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The Finnish phone maker's new N97 device could compete with low-cost laptops.

Here's another species endangered by our cratering economy: the basic, mid-priced cellphone.

Pinched wallets are putting the so-called feature phone--which includes a camera, Bluetooth, text messaging and Web surfing capabilities--at risk, says Avi Greengart, research director of mobile devices at Current Analysis. Carriers, squeezed by the economy themselves, are passing over their more modest handsets to back flashy smart phones.

And in these grim times, consumers are likely to go for all or nothing, opting for either a free phone or a pricey smart phone, Greengart predicts. "The worse the economy, the more buying behavior will consolidate," he says.

He notes that the trend is carving a new winner's circle among handset makers. Those that offer high-end, high profile phones---think Apple (nasdaq: AAPL - news - people )--are profiting while tamer brands, such as Kyocera, sink.

Editor's Rating:

The Good: Nice design, lots of handy ports, great value

The Bad: Premium sleeves are a little gimmicky

As it turns out, Dell's (DELL) new Studio Hybrid PC has little in common with Toyota's (TM) thrifty Prius sedan. No high-end batteries. No carpool lane privileges. And I'm pretty sure it won't do much to improve fuel economy on your daily commute.

Instead, this "hybrid" PC is a small computer that puts a dual emphasis on energy efficiency and design. Dell is trying desperately to break from its past reputation as a maker of mind-numbingly beige PCs. The Studio Hybrid is one of its first products to have been styled by former Nike (NKE) design whiz Ed Boyd. (Read more about Boyd's efforts to make Dell cool (BusinessWeek, 11/6/08).)

Like all Dell computers, the Studio Hybrid is available in a dizzying array of configurations. The most basic model features a zippy Intel Pentium Dual Core processor, DVD burner, generous amounts of RAM and hard drive space, and it costs just $499. But while a wired Ethernet port is standard, that price doesn't include a wireless card, so plan on adding another $70 for that vital accessory.

As with similar small form factor computers such as Apple's (AAPL) Mac mini, ASUS's (AKCPF) Eee Box, and Hewlett-Packard's (HPQ) Slimline series, the Studio Hybrid comes without a monitor. Such computers are generally aimed at college dorms, living rooms, or as second family computers. To that end, the Studio Hybrid is small enough to sit on a crowded desk or be tucked underneath a television. Lying flat, it's about the size of a Thomas Pynchon hardback.

Dell vs. Apple?

Still, when I first heard about the Studio Hybrid, I was a bit skeptical. Dell? Design? Yeah, right. But if Dell wants to swim in Apple's pool, so be it. Still, as a pretty dedicated Mac user, I was more than a little shocked to find that the Studio Hybrid gives the Mac a run for its money—both in terms of hardware and industrial design.

For the money, the Dell represents a better value than the Mini with more plentiful and up-to-date features. (Admittedly, the Mini is in desperate need of a refresh.) An HDMI port that allows the computer to plug into a high-definition television is a standard option, as is a 7-in-1 media reader for camera memory cards. Normally, feature-packed PCs like this look more like 80s-era boom boxes, overloaded with blinking lights and buttons. But taking a cue from Apple's design manual, Dell integrated these extra ports so that they disappear seamlessly into the black case.

The model I tested also included a slinky, removable bamboo sleeve, which is a $100 built-to-order option. Bamboo is the green material du jour for consumer electronics and therefore teetering on the brink of cliché. But in this instance the sleeve transforms an otherwise humdrum box into a distinctive, attractive case. Other premium shells made of brown or black leather also cost $100. Six significantly less interesting colored plastic sleeves are available for free.

ENERGY EFFICIENT

Dell says the hybrid moniker comes from the computer's use of some laptop components to help reduce its energy usage (it meets Energy Star 4.0 standard). The company also claims the Studio Hybrid uses about 70% less power than a typical desktop, while the power supply that plugs into the back of the PC is 87% more efficient than is usual. These savings won't really affect your energy bills; they simply help mitigate green guilt and supply bragging rights. What is useful is that Dell designers really thought about the physical design of the power supply too, turning out a slim, flat black box rather than the usual unseemly brick.

One of my favorite things about the Studio Hybrid is likely its least sexy feature, the packaging. Bucking the Apple-led trend to enshrine consumer electronics in intricate packaging, Dell ships the Studio Hybrid in a modest, minimalist brown box that would surely warm Al Gore's heart. Overall, the packaging is 95% recyclable and contains about 75% less printed materials than typical tower desktops. This is a significant feat considering Dell ships most of its PCs through the mail and its packaging meets rigorous standards—computers must survive repeated drops, bumps, and knocks, after all.

It would have been easy for Dell to check off one or two of these boxes and still label Studio Hybrid a green PC. But it really seems the computer maker's designers tried to think through every element of the computer to meet its green mission. For that and an overall handsome design, the Studio Hybrid is a compelling PC for those who must run Windows.

The Good: Built-in Wi-Fi for music downloads and Web access, large screen, a wealth of applications

The Bad: Slightly underpowered external speakers

The Bottom Line: A poor man's iPhone, the Touch offers wireless music downloads, mobile Web access, and hundreds of applications while on the go

They say sequels often fail to live up to the original. That's not so with the second generation of Apple's (AAPL) iPod Touch. Apple has managed to make the Touch look better, work better, and deliver more features—all for a $229 starting price, significantly cheaper than the previous $299 entry-level version. The changes, while subtle, are so significant that I give the second-generation Touch a rare perfect score.

The Touch, while an iPod, is close to the iPhone in lineage. It has the same touchscreen, plays music and videos the same way, and includes a wireless Internet connection that lets you access the Web from your home network and wireless hotspots, such as those set up by AT&T (T) in Starbucks (SBUX).

Apple tweaked the look of the Touch, too. It's a lot thinner than the previous Touch, measuring 4.1 inches by 2.4 inches by 0.33 inches, and weighs a scant 4.05 ounces. The back sports a contoured stainless-steel casing, whereas the updated iPhone switches to glossy black or white plastic.

New Speakers

A year ago, when I reviewed (BusinessWeek.com, 10/19/07) the original Touch, many readers took me to task for complaining that there was no dedicated volume button for music and no built-in speaker for listening to music without headphones. In the new generation, Apple's engineers addressed both complaints by adding a rocker volume button on the left side and speakers on the bottom. They also added software to let you fetch e-mail and use other applications previously limited to the iPhone.

Perhaps the biggest shocker is Apple's decision to sell $29 headphones with a built-in microphone. The upshot? Users can download third-party applications from iTunes that will turn a Web-connected Touch into a Skype (EBAY) phone. In effect, the combination of features turns your Touch into a poor man's iPhone, letting you make cheap calls anywhere around the world without signing up for AT&T's expensive two-year service contract.

I've always felt the Touch ($229 to start) has stood in the shadow of the iPhone. But Apple's decision to let developers deliver software to both the Touch and the iPhone actually makes the Touch a more important product for Apple in my mind.

Blackjack, Too

The devices' versatility is a key consideration. Not only is it a great high-end iPod but it's also fast becoming a neat handheld game machine for casual users. In the few weeks I've been using it, I've found myself launching a quick game of blackjack or slots while standing in a line or waiting in an airport.

And because of its great processing power, accelerometer, wireless access, and surprisingly decent battery life, the Touch is limited only by the imaginations of a growing stable of developers. One example: Wireless-music company Sonos in late October offered users a free application that turns the Touch into an additional wireless controller for accessing music from a PC, Mac, or online music-subscription service.

Another great new piece of software on the Touch is called Genius. With it, you select a song and press an icon that looks like an atom on the top of the screen. The software creates a playlist of tracks in your music library, based in part on Gracenote's digital music-database technology, that are similar.

Fatter Margins

The iPhone can do all this, too. Because the Touch does not include a 3G radio, though, the company likely gets slightly better margins with each Touch sold.

The Touch now sits in a class by itself. No longer simply a high-end iPod, it has become the foundation of what's sure to be an increasingly important handheld computing platform for Apple. Rivals should take note: This is one Apple product that could seriously take a bite out of the competition.

Apple's new OS X could force Microsoft to dump its beleaguered operating system.

Apple (AAPL) is the only company I know that can tell its customers what they want and make them like it. Nobody else has pulled that off since Henry Ford decreed that consumers could get a Model T in any color they liked as long as it was black. The latest MacBook and MacBook Pro computers suggest that Apple has not lost its touch.

The difference between Apple and the rest of the industry is stark. Dell (DELL) sells 26 laptop models, each available in many configurations, while Apple offers five, with few hardware options. The average selling price for MacBooks and MacBook Pros in September was $1,483, compared with $689 for Windows notebooks, according to market researcher NPD Group. The point isn't that Macs are overpriced for what they are but that Apple offers only high-end products. Yet despite these seeming disadvantages in variety and price, NPD notes, Macs grabbed nearly 18% of the U.S. retail notebook market in September, a jump of nearly three percentage points since last year.

It's not easy to come up with a dramatic design breakthrough in what is largely a mature product category. Last year, Apple offered the revolutionary MacBook Air, but its extreme thinness and lightness was achieved at a sacrifice in functionality that wouldn't be O.K. in its workhorse laptops.

A Solid Lineup

The latest notebooks should keep Apple's winning streak going. The two new products are a 15-in. MacBook Pro (from $1,999) and a 13.3-in. MacBook (from $1,299), now in a Pro-like aluminum case. Rounding out Apple's family are the old white MacBook ($999), the 17-in. MacBook Pro (from $2,799), and the Air (from $1,799). The last two models got processor and graphics upgrades but are otherwise unchanged.

The most striking feature of the new laptops is their huge and extremely usable touch pad. I have long preferred pointing sticks to touch pads, but Apple's latest innovation might change my mind. As in the last generation of MacBooks, this pad uses multitouch: One finger moves the cursor, two fingers scroll the display. What's new is there's no button—just press firmly on the pad, and you feel a button-like click. One finger gives a standard mouse click. Press with two and you bring up a menu appropriate for what you are doing, just like a right click on the mouse. It's simple, and it works.

The MacBook Pro is equipped with two Nvidia (NDVA) graphics adapters. Users can switch between a GeForce 9600M GT to get maximum performance for games, video editing, or other graphically intense applications, and a less capable 9400M chip for best battery life. Expect similar dual-graphics technology to show up on high-end Windows notebooks as well.

Older Hardware Connections Impacted

MacBook fans may find some other changes disconcerting. Apple is relentless in scrapping old technologies. This time, that may be painful for users of older external monitors and video cameras. Both new Mac models use an external video connector called DisplayPort that only plugs directly into the new $899 Apple LED Cinema Display. For all other monitors, you'll need a $29 adapter. Try using an older video camera and there's a worse catch. Apple has eliminated the FireWire port on the MacBook, rendering cameras that connect to computers only with a Firewire cable unusable. The Pro does have a FireWire port, but it's a new version, called 800, so you'll need another adapter cable to use it with a FireWire 400 camera.

With special software, it is now easy to run Microsoft Outlook and other Windows programs on the Mac. I use VMware's Fusion 2.0 virtual machine software on the MacBook Pro, and the results are so good that I'm longing to take a Mac laptop on the road. But that's where Apple's limited variety is a problem. At 4½ lb., even the 13-in. MacBook is too heavy, while the Air is too limited. Oh, well. Apple has never tried to be all things to all people. It may not solve my problem, but Apple's way seems to work just fine for the company and most of its fans.

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I didn't expect much from games on the iPhone. I had visions of casual games, perhaps a fancy take on solitaire or a version of poker that takes advantage of the handset's touchscreen. Surely not a true mobile gaming experience.

Boy, was I wrong. For the last few days I've been sampling some of the games available from the iTunes Store on the iPod Touch, and I've been stunned at how elaborate and involved they are. On the iPod Touch I've played a version of Gameloft's Real Soccer 2009 that rivals the version of the game on the Nintendo DS, and I didn't even miss the buttons. I've seen demonstrations of Sim City, forthcoming for the iPhone and the Touch from Electronic Arts (ERTS), that look more elaborate and sophisticated than any versions I've played before on a desktop PC or console.

They're immersive, addictive fun. And it's now readily apparent to me that the iPhone and iPod Touch are well on their way to becoming an important force in handheld gaming. When you consider the ease and reach of Apple's (AAPL) online method for distributing games, Apple could do in this category what it did in online music, causing big headaches for the genre's established players, Sony (SNE) and Nintendo.

Apple's come a long way in short order. In the three months and change since the iTunes App Store opened for business, it's already home to some 1,500 games, compared with fewer than 300 titles for Sony's PlayStation Portable and about 600 for Nintendo's handheld console, the DS.

Apple's Gaming Advantages

The iPhone maker is also holding its own when it comes to units sold. Based on sales data and analysts' projections, Apple is on track to sell an easy 40 million devices or more a year that are capable of playing games.

Nintendo sold 42 million DS consoles during the 18 months from January 2007 to June 2008, according to market research firm iSuppli. So Apple is on pace to sell about as many game-capable handhelds in a single year as Nintendo, the market's current leader, has sold in the most recently reported 18 months. This suggests that Apple could be on the cusp of claiming the crown as the world's market leader in handheld gaming.

Now look at Apple's advantages over competitors. Apple already has more titles for its games than both of the other two combined. And aside from the free ones, games on the App Store sell at prices ranging up to $9.99 and sometimes a little more. Compare that with the $20 to $40 for Nintendo DS games and the $10 to $40 for games on the PSP.

And with Apple selling via iTunes, there are no costs associated with the distribution of physical media. All games are downloaded directly to the device. And in the event the game is buggy, the developer can easily issue an easy-to-download fix. The developer gets 70% of the sale and Apple keeps 30%, with no one else to get in the middle. Nintendo and Sony partners have to worry about shelf space at stores, shipping, returns, defective merchandise, and even the occasional shoplifter.

On a revenue comparison, Apple's gaming sales will be much smaller than at Sony or Nintendo because the price of individual games is so much lower. What's more, not everyone who buys an iPhone or a Touch will also buy games. But the potential game sales per iPhone user will be higher because of the price differential. In its most recent quarter, Sony sold 3.18 million PSPs and about 12 million games for an average of fewer than four games per device.

Apple's Impact on the Gaming Industry

While there's no data yet on specific iPhone game sales, users of the iPhone are heavier gamers than those of other phones. A survey by iSuppli's ConsumerTrak found that U.S. cell-phone users report spending less than 3% of phone-use time on games. But that average shoots up considerably to more than 9% on the first iPhone and 6% on the iPhone 3G. (That's still less time than iPhone owners spend on e-mail, texting, or talking.)

How big an impact can Apple have? "They're not going to put Sony or Nintendo out of business," says Van Baker, a gaming analyst at Gartner Group (IT). Both companies have strong and thriving home-console businesses.

And the iPhone and Touch aren't ideal gaming devices. They're also made for calling, Web access, and e-mail. And both lack buttons, which arguably would give players more control over complex in-game moves and maneuvers. (But the iPhone and the Touch have the multitouch screen and the accelerometer, which allow for some pretty fancy moves of their own).

Nor are Apple's newly spawned gaming devices cheap. The iPod Touch starts at $229 and the iPhone 3G starts at $199 and requires a two-year service contract. The Nintendo DS goes for $129 while the PSP goes for $170 to $200. But once you add the cost of games, and in the case of the PSP, a $30-to-$40 Memory Stick, the iPhone's price begins to look competitive. Then the iPhone also has iTunes, which includes easy access to music, movies, TV shows, and more games all the time.

It's enough to make me wonder whether Apple is on its way to conquering yet another sector of the consumer-technology business from out of nowhere. We'll certainly know more after the holiday season, but if I worked for the Sony or Nintendo handheld gaming divisions, I'd be watching the holiday sales figures closely.