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AT&T bets big on apps in 2010 and beyond

The carrier is launching new phones, streamlining its development process, and upgrading its 3G wireless network to capitalize on a growing appetite for applications.

LAS VEGAS--From new cell phones to set top boxes to emerging devices, AT&T is looking beyond the iPhone as it focuses on a rapidly expanding application business.

The company's top wireless executive, Ralph de la Vega, told developers at the company's fourth annual application developer conference here Wednesday that AT&T's future is in applications.

AT&T wireless chief Ralph de la Vega addresses application developers. Marguerite Reardon/CNET

De la Vega noted the explosion in application growth in the U.S. cell phone market over the past year. "No country has seen the growth we have seen," he said. In 2009, U.S. wireless consumers downloaded 832.7 million applications, a ninefold increase over the past two years. He also noted that revenue from these downloads has increased some 60 percent.

At the company-sponsored event held on the eve of the Consumer Electronics Show, de la Vega outlined AT&T's strategy for pushing new applications onto a slew of new devices, and he provided a glimpse into how the company plans to help developers make this happen and make sure its network can keep up with increased demand for data, especially on its mobile network.

The first part of AT&T's strategy is to broaden the company's support for new smartphones beyond the iPhone. Specifically, the company plans to support a growing number of smartphones using different operating systems, most notably Google's Android platform. De la Vega said AT&T will offer five new Android smartphones in the first half of 2010. He also said the company will offer two new Palm OS phones.

Motorola will offer the first Android device using its Motoblur technology that layers Motorola-specific capabilities onto Android devices. AT&T also plans to offer the first Dell smartphone, the Dell Mini 3. This Android-based phone launched in China in late November. And cell phone maker HTC also said it will develop devices using Android for AT&T. All these new devices will be AT&T exclusives.

Beyond the new phones, de la Vega also said AT&T will support new application stores. AT&T is creating a new partnership with Google for its Android Market. And the company on Wednesday said it will finally offer Nokia's Ovi application and content store with integrated billing for AT&T customers.

AT&T is also planning to expand mobile applications to its quick-messaging devices through a new partnership with Qualcomm. Starting this year, AT&T's quick-messaging devices, which typically have a QWERTY keyboard and/or a touch screen, but do not support a smartphone operating system, will use Qualcomm's BREW (Binary Runtime Environment for Wireless) platform for applications. By 2011, de la Vega said AT&T expects 90 percent of the lower-price "quick-messaging phones" to be running BREW. Verizon Wireless has long been using BREW for applications on its feature phones.

Qualcomm CEO Paul Jacobs took the stage to strum up support for BREW and told application developers in the audience that "there is money to be made." He said that more than $2 billion has been paid out to BREW developers.

"It's a simple equation," Jacobs said. "AT&T plus BREW plus developers equals opportunity."

De la Vega also said AT&T plans to improve the process for developing applications for all its devices in an attempt to get more applications to more devices on AT&T's network. As part of this, he promised that the company will encourage the development of new applications for devices other than phones, including set-top boxes for its U-verse TV service.

Although he didn't provide details, de la Vega said the applications offered for set-top boxes will be appropriate for TV viewing. And he said new applications are needed for a slew of emerging devices that will be coming onto AT&T's network, including e-readers, Netbooks, and other 3G-enabled devices.

De la Vega and other AT&T executives at the developer conference noted that all these new devices and applications will need a solid and fast network to deliver the applications and services customers want. They promised that AT&T is working hard to upgrade its network to ensure that it can keep up with demand. On Tuesday, the company announced that it had finally finished upgrading all of its 3G wireless towers with HSPA 7.2.

John Donovan, AT&T's chief technology officer, said this upgrade should improve network speed, as well as provide more efficient and consistent capacity management on the network. He said the company is also upgrading its backhaul network with fiber-optic cable and metro Ethernet technology. This is designed to increase the capacity from the cell towers to AT&T's core data and phone network.

Donovan noted that AT&T has seen its data traffic explode more than 6,000 percent from the third quarter of 2006 to the third quarter of 2009.

"We are very much aware of the importance of our mission to improve our network," he said. "And for innovation to succeed, we are going to have to support explosion of new devices. We've already made tremendous progress and think we have the right road map for years to come."

The improvements AT&T is making in its network, specifically in its backhaul network, will also help the company move toward the next generation of wireless, which is LTE, or Long Term Evolution, he said.

AT&T has been struggling to keep up with user demand as consumers buy more smartphones such as the popular and data-intensive Apple iPhone. AT&T has admitted publicly that the iPhone has created more demand on its network, but the company has said over and over that it is working to upgrade its network. And more upgrades are expected over the next two years.

The new devices, new partnerships, and improved network are all meant to keep AT&T ahead of its wireless competitors in the United States and to capitalize on the growing demand for applications.

"We plan to continue our leadership in the smartphone market, support major application stores, and take applications beyond smartphones to emerging devices," de la Vega concluded. "We'll also take steps to strengthen our developer program. And we plan to continue to invest in our network so that device makers and developers can offer new capabilities. It's a win-win-win for everyone."