A Short History

As with many electronics industries, the smartphone industry is rapidly changing and highly
competitive.1 New and distinctive products are being developed continuously, and released almost
weekly. For this reason, the landscape of the market can change dramatically from one year to the
next, or even from one month to the next. It is also a relatively young industry, and especially in the
United States, some of the major players today hardly existed ten years ago.2
The predecessors of today’s smartphones are yesterday’s personal digital assistants (PDA)
and mobile phones.3 Mobile phones gave consumers the convenience of having a phone wherever
they went, while PDA’s gave consumers the ability to easily carry around all of their personal
information (address book, calendar, note pad, etc.) and have access to their email or other data. The
smartphone began as an amalgamation of these two devices, giving consumers the convenience of
one device that performed both functions.
Arguably, the first smartphone was developed by IBM in 1992.4 “Simon” was a mobile phone,
but it also included a calendar, address book, world clock, calculator, note pad, e-mail, fax
functionality, and games.5 Then in 1996, Nokia came out with the first in what is now a long line of
relatively popular smartphones, the Nokia 9000.6 It also included all of the functionality of a
dedicated personal digital assistant (PDA) – such as calendar, address book, note pad, and email – in
the slim form factor of a mobile phone.7 In 1997, Ericsson released the GS88, the first device to be
labeled a “smartphone.”8
Then, in the early 2000’s, the market started to get more crowded as the advance of
technology drove down prices and enabled more and more features in smartphones. Microsoft
released a new version of the Pocket PC operating system for use with smartphones, 9 eventually
leading to numerous Windows Mobile Smartphones from many manufacturers. Handspring began
releasing smartphone devices based on the Palm OS,10 and Research in Motion (RIM) released the
first BlackBerry phone.11
1 Canalys, Smartphone Market Trends Report 2010/2011,
http://www.canalys.com/services/reports/spmt/.
2 See smartphone history at http://en.wikipedia.org/wiki/Smartphones.
3 See http://en.wikipedia.org/wiki/Personal_digital_assistant.
4 See http://en.wikipedia.org/wiki/Simon_(phone).
5 Id.
6 See http://en.wikipedia.org/wiki/Nokia_9000.
7 Id.
8 See http://www.stockholmsmartphone.org/history/.
9 John Morris, Josh Taylor, Microsoft Jumps In The All-In-One Game, zdnet.com, Nov. 12, 2001.
10 Stephen H. Wildstrom, Handspring's Breakthrough Hybrid, businessweek.com, Nov. 30, 2001.
11 See, e.g., http://en.wikipedia.org/wiki/Handspring_(company)#Handspring_Treo.
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The market has evolved considerably in the last eight years, and it has become ever more
complex. More than 250 million smartphones will be sold worldwide in 2010, a 67 percent increase
over 2009.12 In the United States, at the end of the third quarter of 2010, 28 percent of mobile phone
users had smartphones, up from 21 percent at the end of 2009.13 The United States makes up around
23 percent of the total world smartphone market.14
In the last eight years the group of major players has changed. Consumer preference has
drastically changed. Advances in technology have enabled competing firms to produce ever more
feature-rich devices. 15 Additionally, the global market, both in terms of the major players involved,
and the types of devices that are sold, is quite different from the U.S. market. 16
Thus, this market report will focus exclusively on the U.S. smartphone market, even though
every player in the U.S. market also has a global presence. Also, although this report will stay
focused on firms that actually manufacture smartphones, it will also discuss information about other
types of firms as it is necessary to describe the numerous inter-market effects. This is necessary
because an understanding of the smartphone market today requires an awareness of the many
different and highly interconnected industries involved. Some of these issues will be introduced and
discussed next.