Smart phones bode well for users and UK companies

Dec 21 2009 By Anthony Peart, The Journal

Sharewatch with Anthony Peart

THE Apple iPhone has been one of the must-have gadgets this year and in the lead up to Christmas, shoppers may be tempted to splash out on an expensive gift.

It is fair to say that the iPhone brings together an exciting mix of technologies. Not only can you send SMS messages and make a phone call, customers can also listen to their music collection, watch videos, look up emails, surf the net and access a wide range of applications. Indeed, the market for iPhone applications has itself grown very quickly and initially caught Apple by surprise.

Staying with Apple’s very successful iPhone, the barriers are beginning to fall in the UK.

Until recently, O2 has been the only UK operator that has been able to sell the iPhone, following an exclusivity lock-in agreement between the two companies. However, that agreement has now come to an end and Apple has struck deals with Orange and Vodafone to supply the handset.

Although Orange is already up and running with the iPhone before Christmas, Vodafone will have to wait until January before it can offer contracts to customers.

There is also a fourth player in the market. Tesco Mobile has confirmed that it too will offer the iPhone in its outlets.

Indeed, opening up the market may be good news for mobile phone customers. Although Apple has restricted the price changes that can be made, mobile operators can tweak their packages to entice new customers. This may not lead to a full price war but it will enable customers to select the package that best suits their needs.

Looking at the market in more general terms, UK company ARM Holdings is one of the leading lights in mobile technology. The group designs the chips that go into many of the handsets that are produced. To give an idea of ARM’s success, around 90% of all mobile phones use a processor that has been designed by the company.

As customers upgrade to a new smartphone, ARM will also benefit from the purchase. It is estimated that around half of all mobile phones sold by 2013 will be smartphones. The company’s earnings are centred around manufacturers paying a fee to use ARM’s chip designs. As the designs become more complex, a higher fee can be charged. ARM recently stated that despite the downturn, smartphones continue to do well and this trend is likely to continue.

Simply put, we live in the age of the smartphone. Your mobile is now able to accomplish much more than it has done. 3G is being used by network operators and handset manufacturers to deliver better services. Needless to say, it is likely that smartphones will continue to get smarter from this point forward – and we are at the early stages of what may be a long voyage.