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By Jeremy Glaser | 01-07-2011 04:06 PM

Three Trends to Watch in Smartphones

Morningstar markets editor Jeremy Glaser reports on 4G networks, Android, and ever-more powerful devices from the Consumer Electronics Show in Las Vegas.

Jeremy Glaser: I'm Jeremy Glaser with Morningstar. I'm at here at the 2011 Consumer Electronic Show in Las Vegas, and something that everyone has been talking about are smartphones. This is no surprise that smartphones have been a category that's going extremely quickly, but there are three things that we have noticed at the show that have really stood out to us.

The first has been 4G networks and how important they are and how quickly they're rolling out. So far there aren't a lot of 4G phones available. Sprint has really the only large 4G network available in the United States. They've had one really signature phone, the EVO that they've had on that network.

But starting in the first half of 2011, there is just going to be a proliferation of devices that are going to run on both Verizon and Sprint's networks. AT&T will start to rollout 4G, and T-Mobile has rolled out their version of 4G, which is a slightly different variant. I think it's amazing just how quickly some of these data services are being adopted.

The chairman and CEO of Verizon believes that the adoption rate is going to be much faster than 3G, much faster than people anticipate. And that before you know it, a lot of the new devices are going to have this more powerful network. People want a lot of data. They want be able to stream video. They want to be able to do all of these things that they're used to. I think certainly the 4G networks will let them do it.

The second thing that's become really apparent is how important Android is in the mobile ecosystem. We might be standing here at the Microsoft booth in front of some Windows Phone 7 devices, which people are excited about, but certainly there is not nearly as much buzz as there is around Google's operating system--with their Gingerbread that's rolling out now on a few select phones and with talk of the 3.0 system Honeycomb. There is just a lot of OEMs, a lot of device manufacturers, that really think that Google and the Android platform is the future, and is really the one that can go toe-to-toe with the iPhone.

The number of applications has increased really substantially. Consumer excitement around the platform and consumer knowledge about the platform continues to ramp. I think it shows that Android and iPhone and iOS and the Apple platform are really the two to beat. I think the Microsoft Web OS, BlackBerry are really going to be playing catch-up for a while. They have some good devices. They have some good products. They're certainly going to be there, but Android is looking really strong right now.

Finally, I think what's been incredible just how powerful some of these new phones are. Motorola has released a new phone that has a dual core processor that can dock to a desktop monitor, can dock to a laptop station, and can really become a full-featured netbook. The fact that a device that's incredibly small, the size of regular smartphone, has such a big processor, has so much memory, can run a large display, can work just like a computer, is pretty incredible.

I think it comes back to that theme that people demand that performance wherever they go. Smartphones are getting more powerful, more powerful, more powerful, are really moving into at least performance-wise into the same categories, as a lot of portable computers.

I think it's an interesting trend. I think it's one that's going to continue for a while. I think obviously people want more power. It doesn't seem like there is any signs of abating anytime soon.

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