US : Last year's launch of color-enabled handsets set the stage for the emergence of complex and sophisticated smartphones. Above shows smartphone shipments - moderate forecast for 2002 to 2008.

Enthused by the new look and functionality of these enhanced handsets, wireless users the world over are finding a good reason to replace their old handsets for new ones. According to technology research firm ABI, nearly 38% of all handsets sold this year will bear a color screen, helping to fuel handset replacement.

With the global economy improving, handset OEMs' strategies are beginning to pay off. A strong signal of a comeback in the wireless industry, most handset OEMs have shown record sales for the third quarter, surely aided by their models incorporating advanced features like cameras, Bluetooth and
color screens.

Today's handset marketplace is complex and crowded with scores of newer models and features. So as not to miss out on the mass market, handset markers are no longer marketing color screen handsets as premium products only. Instead, they have introduced various low-end, color-enabled handsets that cross the entry barrier and serve more price-sensitive markets. "After a few years, the definition of low-end phones will extend from those with monochrome displays to those with color screens but limited functionality," asserts Kenil Vora, ABI analyst.

The next big growth opportunity in the handset space are smartphones, handsets with a standardized operating system like Symbian or Microsoft Windows Mobile. Besides cost benefits that a standardized OS brings, it provides another edge over handsets with proprietary operating systems. A standardized OS brings with it a pool of developers supplying myriad applications.

In a bold move, Nokia has embarked heavily on the open platform approach and has created a niche category in the handset space -- gaming. With the highly publicized N-gage that packs the Symbian OS/Series 60, Nokia sold more then 400,000 units in the first two weeks since its launch.

Motorola's recent availability of MPx200 with AT&T Wireless marks an important debut for Microsoft's Windows Mobile Software in the North American market. Microsoft has finally made some headway in its struggle to convince a major handset OEM to adopt its OS. This move further demonstrates the anticipated upswing in demand for smartphones in the handset marketplace. ABI forecasts that smartphones will command a 24% market share by 2008, or about 150 million units.

ABI's report, "Wireless Handset Software: The Evolution of OS and Middleware Solutions and Their Impact on Next Generation Wireless Devices," examines the strategies adopted by major wireless OS and middleware providers and includes information and projections on various shipments and license fees. ABI's Wireless Handset Quarterly Service outlines the evolution of the handset to a multimedia and data-centric platform and the progression to the 2.5G and 3G networks. ABI provides a thorough examination of trends in the global market for wireless handsets and offers a realistic outlook on where the industry is headed.