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7 smartphone predictions for 2010

Looking at smartphone growth by the numbers, it's a cinch to predict that sales will continue to boom in 2010.

But the real story of the smartphone's future is not in the numbers. It's a personal one told in many different ways by many smartphone users. One such user, John Davis, has been a physician for many years. He owns a new Droid smartphone, purchased at a Verizon Wireless store near Boston in November.

Davis cites many reasons for buying a Droid, the main one being that it is the closest thing to Apple Inc.'s fantastically successful iPhone that runs on the Verizon network. Having been a Verizon customer for years, Davis said he trusts the Verizon network more than he does the one offered by AT&T, the wireless carrier with exclusive rights to the iPhone in the U.S.

Aside from some initial voice echo problems, Davis sees the Droid as being handy for personal use and in his medical practice, where he can use it to browse for new research and exchange e-mail with colleagues. The Droid's GPS capability is another plus.

But in the end, this is how Davis summarizes what could be the smartphone's biggest impact in the world of computing and communications: “Eventually, this thing is my computer.”

He means, of course, that the Droid or a future smartphone could someday replace his desktop computer, laptop and even other phones.

Whether smartphones ever become the handheld computing/communication devices that replace other computers remains to be seen, but they are already powerful and popular. They have been popular enough, in fact, to sustain the mobile phone market during a recession, and they will continue to generate healthy growth for the sector into 2010, according to several analyst firms.

So that's the basis of the first prediction for 2010, and it's a safe one:

1. Smartphones will grab an even bigger share of the overall mobile phone market

Of the more than 1.2 billion mobile phones expected to ship globally in all of 2009, nearly 190 million will be smartphones, Frost & Sullivan recently estimated. In 2010, nearly 1.3 billion mobile phones will ship globally, and 250 million of them will be smartphones, according to the analyst firm.

Frost & Sullivan analyst Gerry Purdy predicts that in the U.S., where smartphone growth is robust, virtually all phones sold will be smartphones within five years.

Because of the global recession, mobile phone sales have experienced slower growth during the past 12 to 18 months, but the number of subscribers still grew during that period, while the growth in smartphone sales was “amazing” and was in line with what could be expected during a growth market, Purdy added.

Other research firms, including IDC, have noted record smartphone sales growth in the third quarter of 2009, with more growth to come.

2. AT&T will lose its exclusive rights to sell the iPhone

One indication that Apple will move to multiple U.S. carriers for the iPhone is the fact that Apple has struck deals with multiple carriers in various countries abroad.

Economically, it doesn't make sense for Apple to stay with one carrier, analysts said. Some disagree, but most say the exclusive deal with AT&T is ending.

“AT&T is certain to lose the iPhone exclusive within a year,” said Jack Gold, an analyst at J.Gold Associates LLC. “Apple is nuts to keep it with one carrier.”

AT&T has suffered a public relations problem because of its network coverage for the iPhone, and that could be a factor in Apple's decision. Apple in November backed AT&T when it aired two TV ads noting that AT&T's network enabled iPhone users to perform multiple tasks on one device simultaneously. But those ads seem to have been a response to an aggressive Verizon ad campaign that called attention to the fact that Verizon offers wider 3G coverage than AT&T. AT&T attacked the Verizon ads in a lawsuit calling them misleading, but the lawsuit, and a related one brought by Verizon, were withdrawn in early December.

3. The Android mobile operating system will take off

That's a fairly safe prediction, given that several phone makers have announced Android-based models, which could bring the total number of Android devices introduced in 2010 to 36, Purdy noted.

With Verizon's Droid expected to hit 1 million in sales in its first quarter of availability, according to some researchers, a few of the dozens of other new Android devices could also sell well.

The Android operating system is expected to ship globally on 3.7 million smartphones in 2009, but that figure could more than double to 8.2 million in 2010 and Android could start to dominate the smartphone operating system market by 2014, Frost & Sullivan estimates.

By 2014, the Android could be the third most popular operating system, shipping on 65 million phones. That would put it behind first-place Symbian OS, which is used on Nokia devices and is projected to ship on 233 million phones that year, and Research in Motion Ltd.'s BlackBerry operating system, which will be on 92 million phones, according to Frost & Sullivan.

Gartner Inc. believes Android will do better than that, taking second place behind Symbian OS as early as 2012.

Android will benefit from being an open operating system — a fact that will interest a wide variety of application developers, Gartner noted. Wireless carriers and manufacturers will also offer Android devices that differentiate themselves from one another. It's possible that some Android phones will be designed for business users while others will be geared toward consumers, with the latter market segmented further into, say, those who prefer social networking over music, or vice versa.

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