Smartphones Don't Feel Like Talking

Smartphones are used mainly for texting, email and as a browser, not for communicating the old-fashioned way.
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WASHINGTON (TheStreet) -- The band of smartphone descriptives is as broad as a data network, but one identifier is becoming as dated as dial-up: phone.

If your definition of "phone" is a handheld communications device, a smartphone fits the bill. However, if you're going by the Greek derivation of "phone" -- meaning "voice" -- then a

smartphone

isn't what you're talking about, and the telecommunications industry knows it.

The Motorola Droid is one of only a few smartphones with good voice quality.

According to a study of call quality by

J.D. Power and Associates

, smartphone users experience 6% more dropped calls, failed connections and static-strewn conversations than their conventional

cell phone

-owning cohorts. With

Gartner

(IT) - Get Report

noting that smartphone sales increased 24% worldwide last year, J.D. Power says call quality has diminished nearly 20% in the past six months as customers adopt smartphones with a voice element technologically equivalent to smoke signals.

Of the 40 smartphones currently rated by

Consumer Reports

, only 11 mustered even a middling "good" voice-quality rating. Mike Gikas, Consumer Reports' senior electronics editor, says even smartphones with better voice quality, like

Motorola's

(MOT)

CLIQ and Droid,

Research in Motion's

(RIMM)

BlackBerry Pearl and Bold and

Nokia's

(NOK) - Get Report

N97 are becoming more rare as text, e-mail and Web-based applications call the shots.

"It's very clear that companies aren't paying that much attention to voice quality and our testing over many years shows it hasn't improved at all," Gikas says. "If you look at how the market's going, though, what's driving sales are non-telephony things."

A survey released in January by

Infogroup's

(IUSA)

Opinion Research Co. found that 29% of Americans now own a smartphone. Among that group, the top three must-have features were e-mail (coveted by 85%), Internet browser (78%) and digital camera (73%). The ability to hear a pin drop like in an old

Sprint

(S) - Get Report

ad was markedly less important to smartphone owners, with Opinion Research discovering in 2008 that 91% of all phone owners were four times more likely to respond promptly to a text message than a voice mail.

Carriers are just now getting the message. Last month, Sprint Nextel Chief Executive Officer Dan Hesse said his company would fully transition its billing standard from voice minutes to data amounts in about two years.

AT&T

(T) - Get Report

, meanwhile, used

Apple's

(AAPL) - Get Report

iPad launch to unveil $30-a-month unlimited data plans as CEO Randall Stephenson prophesized an industry-wide move toward "variable pricing" of data plans. Now that there's more to monetize than just gabfests with grandma, expect carriers, other companies and creative marketers to cash in.

"With voice calls, you pay for your minutes and that's it, but with data plans there are opportunities for advertising and apps," Gikas says. "When Apple introduced the iPhone 4.0 operating system, the big bang that they saved for the end of the presentation was how it was going to facilitate all sorts of advertising."

Ad revenue will help, but a cut of the App Store receipts could be even more lucrative. Gartner predicts consumers will spend over $6.7 billion downloading more than 4.5 billion apps this year after putting down more than $4.2 billion on 2.5 billion apps in 2009. By 2013, Gartner estimates that 22 billion app downloads will generate about $29.5 billion. As voice-over-IP options like Skype eat into calling minutes, expect carriers to patch into this growing revenue source.

Meanwhile, dinosaurs who still insist on doing business, maintaining correspondence and ordering pizza over the phone can still find sanctuary in a small niche of smartphones. Each carrier has at least one model for those concerned with call clarity:

Garmin's

(GRMN) - Get Report

Nuvifone N60 for AT&T, HTC's Touch Pro2 for

Verizon

(VZ) - Get Report

, the Samsung Moment for Sprint and the HTC Excalibur (aka T-Mobile Dash) for

T-Mobile

(DT) - Get Report

. What isn't clear is how much longer those companies will invest in the conversation.

"There's a battle for the soul of the smartphone," Gikas says. "A lot of the carriers and phone makers have been seduced by the lure of the applications."

-- Reported by Jason Notte in Boston.

Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.