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In the space of little more than 20 years, the mobile phone has changed almost beyond recognition – and with it, the way we communicate has evolved, too.

The first mobile phones were bulky, had poor battery life and variable call quality. Nonetheless, they succeeded because they were convenient. Since 1984, when the first cellular phones went on general sale, mobile networks and, especially, mobile handsets have experienced several waves of development. The first generation networks gave way to the digital CDMA and GSM standards. These, in turn, are being replaced by 3G, while the industry is already busy working on a fourth generation of communications technologies.

The greatest change of all, however, has been in the handsets themselves. The mobile phone has been a beneficiary of both miniaturisation and of Moore’s Law, which states that computer processing power doubles every two years. Handsets have also become significantly cheaper: the early models cost about $4,000, while today, service providers offer free handsets to customers with their contracts.

But although someone buying a mobile phone in 1984 might have predicted – and probably hoped for – cheaper, smaller and lighter handsets, few could have anticipated the way the mobile phone would become a powerful computing, entertainment and business device all in one.

“There has been a change in the way we perceive mobiles,” says Mark Stansfeld, sales director for mobile operator O2. “It used to be that they were a cost and the idea was to buy voice calls as cheaply as possible. Now it is a question of the incremental profits a mobile device can drive to the business.”

At the top end of the market, high-end smartphones have taken on the tasks of the personal digital assistant (PDA), and the more powerful smartphones are starting to encroach on the territory of laptop computers. These phones now come with touch screens, folding keyboards and support for data networks such as WiFi. They can run presentations, come with word processing and voice recording software and increasingly, business applications for everything from field sales to healthcare. According to Gartner, the industry analysts, almost 35m smartphones were sold last year, four times the number of conventional, non-cellular PDAs.

Although smartphones are designed to handle a wide range of communications and entertainment functions, there is one application that above all else has driven phones to replace PDAs: e-mail. Handsets such as the Palm Treo, Nokia’s E Series, Motorola’s Q, Sony Ericsson’s P990 and HP’s iPaq Messenger have all helped to make e-mail on the move a realistic proposition. However, there is one device that has arguably done more than any other to drive the take up of mobile e-mail: Research in Motion’s BlackBerry.

In some ways, the BlackBerry goes against the smartphone trend because it is almost a single-use device; users complain that even making voice calls on the original, PDA-style BlackBerry is an imperfect experience. But the same users say that it is very, very good for e-mail. Research in Motion has responded by developing its own range of more conventional smartphones, alongside its PDA devices. The company has also formed partnerships with phone manufacturers, such as Sony Ericsson and Nokia, to offer BlackBerry functions on non-BlackBerry devices.

But the BlackBerry, and to an even greater extent phones optimised for music and taking pictures, represent what industry observers call “functional convergence, physical divergence”. Such developments have changed the nature, and sometimes the shape, of mobile phones. Manufacturers, for example, have designed phones that are optimised for still photography or for video. These feature flash, high-resolution sensors and high-quality optical lenses.

Phones designed to play music are another powerful part of the “feature phone” market. There are phones with huge hard disks for storing music, phones that connect to Apple’s iTunes and even phones with Sony’s iconic Walkman branding. The best phones in this market have sound quality that rivals or even exceeds that of a dedicated music player.

A handset maker will use the same basic components to build a phone, including a processor, display, memory, interface, camera and software. It is the way the designers emphasise one set of features over another, such as play and pause buttons for music, a shutter button for pictures or a keyboard for e-mail, that give the clues about how the device has been optimised for its target market.

However, this richness of functionality is not without its critics. Some businesses are finding that the growing features of mobile phones are creating administration and support problems around a device that is meant to be a work tool. The consumer appeal and low cost of mobile phones also means that some companies are struggling to manage the personally purchased handsets that their owners want to connect to the company network. This has led some to introduce strict policies on device usage, or even complete bans on non-company smartphones.

“At one level, there is absolutely no benefit to businesses from the new generation of handsets,” cautions Ken Dulaney an expert on mobility at Gartner.

Ignoring the potential of the latest communications devices could, however, mean missing out on an opportunity. “At another level, many of these phones are training wheels for the future,” he says. “The BlackBerry has given CIOs a real insight into what a wireless computer can do.”

The generation of mobile handsets currently on the designer drawing boards will be more powerful still. Handset makers are placing big bets on “dual-mode” phones that can make voice calls over both wireless and cellular networks; the more sophisticated smartphones already have wireless LAN on-board.

Cost savings will be one factor driving the take-up of such handsets. “Dual-mode phones have the potential to act as PBX [office phone system] extensions in the office, using all the facilities of the PBX, and as a VoIP [internet telephony] phone at WiFi public hot spots or at home,” says Phil Sayer, senior analyst at Forrester Research. With half of all mobile calls estimated to be made in buildings – potentially within reach of a wireless LAN – the savings on call charges alone could be huge.

But cost is not the only driver for WiFi-equipped phones. Unified communications and “presence” are both predicted to be important, especially to business users. Unified communications will let office workers use their mobile handset for voice calls, voice-mail, e-mail, instant messaging and video conferencing.

Presence-based systems will route calls to a worker using the most appropriate form of communications, such as a cellular call if they are on a train, an instant message if they are in a meeting or a VoIP call if they are at their desks.

“The real benefit comes from a single phone number approach,” says Mr Sayer. “Your contacts call your ‘one number’, and the call reaches you via a land line to the office, at home, or in a public WiFi zone, or via GSM if none of the other options apply.”

However, making all this work seamlessly is still a little way off. Moreover, there are trade offs to be made between power consumption, device complexity, cost and features. A phone with a great MP3 player is fine, but it is no good as either a phone or a music player if the battery drains too quickly. In these cases, many users will opt for simplicity over a multitude of functions.

“Often the most important feature of all is battery life,” says O2’s Mr Stansfeld. “Talk time is incredibly important for some of our customers, so we developed a phone that has double the talk time. It is a question of what people want from a phone.”

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