A report from wireless industry analyst firm ABI Research released today proclaims that the new Apple iPhone does not fall within the firm’s standard definition of a smartphone, due to restrictions Apple has placed on the phone against the inclusion of third-party applications.

By ABI’s definition, a smartphone is “a cellular handset using an open, commercial operating system that supports third-party applications.” Apple’s announcement two weeks ago that its iPhone would run OS X – essentially an adaptation of its Macintosh edition of Unix – led many to believe the iPhone could open up a world of possibilities for consumer-conceived functionality.

As ABI describes, the functionality of feature phones is controlled by the operator, device manufacturer, and/or carrier, where smartphones “are supported by a third-party ecosystem. Thus ABI principal mobile broadband analyst Philip Solis to comment today, “We must conclude at this point that, based on our current definition, the iPhone is not a smartphone; it is a very high-end feature phone.

“Sure, feature phones have third party applications too,” Solis continued, “but these are relatively weak and limited applications that work with the middleware such as Java and BREW. Applications designed for smartphones can be written to access core functionality from the OS itself, and are therefore usually more powerful and efficient. The competition in an open environment also yields more cutting edge, rich applications.”

Whether the Apple iPhone resides on the smartphone or feature phone side of the fence is not a certainty among mobile analysts, especially those that already proclaimed the device “more than a smartphone” just after Jobs’ initial announcement at Macworld. Two weeks ago, M:Metrics VP and senior analyst John Jackson told PDA Street, “The decision to design the iPhone with a smartphone orientation catapults Apple into the mobile computing business and squarely against Microsoft and the Nokia NSeries.”

The resolution to this problem matters, because some analysts will evidently be tracking the Apple iPhone as a component of the smartphone market. Two weeks ago, Jobs boasted his company’s goal of capturing 1% of the overall worldwide cell phone market - about 10 million users – by the end 2008. M:Metrics projects about 6.15 million total smartphone users in the US alone. The entire smartphone market worldwide, analysts estimate, amounts to about 50 million units per year, so selling an entire fifth of that amount in just two years’ time seems a tad impossible.

On the other hand, if the Apple iPhone isn’t a smart phone, then the ratio suddenly doesn’t look quite that steep.

Two weeks ago during our CES coverage, Frost & Sullivan vice president and chief analyst Dr. Gerry Purdy, on the day after the announcement, could hardly contain his excitement over the device, especially its possibilities for opening a third-party support network. “I would hope that they’ll build an ecosystem that embraces and supports third-party developers to allow the platform to be extended,” Dr. Purdy told BetaNews. “Whether they’ll actually get partners to build iPhones, we already saw that happen and be considered in the Mac days. That may not happen, but I think it certainly has the opportunity to be an ecosystem that allows third-party developers to build applications.”

Unfortunately, ABI analyst Stuart Carlaw has a sobering message that may not please the veteran Dr. Purdy. “Consumers will not be willing to settle for a second-rate cell phone just to have superior music,” said Carlaw, though without stating the Apple iPhone was “second-rate” outright. “Apple must get the phone engineering part of the equation right, and it is difficult to see how they will accomplish that with no track record in the industry. Even though they are working with some prominent suppliers, the task of putting all of the building blocks together cannot be underestimated.”

1:15 pm January 25, 2007 - This afternoon, Info-Tech Research principal analyst Carmi Levy offered BetaNews his take on the issue of whether the Apple iPhone qualifies as a smartphone: "The iPhone is worthy of being categorized as a smartphone by virtue of the way it integrates voice and data functions into one device," Levy told us. "While its inability to support the installation of third party applications will significantly limit its ability to penetrate the enterprise market, this limitation alone does not justify the removal of the smartphone label. It is as much a smartphone as any other converged device that has been introduced previously.

"The definition of 'smart' has nothing to do with its ability - or lack thereof - to support third party apps," he continued. "Precisely what we call it means little to the consumers that will ultimately be purchasing the product. Names and labels mean nothing; what really matters is the bottom-line functionality of a given device and its ability to meet specific end-user needs."