Hardware

BlackBerry 'App World' Formally Launches, Getting Mixed Reviews

Apps for Research In Motion's BlackBerry is nothing new but their distribution through a centralized store (a la iTunes) is. Today BlackBerry App World formally launched at CTIA, joining Microsoft Windows Mobile, Palm, Nokia/Symbian, Android and of course Apple's iPhone as apps platform. Yahoo! has app-like widgets for mobile and so does Opera. Everyone that's serious about being competitive in the smartphone segment now must have specialized apps -- or so it appears at any rate. 

At launch there are apparently several hundred apps across a range of categories, which will probably grow fairly rapidly to thousands. In the US BlackBerry is the dominant US smartphone by marketshare, though not by mobile Internet usage. While it took a couple of months for Android to release paid apps, RIM is rolling out paid and free apps from the start. Buying apps requires use of PayPal, whereas on Android it's Google Checkout. 

Mobile Browsing Marketshare (US)

 NA browser market share mobile

Source: Net Applications (3/09)

One issue is corporate IT departments and how they'll react to apps on what was once described chiefly as a "corporate email device." Many companies issue BlackBerry devices for their employees. Often IT managers don't want enterprise users to install their own software but they probably won't be able to do anything about it in this case. 

So far BlackBerry App World has received mixed reviews: see, e.g., Mossberg, TechCrunch, others on Techmeme.

BB app world
Credit: CNET/RIM

As I said above, to some degree this is defensive for RIM to prevent defections to the iPhone. Regardless, it will give apps developers another viable market to pursue. 

More MIDs + the 'Laptop in the Kitchen'

I hesitate to write about this yet again but I can't help but believe there's an explosion of devices coming with the expansion of IP connectivity from wireless operators and other initiatives (e.g., White Spaces). For example, Verizon is going to start supporting netbooks in the way that AT&T has with the Acer Aspire -- purchase subsidy with a two-year contract.

The number three US carrier Sprint says it's going to do many more wholesale deals (a la Kindle) for access to its network:

The Overland Park, Kan., company is now talking with companies such as GPS device maker Garmin Ltd., Eastman Kodak Co. and SanDisk Corp., which makes storage devices, about delivering wireless Internet service for their products, according to a person familiar with the matter.

In these deals, Sprint will rent out its network and generally collect fees from manufacturers based on how much data is transmitted to the devices. Although wholesale subscribers provide less revenue than retail subscribers, Sprint doesn't have to worry about expenses for billing and customer service.

That means that new MIDs will likely start popping up left and right. For example:

Samsung WiMax device
Credit: Phonescoop

All of these devices can become phones with VoIP/Skype. But the ubiquitous connectivity will make all these devices viable in a way they would not be in its absence. As I said previously, a data connection will become more important than a voice plan.

As a related matter, this new Asus touch screen Eee Top PC may become the "laptop in the kitchen" that hasn't yet materialized. Both AT&T and Verizon are attempting to sell phone-based devices that offer combined phone and touch-screen technology with some Internet access. But this Asus PC (pictured above on upper right) is compact and offers full Internet access. As the NY Times opines:

Unlike the Hewlett-Packard TouchSmart and the forthcoming Studio One 19 from Dell, the Eee Top is small enough to tuck beneath a kitchen cabinet and cheap enough that you will not worry about the occasional dribble.

This device will be tied into the wireless network in the home. But the Asus panel PC as well as the tablets discussed above are part of a new generation of smaller, IP-connected devices that are neither traditional PCs/laptops nor smartphones. As all these machines proliferate our relationship with the Internet -- "the cloud" -- will be less about fetishizing individual devices than ensuring we have access to "our content" wherever we are and wherever we go. 

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These MIDs really blur the line between mobile and the desktop in terms of advertising. In some cases they will be more like a smartphone (and probably run Android); in others they will be much more like a netbook with full pages rendered on their small screens. 

Update: Verizon confirmed that it intends to sell netbooks + mobile connectivity by the middle of this year to compete with rival AT&T. 

HTC Magic/G2 Coming to T-Mobile in the US

The HTC Magic (G2), previewed in Barcelona as a Vodafone handset, has apparetly received FCC approval and is going to be released this year by T-Mobile in the US. In all respects it appears to be superior to the G1:

HTC Magic

ShopSavvy on G1 Now Showing Krillion Local Product Inventory Data

Barcode readers and scanners should be a common part of the next generation of smartphones. But for now the capability among US handsets is limited.

ShopSavvy (from Big in Japan) brought this functionality to the Android G1 (it doesn't exist on the iPhone). The camera-phone-based scanner allows users to get information on products by scanning barcodes on packaging. ShopSavvy had also promised data on local product inventory. However that promise was largely unfulfilled.

Now the company has announced a partnership with Krillion to integrate Krillion's real-time product inventory database into ShopSavvy:

Through technology developed by Krillion, shoppers can now view real-time product inventory at local stores when they use the ShopSavvy application to scan a product barcode. This means they can quickly identify a local retailer with in-stock product and then purchase the product online for immediate pick-up at a nearby store. 

I haven't used it but imagine that one could a) straightforwardly search for local products in nearby stores w/o scanning and b) use this to see who has a better deal on the product scanned nearby

iPhone 3.0 Software Upgrade: Cut 'n' Paste & More

Perhaps to head the Palm Pre off at the pass, Apple introduced a range of new software features and capabilities for the iPhone. Among the most important ones:

  • Search your iPhone (spotlight extends across apps and content)
  • Cut, copy, and paste (long requested)
  • Send photos, contacts, audio files, and location via MMS
  • Read and compose email and text messages in landscape
  • Maps can now be embedded within apps

Gizmodo has a complete rundown of the features. And FastCompany offers a comparison of the forthcoming Pre and the iPhone 3.0 software upgrade.

There are many more APIs for developers as well. If you want to spend lots more time reading about these features, go to Techmeme

Stats from the Apple event (via VB):

  • 25,000 apps in the apps store
  • 800 million downloads (probably will hit a billion very soon)
  • 30 million owners of the platform: iPhone + iPod Touch (that's the market for apps)

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Related: HTC plans to release three more Android-based phones this year. HTC is Windows Mobile's largest OEM; however Microsoft is "diversifying" via other OEMs such as LG. 

US Smartphone Price Ceiling Now $199

Sprint launched the Treo Pro in the US market. What was the price? It was $199 (subsidized) of course. The iPhone is $199, the G1 is $179 and so on. Thus, a practical matter, the ceiling for smartphones (w/subsidy) is sub-$200.

Any phone that tries to enter the market charging more than that will not see any volume sales. The Treo Pro itself may not see volume at Sprint as many people wait for the Pre, coming in the next couple months apparently. 

Treo Pro

Here Come the Connected (Non-Phone) Devices

A trio of articles makes me write this post about the emergence of IP-connected devices that aren't phones, one of my favorite things to think (and write) about. But first, stepping back a couple of years ago, there was the Nokia Internet tablet. People were skeptical: why would someone want a "smartphone" that wasn't a phone?

Then came the iPod Touch, the Kindle and the out-of-nowhere success of netbooks. Now the range of devices will potentially broaden. Accordingly, here are the pieces I mentioned: 

Each of these discusses a range of new devices that diverge somewhat from the conventional "form factor" of phones and/or netbooks. From a pure gadget standpoint, it's fun to contemplate them. But how will they be connected and will they appeal to consumers? What will they cost?

But the connectivity is the fundamental issue as I see it.

Sprint wholesaling its network in the US is one way that these devices may be connected to the Internet, in the same way it does with the Kindle. The danger here is that a data-only plan with one of these devices and Skype or Truphone turns it into an inexpensive mobile phone. That might inhibit Sprint to some degree. 

But AT&T (and O2 in the UK) have already launched a netbook + two year contract model. Indeed, that's another way to go. Yet another option is the White Spaces broadband project. But it probably won't offer access on a commercial basis for at least a couple of years. 

I'm struck by how frequently I can get on a network for free with my iPod Touch -- though not as often as perhaps I'd like. However, as I've said before, once the connection issue is resolved lots of interesting mobile internet devices can emerge that aren't phones or PCs exactly. 

Perhaps we're entering a new period of hardware design creativity that will render the "gray boxes" of the past totally obsolete. 

Amazon Selling Android G1 for $97

Amazingly, Amazon is selling the Android/T-Mobile G1 for $97 with a two-year contract (new subscribers). While this could simply be a bid for new business by T-Mobile, the radical price drop could also signal the near-term arrival of the successor G2 phone, which has no physical keyboard and is generally considered more elegant than the G1.

The G2/Magic is being released by Vodafone in the UK but there's no official US release date. Both are made by HTC.

Here are the Amazon screenshots:

Amazon offer re G1

Picture 10

Quick Look at Gartner's 2008 Q4 and FY Smartphone Numbers

Yesterday Gartner released its Q4 smartphone shipment estimates. According to the release:

Global sales of smartphones for 2008 reached 139.3 million devices, up 13.9 per cent compared with 2007.

As a proportion of all mobile device sales, smartphones remained stable at 12 per cent in the fourth quarter of 2008, from 11 per cent in the fourth quarter of 2007. Samsung entered the top five vendors ranking for the first time (see Table 1), replacing Sharp. RIM recorded an increase in sales both sequentially and year-over-year, while Nokia's volumes continued to fall.

Symbian's share of the global market decreased to 47.1 per cent in the fourth quarter of 2008, down from its 2007 share of 62.3 per cent (see Table 3) ... Meanwhile, RIM successfully grew its year-on-year share of the global smartphone market to 19.5 per cent from 10.9 per cent. Gartner estimated that Android smartphones accounted for 20 per cent of total Linux sales in the fourth quarter of 2008.

In the fourth quarter of 2008, Microsoft's share of the global smartphone market improved sequentially, with unit sales up 16 per cent over 3Q08. This was mainly driven by the popularity of Samsung Omnia and touchscreen products from HTC. Sales of Linux-based smartphones were up by 19 per cent year-over-year, mainly through Android-based smartphones being available through T-Mobile during the fourth quarter of 2008.

The smarphone penetration figures are consistent with our own surveys of mobile users, showing about 12%-13% penetration of the overall market. Because smartphones are so closely tied to mobile Internet usage their adoption is a key variable across a range of fronts, including mobile advertising.

Of course the economy and pricing are other key variables. However, I expect that within five years the market will see about 20% - 25% penetration by smartphones. That would mean something approaching 70 million smartphones in the US market. 

Windows Mobile is hanging in there, because of the volume of devices in the market. Gartner attibutes its success to "the popularity of Samsung Omnia and touchscreen products from HTC." It would be interesting to look a little deeper at the motivations of the buyers of these devices. Is Windows Mobile something they're affirmatively seeking or does it happen to be the OS on the device they're interested in buying? My guess right now is that it's closer to the latter scenario for many people. But that's pure speculation. 

BlackBerry is "on a tear" as they say, without any signs of slowing. And Android seems to be gaining steam. The question surrounding Android is: when will more phones be released? Android is perhaps the most direct competitor and threat to Windows Mobile as it proliferates across carriers and handsets. 

Here are the Garnter tables:

Gartner Q4 OSGartner Q4 vendorGartner FY by OSGartner FY by vendor

New iPod Shuffle With VoiceOver

Apple has released a third-generation iPod Shuffle, the smallest of its portable music devices. Among the new features is VoiceOver, a text-to-speech capability that can tell the listener the name of the song or artist, ability to navigate playlists, or hear status information such as battery life. According to Apple, the new iPod Shuffle is multi-lingual and can speak up to 14 languages.

VoiceOver is already found on the Mac OS X operating system as a built-in accessibility feature for the visually impaired. And in November 2008, VoiceOver was included in an update for iTunes. Because it doesn't include a visual screen or multi-touch technology, the Shuffle is a perfect candidate for speech services. But the fact that Apple is taking strides to highlight the speech capability for the iPod Shuffle underscores the value and form function for voice navigation on mobile devices.

How Low Can PC Prices Go?

BusinessWeek somewhat rhetorically asks "How Low Can PC Prices Go?" The answer is zero or $0, provided there's a two-year contract. That offer has already been floated in the US and in Europe on a trial basis.

Wireless carriers in Europe and the U.S. are starting to offer netbooks to their customers for little money up front or even for free with a monthly wireless data contract. Retailer RadioShack already sells an Acer Aspire One netbook with a two-year AT&T contract for $150. That's $50 less than the cheapest Apple iPhone from AT&T. 

It's a very interesting time in the hardware world, with Apple apparently set to release a pseudo netbook (or tablet), Android set to move into non-phone segments and a range of efforts to broaden connectivity (e.g., the US White Spaces initiative). There's also an impending wireless operator price war.

What devices will consumers opt for; will it be smartphones or netbooks with connectivity (or both) and what will cannibalize what? Stay tuned. As I've argued in the past, if the connection problem is solved (along the lines of the netbook + wireless contract or Kindle with built-in access) we'll see an explosion of devices that offer Internet access. 

A few years from now the $1500+ prices that still exist for many laptops may seem absurdly high. Regardless, the back of the PC pricing model is now all but broken for consumers. 

ShopSavvy Integrates Skyhook Location Tools

Last week Big in Japan, creator of the barcode scanning Android app ShopSavvy, announced that it had integrated the Skyhook location awareness suite of tools. The G1 has built-in GPS but the Skyhook tools will be used to augment that and better provide location-related data that facilitates delivery of nearby store inventory information.

ShopSavvy crawls for data and works with Krillion to provide local product inventory. 

ShopSavvy in action

Other mobile providers of local inventory data include NearbyNow and TheFind (which gets data from NearbyNow). In-store price comparisons and local inventory lookups are going to be increasingly popular as smartphones continue to grow share. 

However ShopSavvy in the US is currently unique; there is no comparable barcode scanning app today for the iPhone, WinMo, Symbian or BlackBerry. Yet we can expect to see much more use of the camera as a search tool across smartphones in the future -- with barcodes, QR codes, etc. And many of those codes will likely be embedded in traditional media: magazines, newspapers, outdoor.

From a usability standpoint this "camera search" capability is roughly akin to voice interfaces in a way, expediting the retrieval and return of information. 

Is the iPhone Vulnerable to Substitution by Palm Pre?

Here's the notion being floated by Roger McNamee, co-founder of Elevation Partners, which owns 39% of Palm:

"If you bought the first iPhone, you bought it because you wanted the coolest product on the market,” said McNamee, 52. “Your two-year contract has just expired. Look around. Tell me what they’re going to buy.”

Of course the answer is the Pre now, in McNamee's mind. Indeed, his public argument is that once these initial iPhone contracts are up people are going to switch from AT&T to Sprint to get the Pre. 

We'll see whether McNamee's prediction is accurate but I just don't think it is. The Pre has prevented me, a Sprint subscriber, from defecting to AT&T to get the iPhone but it's unlikely to lure people from AT&T in anything like the numbers that the iPhone has driven for AT&T. 

Yes, the Pre is exciting as a handset but it's not the iPhone and doesn't have the software marketplace, notwithstanding the Palm apps market, that the Apple device does. It's also true that the market and consumers are not in the same place they were two years ago. The iPhone has moved beyond fashion statement into functional device or gaming platfrom or whatever. People are attached to those phones.

Two years is a lifetime in the mobile market.

Android has so far not caused many subscriber defections to T-Mobile in the US. And though the Pre looks to be a sexier and better integrated device it's likely to have a similarly limited impact on other carriers' subscribers. (The Android G2/Magic is coming too, which could affect Pre sales.) We might see movement among Sprint's customers from other devices to the Pre; it's much more likely, for example, that Windows Mobile will suffer. Apple iPhone owners en masse are not going to abandon it for the Palm handset. 

Sprint's battered brand is also a potential problem for Pre sales, although Sprint hopes Pre will help reinvigorate the brand. If everyone involved really wanted to ensure the success of the Pre and maybe lure some new customers to Sprint the way to do it is to aggressively discount the device upon launch to <$150 or <$100. Alternatively Sprint could offer a special, discounted voice/data plan for the Pre. 

If the carrier is tentative about pricing it may not get the momentum out of the gate it needs to make the Pre a success. Pre as "fashion statement" (see McNamee's comments) requires rapid adoption and related buzz.

If the iPhone didn't exist perhaps all this would be different. But it does; and so competitors must do more to attract customers than might've been the case a couple years ago before the Apple handset. 

The Pre has essentially been set up to be the "savior" of Palm by financial analysts and the media. If it fails to live up to what are now lofty and fairly unreasonable sales expectations, fueled in part by comments such as McNamee's, it could have the opposite effect and cause investors to flee the company. 

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Related: Juniper Research predicts "by 2013, around 23% of all new mobile phones will be smartphones." That's a reasonable and perhaps even conservative forecast, I believe. 

Update: Palm, recognizing how damaging high expecations can be for the company, sought to qualify and distance itself from McNamee's inflated predictions.

iPhone's Mobile Web Share 10x Larger than Nearest Rival

It's difficult to accept this on the face of it: the iPhone's share of mobile Internet usage is roughly 10 times larger than its nearest smartphone rival, Windows Mobile. That's according to Net Applications.

There should be some gains in the coming quarters by Android, BlackBerry, Palm (via the Pre) and Windows Mobile. But, if these numbers are correct, the lead that the iPhone holds right now is dramatic.

Net Applications mobile web share

Source: Net Applications (3/09)

Part of this is device usability and part of this is self-selection. People buy the iPhone in part to access the mobile Internet -- and then they do.

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Related: In-Stat forecasts that smartphones will capture 20% of the US handset market by 2013. Right now they're about 13% (ish). I think that more "feature phones" will gain smartphone capabilities and we'll actually see higher penetration than In-Stat is predicting.

By the same token I think the ceiling for smartphone penetration in the US is about 40% in the medium term. But there will be other mobile devices that enable users to access the Internet that may take over for smartphones in some demographic segments.

Sprint Asserts 'Stability' but Shows More Subscriber Losses

US carrier Sprint asserted in its earnings report and presentation that the carrier had stabilized and cited a number of areas of improved performance. However, it also reported these numbers:

  • The company served 49.3 million customers at the end of 2008, compared to 53.8 million at the end of 2007. The credit quality of our customer base improved every quarter in 2008, and prime customers represent almost 84% of the post-paid base, compared to 79% a year ago.
  • For the quarter, total wireless customers declined by a net 1.3 million, including losses of 1.1 million post-paid customers and 314,000 prepaid users, which was slightly offset by a 146,000 increase in the number of wholesale and affiliate subscribers.

Sprint has the best 3G network (though people may not believe that) and is the most competitive when it comes to pricing. However Sprint continues to lose a million wireless customers a quarter, for a total of 4.5 million customers lost last year. The chief beneficiaries of Sprint's defections appear to be AT&T and Verizon.   

Sprint faces challenges on a number of fronts and no single factor can be blamed for these defections. Sprint's brand as a whole is wounded. A history of poor customer service (though that's changing) and the absence of competitive handsets are all contributing. Sprint may say the Instinct is competitive or claim the HTC Touch Pro is compelling -- not so. 

The Palm Pre is supposed to make its appearance relatively soon and Samsung is supposed to come out with an Android phone for Sprint at some point this year. Sprint needs these handsets pretty desperately to return some "sizzle" to its relatively unimpressive handset lineup (although BlackBerry fans can find plenty of offerings). It may also need to cut prices (again) to get attention and/or retain customers. 

In my particular case only the promise of one of these new handsets -- Windows 6.5 won't be out until later this year --  is holding me back from an AT&T defection.

Nokia News from Barcelona: Maps, Ovi Apps and Skype

There were a slew of announcements from Nokia at Barcelona this week. Here's a rundown:

The Finland-based OEM announced, as expected, its version of the iTunes apps store: the Ovi Store. It offers some interesting and intelligent twists: personalization and recommendations from friends, as well as location sensitivity. The rev share between Nokia and developers is the same 70-30 split as the iTunes store.

Ovi

The company also announced new GPS enabled phones integrated with Nokia Maps (NAVTEQ). 

Skype announced a deal with Nokia to preload the VoIP software on Nokia/Symbian smartphones:

Under the terms of the cooperation, Skype will be integrated into Nokia devices, starting with the Nokia Nseries. The Nokia N97 flagship device will be the first to incorporate the Skype experience in the 3rd quarter of 2009.

The Skype experience will be part of the address book of the Nokia N97, enabling presence - seeing when Skype contacts are online - as well as instant messaging. Nokia N97 owners around the world will also be able to use 3G and WLAN to easily make and receive free Skype-to-Skype voice calls, in addition to low-cost Skype calls to landlines and mobile devices.

Quality issues notwithstanding, Skype stands to gain hugely from adoption by mobile users as a way to circumvent the cost of voice plans, especially in Europe. Skype is also working with other handset OEMs. 

In general, however, improved VoIP on mobile phones is a development that may eventually put price pressure on carrier voice plans. Because of quality, however, that day is not yet at hand. 

Nokia and Qualcomm announced a deal to work on "advanced mobile devices" with Qualcomm chipsets targeting North America, one of Nokia's weakest markets. 

But the apps store/Ovi store was the focus of the week for Nokia. Everyone now has an apps store: Apple, Android, Windows Mobile, RIM, Palm and Nokia/Symbian. It has become "table stakes" in the smartphone market. Accordingly the Nokia/Ovi apps store is unlikely to lure people away from BlackBerry or the iPhone. But it remains to be seen how all the hardware and software variables (operator pricing is another) play out competitively over time. 

HTC Android Vodafone 'Magic' Is Better than G1

In 2009 we may see as many as four or five Android phones in the market (from Samsung, Dell, HTC, others). But the only ones currently come from HTC, which early today introduced the Vodafone "Magic." The Magic/G2 has no physical keyboard but appears to be a leap forward from the G1 (it offers video also). It also looks sleeker and more polished too. 

There's no word on a US version right now. 

 G2

Here's a video that shows the device in action including its virtual keyboard, which still doesn't exist for the G1 in the US. T-Mobile recently introduced the G1 in Europe. However, depending on pricing, the Magic is likely to win and trump the T-Mobile G1 in a head-to-head competition.

In the US, the G1 doesn't seem to have won many new subscriptions for T-Mobile, although it gained a lot of press for the carrier and may have prevented subscriber defections to AT&T for the iPhone.

All operators will likely have their Android devices eventually (even multiple devices), much like BlackBerry.

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Image above and video are from Gizmodo

Netbooks, MIDs to Further Erode PC Sales

There are two emerging threats to Microsoft's traditional PC businesses: the growth of netbooks and potential replacement of Windows OS's on those devices by Linux or Android. Traditional PC sales are faltering in the recession (off 8% according to Microsoft's last earnings call) but netbooks have been on a tear because of their inexpensive price tag. (Apple has said it "can't" build a <$500 computer.)

Microsoft is trying to put Windows on most netbooks and has succeed in doing so across the leading OEMs. However, Android is going to begin a netbook push and chipmaker Nvidia wants to make $99 mobile Internet devices (MIDs):

NVIDIA Corporation, the inventor of the graphics processor, today introduced a new platform, based on the NVIDIA® Tegra™ 600 Series computer-on-a-chip that enables a $99, always-on, always-connected HD mobile internet device (MID) that can go days between battery charges.

This platform will enable OEMs to quickly build and bring to market devices that carriers can offer for as low as $99 —bringing broadband connectivity and all of the Web’s HD content to the masses.

The Acer Aspire has already hit that $99 "price point" but with a two-year contact with AT&T for the IP connectivity. Netbooks have become enormously popular because of how comparatively inexpensive they are. 

These low prices, <$500 (and probably <$300), are likely to continue and further erode the traditional PC market. (If not it will be because of very aggressive pricing by PC OEMs). Indeed, PC sales will likely be squeezed by a growing array MIDs/netbooks and maybe increasingly powerful smartphones.

The challenge and issue for Microsoft is whether it will be able command the same market share on those MIDs as it historically has enjoyed in the conventional PC market. The "cloud computing" model implied by the sale of netbooks makes local software less necessary -- and the machines don't have the memory to support it to the same degree. Beyond this there's the question of how much can be charged for Office and the Windows OS -- at <$300 pricing or, worse, $99 margins will be squeezed badly. 

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Related: Android’s progress elevates Google’s mobile aspirations . . . and Orange to sell LG watchphone this year in EU markets. 

LG watchphone

Netbook maker Acer's new smartphones are out but nothing special to write home about.

Nokia Working on "Facebook Phones"?

Motorola's forthcoming Android-based phone -- theoretically due out this year -- is supposed to have some sort of social networking angle. But, reportedly, Facebook and Nokia are talking about how to more deeply integrate the social networking site into Nokia handsets.

From the Wall Street Journal earlier this week:

Facebook and Nokia are discussing a partnership that would embed parts of the social network into some Nokia phones, people familiar with the matter said. Financial terms of the potential deal couldn't be learned, nor was it clear how many of Nokia's devices would be included.

Under one alternative, contact information stored in Facebook would be integrated with the phone's address book: When users looked up a contact, they could see whether their Facebook friends were logged on, send them messages and post comments on their profile pages.

Talks between the companies have been going on for months, and it is unclear whether an agreement will be reached, these people said. Nokia is deciding whether it wants to team up with an established Web player like Facebook, based in Palo Alto, Calif., or to build a social network from the ground up, said people familiar with the talks.

Facebook has claimed 25 million users in mobile and will have widgets or other forms of integration across scores of handsets. Therefore it's not clear whether a marginally improved Facebook experience on Nokia handsets will do much for Nokia's competitive position. 

Nokia might want to consider buying the social network instead. It spent $8 billion for NAVTEQ and might be able to pick up Facebook for about half that amount (probably not though). A Nokia social network, as opposed to a social layer on other Nokia products, is likely to fail. 

A better model for the company is Google Latitude, which Nokia could try and duplicate as a layer on top of its mapping service. 

Smartphones Are the Future, but Will Remain a Minority

The smartphone segment is the only area of mobile hardware sales not contracting right now. That explains the recent financial performance of Apple and, to some degree, RIM vs. other OEMs.

But how many smartphones are there in the US? Our data reflect that the current ownership of smartphones is about 12% of the overall market. comScore shows something similar, although their numbers put it at about 10% - 11% depending on the base. 

Predicting the future of the mobile Internet and handsets has become harder because we're starting to see more devices and consumer options out there. For example, will some consumers opt for netbooks rather than smartphones? Will the Kindle become an Internet-access device? Will we see a range of interesting new Android-powered tablets or other MIDs that consumers use for mobile Internet access? 

The market is rapidly evolving and quite fluid right now.

One can easily imagine that within five years roughly 30% to 40% of the mobile subscriber market will be constituted by smartphones. That could grow larger or faster if lower priced devices (e.g., $99 iPhone) materialize and data plans become cheaper as well. 

As more people adopt smartphones and dataplans the mobile Internet grows -- ipso facto.  Conversely, smartphone sales could stall if a range of reasonably priced non-phone mobile Internet devices become widely available. 

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See also: Sprint may launch WiMax-enabled Android phone next year.