INBOX:Handset makers are becoming more inventive in the battle for a shrinking market, writes MIKE BUTCHER

AS ALMOST the entire mobile phone industry descended on Barcelona this week for their annual get-together, the mood was grim.

The global economic downturn is a spectral presence throughout the show. The mobile phone industry as a whole is expected to contract in 2009 for only the second time in its existence. Mobile phone unit sales could drop by 5-10 per cent this year.

Barcelona sober was reflected in the reduced attendance, from 55,000 to 50,000 this year. Consumers meanwhile are tightening their belts, cutting back on buying smartphones and those optional “infotainment” services you have to pay for.

That slowing growth means the jump from 3G to even faster “4G” networks will happen more slowly while things like location-based services, mobile wallets and others will probably stay the province of fast-moving start-ups and global internet players like Google. However, consumers are probably going to be the winner in this contracting market. For starters, PC makers, hit hard by the recession, are looking to move into mobile phones to offset the decline in computer sales. We saw Acer and Asus release new handsets as a results and even average phones will gradually get “smarter” as well.

The one area of growth for mobile operators is the use of data services and the move to so-called LTE (effectively 4G) and other acronyms like HSPA and HSPA+.

Meanwhile, the big chatter at the event was about application stores. Apple broke the mould when it launched an application store right on the iPhone. Until then, to get clever applications on your phone you generally had to download them from a website and load them on to a phone from a desktop PC.

Now though, Nokia and others will offer application stores direct from their handsets which will help drive that data use for operators and bring a world of new services to consumers. As a Deloitte report notes, in 2009 mobile phone users are expected to download more than 10 billion applications to their mobile phones – and that will grow again by a third this year.

Another boon to consumers will be the arrival of standard power adapters that will charge any mobile phone. The so-called universal charging solution will help those who find their mobile drained by too much e-mail, SMS and web browsing but can’t lay their hands on the right charger if they are out and about. The bad news is this won’t arrive till 2012, so it’s back to carrying a second battery for a while.

But at least there were some shiny new devices that will be hitting the shops soon. Nokia unveiled the E75 smartphone and the Symbian device will have a slide-out qwerty keyboard, assisted GPS, Wi-Fi, 3G, and a 3.2-megapixel camera.

The HTC Magic is the second Android- driven mobile after Google’s G1 offering. It has a 3.2 megapixel camera, touchscreen and all of the Google-powered services we’ve come to know and love with Android. The Samsung OmniaHD had a huge touchscreen, with an 8 megapixel camera, video recording and deafeningly loud stereo speakers. Skype fans meanwhile can expect to see the application on their Nokias by the end of the year.

So even as the mobile industry nervously waits to see what consumers will do, at least we’ll have a bunch of new toys to play with.