By 2002, an industry-wide transition to smart phones was on the horizon. Smart phones integrated PDA functionality in a wireless telephone. Whereas some PDA models had wireless phone capabilities in the form of a clumsy phone module, smart phones emphasized the styling characteristics of a mobile phone, and thus were more comfortable for use as a telecommunications device. However, unlike regular cell phones that have some organizer capabilities, smart phones had larger, sharper screens that could display regular Web pages rather than the small subset of Web pages designed to be readable on cell-phone displays.7 They also typically enabled users to take pictures and download music or other data. Smart phones had higher margins than PDAs (at least initially); however, the convergence of PDAs and mobile phones also meant that companies that produced PDAs (such as Palm and Compaq) were now to be pitted against very large and established mobile phone rivals such as Nokia, Motorola, and Samsung. Over the next five years, Palm, Research In Motion, Nokia, Motorola, Samsung, and HTC battled each other for the rapidly growing smart phone market, with each generation packing in more features and memory while simultaneously trying to whittle down the price to capture the consumer market. By 2006, analysts were estimating that just over 13 million smart phones had been shipped in 2005, while PDA sales had virtually ground to a halt.

Nearly all of the smart phones relied on tiny keyboards akin to those on the original BlackBerry, suggesting that the pen-based interface was on its way out. A game-changing event occurred in June 2007, however, when Apple made a splashy entrance to the mobile phone market with its iPhone. The iPhone had a sleek form factor, and an elegant and intuitive interface that relied on a touch screen. The device also capitalized on the enormous success of