The coming crop of smartphones are data friendly, third-party software friendly phones with Wi-Fi. But there’s more! The processing power of the ARM application processors used in phones lags that of mobile PC CPUs by about 7 years, so this year’s phones will have roughly the computing power of a 2001 laptop.

These changes come together to make phones chip away at the uses of notebook PCs. Many people who used PCs only for email now use Blackberries instead. Many phones are good substitutes for personal organizer software on PCs. The iPhone can credibly substitute for a PC for web browsing.

These trends motivated Instat to say last November:

Smartphone use will grow mostly from use as a laptop replacement

According to Gartner, the year-on-year notebook sales growth numbers for notebook PCs from 2004 to 2007 remained healthy: 36%, 28%, 22%. The crossover in unit volume came in 2006, when smartphones and notebooks both shipped roughly 80 million units worldwide. That 22% unit growth in notebook sales from 2006 to 2007 represented a jump to over 100 million units shipped. Compare this to a 70% jump in smartphone unit shipments in the same period, to over 130 million.

Intel published a white paper last year about a trial deployment of 802.11a as a replacement for wired Ethernet at a 5,000 person campus. The results were lower costs and happier workers. This was just for PC connectivity. The dual-mode phone phase of the deployment is still to come.

There are several interesting findings in the white paper. First, while the latency of the network increased somewhat, the difference was imperceptible to the users. Second, Intel chose to abandon the VPN, relying on 802.11i for security. This made joining the network faster and easier.

The decision to use 802.11a was presumably for the greater capacity (more non-interfering channels than 11g), and for the cleaner spectrum. 802.11n is superior to 802.11a in capacity and rate at range. This means that what was doable with 11a will be even easier with 11n.

Parvesh Sethi is Cisco’s Vice President, Advanced Services. In his keynote at the Communications Developer Conference this week in Santa Clara, he described an interesting use case for future wireless devices:

Your phone automatically notifies the hotel when you arrive - no need to stand in line to check in. Your assigned room number appears on your phone screen. The phone acts as a wireless key for your room. In your room the hotel puts targeted ads onto your phone’s screen.

The bulk of his talk consisted of advice for developers. The two main themes were “leverage the power of the network” and “exploit the long tail.”

The power of the network bit is to be expected from Cisco. The long tail part was a theme at many of the other presentations in the conference. For those who haven’t read the book, the idea is that the enormous reach of the web at relatively minuscule cost allows products that in the past would have been too narrow in appeal now to be commercially viable, and when combined with enough other low-volume products, to be lucrative. For example, a book that sells two copies a month isn’t worth carrying in a retail bookshop. But an online bookstore with a hundred thousand such titles would glean annual revenues in the tens of millions of dollars.

Sethi explained that custom programming for a particular enterprise used to be prohibitively expensive. But now the Web is packed with useful components that you can invoke through simple APIs. Web development environments automatically take care of the hard stuff for you, stuff like security, transcoding, QoS, authentication. Application acceleration is available right in the network. The open application development environment makes it possible for people to add their own value. This unleashes the long tail effect for the component vendors.

The example Sethi gave for this type of application was a real-world one, from an individual Subway franchisee - not Subway Corporate. The application runs on a Cisco phone. When an employee arrives in the morning, he logs in on the phone. This means no need for a time clock. Suppose four employees are scheduled to work a shift, but only three clock in. Previously one would have to start calling to find a substitute, leaving only two to perform the work. Now the phone system starts outdialing automatically, calling down the list of substitutes until one responds with a touchtone. Meanwhile, back in the store, the phone reminds the employees about essential process steps, like putting the bread in the oven. If the employee doesn’t acknowledge that he has done it, the system calls the supervisor to snitch. Sethi claimed that this application yielded a 30% increase in lunchtime revenue in its first month of operation.

Openness of the development environment, the ability for users to modify Cisco’s system and incorporate it into applications built on a whole set of such open components was one of four “Pillars of UC development” that Sethi identified. The other three were security, simplicity and virtuality (access to the application via any device, any where).