November 13, 2007 11:34 AM PST

Smartphone sales skyrocket

Posted by Marguerite Reardon

Smartphone sales are on fire, according to a new report from market research firm In-Stat.

In a new report published Tuesday, In-Stat predicted that smartphone sales will grow at a rate of more than 30 percent a year for the next five years. This is much faster than the overall cell phone market, which is growing in the single digits. The report also said that smartphone sales are outpacing the sale of laptops, as more corporate customers use their phones on the road.

"Because of the value users are finding, organizations are slowly taking ownership of smartphones and data applications used for business purposes," Bill Hughes, an In-Stat analyst, said in a statement. "Rather than having overcomplicated reimbursement plans, more organizations are finding it more expedient and economical to treat wireless voice and data services as a business expense when they use smartphones."

Smartphones are also starting to expand into the mass market with several handset makers already selling devices. Research In Motion introduced the Pearl. Motorola has its Motorola Q. Samsung has the Blackjack. Palm just came out with the Centro. And let's not forget Apple with the iPhone, the hottest cell phone ever to hit the market.

In addition to e-mail, these devices offer instant messaging and integrated Web services. For example, RIM just announced tight integration between the social-networking Web site Facebook and its Blackberry phones. And Palm's Centro is integrated with MySpace.com. These devices also pack in multimedia applications like music and video.

But what will really drive growth further into the mass market is pricing. Palm's Centro, which hit the market this fall, is priced at $99 out of the gate. And many other smartphones like Samsung's Blackjack are $100 with a mail-in rebate.

Sales could grow even more rapidly if Google is able to deliver on its promise with the new open-source Android software. If Google can find a way to integrate advertising into the platform, the company could further drive down the cost of these phones and the data services.

All of this is good news for the entire mobile ecosystem. Handset makers will obviously sell more devices. Companies such as Microsoft and Symbian will also benefit because they develop the operating software used on these phones. It's also great news for mobile operators, because on average smartphone subscribers spend more on services per month than subscribers using traditional cell phones.