Mobile carriers putting smart-phone sales on their wish lists

Mobile phone carriers are hoping for a smart Christmas.

Having become an invaluable tool for the road warrior, the nation's wireless carriers are now targeting everyday phone users with a blizzard of devices that send e-mail, surf the web and play music.

Cingular Wireless on Thursday will introduce its new BlackJack smart phone, one of several new models that integrate a host of multimedia functions. The major carriers now offer several models, which they are betting will be winners this holiday season.

At Verizon, Motorola's Q has a new low price while T-Mobile hopes its Dash and the BlackBerry Pearl will bring more customers through the door.

Now Cingular, which already has more than 10 different smart phones on its shelves, will put the BlackJack at the forefront of its marketing efforts.

"They are wallet-friendly and pocket-friendly," analyst Michael Gartenberg of Jupiter Research said of the new generation of smart phones. "They appeal to the mom who wants to keep in touch with her kids (through text messaging) or wants to play a casual (video) game while waiting for the kids to finish soccer practice."

Indeed, a combination of style, function and price have heated up the smart-phone sector in the third quarter, where sales of the devices have doubled over the previous quarter, according to analyst Neil Strother of the NPD Group.

"The Q and the Pearl and some other devices appear to be catching on," he said. "People beyond business professionals are starting to look at these phones."

These smart phones, including the BlackJack, are thin and portable. They have sizeable screens for watching video, browsing the Web or sending a lengthy e-mail. They easily slip into a shirt pocket.

Still, despite recent gains, smart phones made up only 4.3 percent of mobile phone sales in the third quarter, up from 2.1 percent in the second quarter, Strother said.

"It's growing, obviously, but try not to get over-hyped by these numbers," he said. "Part of it clearly is that prices are down."

In Cingular stores on Thursday, the BlackJack will sell for $199 with a two-year contract. It comes with a 1.3-megapixel camera, access to Cingular's new music service, a video player, a QWERTY keyboard and runs on the Windows Mobile 5.0 operating system.

The $199 price is the same as T-Mobile's BlackBerry Pearl and an older BlackBerry model from Sprint. But it's $100 more than the $99 promotional price Verizon is currently asking for the Q.

"We'll see more appealing deals this holiday season," Gartenberg said.

The flurry of new activity is also putting pressure on Palm Inc., which is selling Treo smart phones for significantly higher prices.

"Palm has built out a good franchise for its Treo," Gartenberg said, "but we'll start seeing cheaper devices from them that meshes well with these lower price points."

Shares of Palm rose 3 percent Monday to close at $15.08 on the Nasdaq exchange. That price is nearly $10 lower than its 52-week high of $24.91 reached during the spring.

Microsoft is part of the reason Palm shares have suffered.

The Redmond, Wash., software giant has seen the number of smart phones using its mobile software increase threefold this year, from five models to 15.

"They have been strong for business people," said John Starkweather, Microsoft's group product manager for Windows Mobile. "But now they are these amazing crossover devices for people who also want to be connected with friends and family.

"If you were to talk with anthropologists today, they would tell you that the lines between personal and business life have blurred," he said. "Devices like the BlackJack are meeting that need."

Wireless phone executives, too, are happy to point out that trend.

"It's really hard to differentiate where peoples' work days begin and end today. This device helps them," said Kent Mathy, president for Cingular's business markets group.

Cingular now has six phones that use Windows Mobile software and "more will come" before year-end, Mathy said.

Gartenberg, the Jupiter analyst, said sales for smart phones will be strong this holiday season. Jupiter will be releasing new research about the smart-phone market in a few weeks.

"We are seeing significant growth over the next five years," Gartenberg said. "It is getting to the point where smart phones are becoming mass market devices. The BlackJack, the Pearl, the Dash, were all designed with consumers in mind.

"E-mail and text messaging," he said, "is becoming almost as important as voice communication today."