, the first wave of

(

) enthusiasts will have their hands on the nifty new iPhone 3G. It has several key improvements over the original model, in particular its ability to use speedy 3G networks for accessing the Web. The phone's debut has implications for a host of other companies: It sets the stage for a dramatic increase in Apple's share of the handset market, thus raising the bar for players who wish to enter or stay competitive, and it provides a new software platform for application developers. It also turns 3G into a mainstream technology. And that is good news, indeed, for

(

).

BY THE TIME YOU READ THIS Apple Qualcomm

except Nokia phones; it is embroiled in a messy royalty dispute with Nokia).

Yeung also observed that Qualcomm is a direct beneficiary of the growing market for smartphones. Apple is providing evidence that smartphones are an increasingly popular choice for consumers as well as corporate Crackberry users. And, Yeung notes, as buyers switch from older, cheaper "feature phones" to more capable and more expensive smartphones, Qualcomm benefits.

I sat down for a chat last week in San Francisco with Bill Davidson, Qualcomm's senior V.P. for global marketing and investor relations. Davidson confirmed Yeung's view that average selling prices for handsets are going up. At the start of the year, Qualcomm had forecast an ASP for the September 2008 fiscal year of $203; the company's most recent estimate is $217. Growing demand for smartphones partly explains the rise, says Davidson, as consumers now want more features in lower-end phones.

Davidson concedes that ASPs can't continue to increase forever; but he says "you can run scenarios" where the expanding market for smartphones has a positive effect on ASPs "for some time to come."

Meanwhile, Davidson sees huge potential for Qualcomm to expand beyond phones, due to its new Snapdragon processor. He imagines the Snapdragon powering two classes of devices: "pocketable computing devices," with four- to seven-inch screens, and "mobile computing devices" with seven- to 10-inch screens. Think oversized iPhones at one end and small laptops on the other.

Qualcomm isn't the only company targeting the uncharted turf between phones and laptops; Intel also has zeroed in on the new MID (mobile intelligent device) market, with its new Atom processor. Qualcomm contends it has a power advantage over Intel's chip; Davidson says Atom requires four times the juice Snapdragon does. He also notes Qualcomm has announced three customers so far for its new chip: handset makers Samsung and HTC, and GPS-device maker Mio. Presumably, there are more to come.

I grilled Davidson on a variety of other issues facing the handset sector; here's some of what he said.

On the iPhone 3G: Apple has forced the whole industry to focus more on software and user interfaces. The question is whether Apple will stay at the high end, or sell devices at multiple price points, as it did with the iPod. If it does the latter, volume can grow "a lot bigger."

On the impact of a slower economy: Growth in the mobile-phone market hasn't been affected in the past by macro slowdowns. And even if overall handset-unit growth slows in 2009, Qualcomm should benefit from increasing adoption of the CDMA standard, which drives its top-line growth. "We're still well-positioned for years to come."

On the woes at

(

): Contrary to some on the Street, Motorola doesn't face an "insurmountable challenge," and there is still equity in the Motorola brand. "It's a hit-driven business, and that capability still exists for them." But fixing Motorola will take time. If Davidson were asked to be CEO not that he's volunteering he'd ask the board for three years to turn things around.

Motorola

On the future for

(

): "Based on who is over there, I hope we see good things." Davidson still has a U.S. Robotics-branded Palm Pilot in his office. "It was very simple to use, but didn't evolve much after that. It never got more functional." A comeback is possible. "Apple has shown, if you execute well, a decent amount of people will pay a lot for a handset."

Palm

On the prospects for WiMax, a standard on which Qualcomm has no royalty claims: Davidson is a skeptic, recalling the talk that ubiquitous municipal WiFi networks threatened 3G. "It's not even competitive with 3G networks laid out today in terms of performance."

Qualcomm, which beat Street expectations in the March quarter, reports June-quarter earnings July 23; don't be surprised to see another strong performance.

TWO WEEKS AGO, I penned an item (June 30) about Sun Microsystems, while statistically cheap, could prove a value trap. Last week, Sacconaghi previewed Sun's June-quarter earnings, cautioning that results could miss Street estimates. The consensus is for 27 cents a share; Sacconaghi sees 21 cents, noting that on a constant-currency basis, revenues have been below year-earlier levels the past four quarters.

Trip Chowdhry, an analyst with Global Equities Research, asserted in a research note last week that "a search is probably on to find a new CEO at Sun." Since current chief Jonathan Schwartz succeeded Scott McNealy in April 2006, the stock has lost half of its value and now sits close to a 13-year low. (It's down 10% over the past two weeks.) Among the huge number of comments on my blog last week in response to several posts on Sun were many from current or former Sun employees proposing the company dump "the Ponytail," a reference to Schwartz's trademark hair style.

At some point, you have to wonder if KKR which in early 2007 sank $700 million into two series of low-yielding Sun convertible issues now far out of the money or some other private-equity shop might consider taking Sun private. Sun does, after all, have $3.3 billion of net cash, about 45% of its $7.1 billion market cap. But with the private-equity market dormant, IT spending under pressure and the Street unconvinced a turnaround is near, you'd be hard-pressed to find a reason to get buzzed on JAVA.