Smartphone Ubiquity Still Far Off, But Lower Prices Will Help

(MoneyWatch)  Many in tech are looking toward mobile devices to take the place of standard PCs, creating new opportunities for the industry overall and a complete upset in the pecking order. Intel and Microsoft would no longer dominate. New technical capabilities would open new worlds of advertising and marketing, providing additional revenue sources. But for all the talk of Apple versus Palm versus RIM and the millions of units sold, it's sobering to step away from the Kool-Aid counter and remember that in the big world of mobile devices, smartphones are a drop in the bucket and a long way from dominating consumer choices.

DisplaySearch just released its mobile phone brand market share for Q1 2009. Look at the table and notice how the numbers stack up:

The Pre wasn't out in this time period, so Palm doesn't show up, and the iPhone 3GS hadn't come out. But even with the historic sales of Blackberrys and the existing upsurge of iPhones, RIM and Apple together represented 4.6 percent of the market. What were the inordinately vast majority of people buying? More ordinary cell phones: Nokia, Samsung, LG, Motorola, and Sony Ericcson together represented 67.5 percent of the market. If real mobile computing is going to use higher-end handsets, it is going to need a lot more of them to sell, because this is simply too small of a market share to change the way computing is done. And they way to sell more is going to be make the price so cheap that people can't afford to pass up the chance.

Some vendors seem to be getting the message -- and some retailers are really getting it. Not only did Wal-Mart come out with a $99 iPhone, but it is offering RIM's new Blackberry 8250, just out today, for $48. It's been fine to keep high margins while targeting a more select clientèle, but smartphone vendors will need to make a decision soon. Are they going to make a play to become the standard computing platform for the bulk of users, or are they going to cede the ground to the netbook? Or, better yet, are they going to combine the two and offer bundled packages and crowd out most traditional PC and laptop use and change the technology landscape for good?

Image via Flickr user Paul Beattie, CC 2.0.