Oprah and Wal-Mart Bring Smartphones to Main Street

Oprah Brings Smartphones to Main Street
Oprah Brings Smartphones to Main Street

Smartphones: They're no longer just for tech geeks, early adopters, and corporate types tethered to their email.

Mobile phone giant Motorola (MOT) just had its Oprah moment: On Monday, the TV titan Oprah Winfrey bestowed Motorola Defy smartphones on her studio audience -- and that bodes well for the entire smartphone market.

Meanwhile, retail behemoth Wal-Mart (WMT) just announced plans to begin selling Wal-Mart branded mobile service for five devices -- including one Motorola smartphone, the Cliq XT.

In short, smartphones, which have so far typically been favored by tech-savvy early adopters, are beginning to make inroads into the broader mass market.

"Gaining More Traction With the 'Common Man'"

Although basic handsets still dominate the mobile space, accounting for roughly eight of every 10 phones sold, the number of people using smartphones -- advanced devices that offer Web browsing and other applications -- is growing much faster than the number of people using so-called "feature phones" -- more elementary devices that lack the bells and whistles of their fancier and more expensive brethren.

Global smartphone sales increased by a whopping 48.7% in the first quarter of 2010 to 54.3 million units, far outpacing overall mobile phone growth of 17%, according to research firm Gartner, and made up 17.3% of all mobile-phone sales, up from 13.6% in the first quarter of 2009. In the second, quarter, smartphone sales increased by 20%, the firm said.

"In the U.S. smartphones have always meant the Apple (AAPL) iPhone and Research In Motion's (RIMM) Blackberry," Carolina Milanesi, research vice president market analysis firm Gartner, told DailyFinance. "Now, Google's (GOOG) Android [mobile operating system] is gaining more traction with 'the common man,' if you will, thanks to cheaper data plans and more affordable devices."

"The goal is to seed the market," Milanesi says. "If you give consumers a smartphone in their hand, they will discover apps and they will learn how to browse the Web."

Selling BlackBerrys With Beatles Tunes

The Wal-Mart service will run on T-Mobile's network and cost $45 per month for the first line, plus $25 for each additional family member. Devices go on sale next week.

"What we saw was an opening in the marketplace for really bringing family savings and a family plan and T-Mobile was a great partner there," Greg Hall, vice president of merchandising at Wal-Mart, told the Associated Press.

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Michael Gartenberg, a partner with digital media analysis firm Altimeter Group, traces the rise of the smartphone to Apple's introduction of the iPhone in 2007.

"That was the turning point," Gartnenberg tells DailyFinance. "The iPhone wasn't aimed at corporate users or enthusiasts, but everyday folks. Then you have the ultimate corporate brand [BlackBerry-maker] Research In Motion, which is targeting consumers with Beatles songs."

Although feature phones still outsell smartphones by about four to one, that may change in the not-too-distant future, Gartenberg says. "The trend is clear and the stakes are high," Gartenberg adds. "Everyone wants a piece of it."

"The reason you're seeing a scramble is because once the ratio flips, it's too late," Gartenberg says. "You've got to get in on this before it flips. It wasn't that long ago that feature phones accounted for 99.9% of the market and smartphones were a fraction."

"What will ultimately drive this forward is lower prices for devices and data plans, as well as consumers getting educated about smartphones," he adds. "Apple spent literally hundreds of millions of dollars educating the market about a product that people may not have known existed, or if they did, they thought it was $1,000 or something, way out of their reach."