BW Article: Smartphone Use on the Web Goes Mainstream

BW Article: Smartphone Use on the Web Goes Mainstream

Talked to Businessweek about the pricing plans, data consumption and all things smartphones

Smartphone Use on the Web Goes ‘Mainstream’

More U.S. adults—particularly African Americans and Hispanics—are using smartphones to e-mail, network, surf, and send video, says Pew Research

By Olga Kharif

Smartphone use is gathering steam in the U.S., new research shows. Forty percent of American adults use their cell phones to surf the Web, e-mail, or use instant messaging, according to a study from Pew Research Center in Washington.

That’s up from 32 percent a year ago, based on Pew’s survey of 2,252 adults ages 18 and older that was released on July 7. "The smartphone has really penetrated the mainstream of American society," says Aaron Smith, a Pew research specialist. In the first quarter, smartphones accounted for 34 percent of all mobile handsets sold in the U.S., up from 31 percent in the fourth quarter of 2009, according to consultant NPD Group.

Smartphone sales are getting a summer boost from last month’s introduction of Apple’s (AAPL) iPhone 4 from AT&T (T). Motorola’s (MOT) Droid X will be released through Verizon Wireless on July 15.

A separate report suggests that smartphone growth may ebb in the second half of the year as high unemployment and the oil spill in the Gulf of Mexico curb consumer confidence and curtail demand for some nonessential services. "Remarkable smartphone-penetration growth is going to slow down," says Tero Kuittinen, a senior analyst at MKM Partners, an institutional equity trading and research firm in Stamford, Conn., in an interview. After rising for three consecutive months, the Conference Board’s Consumer Confidence Index dropped in June to near the level it reached in March. The index is based on a survey of 5,000 U.S. households and reflects consumer sentiment about the economy.

Amid economic woes, the next smartphone growth spurt may come from cheaper devices. "Specifically, consumers want smartphones priced at $100-$190, and our research finds little supply in this price range," Kuittinen wrote in a July 6 MKM report. To keep sales up, device manufacturers may have to face faster-than-expected price drops through 2011, he says. Phone makers such as Huawei and LG (066570:KS) are expected to push into lower-priced smartphones in the next year.


To spur adoption, carriers may need to keep slashing prices on their cheapest smartphone plans as well. AT&T, the second-largest U.S. mobile-service provider, introduced a $15 limited data plan on June 2. In six to nine months, the average smartphone user will pay just $10 a month for data connectivity, down from $15 today, estimates wireless consultant Chetan Sharma. "The barriers to getting data plans are coming down," he says.

Less-expensive data plans may encourage additional consumers to access the Web via smartphones and other mobile devices. Some 3 percent of respondents in the Pew survey own a tablet PC such as an iPad. About 60 percent of them have used the device to access the Internet. About 4 percent own e-book readers such as’s (AMZN) Kindle and almost half use the gadgets to access the Web.

Overall, 59 percent of adults in the U.S. go online wirelessly, via Wi-Fi or mobile connections, on cell phones and laptops, up from 51 percent a year ago, according to the Pew report. Among all cell-phone owners, 54 percent used their devices to send photos and videos, 23 percent accessed a social networking site, and 11 percent made a purchase.

Older adults are venturing onto the mobile Web in larger numbers, too. Some 43 percent of people between the ages of 30 and 49 access the Internet, up from 31 percent a year ago, the study showed. Those people are also more likely to send or receive e-mails and instant messages. African American and Hispanic consumers remain at the forefront of mobile-Web adoption. More than 50 percent of English-speaking Hispanic users access the Internet on their phones, compared with 46 percent of African Americans and 33 percent of Caucasians, the Pew study found. "For many Americans, their cell phone is one of the essential utilities of modern life," says Pew’s Smith.

Kharif is a reporter for Bloomberg Businessweek in Portland, Ore.