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What You Need to Know About Smart Phones 2.0

Competition is heating up, so you’ll find more models at cheaper prices.

1. Move over, iPhone. Four out of every ten new cell phones sold today are smart phones. No wonder Apple’s iconic iPhone, which is currently available only through AT&T ($99 to $299 with a two-year contract), has some serious competition. The Palm Pre has a similar touch screen, but it offers a real qwerty keyboard and an operating system that lets you run multiple applications. The Pre is available only through Sprint this year ($150 after a $100 mail-in rebate and with a two-year contract), although Verizon plans to offer it in 2010. BlackBerry phones are available from all the major national carriers. Most BlackBerries come with a track ball and qwerty keyboard, which make them a hit with the business set. The BlackBerry Tour 9630 costs $150 with a two-year contract from Verizon.

2. Don’t get hung up on The phone’s price. It’s the cost of the contract that matters. At $199, a 16-gigabyte iPhone 3GS might seem like a better deal than an after-rebate Palm Pre -- until you read the fine print. Sprint charges $100 per month for an unlimited text-messaging, voice and data plan for all its smart-phone models. AT&T charges $120 per month for unlimited voice and text, and an extra $30 for data. So over a standard two-year contract, the iPhone would cost $1,200 more than the Pre. AT&T also doesn’t insure the iPhone against theft or damage. For $7 a month, Sprint will replace a Pre that has been lost, stolen or physically damaged, after a $100 deductible.

3. The Androids are coming. Although the iPhone and the Pre have generated loads of buzz, a wave of phones powered by Google’s new operating system, Android, will hit the market this fall. “It will be the dominant smart-phone operating system by the end of the year,” says Roger Entner, head of telecommunications research at Nielsen. Currently, only two Android-powered phones are widely available in the U.S.: T-Mobile’s G1 ($150) and myTouch 3G ($200). T-Mobile offers an unlimited voice plan for $100 per month, plus unlimited text messaging and Web access for $25 per month. But Sprint plans to offer multiple Android devices this year. The first, the HTC Hero, costs $180 after a $100 mail-in rebate and with a two-year contract. Verizon is said to be ready to launch a Motorola-made Android phone soon. So it might be worth waiting before you commit to a two-year contract.

4. There’s an app for that. Big deal. Google, Apple, BlackBerry and Microsoft offer thousands of applications for smart phones. (With more than 58,000 apps, Apple has a huge head start.) But, says David Owens, director of consumer acquisition at Sprint, the functions customers use most (more than ten times a month) are the basics that all the models do well, such as sending and receiving e-mail and text messages, and taking pictures.


5. Not-so-smart might be good enough. You don’t have to pay smart-phone prices for your favorite features. “Mid-price phones are getting smarter,” says Ian Fogg, an analyst for Forrester Research. The LG Lotus, which has received positive reviews, is a good example. The phone has a 2-megapixel camera, a real keyboard and a Web browser. It costs $50 with a $50 mail-in rebate and a two-year contract from Sprint.