How the mobile social web will make 2009 a smart phone odyssey

22 Jan 2009

A handset revolution is under way, but mobile bosses say the kids are all right

TECHNOLOGY becomes invisible when it becomes accessible to everyone. While Ireland has 110pc mobile handset penetration, only 10pc of phone owners are smart phone users.

Hutchison, the parent company of Three, spent two years designing its first-ever handset, a cost-conscious smart phone, that it reckons will be the one to break through to the mainstream marketplace.

It has been marketed as the world’s first social mobile, but – in reality – it really is the world’s first smart phone the kids can afford.

If it succeeds, this smart phone will blow the market apart the way Nokia did with its cheap and cheerful handsets in the late Nineties and early Noughties.

Robert Finnegan, chief executive of 3 in Ireland, says that, in 2009, “the outstanding requirement is for value”, and in this sense he says that business is no different either.

Therefore, he reckons that – aside from teenagers and young adults – the lower price point on smart phones is something the business market will be interested in too.

“Historically it was different – businesses were usually able to afford and chose to buy phones in the high-end price bracket, but looking at the increasing trend for cost-saving services such as Skype, the market is changing,” he says.

Therefore, does the smart phone market look set to grow exponentially in 2009?

What Three has managed to do with the INQ1, says Adam Leach, principal analyst at UK firm Ovum, is target the masses with social-web services such as Facebook and make it work for the masses at a price point that works as well. But will the introduction of the INQ1 mean that other smart phone manufacturers on the market, including Nokia, Apple and Palm, be watching Three and reacting accordingly with lower price points themselves?

“The response to this will also be a response to the economy. In 2009, there will be pressure on new smart phones coming to market, and vendors will be keen to get volume while meeting customer demands.

“The prices of these phones will be discounted, as vendors sacrifice margin for volume this year to make sure their handsets will sell – we will see that the market will be quite price-competitive,” adds Leach.

However, he says that it is important to note that while the INQ1 targets a large demographic of the mass market who are Facebook users and can afford this price point, Three’s handset “doesn’t offer the same experience”.

“It offers access to some of your services on the web in a way that integrates it into the phone experience, but it is not quite the same thing that a user experiences on, say, the iPhone.

“So, while it is not really a comparable user experience to more advanced smart phones on the market, when it comes down to it, the unique affordable price point that has come from an operator is quite innovative in itself, and Three has a history of innovation in the form of collaboration on Skype,” says Leach.

Finnegan of Three says that innovation has always been something the operator has focused on from the outset.

The Skype handset from Three was the first to fully integrate the service, and now the INQ1 – or Facebook phone as some have been calling it – has integrated the social-networking site’s functionality deeper than any other phone before.

“We have a strong history of third-party collaboration and Three is always looking to do new things in this space,” Finnegan adds.

In fact, this third-party collaboration could be the platform to really bring a mobile social-web experience to the mainstream, says Thomas Husson, senior analyst at business and IT research firm JupiterResearch.

“[For Three] a slightly different angle from the beginning has been to work with operators to meet market needs, and the INQ1 has been promoted or marketed as Facebook phone in a sense,” says Husson.

This direction for Three highlights a couple of things about trends in the mobile market, he explains.

“We are finding that smart phones or multimedia handsets are going mid to low market in terms of pricing.”

In that sense this positioning in the market also highlights how online social networking is expanding into the mobile space, says Husson.

“It is a new form of communication for a younger generation who are not using email all that much – a generation who communicates through sites such as MySpace,” he explains.

By capturing the needs of a younger mobile generation, and creating an affordable smart phone, Three may not win the entire mobile market with the INQ1, but this is not the aim – rather it is to bring a change to the market and provide value, says Finnegan.

“From an operator’s perspective, this is very good to see – in a sense it is throwing down the gauntlet,” adds Leach.

Caption: 3 Ireland CEO Robert Finnegan. 3 hopes to make major inroads into the smart phone market with its new INQ1 handset that enables consumers to make Skype calls, interact with friends on Facebook and download third-party applications

By Marie Boran