The trend towards cramming ever more functions into mobile phones is forcing consumer electronics vendors to explore new capabilities in their devices in order to stay relevant to consumers in a “connected age.” Mobile Internet Devices (MIDs) combining specialized functions (camera, media player, navigation etc.) with wireless Internet access seem likely to succeed and consumers increasingly expect their electronics to connect to the Internet. But makers of these products have only a window in which to build devices and business models that users will adopt.

“CE manufacturers try to stay relevant in the face of phones that perform multiple functions ‘well enough’,” says ABI Research director Kevin Burden. “Mobile Internet Devices promise to deliver that relevance, but consumers aren’t clamoring for these new devices yet. That means CE vendors must get the user experience and the economic model right from the start. If consumers are not hooked by a compelling experience right away, they’ll stick with what they’ve got.”

Creating a functional product with an intuitive interface may be the easy part. Internet access means service delivery, and the user’s ongoing relationships with the vendor and service provider are equally important. “CE manufacturers realize the importance of a service infrastructure to the long-term use of mobile devices,” says Burden. “The lessons of Apple’s iPod/iPhone/iTunes integration and the RIM’s back-end infrastructure are not lost on them. What’s the best model for multiple device ownership? Consumers want one service plan and one bill for all their connected devices.”

Amazon’s Kindle is proving a new model for devices without up-front service costs. Another example is Openwave Systems’ recently announced Passport service, which allows operators to offer on-demand Internet access to casual mobile data users. Whatever options are developed, says Burden, vendors and operators need to find new ways of delivering connectivity without forcing users to buy another service plan.

ABI Research’s “Mobile Devices Annual Market Overview” delivers an integrated view of the mobile devices market and examines the unique market aspects of individual device form factors, including mobile handsets, ultra mobile devices, broadband-enabled consumer electronics and cellular modems. It includes detailed shipment and revenue forecasts, and is a component of the firm’s Mobile Devices Research Service.

ABI Research is a leading market research firm focused on the impact of emerging technologies on global consumer and business markets. Utilizing a unique blend of market intelligence, primary research, and expert assessment from its worldwide team of industry analysts, ABI Research assists hundreds of clients each year with their strategic growth initiatives. For information, visit www.abiresearch.com, or call +1.516.624.2500.