“Much of the smartphone growth during the first quarter of 2009 was driven by touchscreen products, both in midtier and high-end devices,” said Roberta Cozza, principal analyst at Gartner. Fellow mobile devices research director Carolina Milanesi told the Wall Street Journal that, “Making sure you have a strong smartphone portfolio is going to be very important for the vendors.”

Cell phone sales won’t pick up until the second half of 2010, when Gartner expects them to rise 5-6 percent, according to the newspaper. Although “touch for touch sake drove the midtier space, high-end handsets will require integration around music, e-mail and Internet browsing, according to Gartner.

Worldwide Mobile Terminal Sales to End Users in 1Q09 (Thousands of Units)

Indeed, smartphones accounted for 13.5 percent of handset sales during the first three months of the year vs. 11 percent in the same period a year earlier, buttressing an earlier Infonetics Research report of growth despite an overall fall in handset demand.

The research may be good news for Dallas-based AT&T. The carrier recently unveiled an ad campaign focusing on smartphones, announcing nearly one-third of its postpaid customers used the handsets.

Worldwide Smartphone Sales to End Users in 1Q09 (Thousands of Units)

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Why iPad 2 Will Lead Consumers Into the Post-PC Era
• The Near-Term Evolution of Social Commerce
• Content Farms: The Players, The Benefits, The Risks

The Pre is being viewed as a potential make-or-break rollout for Sprint. Along with cutting 8,000 employees, the carrier is still losing subscribers at a time when competitors are adding them. The Pre is also seen as a potential rival to Apple’s dominant iPhone. Palm has a lot riding on this device as well. It’s a classic case of where the CEOs of the two companies are hoping that one plus one equals eleven. (Related: Can Pre Save Palm From Being Put Out to Pasture?)

The launch comes ahead of Apple’s expected introduction of a new iPhone, which many expect to include a lower price tag. BusinessWeek has suggested AT&T may be preparing to cut its data prices to entice more iPhone subscribers.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile Q4: All Eyes Were on Android, 4G and the Rising Tablet Tide
• Report: A Mobile Video Market Overview
• In Q3, the Tablet and 4G Were the Big Stories

AT&T is not the only telco making a push into cloud computing. Verizon Wireless in April introduced its Verizon Remote Backup and Restore effort for individual PCs. Then in May, the carrier extended its Enterprise Mobility Services into India. As a network provider, Verizon Federal President Susan Zeleniak told Washington Technology earlier this month, “we’re in a perfect position to deliver cloud computing.”

More recently, Sprint introduced a branded version of the MiFi, a personal wireless hotspot, and Verizon on Sunday introduced its own version.

EMC becomes the second telecom infrastructure player to reach out to carriers entering the cloud computing arena. Earlier this month, Cisco announced plans to help carriers faced with increased bandwidth demands. Cisco’s Unified Services Delivery program connects data centers with IP networks allowing carriers to offer video, enterprise applications and other bandwidth-intensive cloud-based services.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile Q4: All Eyes Were on Android, 4G and the Rising Tablet Tide
• Report: A Mobile Video Market Overview
• In Q3, the Tablet and 4G Were the Big Stories

“We’ve taken integrated devices mainstream,” AT&T chief marketing officer David Christopher said in a statement, adding that nearly a third of the carrier’s postpaid customers use one. In March, AT&T led its rivals with 11.8 million smartphone users, or 47 percent of all U.S. smartphone customers, the Wall Street Journal reported, citing data from M:Metrics, the mobile research division of analytics firm comScore. That compared to 5.1 million smartphone subscribers for Verizon Wireless, 4 million for Sprint and 3.7 million for T-Mobile.

Along with its Wi-Fi hotspot network and growing number of “quick-messaging” devices, however, AT&T in the release omitted Apple’s iPhone among a list of smartphones (such as the BlackBerry Bold and Nokia E71x) it offers. The iPhone, which accounted for 73 percent of new subscribers, is also clearly absent from AT&T’s new smartphone ad blitz. Nokia’s E71x replaces the Apple handset in the starring role.

Christopher pointed to several reasons for the upsurge in data usage by subscribers. Its smartphone lead could grow even further following Monday’s $2.35 billion purchase of Verizon’s rural wireless spectrum. We asked at the time whether the move was simply a blocking tactic by AT&T to keep rivals at bay.

Although AT&T is touting its lead in postpaid smartphone subscribers, the carrier is just now taking steps to gain a better foothold in the prepaid market, an area where rivals have a head start. A week ago, the carrier announced a $3-per-day plan for those customers not inclined to contracts.

While AT&T understands its exclusive iPhone deal may expire in 2011, it’s not giving up on plans to build a faster network – something Apple appears to want. AT&T is moving forward on an HSPA upgrade, diverging from an LTE network Verizon and others are exploring.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Why iPad 2 Will Lead Consumers Into the Post-PC Era
• The Near-Term Evolution of Social Commerce
• Content Farms: The Players, The Benefits, The Risks

So is it a phone, PC, or both?

Indeed, AT&T’s argument appears to go to the heart of our message earlier this week that the iPhone won’t destroy wireless carriers. AT&T has a love-hate relationship with the iPhone, acknowledging the handset is responsible for increased revenue, yet fearful its 3G network might crumble under the higher bandwidth from iPhone users. As MediaMemo interpreted AT&T’s statement, “If we give people the chance to watch TV on the iPhone, they’ll flock to it –- and our network can’t handle that.”

Along with questions about the sturdiness of AT&T’s 3G network, Kevin Tofel over at sister site jkOnTheRun feels the “crippled” SlingPlayer iPhone app returns us to issues of network neutrality.

But AT&T may have also inadvertently rekindled the argument over whether the iPhone is more like a netbook than an iPod with telephone features. Apple CEO Steve Jobs drew the original comparison in 2008 when the iPhone 3G was released, telling the Wall Street Journal “there’s been nothing on a mobile phone a fraction as good as what’s on PCs.”

This isn’t the first time carriers have wanted to rein in the iPhone. Earlier this month, reports surfaced that Microsoft would ban VoIP applications from its upcoming Windows Mobile Marketplace, a move seen both responding to carriers and preventing a repeat of Apple’s episode over a Skype app available through the iPhone App Store.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Why iPad 2 Will Lead Consumers Into the Post-PC Era
• The Near-Term Evolution of Social Commerce
• Content Farms: The Players, The Benefits, The Risks

Being picked by T-Mobile would be just what Motorola needs to finally get back in the game; it’s seen its wireless market share tumble to 6 percent from 18 percent a couple years ago and its revenue fall 45 percent to $1.8 billion in the latest quarterly period. Such a win could also provide a welcome diversion from the drumbeat over its legal skirmish with former CFO Paul Liska.

And adoption of Android is expected to rise 900 percent in 2009, according to a report out today from telecom analysts at Strategy Analytics, far outstripping the 79 percent gain for the iPhone. T-Mobile USA CTO Cole Brodman, meanwhile, in an interview with Om ranked Android alongside the BlackBerry as one of “two significant partnership bets” the carrier will make.

Motorola is still trying to revisit the short-lived glory days brought on by its RAZR line of handsets. To that end, in 2008, it cut loose its handset unit altogether. Shifting to Android will be a tricky balancing act, or as Om put it, akin to “climbing Mount Everest without an oxygen tank.”

But if they can pull it off, it will take them to the top.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Why iPad 2 Will Lead Consumers Into the Post-PC Era
• A 2011 Mobile Forecast
• Green IT’s Q4 Winners: Wind Power, Solar Power, Smart Energy

“These are tough economic times, but these are times that are rich in opportunity,” he said. Microsoft says a number of startups are producing Windows applications, including ZocDoc, Tweba and SquareClock. Ballmer’s remarks, however, were balanced by the software maker’s announcement the day before that it would cut 3,000 additional jobs.

In a similar vein to BizSpark, Qualcomm Ventures, the funding arm of wireless chip giant Qualcomm, earlier this week unveiled the QPrize. The competition will provide $550,000 to four startups with the best wireless, consumer and green technology business plans. Both projects seem to point to a larger effort by technology leaders to promote startup creation during these cloudy economic times.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Content Farms: The Players, The Benefits, The Risks
• What Google’s Honeycomb Means for Apple and Microsoft
• The Future of Work Platforms: An Overview

The delay was especially mystifying in light of the software maker’s financial backing of Facebook. In 2007, Microsoft poured $240 million into the social-networking service, helping to push Facebook’s valuation to an estimated $15 billion.

As for features, the Windows Mobile client accomplishes the usual tasks — allowing users to edit their profile, send messages and post notes to their wall — but adds some uniqueness. Along with claiming to be the first to let users of the web site upload video directly from their Windows Mobile handset, the Microsoft app skims friends’ Facebook profiles, looking for contact information. The information is then used to call or text message your social networking acquaintances.

Another version of the Facebook application compatible with Windows Mobile 6.5 phones will be introduced later this year when the updated smartphone software becomes available, according to Microsoft. The update will likely be available through its Mobile Marketplace, an online Windows Mobile storefront designed to compete with Apple’s App Store and equivalents from RIM, Nokia and Palm. Earlier this week, PCWorld reported that Micorsoft was banning VoIP applications from its Windows Marketplace for Mobile store. The move was seen as preempting a Windows Mobile 6.5 Skype application similar to that already available through Apple or RIM’s application stores.

Windows Mobile users also part of the MySpace community are still waiting for an app, however. Although one was promised to the veteran social network service in March, there is no word on an eventual product announcement. As with Facebook, Microsoft has been late to support MySpace. MySpace apps for RIM and Apple have been available for a year. Palm has already unveiled an updated MySpace tool for its Pre. Our original question, then, still applies: Hey Microsoft, what’s taking you so long?

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A 2011 Connected Consumer Forecast
• A 2011 NewNet Forecast
• A 2011 Mobile Forecast

Microsoft’s decision means VoIP applications, such as Skype, will sell to Windows Mobile users with only Wi-Fi calling available; the action may also head off a confrontation carriers faced when the VoIP application began selling to iPhone users through Apple’s App Store. In that case, hackers found a way around AT&T, the iPhone carrier that blocked Skype from its 3G network.

But is Microsoft waging a futile battle? The same day the mobile software maker reportedly decided to ban VoIP from its Windows Mobile marketplace, research firm Gartner said end-to-end mobile IP may account for over half of wireless calls within a decade. Indeed, Gartner researchers see VoIP as “a huge and direct challenge to the $692.6 billion global mobile voice market.”

The key to VoIP’s advance is upcoming 4G networks, including WiMAX and LTE. While the economy adds a question mark to the eventual size of the 4G landscape, Gartner believes carriers will embrace 4G out of necessity. With declining voice average revenue per user prompting a search for greater efficiencies, 4G will benefit carriers through reduced network operating costs. Earlier this week, we learned Sprint was mulling the idea of outsourcing its 3G network to save 20 percent on operating expenses.

Although carriers currently have leverage against VoIP on mobile phones, it may not stay that way for long. Google, Yahoo and other portals could account for a third of mobile calls within 10 years, according to Gartner, a trend that recent moves on the part of carriers seems to confirm. Sprint, for example, reportedly wants to refocus on building applications, not maintaining the pipe. Along with an upswing in applications, such as Skype, to make calls, companies not known as telecoms are encroaching on the space once the sole domain of carriers. Apple, for instance, has transformed itself from a computer company to a consumer electronics player with iPhone, an unconventionally designed mobile phone.

Can Microsoft hold back the rising waters threatening to sweep away the familiar carriers? The short-term answer is likely “yes.” However, Skype and other VoIP applications are unlikely to stand still. As we saw with the App Store and RIM, the freely available Skype has tasted telecom blood and Windows Mobile may still be swept aside by a flood of mobile VoIP demand.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Content Farms: The Players, The Benefits, The Risks
• What Google’s Honeycomb Means for Apple and Microsoft