Smartphones drive mobile markets

Fans of high-end phones were spoiled for choice in 2008

There is no doubt that 2008 was the year of the smartphone.

The last 12 months has seen the launch of iconic devices such as the iPhone 3G, Google G1, Blackberry Storm and Nokia N97.

It also saw the emergence of the electronic ecosystems needed to get the most out of such handsets.

But all is not rosy in the smartphone garden. The popularity of these devices has brought to light several problems that look set to become acute in 2009.

Customer control

"It was a goodish year," said Andrew Bud, chairman of mobile firm Mblox and director of the Mobile Entertainment Forum.

One of the high spots, he said, was the knock-on effect the launch of innovative smartphones had on the mobile market.

Many were using them to get at popular social networking sites such as Facebook, MySpace and Bebo, said Mr Bud.

"We've also seen the emergence of applications as a whole new content category," he added.

Alongside the launch of the Apple and Google smartphones went shops that gave away and sold applications to run on the high-end handsets.

Nokia's Comes With Music could set trends for 2009

Apple said more than 100 million applications had been downloaded from its App Store between July and September.

For Steven Hartley, senior analyst at Ovum, the popularity of the smartphone was a signal that older technologies were coming of age.

"3G has really started to deliver on its promise," he said. "That's again something that has been talked about for a long time."

The success of 3G has been attributed to the use of a technology known as High Speed Packet Access (HSPA).

Dan Warren, director of technology at the GSM (Global System for Mobile communications) Association, described HSPA as: "the original 3G service on steroids".

Mr Warren said data rates looked set to get a further boost in 2009 thanks to a follow-up technology known as HSPA+.

He said: "HSPA+ will start to become prevalent in 2009. It takes you up to 42Mbps but the maximum at the moment is 7.2Mbps in the UK."

Switch off

But despite the good news for the mobile world 2009 is unlikely to see that success continue.

For a start, said mobile analysts CCS Insight, 2009 will see sales of handsets shrink.

"This will be the first time the market has contracted since 2001," said an end of year report from CCS.

The firm said this slowdown could be blamed on the global economic downturn that will hit every part of the mobile industry.

The only place to buck these trends will be markets in developing nations, said the report. In particular, it said, India, sub-Saharan Africa and China still have low penetration rates by the standards of mature economies such as the UK.

Handset sales look set to dip in 2009 following years of growth

But, said Mr Hartley from Ovum, more customers in some markets will be a mixed blessing.

"As more and more people get a mobile you are going down the value pyramid," he said. "You get a lot of people but every single one is not going to be generating a lot of revenue."

The important thing that mobile operators have to get right in 2009 is increasing the numbers of people paying for data traffic, he said.

But, added Mr Hartley, the problem with pushing people towards using more data on the move is the knock-on effect it has on the infrastructure operators need to support those customers.

The global downturn could mean operators will find it hard to raise the capital needed to cope with significant growth, he said.

For Mr Bud from Mblox the growth of mobile broadband highlights another pressing issue for operators - how they price data plans.

Research by Mblox showed a huge discrepancy between the amounts people using different operators in different countries will pay when downloading or browsing the web.

In the UK, it found, some folk will pay about £10 to download a two megabyte music track. By contrast in Germany, on some tariffs, customers will only pay 24 cents (22p) a megabyte.

The confusion that results was holding back the growth of mobile data services, said Mr Bud. Few people were willing to risk downloading as they were worried about racking up huge charges.

In some cases, he said, their fears were being justified. In the summer of 2008 one unlucky Vodafone customer returned home from a holiday in Portugal to a phone bill in excess of £31,000.

He racked up the bill by using his phone to download an episode of Prison Break and several music tracks while on holiday abroad.

"The price consumers see should be the price they pay," said Mr Bud.