As I tweeted earlier, Amazon is (presumably for a limited time) selling a $25 Pixi with a two year service contract and an $80 Pre. This follows Best Buy's decision to put both Sprint Android phones on sale for $99 (Moment and Hero). These prices are amazing and going to accelerate the market's movement toward smartphone adoption. Nielsen has argued smartphones will cross the 50% threshold (in the US) by 2011. There are even some who contend this forecast may be conservative.

We know from lots of surveys and behavioral data that smartphone (and dataplan) ownership is a key variable in mobile Internet usage and adoption. So with smartphone adoption there are more searches and page views, which both translate into mobile ad revenues. Thus smartphone penetration is a key variable and driver of mobile ad revenue growth. 

Prices like those listed above certainly bring more people into the smartphone fold; the hardware is becoming a loss leader for dataplans essentially. But we believe the Nielsen forecast is still too aggressive. We think it will take more like four or five years to get to a 45% - 50% number, if it gets there. Think about it, 50% of the market would represent about 150 million smartphones by then. That could potentially generate (emphasis on potentially) another 3 to 5 billion more searches per month from mobile devices. 

Stepping back, NPD Group reported that in Q2 of this year feature phones were 72% of handset sales in the US. So don't assume they won't be around for some time to come. And that's one reason that marketers still must use SMS as the "platform" with the greatest reach. 

Separately I was in a Sprint store the other day fondling the Pixi myself. As I was examining it I watched a guy trying to return an HTC Android Hero and want to swap it for an HTC Windows Mobile phone (largely because of the hardware appearance). Arrayed side by side on the counter there were the two Sprint Android devices, the Samsung Moment and the HTC Hero, beside the HTC Touch Windows Mobile phone.

The Sprint salesperson had great difficulty describing the differences between the handsets. What it came down to was something like: this one is Windows (HTC Touch) this one is Android (HTC Hero) and this one has a keyboard (Samsung Moment). After several minutes she walked away and I discussed the differences between the phones with the guy. 

Think about it . . . when there are 12 or 15 Android devices, with 5 or 6 offered by every carrier, there's going to be considerable confusion among buyers (that's why HTC is trying to build its brand). The deciding factors will likely be hardware variables and, of course, price. Indeed, in the end price was a big factor, with the HTC Touch (WinMo) phone at $379 and the Android phones both selling for $179. He would have had to pay $200 more to take home Windows Mobile device. So he stuck with Android.