Is the IPhone's Honeymoon Over?

A Raft of New Smartphones Gives Apple its First Major Holiday Competition

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For the third year in a row, Apple's iPhone will enter the holiday shopping season as the smartphone to beat. But this year, it actually has some respectable challengers.

iPhone 3GS
iPhone 3GS Credit: Apple
Perhaps the best rival will be the new Droid phone by Motorola for Verizon Wireless. Running the newest version of Google's Android operating system, Droid includes an improved web browser, free turn-by-turn navigation, a gorgeous screen, a slide-out keyboard and a super-fast processor.

Droid is easily the best smartphone that Verizon Wireless -- the biggest U.S. wireless carrier -- will offer this Christmas, and it represents the beginning of a line of Android phones that Apple will have to deal with.

Indeed, if there's one platform besides the iPhone that could significantly grow its market share in the smartphone industry this winter, it's Android, which has become huge over the last year, taking steam away from the likes of Palm and Microsoft's Windows Mobile.

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Three U.S. carriers, Verizon, Sprint and T-Mobile, will offer a handful of Android devices this Christmas. They range from the Droid to the well-reviewed HTC Hero -- at Sprint, and likely Verizon -- and the new, teen-focused Motorola Cliq, which will sell at T-Mobile. The Cliq includes a slide-out keyboard and a unique interface that brings your social networks -- Facebook, Twitter, etc. -- to the phone's home screen.

Still, we expect the iPhone to be the most popular phone this holiday season. Apple's user experience is unparalleled, its pricing -- $99 for an 8 GB iPhone 3G, $199 for a 16 GB iPhone 3GS -- is unbeaten, and its app platform puts others to shame. The iPhone App Store offers tens of thousands of interesting, amusing, and useful applications, ranging from casual games to research and productivity tools. There's even dozens of apps that turn the iPhone into a remote control for other gadgets you own, from your DVR to your computer.

We think apps are a big part of the next generation of mobile devices and, so far, no one is anywhere near Apple in app features, selection, commerce and marketing. As more companies -- from Chipotle to Nike to Amazon -- build and promote their iPhone apps, they're promoting Apple and the iPhone, too. A win-win situation, and a huge hurdle for Apple's rivals to overcome.

Meanwhile, industry stalwarts Palm and Research In Motion, maker of the BlackBerry, will also try to gain share this Christmas. But both have had a rather disappointing autumn that could limit their gains this holiday season.

Palm will sell its newest smartphones, the Pixi and Pre, only at Sprint, the No. 3 carrier that is still losing customers every day. The newest Palm Pixi, aimed especially at women, will be cheap, at $99. But it will likely support the smallest third-party app store in the business. While Palm's web OS platform has received interest from developers since it was announced in January, its app service is still not fully open for business, and Palm only has a few hundred apps to offer -- compared to almost 100,000 for the iPhone.

And while we expect BlackBerry to retain its dominant market share -- thanks to its broad product line and distribution -- the platform has lost some attention recently as Apple and Android have continued to improve.

RIM's latest, the BlackBerry Storm 2, is really what the first Storm should have been a year ago -- including a better touchscreen, wi-fi support, etc. -- and is still not a very impressive device. As such, we expect Verizon to support RIM with much less advertising this holiday season, instead favoring Droid. RIM -- which now receives the vast majority of its growth from consumers, not corporate buyers -- must do better in 2010.

See this season's top smartphones.

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Dan Frommer writes for Business Insider.

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