Microsoft Rumored To Eye Smartphone Pie

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So far this year, Acer, Dell, Garmin-Asus and Toshiba have all been said to be prepping new smartphones, hoping to get a foothold in a market that analyst firm Strategy Analytics predicts will grow 31 percent this year. The new devices are expected to be showcased at the GMSA Mobile World Congress in Barcelona, Spain, Feb. 16 through Feb. 19.

Now there's even talk of software giant Microsoft getting in on the action, with analysts saying several sources have confirmed that CEO Steve Ballmer and Co. have a smartphone twinkle in their collective eyes. Microsoft, however, has denied the rumors of it making a Microsoft-branded smartphone: "Microsoft is not doing a phone," one Microsoft spokesperson told the Wall Street Journal.

It's no surprise that these Johnny-come-latelies see smartphones as an easy sell in a down economy. The smartphone market, aside from a few hiccups, has been relatively stable and, as Strategy Analytics indicated, is expected to flourish.

And even at its lowest point, the smartphone market continued to grow. According to research firm Gartner, global smartphone sales suffered their weakest year-over-year growth in the third quarter of 2008. But even at that low point, 36.5 million smartphones were sold, marking an 11.5 percent increase from the same period in 2007.

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Obviously, the Acers, Dells, Microsofts and others want a piece, and want it now while there's still money to be made.

Market conditions aside, these newcomers face an uphill battle. There are already strongly entrenched players in the smartphone game. The Apple iPhone was an immediate hit and its updated 3G model sold 2.4 million units in its first quarter alone. Apple's rapid success, however, was uncommon in a market that typically lets new players linger before adopting them in earnest.

RIM's BlackBerry line of devices, which hit 50 million sold in January, has become a corporate staple, even as recent additions to its device roster appear to target the consumer more than the enterprise professional. Even when BlackBerry ventures out of its safety zone, it does well. Case in point: the BlackBerry Storm, the first touch-screen BlackBerry -- Verizon Wireless said it has sold about 1 million of the devices in its first two months on the market.

BlackBerry also has another trick up its sleeve, planning to release the BlackBerry Curve 8900 via T-Mobile on Feb. 11, a device so highly anticipated that T-Mobile hasn't even launched a Web pre-order and won't let potential buyers join a waiting list.

If Microsoft really is planning a device, what would it deliver that hasn't already been done? Microsoft's Windows Mobile operating system is already on a host of devices from Palm, Motorola and several more. But with that setup, Microsoft doesn't reap the financial benefits of making or selling the hardware. The profit opportunity that could stem from selling both together might be too strong a lure for Microsoft to ignore. Ballmer is expected to take the stage at the Mobile World Congress. Exactly what he'll discuss is unknown, but from the sound of it, a Microsoft smartphone isn't on the agenda.

Acer and Dell have a leg up on Microsoft in that they come from the hardware side to begin with, though they will still struggle to gain smartphone mindshare against the market leaders.

Probably the most innovative new devices will come from Toshiba and Garmin-Asus. Toshiba has hitched its wagon to the 1GHz Qualcomm Snapdragon chipset to launch its touch-screen TG01 device, a high-end, high-performance smartphone. The multimedia-focused device is expected to offer mind-blowing memory at 32 GB and a 0.39-inch compact form-factor with a 4.1-inch high-resolution touch screen. Garmin and Asus are taking a different approach, pairing up to make a series of nuvifone-branded devices with the main focus being location-based services, GPS and personal navigation, a new twist on traditional smartphones. Both Toshiba and the Garmin-Asus mash-up bring something fresh to the market.

Regardless of what Microsoft and the other market followers have planned, all eyes are going to be on the Mobile World Congress when it kicks off Feb. 16 to see what these smartphone wanna-bes have in the works.