Editor's Corner

Smartphones and the consumer market: The combination has turned into somewhat of a Holy Grail for device makers and operators, but can they find the sweet spot that will get those consumers clamoring for these devices?

Carriers are making some preliminary moves. This week we'll see the BlackBerry 7130c go on sale in Cingular retail stores for $200 with a two-year contract and qualified voice plan and unlimited web browsing (with a new service plan) for about $30 per month compared with the $45 a month Cingular used to charge to all of its subscribers. The move looks like a direct competitive move against Verizon Wireless' Moto Q phone offering, which is also $200 with a two-year plan that starts at $80 per month for unlimited data usage and 350 voice minutes.

These offerings are aimed at the "prosumer"--that segment of users midway between consumers and professionals. They're tough customers, more sophisticated and demanding than garden-variety consumers, but less experienced and free-spending than professionals. Will they bite?

And how low in the market do vendors and operators want to go with smartphones? Motorola has said it aims to target more than just the typical smartphone user and believes the Q phone will fly off the shelf just as fast as the Razr did in the first 90 days of its release. To achieve sales similar to the Razr, you would think the Q would have to move pretty deep into the consumer market. One of the main struggles for the smartphone market in the U.S. is the fact that consumers are conditioned to buy devices that are heavily discounted when they buy their service plans. In fact, a recent survey from J.D. Power and Associates said that price and design are the primary reasons consumers buy certain wireless devices, not advanced features--hence the popularity of the Motorola Razr. Not many respondents said they chose their current phone because it had a particular feature, like web browsing. IDC says about one-third of customers use the Web browsing and email features on the phone.

Folks like those at Symbian know price is an uphill battle in the U.S. market, and there is a mad rush to get the BOM (bill of materials) down to the $100 range so that operators can subsidize smart phones below $200. But then there is that issue of service pricing. You don't just buy a Moto Q because you think it looks cool and get a typical voice plan with it. Customers naturally have to buy a data plan and carriers don't want to clog their networks with cheap all-you-can-eat data pricing. Last week RIM co-CEO Mike Lazaridis warned attendees at GlobalComm that carriers need to be very careful about unlimited wireless data plans. While the average voice-only user clocks 500 minutes of airtime or about 45MB of capacity per month, a user with an unlimited data plan who watches 15 minutes of video per day, reads at least three articles from a mobile Web site and checks email using his company's VPN uses about 1.6GB of capacity per month. Lazaridis said that's tantamount to 20,000 minutes per month. - Lynnette