Smartphone Makers Size Up Apple in Holiday Competition

Smartphone Makers Size Up Apple in Holiday Competition
Samsung Electronics Co. Galaxy Note 2 smartphones on display. Photographer: SeongJoon Cho/Bloomberg

If you're shopping for a smartphone this holiday season, you might notice something: They're getting bigger.

The latest mobile devices, coming from companies that include Google Inc., Samsung Electronics Co. and Nokia Oyj, are coming out with larger screens and features such as fast, high-definition video streaming. Analysts call these smartphones "hybrids" because they resemble tablets.

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While the larger and faster phones are trying to grab attention from the ubiquitous iPhone, manufacturers of the hybrids are also looking to snare sales from Apple's other popular product, the iPad, said Ross Rubin, principal analyst at Reticle Research.

"Manufacturers view phones with larger displays as competition for tablets," Rubin said in an interview.

There's good reason for their interest in tablets -- the market is growing fast. Global sales were forecast to reach 119 million units this year, a 98 percent increase from 2011, according to research firm Gartner Inc. Much of that is from sales of iPads, which accounted for 70 percent of tablet shipments in the second quarter of this year, according to IHS iSuppli, another researcher. The nearest competitor, Samsung, had a 9.2 percent share, down from earlier in the year, IHS said.

Hitting the Right Note

Several earlier hybrids have met with success. Samsung's Galaxy Note has sold more than 10 million units, and the Samsung Galaxy S III has sold more than 20 million units worldwide. The Galaxy line is narrowing the gap with the iPhone for the best-selling family of smartphones ever, said Michael Morgan, an analyst at ABI Research.

Many of the latest hybrids feature improvements that phone users covet –- such as a better camera and wireless charging -– while also offering faster speeds and more powerful processors handy for streaming video in the home, the domain of tablets.

"Imaging seems to be the big thing," said Will Stofega, program director at researcher IDC.

Pushing Pixels

The new Nokia Lumia 920 comes with an 8.7-megapixel camera with technology that reduces blur and provides better pictures in poor light. The phone can also charge wirelessly, so there’s no need to plug it in.

“The hybrids are coming out because telephony is no longer the primary motivation for buying a smartphone,” said Shawn DuBravac, director of research for the Consumer Electronics Association.

Most hybrid manufacturers also offer a smartphone with a high-definition screen. In September, Google’s Motorola Mobility division introduced the Razr HD and Razr Maxx HD, each with 4.7-inch high-definition screens. The same month, Samsung announced its Galaxy Note 2, which features a 5.5-inch HD screen and lets consumers launch more than one window so they can multitask.

"Samsung Mobile does not market its products against a single product or single competitor," Teri Daley, vice president of public relations for Samsung Mobile, said in an e-mailed statement.

Meanwhile, Motorola spokeswoman Danielle McNally said that "while there’s certainly a market for larger screen phones, after talking with consumers we also know that there’s a sweet spot for big screen phones in a small package."

Nokia didn't respond to a request for comment.

Faster Phones

To compete with the latest iPad that runs on the faster, so-called Long Term Evolution wireless networks, Apple's rivals are coming out with smartphones that run on the same, speedier technology. In September, HTC unveiled the Windows Phone 8X, which has a 4.3-inch screen and runs on LTE.

Meanwhile, LG Electronics’ new Optimus G, whose U.S. availability is yet to be announced, can be operated by voice. For example, a picture can be taken by saying "smile" or "cheese." Many hybrids also offer near-field-communication technology, which lets consumers make wireless mobile payments, as well as share pictures and videos by touching each other’s phone.

Although Apple's mobile devices lack near-field communication, the company has countered its rivals' moves by making the iPhone 5 -- with its 4-inch Retina display -- a hybrid as well. The device runs over the faster LTE networks and comes with a camera that can shoot panoramic images. As for the hybrids' challenge to the iPad: Apple is expected to release a smaller version this month.

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