but we're seeing more and more of them come down in price and targeted for consumers."

Traditionally, in the United States, the smart phone market has been dominated by Research in Motion's BlackBerry devices and Palm's Treo line of phones. Initially, these devices were thought of as corporate productivity tools allowing people to send and receive corporate e-mail.

While the corporate market is humming along quite nicely, carriers and cell phone makers also see huge potential in the mass market where teen-agers and even soccer moms, who want e-mail access and Web surfing on the go, could benefit from smart phones. Of the 213 million cell phones operating in the United States today, only about 4 percent of them are smart phones, according to market research firm M:Metrics.

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Video: Palm Centro
At less than $100, it could convert a lot of regular cell phone users to a sleek new smart phone.

But experts say there is a clear indication that people are hungry for more advanced devices. According to M:Metrics the rate at which people have been buying smart phones is increasing rapidly. Today there are roughly 9 million smart phone users in the U.S. That figure has almost tripled in the past two years.

Some e-mail and Web surfing can be done on feature-based phones like Motorola's popular Razr. But the experience is often clunky. Still, consumers generally don't like the bulk and design of the traditional smart phones. And of course, price is a major factor, as most smart phones cost hundreds of dollars, whereas many feature-based phones are practically given away by carriers.

"Carriers and manufacturers recognize that smart-phone owners spend more money on services by browsing the Web and watching mobile video," said Mark Donovan, chief market senior analyst for M:Metrics. "But the challenge has been to design a device that appeals to this market and also hits an affordable price point."

As a result smart phones are evolving to address this market. These "lifestyle" devices not only offer business applications for the corporate set, but they also offer features that are common on regular cell phones, such as easy access to Web-based messaging tools, music players and cameras.

Apple takes a bite of the market
Over the past 18 months, almost every major cell phone manufacturer has come out with a product to address this market. RIM introduced the BlackBerry Pearl, a slimmer version of its BlackBerry device with an abbreviated QWERTY keyboard for typing. Motorola came out with the Q, and Samsung introduced the BlackJack.

Then along came Apple, which essentially redefined the market, with its sleekly designed iPhone that combines the functionality of an iPod music player with a phone and portable Web browsing device that allows people to surf the Net on their mobile device just like they would on their PC at home. While other smart phones allow people to surf the Web with full browsers, Apple took the mobile Web surfing interface to a new level.

But up to this point, price has been a major barrier to truly penetrating the consumer market. Most "consumer"-oriented smart phones have still been initially priced above $300. The iPhone retailed initially for $500 and $600. Prices are starting to come down, but experts say the hefty price tag of these devices has prevented them from reaching the mass market.

The Centro is Palm's attempt to reach this consumer market with a smaller device that is more attractively priced. At $100, the phone, which will initially be sold exclusively through Sprint's network, hits a price point that someone interested in buying a next-generation Razr or other feature-based phone might consider buying, Ed Colligan, CEO of Palm, said during the product's introduction at the DigitalLife show in New York City on Thursday.

CONTINUED: Changes in hand…
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16 comments

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Kinda cute
I always liked the Palm interface. Nice to see a unit priced in the low range with most of the PDA capabilities. Now, all those young drivers will be holding the steering wheel with their teeth while they use two-hands to send text messages.
Posted by Kings X Rocks! (89 comments )
Reply Link Flag
Not phone price but service
I have a smart phone that is not used anywhere near capability because of the service cost. Individuals can afford decent handsets, just not all the additional cost of the individual services offered by the carriers. Maybe they could use some pointers on lowering cost.
Posted by becareful (7 comments )
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Completely agree - the issue is service cost and not device price
I can see myself getting a so-called "smart" phone, as there are lots of devices based on Windows Mobile and blackberry that can be had for free or small cost of you sign up for a contract.

However this article completely misses the major barrier, which is the $30 odd additional per month that providers charge for e-mail and web surfing. Not worth that for me, given the crappy web experience and for personal e-mail on weekends, when out.

The other thing I have a peeve about is that these "smart" phones have not changed at all in 5-6 years in terms of what you can do, except adding cameras and mp3 players. Calendaring, todo lists, note taking, address book and e-mails are still the same, and not very usable with keyboards.

Calling something a smartphone just because it has e-mail and an address book is a bit much IMO
Posted by cemptor (31 comments )
Link Flag
For some it is phone and not service
I have a good service plan but I can not upgrade my phone without "upgrading" the plan for $20 more a month. With 2 year contract that is $240 extra for basically nothing. $99 for new, unlocked smartphone is a great deal. Palm has a great opportunity here.
Posted by pauliusp (4 comments )
Link Flag
What about Windows Mobile smartphones?
Why did you leave a whole category out of this article? Doesn't seem like the writer was doing his job by ignoring a whole category. Just mentioning that Palm has WM versions of their phones is not enough of a mention to claim they were in the article, in my opinion.
Posted by dondtus (1 comment )
Reply Link Flag
Full web browsing?
"While other mobile smart phones allow full web browsing the
iPhone has taken it to a new level."

Other cell phones allow you to surf the stripped down cell phone
version of the internet. The iPhone just surfs the regular internet
version your computer at home uses minus flash. Cnet looks the
same on the iPhone as it does on the home computer, just on a
smaller screen.
Posted by Nodack (198 comments )
Reply Link Flag
Cnet looks fine on my Motorola Q
Not to say that Nodack is talking out of his fundament, but Cnet
looks pretty much the same and unstripped down on my Q-phone.
The layout is sometimes reformatted to make it look better on the
small screen, but it is all there. I do occasionally use a "mobile" web
site like the weather underground's mobile version because the
formatting works better. Of course, I use the phone for
information, not infotainment which seems to be the market of the
iPhone.
Posted by wylbur (110 comments )
Link Flag
Bluetooth
Just about every product these days have Bluetooth and every
review that I have read mentions whether a device has Bluetooth.
THE PROBLEM: Very rarely is there ever mention of what CLASS of
Bluetooth a device has. You have people with Class 2 devices
(mainly cell phones/pdas buying Class 1 dongles and can't figure
out, why in the world they don't have and can't get the advertised
range of the dongle.
Posted by hht311 (8 comments )
Reply Link Flag
Ok
I like the idea behinde the centro but they missed the os and the easy solution would be to skin it so that it is more apealing to teens like myself. In the process of skining the os as long as the layout of the buttens stays the same then there is no problm. I would also like to point out that even some phones like the razor and not the moto q use a dumbed down web that is usualy suported by the service provider like verizon their service sucks. The sites have adds and It is a paid service and you can't get any of the reall mobil sites like the one for g--mail or google talk or even google search. And then SMART phones like the moto q use the reall web with the option for use of the mobil web.
Posted by tehrani625 (157 comments )
Reply Link Flag
Good replacement for OLPC - Perfect for Asia
As some bloggers have also pointed out, (<a class="jive-link-external" href="http://techlahore.wordpress.com" target="_newWindow">http://techlahore.wordpress.com</a>), this phone is perfect as a replacement to the OLPC. In fact, in many ways it would be more useful. In large quantities, I am sure it would be available for $50-60.

The only problem, as pointed out elsewhere as well, is the lack of GSM. Hopefully Palm will come out with a GSM enabled phone. And I am sure Nokia and others will follow with equally capable phones in the same price range.

Big move forward for mobile computing at a global scale!
Posted by jamal_shah (6 comments )
Reply Link Flag
Perfect replacement for OLPC - Perfect for Asia
As some bloggers have also pointed out, for instance at <a class="jive-link-external" href="http://techlahore.wordpress.com" target="_newWindow">http://techlahore.wordpress.com</a> this phone is perfect as a replacement to the OLPC. In fact, in many ways it would be more useful. In large quantities, I am sure it would be available for $50-60.

The only problem, as pointed out elsewhere as well, is the lack of GSM. Hopefully Palm will come out with a GSM enabled phone. And I am sure Nokia and others will follow with equally capable phones in the same price range.

Big move forward for mobile computing at a global scale!
Posted by jamal_shah (6 comments )
Reply Link Flag
For $100 bucks = iPhone killer
The features of the Centro seem just as good if not better than my Treo 650, and it's priced $400 dollars cheaper that the Treo 650 cost.
With a nice 4GB SD card thrown into this device, you could make it into a nice portable music or video player.
I hope Palm markets this device strong because I think with the right push, Palm can recapture the PDA/phone market with this device.

Only $100 dollars, that's too good to pass up for anybody.
Posted by clsmithj (89 comments )
Reply Link Flag
Availability in Philippines
Hope it will be available in Philippines, i think filipinos will embrace this product. specially the budget conscious once
Posted by decnet (1 comment )
Reply Link Flag
Bomjpacket - an open source mobile browser
You can browse Internet on a low-end cell phone using OperaMini which requires Java. If your cell phone does not have enough resources than try out another Internet browser called Bomjpacket:

<a class="jive-link-external" href="http://research.alexeysmirnov.name/bp" target="_newWindow">http://research.alexeysmirnov.name/bp</a>
Posted by alexeysmirnov (1 comment )
Reply Link Flag
What about Windows Mobile Professional Phones
The article in question seems to have left out the Windows Mobile Professional and Smartphone segment. I know that CNET loves anything Apple, but sheesh give credit where credit is due. Palm could sell millions of these to the "Sidekick", and "Helio" crowd. Personally it's a little stripped down for my tastes but for the price I may just buy one because it's cheap and use it as a backup for my Windows Mobile Professional HTC branded Athena.
Posted by ~Neo~ (24 comments )
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