Photography and calls are just the start of smartphone functionality / Getty

In fewer than 20 years, smartphones have developed from clunky executive toys to essential communication tools for everyday use, and there is still much more to come

Google's visionary former chief executive and chairman, Eric Schmidt, knows a thing or two about technological advances but even he cannot predict the full future potential of smartphones. He told the Mobile World Congress in Barcelona earlier this year that mobile devices will "do things we haven't begun to think of". What he did forecast, however, was that within a few years mobile devices will integrate even further into our lives. They will monitor our health and become digital personal advisers, storing details of our interests, desires and preferences and offering suggestions based on our locality. They will even take the place of the human memory and improve upon its function.

Smartphones have revolutionised the way we communicate and the way we live. They are a marvel of 21st century technology and most of us who own one couldn't live without them. Yet less than 20 years ago the concept of a handheld mobile device that connected to the internet, sent email, allowed video calling, acted as a personal computer, TV and games console, took photographs and video and used GPS navigation would have seemed like science fiction.

The growth of the global smartphone market has been remarkable. As of March 2011, 22 per cent of UK consumers owned one and global shipments increased 74 per cent from 2009 to 2010. Last year 300 million were shipped across the globe and Schmidt envisages a day in the not too distant future when two billion people will be smartphone owners.

The smartphone has even altered the way software is designed. PCs used to be the starting point for programme writers, but now software packages are developed for smartphone platforms first.

Handsets on sale today, such as the iPhone and the Samsung Galaxy, bear little resemblance to their evolutionary precursors. Those clunky, cumbersome devices emerged in the early nineties and were targeted primarily at the business consumer by manufacturers who saw a gap in the market for a new type of executive toy that combined the functions of a phone and a personal digital assistant (PDA). While widely taken to be the first smartphone, all the Simon Personal Communicator had in common with its modern-day descendants was a touchscreen. Developed in a joint venture between IBM and BellSouth, it lived up to its name; Simon was simple. The expensive eight-inch, 18-ounce handset was launched in 1993 and retailed in the US for $899. It featured a mobile phone, pager, basic PDA, fax machine, calendar, address book, world clock, note pad, email, and games. Because of cost and size, the Simon was a niche product. It would be another five years before consumers got their hands on a more advanced and cheaper mobile device.

The smartphone evolutionary breakthrough came 1996 when Nokia released its 9000 Communicator range. The Finnish company had dabbled in the mobile data market before, producing the comical HP 700LX in partnership with Hewlett Packard, which was literally two devices crudely stuck together: a Nokia mobile phone and an HP PDA. The 9000, however, was a different proposition introducing the flip keyboard, which served as a design blueprint for later slider phones. Still heavy, at 397g, the 9000 was more functional than any previous design. Two years later Nokia released an improved model; the9110 weighed 250g and was smaller and faster, with a 33MHz processor. It had a backlit screen, greater battery life and digital photographscould be viewed on its screen. The smartphone had arrived.

Other telecommunications companies jumped in the bandwagon, realising email and internet connectivity were becoming as important as telephony, if not more so. In 1999, Canadian firm Research in Motion (RIM) launched the 850: a communicator without a phone but with email and wireless internet. Powered by two AA batteries, it was a hit with businesses that wanted a more mobile workforce. In 2002, RIM launched the BlackBerry 5810, an email and internet handset with a phone, and the BlackBerry 6210 came out in early 2004. The design, with its qwerty keyboard and instant 'push' email developed a huge following. Since the 850's launch, it took five years for BlackBerry to sell one million devices but in 2004 the smartphone snowball was reaching critical mass. In November of that year RIMsaid there were more than two million BlackBerry subscribers worldwide. In May 2005 it announced three million sales. Less than a year later there were five million and by 2008, 13 million people were Blackberry owners.

Then, in 2007, there was a new kid on the block that changed the face of mobile communications; the Apple iPhone. With its touchscreen interface, ergonomic design and superior internet browsing, it became a cult must-have, despite an expensive price tag and the fact that UK consumers could buy it only on a pricey O2 contract. A year later Apple changed the game again when it launched the second generation iPhone along with the App Store. Unlike the majority of other mobile phone applications, which had to be downloaded from the internet, iPhone apps could be downloaded directly via 3G or wifi. Featuring more than 500 applications at launch, the App Store marked a leap forward in smartphone functionality and inspired other smartphone makers tocopy the model.

With the advent of apps, smartphones became limitlessly expandable; they became business devices, games consoles, news aggregators and a gateway to the global marketplace. Businesses saw the potential and raced to develop the next killer app. Entrepreneur and web developer William Steward, who runs Pint Drop, a phone and internet-based service that allows customers to text each other drinks vouchers, believes apps are now as vital for business growth as websites were five years ago. He says: "There is huge potential in the app marketplace. It is so easy to build an app now for any of the major platforms, whether it's Android or the iPhone, and programmers are increasingly working on systems which allow app designs to work across all the major smartphone operating systems."

The app market is huge. In 2009, the complete global app market was worth somewhere in the region of $750m. In 2010 that figure increased to over $2bn. And new developments will open the market further."The next big thing in terms of apps will be social commerce," says Steward. "The one place where phones traditionally fall down has been in allowing owners to pay online for impulse purchases. It's a pain to enter your card details into the handset each time. But there is promising new technology that lets you use the camera on your phone to record the details of your debit or credit card. Google is trialling a system called Google Wallet in the US that allows you to store all your card details on your phone and swipe it against a device to make a payment. You can claim any of your loyalty points with it as well."

While the iPhone 4 and 4S are today seen as the gold standard at the top end of the smartphone market, overall sales are dominated by Android phones. Operating systems (OS) dictate how a phone functions and which apps can be used on the phone and the Android OS, which was launched in 2007 after being developed by theOpen Handset Alliance led byGoogle, has the advantage of being used in a multitude of handsets including Sony, HTC, Motorola and Samsung. In the second quarter of 2011, Android phones accounted for 43 per cent of the global smartphone market. Symbian phones (predominantly Nokia handsets) were second followed by iPhones and BlackBerry.

However, in the past year a new OS was launched that some experts predict will challenge the iPhone's position as the smartphone to beat. Microsoft's Windows Phone OS now runs on handsets manufactured by Samsung and LG and, earlier this year, Nokia announced Windows Phone 7.5 will be the primary OS of choice for its phones.

Retailers are relishing a commercial battle. Carphone Warehouse spokesman Richard Quinto says: "Microsoft Windows 7.5 phones are looking like the next big thing. People are interested in them. They take advantage of cloud computing and that seems to be where things are heading; you can push data to the cloud and take data off. The phones have loads of cool functions, the internet browsing is fast and intuitive and the system integrates with the Xbox console too." Only time will tell if it will take a bite from Apple.

Welcome to the next generation of applications

3D or not 3D?

Earlier this year, LG launched the UK's first glasses-free 3D phone, theOptimus 3D, and HTCfollowed with the Evo 3D, which includes a dual-core processor, five-megapixel cameras and a 4.3in 3D screen. The jury is still out on whether the screens are too small to enjoy the full 3D effect.

Call off the search

Experts believe that eventually your phone willautomatically search the internet so you no longer have to. Search engines will use information about you to build a profile of your interests. Yoursmartphonewill pick up information from your environment, anticipate what you will want to know and deliver it automatically.

Serious business

Forget Angry Birds. The focus is increasingly on serious business apps that are gaining visibility in app stores. The report Forecast: Mobile Application Stores,Worldwide, 2008-2014, by IT research firm Gartner, says global mobile application store revenue is expected to reach $15 billion in 2011 and will reach $58 billion by2014, a large percentage of which will be driven by business apps.

Location, location, location

Location-aware smartphone systems will increasingly provide information about the geographical space around you, superimposing a layer of knowledge on the physical world that can be accessed for information and convenience. Instant geotag information will be available on map apps and added to photos, email or Twitter posts.

Head in the cloud

In most phones, all data storage and processing is done on the mobile device itself. In the future, cloud computing and smartphone technologies will evolve into a mobile cloud, with mobile-specific infrastructure, cloud storage, security and applications. Huawei, one of Asia's largest telecommunications companies, is already busy developing the first cloud-only smartphone for the Chinese market. It will offer unlimited downloadable content via the cloud and enable the sharing of movies, electronic books and huge amounts of music, while backing up information on the cloud.