Just before the holiday shopping season kicks off, Research In Motion Ltd. has unveiled the latest iteration of its Storm touch-screen phone, with a goal of capturing consumers' imagination and luring them away from Apple Inc.'s iPhone. In the next few months, other smart phone makers will do the same.
But the behaviour of a growing segment of consumers is prompting a question that will fundamentally change the way companies like RIM market smart phones: What if it's not the phone that matters, but what you can install on it?
For smart phone makers - and, indeed, for an increasing number of electronics makers designing everything from radios to televisions - the emphasis is quickly shifting away from hardware design and toward the type and variety of applications that users can download and run.
"We are gradually moving away from buying our devices based on their hardware capabilities," independent technology analyst Carmi Levy says.
"In the future, we will increasingly buy them based on their software capabilities. "Today, you do not release a smart phone without some kind of online software delivery mechanism - it's just unheard of."
Much as it did in the MP3-player market with the iPod, Apple has taken the early lead in the smart phone applications race with its app store. Launched the summer of 2008, the app store already boasts about 85,000 applications and two billion downloads - likely more than all other smart phone providers put together. RIM may be the North American market leader in next-generation handheld devices, but with only about 2000 BlackBerry applications on offer, it is still playing catch-up in the app wars.
Google's app environment may eventually top out at just a few thousand, but if they can offer gateways to rich online services, they've won on their terms. Carmi Levy, independent analyst
And the market is growing. Earlier this month, Microsoft launched its own, relatively small applications store for phones running the company's mobile operating system. Smart phone maker Palm also has an app store.
The trend is even beginning to extend beyond smart phones. Some HD-TV makers, such as Sony, are beginning to let users download weather and stock-ticker applications onto their televisions. When peripherals maker Logitech recently introduced a new standalone radio and MP3-player, it included access to a tiny applications store with the device.
Behind the variety and download statistics of smart phone apps lie a host of strategies and challenges employed by and facing the biggest players in the market, including Apple, RIM, Google and Microsoft.
With [Apple devices] you do iPhone testing and you know the iPod Touch doesn't have [a]camera. Once you enter the BlackBerry world, it's much more difficult because you have different keyboards and different screen sizes. Jeson Patel, founder of socialDeck Inc.
Google, for example, has invested significant effort into attempting to recreate online experiences on mobile devices - services such as Gmail and Google Maps. For the search heavyweight, Mr. Levy notes, it may not be necessary to compete with Apple in terms of the sheer number of applications available for Google's Android mobile operating system versus Apple's app store.
"Google's app environment may eventually top out at just a few thousand, but if they can offer gateways to rich online services, they've won on their terms," Mr. Levy says.
For RIM, the company's ongoing shift toward consumer phones presents many challenges, especially for developers looking to design BlackBerry apps. RIM has always focused heavily on security of data because its main client base - corporate and government clients - demanded it. But that also means developers of consumer applications have to deal with many constraints when trying to draw information from the device or attempting to complete other technical tasks that are relatively simple on the iPhone.
Ultimately, Apple's biggest advantage over its competitors in the app wars may be the simple fact that there is only one iPhone (and it's sister device, the iPod Touch). By comparison, there are several BlackBerry models, and more than a dozen Android-powered smart phones are expected to hit the market in the next few months.
"Supporting all the devices is quite challenging," says Jeson Patel, founder of socialDeck Inc., a company that specializes in creating games that connect players on BlackBerrys, iPhones and Facebook. "With [Apple devices] you do iPhone testing and you know the iPod Touch doesn't have [a]camera. Once you enter the BlackBerry world, it's much more difficult because you have different keyboards and different screen sizes."
RIM has tried to attract more developers by giving them a bigger share of revenue from BlackBerry app sales. BlackBerry app developers keep 80 per cent of sales, whereas Apple gives developers 70 per cent.
But for some developers, making it easier to code apps for BlackBerrys is a more pressing issue than a better revenue split, and something that, if remedied, could allow RIM to give Apple a run for its money in the app marketplace, Mr. Patel says.
"Everybody wants to make iPhone apps because it's easy, but at the same time there are tons of people with BlackBerrys," he says. "If it was easier, I'm sure we'd eventually see the same number of apps on BlackBerrys as well."