Author: Kevin C. Tofel

Some 2.6 million unique iPhone owners are using Opera Mini, according to its maker’s latest State of the Mobile Web report, the first full dataset since the browser arrived for Apple’s iPhone last month. In fact, the iPhone now tops the U.S. list of devices on which Opera Mini is used and is No. 3 on a worldwide basis. But while that sounds good, some of the numbers don’t seem to add up.

For starters, in light of the Opera Mini’s reported 58.9 million users in April, 2.6 million of them using the browser on an iPhone is nothing to sneeze at. And given historical data showing iPhone web use to be high, even when its worldwide market share is low, I’d expect them to greatly boost the overall page views served by Opera Mini. But that’s not the case as shown by Opera’s own graph of PVs in April:

In fact, the browser’s page view trend showed higher growth rates prior to the availability of Opera Mini on the iPhone, not after it. February is an outlier, but that’s likely due to having fewer days in the month. Opera says that in April, the 26.3 million page views transcoded was a scant 1.6 percent higher than in March. Wouldn’t you expect that the web-hungry iPhones would cause April’s numbers to jump? They would — if iPhone users were actually using Opera Mini. Much as I suspected would happen, I believe that Opera Mini is getting installed on iPhones, but it’s not actually being used for browsing in any significant way.

At last check, Opera Mini was ranked as the No. 3 free productivity application in Apple’s iTunes Store, which adds credence to the installation base. But the current version of Opera Mini has a solidly mediocre three-star rating, with 1,495 users giving it five stars and a nearly equal 1,424 users rating it with just one. Notably, you can’t make Opera Mini the default browser on an iPhone.

Opera’s data is on one side of the ring, while my own thoughts are in the other. Maybe this is a good time to for our readers that own an iPhone or iPod touch to cast the final punch. Forget what Opera says about who uses Opera Mini on the iPhone — the real question is: Do you?

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Apple’s iPhone production is ramping up to levels that suggest it’s “increasingly becoming carrier-agnostic” and could mean we’ll see a Verizon iPhone sooner than previously expected, Rodman & Renshaw analyst Ashok Kumar alleges in a note to clients today. Up to 12 million iPhones are already in the supply chain for the September quarter — a huge amount considering Apple has sold some 50 million of the devices worldwide since June of 2007. Kumar believes that if such production trends continue, Apple will move 40 million iPhones this year. He further believes that if Apple inks a deal with Verizon Wireless by the end of 2010 — which may be the last year of iPhone exclusivity with AT&T in the U.S. — pent-up demand for a Verizon iPhone could drive quarterly sales to 17 million.

Although Kumar is throwing around what sound like large numbers and what-if scenarios, his numbers may actually be in line when you look at several other key bits of information:

• Apple sold 8.75 million iPhones in the first three months of 2010. That’s a yearly run-rate of 35 million handsets, not far below the 40 million Kumar expects.
• Love it or hate it, Apple sold more than a million iPads in the first 28 days after launch, there are reports that 200,000 are being sold each week and in many retail locations, there aren’t any currently left. The halo effect of a successful iPad could help iPhone sales.
• Recent documentation confirms AT&T’s exclusive relationship to carry the U.S. iPhone until 2012, but Kumar sniffed out other supply chain details earlier this year that signal a potential change to that deal. In January, Kumar reported that Qualcomm had been tapped by Apple to supply CDMA radio chips — there’s no iPad model with CDMA support, so the only other reasonable explanation is a CDMA iPhone.
• Apple surely knows that there’s pent-up demand for its phone the largest carrier network in the U.S. — in a recent survey, more than 50 percent of cellular customers said they’d be “somewhat likely” or “very likely” to purchase an iPhone on Verizon’s network.

Given that Google claims the activation of some 100,000 Android devices per day, the game is clearly on between it and Apple. In 18 short months, Android has proven itself to be a force against Apple’s mighty iPhone and is catching up in terms of market share. And according to a recent AdMob report, much of the Android army is based in North America, so Apple could use another iPhone brigade in the form of Verizon.

And the fact that AT&T recently jacked up the price of its early termination fee to $325, effective next week, is just further evidence that AT&T expects to soon be losing its cash cow. Perhaps the big news at Apple’s WWDC event next week isn’t what we already know — there’s a new iPhone coming soon — but instead is what many hope for: at long last, a Verizon iPhone.

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Google Takes the Open Battle to Apple on Multiple Fronts

The last piece of the Android puzzle appears to be in place — Matias Duarte has joined Google as user experience director for Android, according to All Things Digital. If you’ve ever witnessed or experienced the elegance of Palm’s webOS smartphone operating system, then you’ve seen Duarte’s work first-hand. His deft touch is the icing on the cake for Android, one of the fastest-growing smartphone platforms today, but Duarte isn’t new to the Google team — he had ties to Android before Google ever owned the platform.

Instead of speculating on the future, in particular what Duarte might do to revamp Android’s utilitarian interface, it’s worth looking at what he’s done in the past. Under his leadership as Palm’s VP of human interface and user experience, the webOS team created a beautiful palette for interaction between a user and a smartphone. If webOS had only offered more tools in the form of software, I never would have dumped my Palm Pre in favor of a Google Nexus One. Not a week goes by when I don’t miss the webOS interface. I’ve even gone so far as flash cooked ROMs on my Nexus One to gain the HTC Sense interface and pretty up Android, but even that pales next to webOS.

Duarte also in the past worked with members of the current Google Android team. According to his LinkedIn profile, from March 2000 to August of 2005, Duarte was the director of design for another phone maker, Danger, which like webOS, provides a slick, fun user experience in its Sidekick line of devices. Coincidentally, Danger was co-founded by Andy Rubin, but Rubin left in 2003 to start Android Inc. Two years later, Android Inc. was sold to Google, Rubin became the VP of engineering in charge of Android, and…well, the rest is history, as they say. Another bit of detail to close the Danger-Android loop — while BlackBerry phones are often the corporate norm, Google founders Sergey Brin and Larry Page reportedly wore Danger Sidekicks on their belts as recently as 2002.

Android would have likely benefited with Duarte’s involvement from the beginning, however the platform is doing just fine even without a stellar interface. At last week’s Google I/O event, Google reported that 100,000 Android phones are activated daily, so consumers appear willing to concede some design prettiness for functionality and customization features. With that kind of momentum, Google wasn’t completely hurt by a marginal UI and in fact, the user experience is enhanced with Android 2.2, aka Froyo, which I’ve been using on my Nexus One for nearly a week.

But Froyo is no webOS. I anticipate that much of Duarte’s visual influence won’t appear on Android devices until the end of this year at the earliest. Gingerbread, the next version of Android, is already in progress, so it could be tricky to make major interface changes at this juncture. Google would be wise to allow Duarte as much input as time allows on Gingerbread, but a full revamp of the interface would be a challenging deliverable in under six months. I doubt Google is worried, though — the Android juggernaut is rolling along just fine, even if it has been battered around with the ugly stick.

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Google Takes the Open Battle to Apple on Multiple Fronts

Verizon Wireless customers can expect tiered pricing when the carrier implements its LTE mobile broadband network later this year, the carrier’s CEO confirmed this week. Gone will be the monthly plans that Verizon currently offers — instead, customers will pay for pre-determined buckets of wireless data each month. It’s currently unclear if those buckets can be altered to higher or lower data amounts during a customer contract, but one thing is clear: Offering various pay-per-use plans allows Verizon to insure high margins.

In today’s 3G world, one could argue that carriers already provide tiered data plans, typically in two tiers: roughly 200-250 MB for one price, and an “unlimited” plan at a higher price — though the so-called unlimited plans are typically capped at 5 GB and can include overage charges (T-Mobile recently eliminated such fees and may reduce bandwidth after 5 GB of data is used). The smaller buckets work just fine for basic daily web activities such as email, light browsing and social networking updates. But add in video content, music streaming or other bandwidth intensive uses and you’ll quickly see the bucket overflow. The same applies to the unlimited 3G plans — you can burn through a monthly 5 GB plan with just 5.68 hours of video. The issue with today’s pricing is that carriers like Verizon have no idea how customers will use the network, so they can’t plan for demand, which varies by activity and device type.

With tiered pricing, however, the burden of forecasting demand shifts to the consumer. I suspect that Verizon will allow customers to routinely modify the size of their data bucket for this reason — multiple tiered choices with no room to change won’t help the demand forecasting problem. In this case, if you expect to be on the road for a few weeks and plan to stream a season of “Heroes” on Netflix, for example, you can plan to purchase enough data throughput in order to watch it from start to finish. Whereas if your travels are confined to the home office or the local Starbucks where you can use Wi-Fi, the purchase of a smaller data bucket makes more sense — both for you and for the carrier providing the network. The carriers’ argument to the consumer is that she will benefit from less network congestion — and that you don’t expect an all-you-can-eat buffet experience at an à la carte restaurant, so why expect it from a mobile broadband network?

The benefit to carriers, of course, is in the form of fatter margins. As Chetan Sharma, a wireless industry consultant and GigaOM Pro analyst explains:

“LTE will help force costs down 60 percent on a per-megabyte basis, but usage might go up by the same amount. Most of the gains [for network upgrades] are in the cost savings, but with faster throughput, things will download faster and people will do more of it, and since the price of the service is fixed, the cost of delivering the content will only go up.”

Indeed, tiered pricing offsets the cost of delivering content because all customers will pay for what they’re truly using, which helps moderate the delivery costs while also hedging the profit margin for Verizon. Stacey expands on that point in her GigaOM Pro report, “Metered Mobile: Pricing for Profits” (subscription required). She also underscores the expected Verizon pricing model, noting the carrier is “trying to figure out how to encourage usage and keep margins for mobile broadband high without overloading their networks or driving users back to the bad old days when everyone was too afraid to open the web browser on their phone for fear of exorbitant data fees.”

While we don’t yet know the details of the LTE pricing buckets, we shouldn’t have long to wait. McAdam expects three to five LTE handsets to launch in the first half of 2011 as Verizon plans to bringLTE to nearly 30 U.S. markets before the end of 2010.

Is the window of opportunity for e-book readers with embedded broadband going to close not long after it just opened? That’s the forecast being made by UK research firm Informa Telecoms & Media — it believes device sales will peak in 2013 and then decline by 7 percent the following year because instead of purchasing dedicated e-book readers, consumers will shift towards other multifunction devices with mobile broadband, such as Apple’s iPad or an anticipated Android tablet, to read e-book content.

Indeed, one of the key reasons for the recent success of readers like Amazon’s Kindle or the Barnes & Noble Nook is also a limiting factor in terms of multipurpose functionality — today’s  E Ink displays that make such devices attractive aren’t as effective for activities like browsing the web or viewing video. New display technologies are needed to support those use cases. Two that come to mind: Qualcomm’s Mirasol low-powered color panel and Pixel Qi’s innovative dual-mode screen, which can use ambient light instead of a power-hungry backlight as needed. With its next-generation “E Ink mode” you can watch a fast-frame movie on the Pixel Qi screen — skip to the 9:30 mark of my CES video to see how well this display works.

As a voracious reader and former Amazon Kindle 2 owner, I see both sides of the page when it comes to dedicated e-book readers. On the one hand, I love the paper-like reading experience a dedicated E Ink reader provides. Combine that with a light device that doesn’t require a battery recharge for weeks and it’s no wonder I took my Kindle everywhere I went. But after just one day with my iPad, I sold my Kindle, mainly because I didn’t want to tote both devices and the Kindle for iPad application provides the same experience as the original. Plus, although everyone’s eyes are different, I don’t buy into the eye-strain argument in favor of E Ink. I’m already looking at an LCD display for 10-12 hours a day on my computers — what’s another hour or two?

In other words, I didn’t wait until 2013 to switch from a dedicated reader to a multifunction device. And with the expected onslaught of slates and tablets this year — by and large, e-book devices use a slate form factor — I imagine I won’t be the only one. One portable device with embedded broadband for web, social networks and other online activities appears to be the future. There’s still a market for standalone e-book devices — folks that prefer E Ink over LCD or people who would rather check email or visit the web on a traditional computer will opt for an e-book — but these consumers will be in the minority as people will opt for converged connected devices. For continued growth and success, e-book readers have to add new functionality in order to compete for consumer dollars.

This market isn’t really about hardware, anyway; it’s about the sale of content — and Amazon is still expected to earn a billion dollars on digital books, even if its Kindle hardware doesn’t continue to sell well. That explains why Amazon created a Kindle for iPad application and why Barnes & Noble today outed its reader software for Apple’s slate: More content on more devices equals more money.

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With sales up 43 percent year-over-year in the first quarter of 2010, according to Gartner — the highest rate of growth in nearly eight years — the mobile PC market is flexing its muscle. And it’s no coincidence that of the top five vendors in terms of market share, the two showing the most growth — Acer and ASUS — were among the first to embrace the netbook market.

Netbook sales grew 71 percent from the prior year quarter after cresting 36.3 million units in 2009 — a figure expected to top 58 million in 2010, estimates ABI Research. So why isn’t the strong netbook market doing more to help sales growth of HP, Dell and Toshiba? Answers vary based on the company in question. I uncovered one of them yesterday, while attending the Netbook Summit.

Eric Tilton, manager of networks and engineering for the Fresno Unified School District, told me his organization helped refine early HP netbook designs to optimize them for the education market. He suggests that HP netbooks are poised to do well in this market — over the next four to five years. Schools commonly run though long budgetary cycles, so HP can’t reap rewards in this market any faster. Consumers don’t face such cyclical fiscal constraints, yet HP netbooks can be pricey for the general public — last time I checked, a fully decked-out HP netbook could run you $700, near the current average selling price ($732) of a full notebook.

Toshiba, meanwhile, only offers two netbook models to choose from — one of which, I should note, I bought last year and absolutely love it — the netbook has a trackpad larger than that of some notebooks I’ve used. But as computers become smaller, they also become more personal, a thesis presented in our GigaOM Pro report, “The Future of Netbooks” (subscription required). And with only two netbook models, Toshiba can’t compete on personal choice with Acer and ASUS, each of which offer scores of different models.

On the other hand, Dell netbooks do provide many customization options. The base netbooks typically start at under $300, which sounds like a good deal initially, but these often run on the Intel Atom Z-series processors, which are really intended for lower performing devices. To Dell’s credit, changing the specifications is an easy, though time-consuming, experience. Often, it results in a machine comparable in price or performance to a specific ASUS or Acer model that could be had without the configuration hoops.

While all the mobile computer vendors are enjoying growth, there’s something to be said when you’re first to a new market. Assuming you implement your product plan well, you’re likely in the best position to reap the largest rewards.

At a time when Microsoft is facing challengers to its desktop operating system, productivity suite and handsets, you wouldn’t think the company would be changing up officers on its front lines, yet that’s exactly what’s happening. Robbie Bach and J. Allard, both of whom were both instrumental in creating consumer products through Microsoft’s Entertainment & Devices Division, both are leaving the company as part of a broader reorganization, reports TechFlash. As a result, Steve Ballmer, Microsoft’s CEO, will initially gain greater control over the division, which includes the Xbox, Zune and Windows Mobile products.

Details on what led to the shakeup are sketchy, but more concerning is what the restructure means going forward — the departure of Bach and Allard is a huge loss for Microsoft. Add in the fact that Ballmer is often out of touch with what consumers actually want and the loss is potentially magnified, depending on how much involvement he actually has in these product areas going forward. Perhaps the best example of Ballmer’s “perception risk” comes from a 2007 interview with USA Today, in which he’s quoted as saying:

“There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.”

Given Apple’s 10.8 percent share of the worldwide smartphone sales last quarter — and Microsoft’s declining presence in that same market — it’s safe to say that Ballmer’s prognostication skills are lacking. And Windows Mobile is only just this year morphing into a more competitive Windows Phone. It’s difficult to look forward when you’re two or three years behind your competitors.

While the Windows Mobile group has been slow to respond to the fast-changing mobile market, the Xbox area has been a beacon of success for Microsoft, largely due to Allard. Incidentally, it was a 25-year-old Allard who in 1994 penned a 16-page memo titled “Windows: The Next Killer Application on the Internet,” the main thesis of which was to integrate the web within Windows, as Allard already saw the web-connected future. Between the Xbox design, 40 million consoles sold, and foretelling of the web’s importance, how does a company like Microsoft let a person with talent like this go? TechFlash says that Allard will stay an adviser to the company, so it’s not a total loss, but perhaps he should be moved up in the chain of command — not out of it.

The plan instead is for Ballmer to take the reigns, with key current leaders Andy Lees and Don Mattrick reporting directly to him. Lees has his hands full as the senior VP of Microsoft’s Mobile Communication Business, the area responsible for Windows Phone and Kin devices. As senior VP of the Interactive Entertainment Business, Mattick can build off the the Xbox successes while trying to push Zune into the limelight — a tough challenge in a world filled with iPods. And maybe an even tougher challenge the longer Ballmer runs the show.

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T-Mobile today announced availability of its HSPA+ network in three new Northeast corridor areas comprised of upstate New York (Albany, Buffalo, Rochester and Syracuse), Connecticut (Hartford, New Haven, Milford and Stamford) and Providence, R.I. The carrier says that Washington, D.C. and Boston are next on the HSPA+ implementation list “in the coming weeks.”

Perhaps more interesting than the actual network news is the language T-Mobile uses to describe it — the carrier states that its 3.5G HSPA+ network offers speeds comparable to the 4G networks of its competitors. From the press release:

“Our competitors are asking consumers to pay more for faster wireless service with limited coverage and very few capable devices,” said Neville Ray, senior vice president of Engineering and Operations for T-Mobile USA. “In contrast, T-Mobile is already delivering 4G speeds today to customers and we continue to make major leaps in expanding our HSPA+ mobile broadband footprint.”

Clearly Ray is pointing a finger at Sprint, which is the only U.S. carrier offering and marketing a 4G network, the nationwide WiMAX network it’s in the process of implementing with Clear. The “asking customers to pay more” is a likely reference to Sprint’s $10 premium data charge for the first 4G handset, the Sprint EVO.

So does the HSPA+ network offer 4G-like speeds? I’ve had some hands-on time with both the HSPA+ and the WiMAX networks and based on my experience, I’d generally say yes. Download speeds of 10 Mbps aren’t uncommon when using hardware like T-Mobile’s webConnect Rocket Laptop Stick in an HSPA+ coverage area, which is as fast, if not faster than what I’ve seen on a WiMAX network. Even my Nexus One and its 3G radio capable of only 7.2 Mbps speeds is as fast as what other hands-on testers have reported with Sprint’s EVO on a WiMAX network — and that’s without a premium data charge. In fact, T-Mobile recently eliminated overage charges on its data plans and instead reserves the right to throttle down service after users consume more than 5GB of monthly bandwidth. As the carrier loses customers, it continues to bet that the HSPA+ network expansion and overage elimination will pay off in the long run.

Here’s a look at my HSPA+ experience on a non-optimized area of the T-Mobile network back in February.

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Samsung today launched its Wave smartphone in the UK and France, less than a week after the device was introduced in Germany. The Wave runs a proprietary operating system called Bada, which Samsung debuted at the Mobile World Congress earlier this year. Samsung has previously stated that over 50 percent of its new smartphones would run on Google’s Android platform, so not only is Bada competing with one of the fastest-growing operating systems in the world, but it means Samsung is now competing against itself as both its consumers and developers will be forced to choose between the two OSes. Maybe Samsung should look closer at the Bada name because the first three letters indicate what kind of idea this is: B-A-D.

It brings to mind an early “Battlestar Galactica” episode in which the then-newly sworn-in President Roslin tries to temper the wish of Commander Adama to continue warring against the Cylons, which had nearly exterminated the human race in a single day. “The war is over,” says Roslyn. Same goes for the mobile platform battles: the top smartphone ecosystems of iPhone, Android and BlackBerry have won.

The shame of it all is that Bada looks like a solid smartphone environment and the Wave device appears potent — the phone runs on a 1GHz chip with an 800×480 resolution AMOLED display and can record video in 720p high-definition. Based on specifications alone, the Wave competes well with the latest and greatest handsets on the market.

But features and specifications by themselves won’t win any wars; ecosystems and developer traction are also required. To that end, Samsung provided a beta version of its Bada SDK to developers earlier this month and will sell apps through a Samsung Apps store. The company is also offering a $2.7 million prize pool to Bada developers in an effort to quickly ramp up the number of software offerings. But its big three competitors already offer more than 250,000 applications combined, and while not all of those titles are what I’d consider “quality applications,” there are more than enough solid software selections to keep people happy.

I’m not suggesting that there will never be another mobile platform that can compete with or dethrone the current incumbents. Instead, I think any new and successful effort will require a unique, fresh approach both for consumers and developers. I don’t see why a developer would create applications for Samsung through Bada when it could create software using Android for Samsung phones and many other handsets as well.

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Yahoo and Nokia have unveiled a partnership that will see Yahoo power Nokia’s Ovi Mail and Ovi Chat platforms and Nokia provide mapping services for all of Yahoo’s navigation products. But the deal is a late effort by two companies being leap-frogged by newer, nimble competitors in the mobile space.

Or as my friend Michael Gartenberg, who tweeted just after the announcement, put it: “Yahoo and Nokia deal feels like two brands that have lost relevance seeking to reclaim it.” Indeed, this deal would have held far more promise had it been inked as little as two or three years ago. But at this point, swapping services won’t be enough to slow down the mobile juggernauts of Apple and Google, both of which already provide rich ecosystems and services.

Some numbers to help put this last-ditch alliance in scope:

• Yahoo! Mail has over 600 million members worldwide
• Nokia Ovi has over 9 million mail users
• 100 billion messages sent monthly on Yahoo! Mail
• 81 billion instant messages sent monthly through Yahoo! Instant Messenger

Yahoo, which hasn’t focused on its Maps platform for years — CEO Carol Bartz admitted as much during the webcast detailing the Nokia deal — gains the navigation expertise offered by Nokia both in Ovi Maps and in Nokia’s Navteq assets, which Nokia purchased in 2007 for $8 billion. And given Nokia’s focus on emerging markets, this alliance brings the Yahoo brand to new places around the world — locations poised for growth, so there could be some short-term, marginal benefit.

Ironically, Nokia’s Ovi brand will gain recognition as well, but not in emerging markets. Instead, Nokia’s Ovi name will be seen in the United States each and every time someone uses Yahoo Maps, which will be tagged: “Powered by Ovi.” Although Nokia is the undisputed worldwide champion when it comes to handsets, it wants a foothold in the U.S. to offset lost market share. Nokia President and CEO Olli-Pekka Kallasvuo called the deal a step toward helping the company “compete in the world’s largest market.” It is a step, but not much of one and not one that the company should have waited until 2010 to take.

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Mobile OSes Are No Longer Just About Mobile

Research In Motion today announced a partnership with China Telecom to sell the BlackBerry Storm handset to enterprise customers in 16 provinces. As part of the deal, China Telecom will also offer RIM’s BlackBerry Enterprise Server for integrated messaging and communications. The move is seen by some as aimed at upending China Telecom’s rival, China Unicom, which has carried the Apple iPhone since October of last year, but these two phones — and the target audiences — couldn’t be more different.

When RIM introduced the touchscreen BlackBerry Storm in 2008, many suggested it was the device to dethrone Apple’s iPhone. But it was plagued by poor reviews and a buggy implementation. As Om noted in January 2009, with the Storm, RIM didn’t play to its strengths; instead, it attempted to create an iPhone-like experience and fell far short of the mark. I remember the Storm hype back then, but I also remember how quickly it dissipated not long after launch — and therein lies the other challenge.

Why is China Telecom trying to sell enterprises a BlackBerry handset without a hardware keyboard when mobile workers are primarily using handsets to communicate via text message and email? When it comes to enterprise mobility, RIM’s products and solutions are typically high up on the list, and for good reason. But that reason doesn’t include touchscreen devices — the workhorses in RIM’s enterprise stables are keyboard devices such as the Bold and Tour. Is this a case of the wrong device for the wrong market? It seems to me that RIM would do better in an enterprise market with a keyboard device better suited to productivity. Especially if RIM wants to compete with the iPhone in China, it should be targeting consumers with the Storm.

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Worldwide handset shipments rose 13.8 percent in the first quarter of 2010 over the same period a year ago, but the rising tide isn’t lifting all boats, according to the most recent iSupply report, titled ”Mobile Handset Industry Foresees End of the Recession.” Motorola continues to leak market share, dropping to the eighth spot from sixth in the span of 12 months — the handset maker sold 8.5 million phones during the first quarter of 2010 vs. 14.7 million in the comparable three months of 2009, a decline of 42.2 percent. Research In Motion, Apple and ZTE all leapt past Motorola in terms of sales in the most recent quarter.

Sales in thousands. Source: iSupply

The data reflects all types of handsets, but the numbers show the growing importance of the smartphone, sales of which is expected to surpass feature phones in the U.S. by the end of 2011. And that trend is both hurting and helping Motorola. On the one hand, the company hit a home run with its Motorola Droid handset that debuted on Verizon’s network in October of last year, with nearly a million units sold, or 8.33 percent of all Motorola sales, according to iSupply’s fourth-quarter 2009 data. But other recent at-bats have been singles at best. The Cliq, Backflip, and Devour aren’t selling like the Droid has, perhaps because they lack the advertising push it received.

It has to be tough for the Devour (see our video review here) to compete with the Droid on the same network — Verizon customers can purchase the Droid right now for $199 and get a second one free. Priced at $149, the Devour only saves customers $50, uses the older Google Android 1.6 software and doesn’t net you a second, free Devour, though Verizon will throw in up to three free feature phones. The Backflip faces similar challenges on AT&T’s network: it runs the much older Android 1.5 software and is priced at $99, for which a customer could grab an 8GB iPhone 3G. For Motorola to reverse momentum, it needs to find another Droid.

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HP’s proposed $1.2 billion acquisition of Palm, is so far being lauded as a win-win: HP, which had only ever dipped a toe in the smartphone space with a few “me-too” devices, will now be able to jump into the deep end of the handset pool. And based on comments from HP executives, Palm will continue to mature the webOS platform it built from the ground up for the Pre and Pixi handsets. But this deal is about more than just smartphones — it’s about multiple devices on a “mobile computing platform”, according to Tom Bradley, EVP of HP’s Personal Systems Group. Such a statement spells trouble for the mobile ambitions of two of computing’s largest incumbents: Microsoft and Intel.

Both are on the outside looking in when it comes to mobile computing. Microsoft had and then lost its smartphone lead when it failed to adapt its Windows Mobile platform to meet the needs of the mobile Internet, allowing younger, more nimble upstarts to create brand-new mobile platforms from scratch and snap up market share. Intel, meanwhile, realizing that its power-hungry processors weren’t equipped to run handheld devices all day long, created the low-voltage Atom CPU in 2008. It’s been tweaking the Atom for use in phones ever since, but few smartphone manufacturers have abandoned power-efficient ARM chips to use Intel’s Atom. Ironically, Intel once powered early Windows Mobile devices with its Xscale ARM chips, but sold that division in 2006 to Marvell for $600 million. So what are Microsoft and Intel doing about slowly getting brushed aside in the mobile space and how will the HP-Palm deal hamper those efforts?

Microsoft is taking a fresh new approach with its mobile operating system for smartphones. Early looks at Windows Phone 7, due out on devices this holiday season, show a clean, touch-friendly user interface that focuses on the mobile activities people engage in most on a phone — social networking updates, email, media consumption and creation, and web browsing. We’ll never know if HP had planned any new smartphones built on Windows Phone 7 — if it did, you can rest assured those plans are already in the trash can.

That’s just one minor way Microsoft is potentially losing out. The bigger elephant in the room is that HP Slate shown off by Steve Ballmer at the Consumer Electronics Show in January. This marks the fourth year that Microsoft has partnered with hardware makers to create a consumer market for a slate device running Windows. The past three years didn’t see many of the UMPCs, or ultra-mobile personal computers, be sold, however, and the few that were bought were created by brands that most consumers here wouldn’t recognize — Samsung being a notable exception. But with the HP name, a Windows-powered slate has instant brand recognition that might get more people to consider such a device. Unfortunately, mobile devices don’t work well with desktop operating systems —  a lesson that wasn’t lost on Apple, which uses the iPhone OS on its iPad tablet.

The burning question now is: Will HP even go forward with the Slate? I suspect it will, only because it’s already invested time, effort and other resources in the device. And trying to quickly re-jigger webOS in the existing slate design would be a challenge due to chip architecture differences — the Slate is powered by an Intel Atom chip — and a screen resolution for which webOS isn’t equipped. But now that HP has its own mobile platform in webOS  it can create a different slate tablet without having to pay anyone else licensing fees. Bradley made this point clear in yesterday’s conference call, saying, “HP plans to release smartphones, tablets and maybe even netbooks using webOS.” And therein lies the rub for Intel.

WebOS isn’t made to run on Intel’s chips that use the x86 architecture, so unless HP decides to port the operating system to run on x86 chips — and I see no good reason why it would — webOS devices will continue to run on ARM chips. That slams the door on a major mobile hardware partner for Intel. Other popular mobile platforms all run on non-Intel chips — Apple, Google, Research in Motion and Symbian all work with the ARM architecture, not with Intel’s. And this isn’t news to Intel; in order to carve out it’s own niche in the mobile space, Intel has partnered with Nokia on the MeeGo operating system for handhelds and netbooks.

With the mobile space already crowded, there may not be room for a MeeGo to save Intel and a lackluster HP Slate effort isn’t what Intel needs right now. And HP certainly won’t be helping Microsoft with its big Windows Phone 7 launch. The way I see it, HP’s gain from the Palm deal is mainly Microsoft’s and Intel’s loss.

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Symbian today announced a new initiative intended to attract developers, and is providing web development tools to ease application programming for its open source mobile platform, Symbian 3. Using the web standards of HTML, CSS and JavaScript, developers can create software for devices such as Nokia’s new N8, which was introduced earlier this week as the first handset to run the Symbian 3 operating system. The web application development tools are available today for Windows, Mac and Linux computers and will supplement the Qt cross-platform framework that already supports application development for Symbian 3 devices.

Last night, I spoke with Larry Berkin, the Head of Global Alliances and General Manager USA of the Symbian Foundation, about the use of web standards for mobile phone development, mainly because we’ve seen this approach before — Palm touted the same strategy upon introduction of its webOS platform in January of 2009, but the approach didn’t seem to capture the attention of developers who flocked to other popular platforms, by comparison. I asked Berkin why offering a simple, web standards approach might work for Symbian, when it didn’t do so for Palm.

“While there will always be a need for native apps, this will lower the cost of development for developers,” Berkin said. That makes sense because coding with HTML, CSS and JavaScript doesn’t require a deep knowledge of object-oriented programming or as sophisticated a technical understanding of programming in general. And quite literally anyone who has created a web page can build an application using this method — Symbian’s own developer page runs this tagline now: “If you can create a web page, you’re a Symbian 3 app developer.” As far as the inevitable comparisons to Palm are concerned, Berkin spent seven years at PalmSource, the company that created the Palm OS and was later bought by ACCESS and says “We think it will work out better (for Symbian).”

Web standards might be easier to use than low-level programming languages, but that simplicity can also limit an application’s capabilities. Berkin, however, says this isn’t the case with the new Symbian 3 web development tools, due to accessible APIs. “The breadth of available platform services is good. Using APIs, developers can access the dialer, calendar, camera, contacts and more,” he said. That means without much additional effort or coding knowledge, a web standards application for Symbian 3 doesn’t have to be a simple client that can only access the web. By exposing APIs to core functionality, Symbian apps built on the new tool set could be used to capture a photo and share it on Flickr, for example.

I also asked Berkin about Qt, the Nokia-owned framework that was originally introduced as a programming method for Symbian 3. “Symbian offers a wide variety of development tools,” Berkin said, “but in terms of absolute numbers, Qt is still limited. This is just another tool in the arsenal.” So a two-pronged approach is the path towards Symbian software — one for experienced programmers looking for a write-once, run in several places with Qt, and one for us everyday folks that have the skills to build a web page. Between the two development tools, Symbian hopes to achieve what Palm hasn’t: a large and thriving development community to support one of the largest, open-sourced mobile device platforms in the world.

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Given recent economic challenges around the globe, one might conclude that demand for the web is down, but apparently that’s not the case. According to a report from research firm TeleGeography, international bandwidth usage continued to grow in spite of the global recession of the past few years. It notes that:

“International bandwidth usage increased 60 percent in 2009, in line with the past two years, and well ahead of the trend of 2002-2006. Growth has been particularly rapid in the Middle East, Africa, and Latin America. However, capacity requirements to seemingly mature markets, such as Europe and the U.S., have also grown at a compounded annual rate of more than 50 percent since 2002.”

Home and enterprise Internet access are surely driving demand, but the TeleGeography growth numbers from the Middle East, Africa and Latin American regions are undoubtedly being impacted by the mobile web. In emerging markets, it’s not uncommon for the primary information source to be a cellular phone connected to the web. That’s something I learned during Nokia’s CES keynote earlier this year — a moving experience that I’ve not forgotten.

Although the recession appears to be nearing an end in some areas of the world, the data has me wondering if readers would give up their Internet access — either home or mobile — before cutting back in other areas. There are too many scenarios to account for, so instead of running a poll here, leave us your thoughts in the comments. Would you give your web access during financially troubled times or is it one of the last items you’d drop in a cost-cutting measure?

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Intel reportedly plans to pack more power into its next-generation Atom chips, the line that currently powers netbooks. While some thought the netbook market was a race to the bottom — or at the very least, the low end of the market — Intel is reversing that course by maturing the Atom. The move will further blur the lines between netbooks and notebooks, and could mean the netbook market will disappear as quickly as it arrived.

The Atom line accounts for less of Intel’s overall chip sales than it used to; an upcoming IDC report will reportedly show that in the first quarter of 2010, Atom contributed up to 20.3 percent of the Intel’s processor sales compared to 24.3 percent the prior quarter. Such a drop coincides with slowing netbook sales, the result, in turn, of consumers having a wider variety of device choices, including notebooks, which are entering price levels where once only the lowly netbook dared to tread.

The NPD Group reports the average selling price of a Microsoft Windows notebook was $528 for the 2009 holiday season. That number includes netbooks — which still typically fall into the $350-$450 range — but also premium or specialty notebooks that can cost north of $2,000. While low netbook prices drag down the average selling price of notebooks as a whole, there are plenty of full-featured notebooks available at near-netbook prices of $500 or less. Likewise, some Atom-powered netbooks can be configured with options that boost their price to above $700. There’s more of a pricing overlap now between netbooks and notebooks than ever before, even though the potential for cannibalization of both devices already existed.

This price parity is happening as Intel is beefing up the Atom — unofficially, Intel’s expected new N455 and N475 Atoms will have faster clock speeds and support DDR3 memory, much like today’s notebooks. Instead of a growing capability gab between netbooks and notebooks, the two device classes are becoming more similar. Does that mean there won’t be a netbook market in the future? It could and if so, that would be tragic — there’s still a place for netbooks in my opinion, although some — Steve Rubel comes to mind — can do 80 percent of their work with today’s Apple iPad and there will be more slates coming down the pike later this year.

Intel and computer makers shouldn’t overlook the fact that netbooks can be used in places where a traditional larger computer doesn’t make sense, or if that computer has run out of battery power. As Dave Winer said recently on his blog: “I think the tech industry should give up the belief that netbooks are a temporary thing and fully embrace them and make the work better and better. Ultimately the user is always right, and ultimately always gets what they want.” Maybe he needs to talk to Intel directly — if the trend continues, the split between netbook and notebook could disappear entirely.

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