Look Who's Talking About Smart Phones

CNET says 'Look Out RIM' as Dell introduces its new Smart phone. WSJ says Dell’s (DELL) device would compete with Apple’s (AAPL) iPhone and RIM’s (RIMM) Blackberry. Palm is in the game with its latest Palm Pre (PALM).

Verizon (VZ), which is supposedly not even focusing on its wireless business as much as it is on TV and FiOS, noted how profitable Smart phones are and will be. From Verizon Communications Inc. Q408 conference call:

In wireless we launched a total of 36 new devices in 2008, more than 1/3 of which were PDA’s or Smart phones and we already have about two dozen new devices scheduled to launch in the first half of 2009. We were the first to introduce nationwide unlimited plan aimed at the high end of the market and the first to introduce megabit pricing for data usage.

Smart phone sales continue to accelerate representing more than 37% of the retail devices sold in the fourth quarter up from 30% last quarter.

We are selling more Smart phones… We are increasing our focus on the business segment where we have relatively lower share. Our growth drivers are clearly performing for us. We are first to report but I don’t think we lost share this quarter. Our reporting ratio actually improved. We have no evidence of slowing or customers trading down either on plans or features.

Google (GOOG) also mentioned Smart phones in its strategy on the internet search company's Q408 Q&A session:

The mobile strategy… is front and center in the strategy of the company, and Android and mobile continues to be a huge part.

We're really seeing significant increases in the sales of the smarter phones, both the iPhone, which we mentioned, but also Android. With those kind of phones, it's going to significantly grow the pie for mobile searches, and these smart phones have full browsers. When you have a full browser, then you are typically not as dependent on a deal that locks somebody into a particular direction from a search perspective. So, the better browsers get, the better phones get, and the better ecosystem that evolves there, the better from our perspective.

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Comments

[Sentinel:]

Dell's "samrtphone" is dead in the water because it will use either Windows Mobile CE or Google's Android....depending on the model, Dell may use both.

Windows smartphones have been losing market share to first RIM and now that trend has accelerated since the introduction of the iPhone.

Why? Because Windows Mobile CE is buggy, non-intuitive, crashes during calls and does not have a cohesive marketplace for apps like Apple or RIM.

Google's Andriod OS is now and will continue to be like most of Google's products, in perpetual BETA. There is no real push by Google to become the next RIM or iPhone. That's not Google's job. Google's job is to remind folks that Google is the world's biggest advertising firm. That's all.

Dell has already tried getting into the PDA space with Windows Mobile CE and in the mp3 space with a Windows media player based model.

Both were dismal failures. And so will Dell's smartphones.

It's all about innovation and owning a space. RIM innovates and owns the business space. Apple innovates and owns the consumer space and increasingly the business space.

Dell IMITATES by aligning itself with the biggest imitator of all.....Microsoft. And both are crowded out of the spaces they need to compete in.

Feb 02 07:46 AM

[Roger Knights:]

Dell, you're getting a dud.

Feb 02 08:56 AM

[mollytjm:]

emotionally, in difficult time, people have more of a need to feel connected to friends, family and associates. smartphones will become 'the phone' very soon and most people will ante up the extra $ for the wider contracts. they'll find a way to rationalize it so it seems logical, but for many, it will be for the emotional support they need. we are, after all, social animals. i think an investment in APPL is a value investment. It's the one company that looks sure to still be in the game over time...along with, perhaps, RIMM.

Feb 02 10:11 AM

[jmmx:]

This would actually be good news for Apple.

The reason is that it will fragment the marketplace. Zune might have done OK if there were not a dozen other players aside from the iPod. Like wise, in the smartphone arena, there will be Apple RIM and others. The "Others" will be competing amongst themselves.

Let's face it, why should someone buy a different smart phone?
+ Hate Apple - well, a few people feel this way, & will never change
+ Hate ATT - more than hate Apple, also never change
+ Got to have a physical keyboard or cut-and-paste - ditto

RIM has the only really compelling story with their push email service. although Nokia also has an edge in world-wide usage.

So, if you do not have a real reason to not buy an iPhone, and you are ready to shell out the extra $ each month, then most people will go with the leading design, and elaborate "ecosystem." Apple.

Feb 02 10:23 AM

[brewer:]

People want the iPod integration, too, the others don't have that, of the music or app stores --RIM has some apps, but not nearly as many as. Apple.

Feb 02 10:37 AM

[Zoltan L. K...:]

This report is quite interesting and it tells a lot about the emerging market for smartphones. And this market can become very nice. First of all, let's say there are thre kind of players: manufacturers, ad or other internet based, and mobile operators. It is beautiful that all of them are interested almost symbiotically in "growing the pie", although manufacturers go for market share. I still think that software will be key, though Google might do it for accelerating the development. Well anyway, Android could prove itself as a troyan horse for manufacturers, since they won't be able to differentiate their products using a common OS. And this will especially hurt the ones like Dell, since they plan to do it for the margins. I still feel quite well about Apple.

Feb 02 11:42 AM

[jack dee:]

the Phone companies are not dumb.

They are not about to create another goog or msft. Apple knows this, I know this, the dogs on the street know this.

Win goog nok mot apple they will all do well over the next few years. In the phone world people jump ship all the time, they change phones companies and pants, no one company owns it.

I know a lot of you guys here love apple , but you are breaking rule number one of investing. NEVER FALL IN LOVE WITH YOUR STOCK.

Dell would be silly not to enter the phone market to some degree, they have many of the parts already in place to make and sell phones.

Feb 02 01:46 PM

[KenC:]

Sure, Dell has had their PDA, fail. They had their Ditty, fail. They can combine their PDA with their Ditty and put a phone on top. Lemme see, you think it's going to succeed? Have you even looked at what HP is doing? They just put their name on a HTC, kind of how they used to put their name on an iPod. They have almost no traction in smartphones, and you think Dell will?

Dell needs to stick with their knitting. They need to fix their core business before they go traipsing into new areas just because some consultants told them to do it.

Feb 04 01:08 AM