By Morgan Smith
The age of the smartphone is here; no longer is having instant web access in your pocket a novelty. As more and more consumers are being drawn to the smartphone market, mobile phone and telecommunications companies are fighting it out for domination. At the moment, it's Apple (AAPL) that's coming out ahead, with its legendary iPhone range that has revolutionized our idea of mobile phone functioning. Nokia's (NOK) range of Google-powered Android phones comes next in the stakes, and other products such as the BlackBerry by Research In Motion (RIMM) are also widely popular.
As innovative developments are continually made by each of the big hi-tech companies (only last week we saw Google (GOOG) release a pair of digital glasses with smartphone functionality for public testing) competition in the industry remains fiercer than ever. The market is relatively new, and still expanding; with the addition of research and development programs revolutionizing it at a tremendous pace, even the largest multinational superpowers must be on their toes to remain ahead of the game.
The Xperia Ion Smartphone has now been released, the latest Smartphone by Sony, featuring an Android-powered operating system. Topping bestseller charts, the device is principally being sold by AT&T (T). AT&T will supply the phone at the low price of $99.99 on a two-year usage contract. The Xperia Ion will be Sony's first major Smartphone on the market in the US after Sony's break with its former production partner Ericsson.
Sony hopes to establish itself as a major Smartphone producer with the Xperia Ion by running an advertising campaign similar to that of the PlayStation Vita. Promotions will focus heavily on the Xperia Ion providing music ad video entertainment whilst on the move. The all-new Spider-Man movie is also being used to endorse the product, with one of the Smartphone commercials featuring key characters from the film in the background.
The potential for the Xperia Ion Smartphone to be a hit is huge, but almost as big is its potential to flop. This could mean good or bad things for investors in AT&T, who await news on the sales performance of the smartphone with baited breath - I have no doubt the coming weeks will see the company's share price move, one way or another.
The phone itself is aesthetically pleasing, and consists of all the functionality you would expect to see in a top of the range smartphone - fast 4G web access; high quality screen graphics; exclusive access to games in the PlayStation suite. I think it is likely the Xperia Ion Smartphone will struggle to outperform arguably its closest competitor, the Samsung Galaxy S3 Smartphone, due to the Galaxy's superior 4.0 Android operating system - but when it comes down to price, the Xperia Ion is a far better deal. At this stage, I would be tempted to predict that the great value offered by the Xperia Ion will help AT&T maintain the strong performance it has achieved in the stock market over the past few years - but don't expect anything too extraordinary.
Has the Xperia Ion done enough to persuade iPhone and Android users to make the switch? Unfortunately, I think not. It isn't that Nokia and Microsoft have done something wrong - Apple and Google have simply done too much right. I can't see Nokia knocking either firm off the top spot with ease. Apple and Google certainly seem too involved in competition with one another to pay much attention to the introduction of the Xperia Ion in the market. However, this shouldn't bother AT&T too much, considering it is affiliated with a vast proportion of iPhone models on the market - the company is essentially enjoying a win-win situation in this respect.
AT&T's rival Sprint (S) will be looking closely at the progress of the Xperia Ion. The telecommunications company took on the Palm Pre in a similar fashion to AT&T taking on the Xperia Ion. Despite positive reviews that raved about the model being an iPhone alternative, Sprint could do little to prevent it becoming a failure. The Palm Pre was subsequently sold to tech company HP, who used its Web0S software in its TouchPad tablet. Again, the tablet failed to take any market share from Apple's iPad. It appeared that neither Sprint nor HP had the innovative product needed to take on the technology giant.
I am also of the opinion that Sprint is a company on its way down. The company's unlimited data plans have been the key to its overall success, but how long can this last? Last year, we saw the company's share price drop by $1.45, and many speculators predict further losses in the 12 months ahead. We could even see AT&T take over Sprint, particularly if the economic upturn continues and consumers change their preferences towards higher-end telecommunications companies.
Will the same thing happen for AT&T? It's certainly a possibility, but it does have far better chances than Sprint of success. For one, the Xperia Ion has a more developed functionality than the Palm Pre, not to mention an edgier design. One of the main faults with the retailing of the Palm Pre, according to industry experts, was that Sprint salespeople weren't familiar enough with the product. This shouldn't be the case with the Xperia Ion, as Sony makes a massive push to ensure the success of their first ever model. I'm not saying that AT&T has done all it needs to for sales of the Xeria Ion to be an easy ride, but I don't think the smartphone is doomed to be completely shadowed by the iPhone and Android market just yet.
If it was me holding shares in AT&T, I would be tempted not to act yet, but keep a very close eye on the sales performance of the Xeria Ion. If the phone turns out to be a knockout (unlikely, but possible), the company's share price will see an upwards trend. If it doesn't, AT&T's current market expansion will probably allow it to weather the storm. Keep hold of your shares and await further news regarding the company's long-term prospects.