It's Hand-Held to Hand-Held Combat - TheStreet

It's Hand-Held to Hand-Held Combat

The rapid pace of development promotes the use of worldwide GSM technology.
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It seems as though every cell phone company is about to announce or release a new generation of smartphones -- and the rapid development pace is facilitating the adoption of worldwide networks.

Apple's

(AAPL) - Get Report

announcement of its second-generation iPhone is expected in a month.

Research In Motion

(RIMM)

just

announced

its super-high-speed

Blackberry Bold

.

We've been promised similar new smartphone products from

Google

(GOOG) - Get Report

(the system it's working on has been dubbed the Gphone),

Garmin

(GRMN) - Get Report

(nuviphone, which we've seen but not been allowed to touch),

Sprint

(S) - Get Report

/Samsung (the feature-packed Instinct),

SonyEricsson

(SNE) - Get Report

(ERIC) - Get Report

(we saw the Xperia at CTIA last month) and many, many more.

Verizon, Sprint Will Lose the Smartphone War

var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1554906797; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);

Without having tested any of these future phones, I can report that, for the most part, they have one major feature in common: They are all designed to use worldwide GSM/GPRS/EDGE/UMTS/HSDPA networks.

The key word in the last sentence is "worldwide."

The GSM standard is just that -- it's the

only

cellular standard everywhere on the planet except for here in North America.

In the U.S., our two major GSM cellular providers,

AT&T

(T) - Get Report

and

T-Mobile

(DT) - Get Report

, have to compete with companies like

Verizon

(VZ) - Get Report

and Sprint/Nextel, which use the completely different -- and totally incompatible -- wireless systems CDMA and TDMA. These two standards have not been widely adapted anywhere else in the world.

I will not debate which system is the best, or which has better coverage in a specific area. Quality has nothing to do with what's happening. The reason they're choosing to design for GSM is based on quantity.

Conceptualizing, designing and mass producing a smartphone is a long, tedious and very expensive process. And none of this process is being done in a vacuum. As one company is secretly working on its super, new design, at least five of its competitors are doing the same thing.

Now, all of this would be OK if companies had the luxury to produce new phones once every few years or so. But, that's not the case. These new smartphone designs are produced every few months -- a year at best.

But, when companies fall behind with new designs, their bottom line suffers. Just ask

Palm

(PALM)

about its Treos or

Motorola

(MOT)

about the RAZR -- super-successful designs that were ignored by their manufacturers in search of profits.

These days, designers have six months to a year, maximum, to complete and compete with the other new, cutting-edge designs.

So, what is a cell phone manufacturer to do? What would you do?

You would maximize your effort. Since you have to spend lots of money to make a new phone that will have a very short shelf life, why not make just one phone that can be sold in every country on the planet?

And, for the most part, that's why the great majority of next-generation smartphones are being made to run on GSM networks. As a matter of fact, the new Blackberry Bold is one of the first designs I've seen that can work on super-high-speed networks in

every

country on earth.

Maybe, if the GSM version is successful, a phone manufacturer will talk to the two U.S. CDMA providers about making a version for their networks. And that's only if it makes economic sense for everyone involved.

(The $99 Palm Centro is an exception to the rule, because Palm based a lot of the inner workings on the tried-and true Treo design which has runs on GSM and CDMA networks for years.)

Overall, the trend does not bode well for Verizon and Sprint in the future. There are reports that Verizon could score big with a new Blackberry Thunder touch-screen smartphone. But those same rumors believe the handset will also be a

Vodafone

(VOD) - Get Report

GSM/HSDPA device for the rest of the world - and it should be capable of handling LTE - the upcoming 4G wireless data technology.

Sprint has teamed up with its old pal with Samsung for the Instinct - and Verizon just announced that they've joined LiMo - a consortium that is trying to compete with everyone else by creating smartphones that run on the Linux operating system. Past Linux smartphone designs, from Motorola, have never caught on here in the U.S.

So, as the majority of manufacturers continue to produce new GSM designs every few months, Verizon and Sprint could be left out in the cold.

Gary Krakow is TheStreet.com's senior technology correspondent.