October 30, 2008, 12:00 AM

Phoning It In

Smarter than the average smartphone, the iPhone is helping to drive mobile commerce.

Part of the promise of Apple’s much-publicized iPhone is that its users can browse full web sites, not pared-down versions designed for the small screens of mobile phones. In theory, that means online retailers can sell to iPhone users without creating special mobile web sites. In practice, a small but growing number of e-retailers are creating special sites for the iPhone.

Among them is the leading e-retailer, Amazon.com Inc., which launched its first mobile commerce site in 2001 and has been continually upgrading its mobile offerings as new phones arrive that are more powerful and easier to use. Within two months of the launch of the iPhone in June 2007, Amazon went live with a site optimized for the new Apple handset.

“When customers are in a mobile environment, our goal is to put the best shopping experience we can in their hand,” says Sam Hall, director, Amazon Mobile. “When the iPhone came out, we knew we could be cool and innovative.”

The iPhone-optimized sites of Amazon.com and other pioneering retailers show how optimization makes browsing and buying much easier than accessing a standard web site from the iPhone.

For all the hype around it, the iPhone is just one handset in a growing category of smartphones-increasingly sophisticated mobile handsets with PC-like brains, larger screens and keyboards with a key for every letter (known as QWERTY keyboards). While the iPhone offers some functionality that most smartphones do not, it faces stiff competition from other smartphone manufacturers with firmly entrenched brands, including Palm and BlackBerry. What’s more, mobile phones such as the Instinct from Sprint and Google’s new T-Mobile G1 offering the same or extremely similar functionality as the iPhone are now on the scene.

But all mobile phones, smart or otherwise, have one great limitation: a smaller screen than that of a personal computer. “The form factor of the iPhone limits the experience of viewing a full web site,” says Josh Martin, a Yankee Group Research Inc. senior analyst who specializes in mobile technology.

And that means retailers really should optimize sites for the iPhone and competing smartphones, Martin says. “An optimized site can offer people the same content but in a different, better package,” he says. “And getting into the optimization game early is advantageous; otherwise, the early guys will be eating your lunch.”

Amazon.com, for instance, is able to offer several features on its iPhone site that it can’t offer through most other smartphones. They include placing multiple product images on the opening screen of the home page and displaying product images with search results. “This makes it really easy for a customer to see that this is what they want and then buy it that much more quickly,” Hall says.

Until recently, the iPhone has been a standout among smartphones for a few reasons. Its screen is slightly larger, it offers a touchscreen interface, its web browser is extremely powerful, its processor is faster than most, and it links to a third generation, or 3G, wireless data network.

But this is changing as more smartphones, like the Sprint Instinct and T-Mobile G1, offer serious alternatives to the iPhone. The iPhone is no longer the unique mobile device it once was.

Apple is tight-lipped about the total number of iPhones it has sold. However, on October 21, it announced 6.9 million were sold in the quarter ending Sept. 30, and that it has surpassed its goal of selling 10 million in 2008. Daniel Longfield, a mobile technology analyst at research and consulting firm Frost & Sullivan, estimates about 90% of sales last year and 60% this year will be in the U.S.

Devices in use

When it comes to the current number of devices in use, Nielsen Mobile, a service of The Nielsen Co., says there were 2.6 million U.S. wireless subscribers using an iPhone at the end of the second quarter this year. That number is certain to increase because of the debut in the third quarter of the iPhone 3G.

And when it comes to mobile web users, Forrester Research Inc. says 89% of iPhone owners regularly browse the Internet on their devices. This compares with 72% of Palm Treo owners, 71% of Blackberry owners and 17% of all mobile subscribers. And e-retailers should take note: 25% of iPhone users and 10.8% of smartphone users overall are accessing shopping sites, according to comScore M:Metrics.

Because Apple is heavily marketing the iPhone and focusing on its ability to access the web on the go, and because nine out of 10 iPhone early adopters are doing so, the iPhone is in part responsible for a shift in mobile phone replacement purchasing: More consumers are dumping their conventional phones in favor of smartphones, experts say.

“For a long time smartphones were about 5% of the market; they are now growing faster than the rest of the market,” says Avi Greengart, research director, mobile devices, at research and consulting firm Current Analysis Inc. “The price of processing power has dropped, so smartphone prices have dropped. The Palm Centro, for example-there are more than 2 million in use across the three biggest wireless carriers. They sell them for $99. So if you’re looking at a $69 flip-phone, you can spend just a little more for 3G, touchscreen and much more.”

This is why e-retailers in m-commerce are keeping a sharp eye on smartphone users, looking to understand who they are and what they want.

“The people who have smartphones and data plans are higher-end consumers who by their nature are interested in using wireless data to access the web and buy products,” says Martin of the Yankee Group.

A flowery application

1-800-Flowers.com Inc. is betting iPhone users will buy its products. The retailer, which has operated an m-commerce site since April 2007, launched last month a downloadable mobile application, dubbed the Mobile Flower and Gift Center, for the iPhone.

A mobile application is a small program that resides on a mobile device, linking that device with a web site. Mobile applications are more powerful than m-commerce sites because they can use the computing power and functions of the device for much of their work without having to rely on the lesser power of an m-commerce site.

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