Say Goodbye to Cell Phones

Industry experts believe that the cell phone will soon be a thing of the past.At Monday’s Smartphone Summit, panelists agree that smartphones will soon dominate the mobile market.

Smartphones are mobile devices that run on open operating systems – the most famous example of which is the Apple iPhone. What makes them more marketable is their ability to run third party applications. These 3rd party apps can vary like PC software and the possibilities for their development are endless.

Aside from the fairly recent launch of the iPhone SDK (software development kit), Google will soon be supplying manufacturers with their open-source Android platform. These recent development are making it easier for programmers to develop 3rd party apps for the smartphones – again making them ultimately more useful than your basic cell phone (and possibly your laptop?!).

According to the experts, they expect smartphone sales in the United States to double this year – totaling to approximately 15 million sets, up from 7 million last year. This 100% growth rate is definitely higher than the expected growth of total mobile phone sales – possibly an exaggeration on their part – but they are optimistic about the numbers.

This could spell trouble for basic cell phones. All the panelists agree that in just two or three years, demand for cell phones will reach its end.

Much of the growth, according to Bill Hughes, principal analyst at in-Stat, is because wireless carriers agree that “their profitability is now driven by smartphones, and more specifically by data applications that run on them.”

Because of this, smartphones are offered more in carrier deals… and eventually, in all their deals.

Andy Castonguay, director of consumer research at the Yankee Group, said that this trend will “upset traditional business models” as carriers will soon end the practice of subsidizing handsets. “Over the next 18 months you’ll see many of the top-end smartphones offered subsidy-free,” said Castonguay, “in exchange for a greater combination of offerings including one-year contracts or no contracts at all.”

His prediction is actually sensible. Once smartphones take over the market, everyone will be getting one regardless of carrier deals. The wireless device carriers will be at the mercy of the manufacturer and not the other way around – which is exactly what Apple did for the iPhone. The hype over the iPhone was so big that carriers were fighting for exclusive distribution. Apple promised exclusivity and therefore had the bargaining power.

“When you walk in a carrier retail store today you see the smartphones are no longer in a little corner off by themselves,” said senior analyst Jonathan Goldberg. “They’re mixed in with everything else. Those lines are becoming completely blurred.”

“Most of the world’s population will never own a computer,” Goldberg added. “They’ll own a smartphone, though they won’t think of the device that way.”

In a way, that’s true. In developing countries, not all consumers who have cell phones own a PC – especially since the mobile device is way cheaper than the basic desktop set-up. If eventually the smartphones do get the bulk of the market, they will become cheaper as manufacturers produce model after model and prices become even more competitive. Furthermore, if the development of the smartphone 3rd party apps continues its current path, soon all functionalities of the common PC will be available in the handheld device – then it just boils down to common sense.