Sunday, July 31, 2005

Everyone Has An Opinion - HP Drops Apple's iPod

The big news going into the weekend was HP ending its partnership with Apple to sell HP-branded iPods. For obvious reasons, the story got a lot of play in the press with many of the biggest names in consumer tech analysis offering up their thoughts on why the deal went south and what it meant for the two companies.

In the San Francisco Chronicle, former IDC analyst Roger Kay, who recently founded his own shop, Endpoint Technologies Associates, said, "[HP CEO] Mark Hurd is cleaning house. He noticed it wasn't a great deal for HP and they weren't making any money on it."

Financial analyst Shaw Wu from AmTech Research added in the Los Angeles Times that "The Apple deal was a Carly [Fiorina] deal. He's making his own mark on the company." Wu also remarked the timing of the deal caught Silicon Valley by surprise. "HP just weeks ago expanded their relationship with Apple by selling Apple's iPod shuffle player. Now, all of a sudden, they're cutting it off," he said.

The consensus among analysts was that Apple wouldn't be hit hard since HP-branded iPods made up only 5 percent of overall iPod sales, although that figure had climbed to nearly 8 percent the past few months. Even so, NPD analyst Stephen Baker told the LA Times that "The long-term impact on Apple is next to nil. Apple has proven they can get their products out there with no problems."

Back in The Chronicle NPD analyst Ross Rubin noted that HP wouldn't be able to sell a portable music player until August 2006, due to a noncompete clause "in the original deal with Apple that prohibits HP from developing or marketing a music player that's competitive with the iPod."

NPD's Baker thought this wouldn't be an issue in a San Jose Mercury News article. He suggested that developing a MP3 player was probably not in the cards at HP since digital music was not essential to the company. "HP has clearly made a focus on video and imaging that they want to play in. They are allocating resources to the media center, digital entertainment PCs and TVs. I don't know why they necessarily have to have their own [MP3 player],'' opined Baker.

Tim Bajarin of Creative Strategies, who is quoted in The Mercury News as well, provides a very thorough analysis of the news at Technology Pundits. Bajarin believes HP is taking back control of its destiny and doesn't think the non-compete is a big deal "because the next battle will not be for digital music devices but instead, for what we call hand held media players. And at this time, nobody owns this emerging market that has even greater potential then stand alone music players will ever have."

For Bajarin, HP's ace in the hole in this nascent market is another device beginning with a small i and big P - the iPaq. He calls it "a full fledged hand held media platform wrapped in a Windows Pocket PC cloak, that "could easily re-emerge as a consumer product that not only supports music, but also video and 1000’s of Pocket PC applications."

Bajarin cites the Palm LifeDrive as a great example of this new type of mobile media device and
points out that Todd Bradley, Palm’s former CEO, "oversaw the LifeDrive’s development until he left Palm, and is now the Sr. VP of HP’s Personal Systems Group, the part of HP that has the iPaq."

Bajarin still thinks that if and when Apple goes the video iPod route they will do it better than anyone else. However, a window of opportunity currently exists for others to "start moving people and the market buzz from stand-alone music players towards a richer mobile hand held entertainment environment" and get a leg up on Apple.

Bajarin makes good points about the iPaq and its potential to help HP lead the charge in to this new arena. Frankly, I never considered HP and its iPaq as a thought or technology leader in this space. I just lump them in with all the other me-too companies.

Branding and marketing will be HP's biggest challenge as they compete against both established global brands (i.e. Apple, Sony, Nokia, Motorola, Samsung) and Taiwan upstarts like HTC and BenQ, who are designing and producing for other companies and carriers some of the most droolworthy and innovative mobile devices on the market today.

Maybe I've become too jaded about HP's prospects since the Carly era of empty promises, but I just can't see them out marketing Apple or any of the others for that matter...

Mobile Monday at Stanford

I'll be attending my first Mobile Monday event tomorrow evening at Stanford. I'll also be trying out 6th Sense's bluetooth-enabled location-based service as well. If you want to talk about the mobile analyst scene then I'll be the guy in khakis and a polo shirt :-)

Saturday, July 30, 2005

Weekly Roundup

A roundup of mobile analysts in the news for the week ending July 30:

  • Julie Ask of Jupiter via NewsFactor on mobile search

  • Linda Barrabee of Yankee Group and Charles Golvin of Forrester via InformationWeek on web-browsing and search on cell phones

  • Chris Ambrosio of Strategy Analytics via E-Commerce News about growth in the global cell phone market

  • Strategy Analytics on market projections for cell phones with memory card slots

  • UK firm Juniper Research via Newsday predicting the worldwide market for gambling on mobile devices could generate $19.3 billion by 2009

Redirecting Traffic

It use to be the only way to get traffic information revolved around waiting for radio stations to give an update, and even then it might not cover the road you were driving.

The Washington Post writes about new technologies, such as email alerts, interactive maps, satellite radio,and mopbile devices that are allowing people on the go to get real-time traffic reports. NPD analyst Stephen Baker notes that "local radio stations have often complained about such new technologies, because they encroach on a service that was once their exclusive domain."

One of the new mobile services comes from Palm, which just introduced the "Traffic for Treo Smartphones" service for 10 U.S. cities. For less than $5 a month per city, Treo users can get "interactive maps with blinking traffic alerts containing the latest information about local traffic speed, accidents, construction and stalled cars on the roads" sent to their handset.

Since the Treo 650 lacks a GPS chip, "Traffic for Treo Smartphones" is not a true location-based service and some level of interaction on the users part will be required to get more detailed traffic information. It is a start and if and when Treo offers models with GPS technology then the potential and usefulness of the service will be even greater...

via Washington Post (site registration required)

Friday, July 29, 2005

Mobile Etch-A-Sketch

Ovum analyst John Delaney comments on a new casual game introduced by UK mobile operator Orange that is based on the long-time toy industry standby - Etch-A-Sketch.

The no-tech doodling tablet has been ported to the mobile world and users "can draw on their mobile phone screens using keypads. The drawings can be saved on the phone. To delete the drawings, users press '0 and the phone vibrates - mimicking the shaking motion on the old Etch-A-Sketch."

The new game takes Delaney back to his childhood, and he makes some good observations about the current mobile scene:

"Alright, putting Etch-A-Sketch on a phone is a bit wacky, but then it's pretty wacky to expect people to buy a tinny 20-second clip of a song, and pay three times as much for it as they would for a hi-fi copy of the whole thing. But ringtones have turned out to be pretty popular. We like Orange's idea of mobile Etch-A-Sketch. The key, we think, is not to make it too slick: the clunkiness and lack of sophistication were an integral part of this toy's appeal."
Delaney also ruminates about other childhood favorites that might make good mobile games. Suffice it to say, casual games are driving the current mobile gaming market due to a host of network, handset design and memory issues, and Orange just might have a winner on its hands as long as customers can find the game on their network....

via Ovum

Sex and Mobility

Wireless Week reports on a new study from liberal think tank Third Way that says wireless technology is aiding, abetting and corrupting today's connected minors by allowing online access to adult material.

More and more people under the age of 17 are acquiring cell phones, and the study cites research from UK firm Juniper Research that found "Pornography already constitutes half of the multimedia traffic carried by U.S. wireless carriers outside of their own portals. Revenues from pornography delivered via mobile devices are projected to increase by more than 50 percent in 2005 and perhaps triple by 2009."

The rollout of data-centric, high-speed 3G networks is helping the proliferation of mobile content and services. If you combine it with the adult industry's well known agility in taking advantage of new distribution mediums and business models, and throw into the mix curious teens with cell phones and raging hormones, you have the makings of a potentially booming and controversial market.

The big question is whether the network operators and industry can and will police themselves or will it require some type of government intervention to try and nip this market in the bud...

via Wireless Week

Mobile Games Growing

Research firm NPD Group recently announced the U.S. video game retail sales numbers of hardware, software and accessories for the first half of 2005. NPD attributes a big part of the industry's 11 percent increase in overall unit sales was due "to the new portable platforms introduced into the U.S. market in late 2004 and early 2005."

Anita Frazier, entertainment industry analyst at NPD said, "The robust performance of the portable market certainly contributed to the considerable sales growth of the industry," and portable game hardware, software and accessories saw dollar sales jumps of 181 percent, 74 percent and 81 percent respectively.

The NPD study didn't track gaming on cell phones and other non-gaming mobile devices so it is harder to get a better picture of the overall mobile gaming market. However with worldwide sales of the Nintendo DS and Sony PSP at more than 11 million and counting, the prospects for the portable gaming market looks extremely healthy, especially when you factor in the relatively small amount of content currently available for the two systems....

via NPD

The Future Market for Mobile Entertainment

Computing writes that UK firm Informa Telecoms & Media is predicting the market for mobile entertainment could reach $42.8 billion by 2010. Informa projects that mobile music and gaming will each be worth about $11 billion with gambling bringing in $6.2 billion and mobile TV and downloadable files making up the rest.

Informa analyst Simon Dyson said, "The growth of mobile music has been astounding, from a cottage industry making basic monophonic ring-tones in 1998 to a multi-billion dollar global business on which the music industry is staking much of its future."

The numbers seem a bit inflated to me. Canalys analyst Rachel Lashford tends to agree, but doesn't really go out on a limb when she comments that Informa's projections "seems very optimistic for a five-year prediction. The growth of this market relies on what catches the public attention and, given the competition for things like MP3 players and phones, the market could return a lot less."

What's most interesting in Informa's report is the relatively small share for mobile adult entertainment at only $2.3 billion, while the mobile gambling market is expected to be three times that amount in 2010. With online poker being all the rage, I always thought it might be perfect for the mobile medium, and I guess in Informa's eyes the potential to win money trumps sex for the mobile crowd...

via Computing

Thursday, July 28, 2005

Less Churn = Cheaper High-end Handsets

It's earnings season and Dow Jones reports that U.S. network operators are doing a better job in reducing customer churn. Agressive promotions and ubiquitous family plans are being attributed to carriers showing more growth and less turnover.

Financial analyst William Power at Robert W. Baird & Co. said "As those members become more reliant on their wireless phones, it would require agreement of everyone for them to switch. It's a strong driver for each of the carriers."

On the M:Metrics blog, Seamus McAteer does a great job breaking down the impact less churn has on Verizon's bottom line. Subscriber churn at Verizon dropped to 1.2% and McAteer calculates that this rate "corresponds with a customer lifetime of about 79 months or revenue of about $3,920 over the lifetime of a typical subscription given the carrier's current ARPU. Each drop in churn of 0.1 percent yields an incremental expected subscriber lifetime of 5 months."

More importantly, McAteer says lower churn and the corresponding higher lifetime customer value will enable carriers to invest more in customer acquistion, resulting in "speedier proliferation of higher-end handsets to support services such as streaming video and music distribution."

Good stuff to know. Hey Verizon, can you hear me now? I'm a long-time, high-ARPU Cingular customer looking for a high-speed, wi-fi enabled smartphone. What kind of deal are you willing to swing...

via Cellular News
M:Metrics Blog

Switched On: MP3 from Rio flight to neophyte

NPD analyst Ross Rubin takes a look at the MP3 portable device market in his weekly Switched On column at Engadget. Rubin comments on the different directions Rio, Thomson and Samsung are taking to compete in a market dominated by the iPod.

Rubin observes that while "the prestige audio brands have been unwilling or unable to able to crack the MP3 market, the mass-market manufacturers aren’t giving up." The Thomson RCA-branded five-CD shelf system and docking MP3 player is one of those products, although in my opinion its high cost ($179 at Best Buy) and lack of memory (128MB) might be gating factors against achieving mass market success.

Rubin says "Thomson has aimed it at “younger children, students, and even grandparents,” with its best chance for success probably among that last group," but still deems it "a decent transition product for late-adopter CD owners who would like to check out this MP3 fuss."

Even with Apple making a killing in the space, expect to see a lot more branded players to hit the market in the months before Christmas that retail at the mass market sweetspot of around $50...

via Engadget

iPhone to Launch at U.K. Music Festival on August 20-21?

The reports that according to AmTech Research analyst Albert Lin, the long-awaited ROKR iTunes phone from Motorola will debut in the U.K. either August 20 or 21 at the "V Festival" concert sponsored by Virgin Mobile U.K.

The introduction of the music handset by Motorola has been rumored to have been pulled twice under orders by Apple head honcho Steve Jobs. Fittinngly Lin says "Virgin Mobile U.K. will be one of the first telcos to offer the phone."

If it indeed happens, many kudos are in store for Apple (and Motorola) for not launching at the customary industry tradeshow, but instead choosing this 2-day music festival, which seems to be the perfect venue for such a launch. Once again, Apple is thinking different and demonstrating why it's lightyears ahead of the competition in terms of marketing to its core audience and picking a similarly enlightened carrier in Virgin.

I bet they sell out all the handsets at the festival...


Mobile Viruses: Threat or Hype?

I use to work in the anti-virus (AV) industry so this article about the potential threat and/or hype of viruses and malware striking smartphones and mobile devices seems like deja vu all over again. Back in 2000 when I last worked in the industry, the potential treat to the Palm platform was all the rage due to its market share dominance.

The mobile market has changed significantly since then and Gartner recently predicted little mobile phone virus activity for at least two years since "not many U.S. consumers have smartphones with which they exchange executable files" and the "market lacks a dominant operating system for virus writers to target."

Of course, one could argue that the Symbian platform has a large enough customer base, and when combined with the growing Windows Mobile platform (Microsoft has never been known for offering secure products) provides fertile enough targets for enterprising virus writers.

The continuing growth of mobile content and data also adds to the mix, especially as users explore beyond the carriers' network. The article reports network operators are teaming up with AV vendors to provide customers with malware-protection

IDC analyst David Linsalata thinks "For the carrier it could be a powerful differentiating factor to say, 'We will protect you and make sure you are secure,'bBut I can't see a carrier simply saying, 'You will always have antivirus protection and we will provide it for you.'"

In the end, protecting your mobile assets comes down to common sense. Viruses and malware are socailly engineered to take advantage of people's inherent susceptability to persuasion and manipulation. Mobile device users need to practice safe-computing that should be ingrained in their minds from using a PC.

For example, Linsalata advises Symbian OS smartphone users to look for the industry certification standard before installing anything. "If you get a file from a friend, make sure he really wants you to install that new game or whatever. If you get a message that the program is not Symbian Signed, first ask yourself whether you are really sure you want to install it."

To paraphrase the NRA, mobile viruses don't cause damage, people do...

via NewsFactor Network

Wednesday, July 27, 2005

Is There a Market for Location-Based Services?

Lately, more has been written about the market potential for location-based services (LBS). A new report by Swedish market research firm Berg Insight predicts the European market for LBS will grow by 153 percent this year to reach €274m (approx. US$300m).

Berg Insight analyst, Johan Fagerberg, attribues the market finally starting to show signs of growth due to "increasingly user friendly handsets paired with a more mature approach to content services [to] create the right conditions for launching new offerings on the market."

Fagerberg cites recently introduced navigation services from network operators Vodafone and Teliasonera as attractive new LBS that turn users "mobile phones into GPS navigators." These mobile services feature "dynamic map information that is downloaded directly from the wireless network" enabling "users to view anything from the latest traffic updates to hotels and restaurants on the handset display."

Last month on this side of the pond, ABI Research issued a report that found mobile carriers were beginning to push LBS here in the States. While the U.S. has trailed Asia and Europe, ABI predicts the market is gaining traction quickly with "Sprint recently introducing an operator-assisted direction-finding service, and other operators set to join the LBS bandwagon in the near future."

Analyst Kenneth Hyers commnetd, "As we forecast last year, GPS — an essential element for LBS — is starting to be included in GSM and WCDMA handsets as well as CDMA. Location-based services will proliferate along with a variety of other services. Gaming, 411, SMS, MMS, photography — will all be bolstered and powered by LBS."

It'll be interesting to see what types of content and services are introduced to the market by the network operators and vendors and whether privacy will be an issue. Some location-based services such as combining navigation with discovery and e-commerce capabilities might sound pie-in-the-sky , but is probably already in the works.

For example, imagine the convenience of locating the nearest Starbucks, finding and paying for a parking spot close by and then ordering and paying for a venti soy latte all from you cell phone or mobile device. Sounds cool......

via Digital Media Europe
via ABI Research

Global Market for Smartphones Rising

UK research firm Canalys yesterday announced market numbers for Q2, 2005 that showed the continuing strong demand for smart mobile devices worldwide. Highlights of the report include:

  • Overall global shipments of smart mobile devices up 105% year on year in Q2 2005
  • Converged devices up 186%, handhelds down 14%
  • Nokia’s share grew to 55%, with it shipping 6.7 million smart phones
  • Palm retains second place as its smart phones grew more than 200%, but handhelds fell 32%
  • RIM, in third, ships almost 900,000 converged devices, on target for its first million-unit quarter
  • Nokia's 54.9 percent share of the worldwide smart mobile device market roughly translates into Symbian easily leading the mobile OS platform market with a 62.8 percent share followed by Microsoft in a distant second at 15.9 percent and PalmSource with slightly less than a 10 percent share.

    via Canalys

    Tuesday, July 26, 2005

    Carrier Demographics

    Yesterday M:Metrics issued a press release that offers up some very interesting demographic data on the consumer makeup of the U.S. mobile carriers. As senior analyst and chief product architect Seamus McAteer states, "Our data shows that each carrier attracts its own demographic, which correlates with the consumption of mobile content."

    For example, higher percentages of younger consumers, particularly between 18-34, subscribe to T-Mobile and Sprint. M:Metrics data shows that "mobile content consumption on both networks is above average, particularly in gaming, photo messaging and text messaging."

    Another interesting tidbit is the comparison of the two largest MVNOs in the U.S., Tracfone and Virgin. M:Metrics found that "consumers of both services spend roughly the same amount on mobile services and have similar household incomes, Virgin subscribers are heavy users of mobile content, whereas Tracfone subscribers are not."

    McAteer opined that "Tracfone's big-box retailer presence has made it an attractive option for older subscribers who keep their phone in the glove box for emergencies, Virgin's exclusive content deals with MTV and youthful branding have captivated 13-17-year-olds, who are also more interested in making a fashion statement with their phones."

    In addition, "with 16.9 percent of its subscriber base being comprised of 13 to 17-year-olds, Virgin has more than twice as many of this age group than average and Tracfone has almost double the average number of subscribers 65 years old and above, accounting for 22.3 percent of its base."

    Having data like this should come in handy as network operators, content developers and manufacturers try to better understand the various mobile audiences, so they can target their products and services more effectively...

    via M:Metrics

    Single vs. Multiple Portable Devices

    Analyst Jerry Purdy of MobileTrax discusses the ongoing debate on how many mobile devices consumers are willing to carry in this lengthy newsletter article. He says nothing earth shattering, but he does present the both sides of the coin for carrying single purpose devices (i.e. iPod, digital camera and phone) or one integrated multi-functional device (i.e. smartphone).

    In the end, his safe conclusion is people:

    "will carry around all the devices that provide clearly differentiated value with most likely one device that does a lot (such as a feature rich cell phone) and then one or two special purpose devices that provide value in one specific way that the user feels they cannot get or enjoy in the generic device."
    Obviously, it all comes down to individual preference. I use to carry a cell phone and PDA that always got left behind due to lack of pocket real estate. I then migrated to a Treo 180 that combined the best of both worlds until it broke.

    Now I have a Windows smartphone that provides enough functionality for me. I primarily use it for phone calls, syncing with Outlook contacts and calendar, light emailing (mostly staying on top of emails when away from the computer), surfing the Internet (i.e. sports scores or Bloglines), and some casual gaming to keep the kids occupied when we're out and about.

    The phone has decent multimedia capabilities but I couldn't see it replacing a camera and MP3 player or being used as a portable video player. The Sony PSP is another example of a cool albeit expensive device that has lots of potential, beyond portable gaming and video, but still lacks certain functionality such as the phone, messaging, camera, etc.

    Which actually brings up a bigger question. Technology is constantly improving/shrinking and manufacturers could build an all-in-one device right now, but at what cost? Let's say my ideal mobile device has a phone, keyboard, high-speed data access, wi-fi, integration with Outlook, a 3-4 inch LCD screen for gaming/video, a 3-4 megapixel camera with a "good" lens and a decent-sized micro hard-drive for storage.

    Usually a mix of these features requires design and cost tradeoffs (i.e. bigger screen for less on board memory and/or no HDD/optical drive) so this "ideal" device would be a very expensive and unwieldy and still would compromise certain fucntionality (i.e. phone) for others (i.e. video). Until technology advances further and the cost of manufacturing this all-in-one device drops significantly for selling at a reasonable retail price point ($100 - 200?), we will probably continue the single vs multiple devices debate for some time....

    via MobileTrax

    Motorola Unveils Competitor to BlackBerry

    Yesterday, Motorola announced some new products of which the highly anticipated iTunes phone was not one of them. Motorola said the ROKR line of iTunes music phones will be announced and shipped by the end of this quarter. Sounds more like an Apple-style launch where product is announced and made available at roughly the same time.

    Motorola did announce its sleek Q smartphone that combines RAZR-like styling with Windows Mobile 5.0 and a keyboard for messaging capabilities. Dubbed in some quarters as the RAZRberry, the phone is being viewed as a potential threat to Research in Motion's BlackBerry products.

    Deepak Chopra, analyst at National Bank Financial thinks the Q "presents both a risk and an opportunity for RIM. It's a threat in that (Q) will work on the new Microsoft system" but an opportunity in that RIM could get its mobile messaging software installed on the Q." Chopra noted "RIM and Motorola have an agreement to license RIM's e-mail software, but the pact hasn't translated into any products yet."

    Charter Equity's Edward Snyder chimes in saying the Q gives the Motorola brand a new luster. "This product is all about branding, in my opinion," he said.

    On his Jupiter blog, Michael Gartenberg posts his thoughts on the Q. A big smartphone fan, Gartenberg is impressed with the phone specs and design saying the "form factor is amazing, thinner than the RAZR with what looks like a very usable keyboard." He warns that the Q is expected to ship in Q1 of 2006, and Motorola doesn't have the greatest track record getting product to market in a timely manner or at all, citing the MPx as an example.

    The MPx was announced to much fanfare but never made it to U.S. shores after more than a year of anticipation (hmmm, sounds like the ITunes phone). Smartphone aficionados might also want to note the plight of Motorola's MPx 220 smartphone that was riddled with problems and eventually pulled by Cingular in favor of the Audiovox SMT5600...

    via Chicago Tribune (site registration required)

    Monday, July 25, 2005

    Finding Things on the Mobile Internet

    Research firm M:Metrics, which measures consumer consumption of mobile content and applications, and benchmarks the performance of carriers, handset manufacturers, platform vendors, media companies and others, recently kicked launched its blog. The firm is a great source for all types of industry data and observations such as:

    The number of people (in the U.S.) that pay for wallpapers is close to the number that downloads a game -- about 6 million. Ringtones are a healthy market with about 18 mil. downloading a tone.
    One of the difficulties M:Metrics notes in a recent post is the tremendous amount of content, applications and services available to U.S. mobile subscribers, and the challenge network operators and content publishers have in promoting it to get consumers to discover and purchase. For example:
    If you're a Cingular subscriber you can choose from over 300 games to buy! If you're on Verizon you have over 350 games to choose from! Choice! It's great. But making this choice requires you to spend more time browsing the catalog than average mobile game would take to play.
    As I've discussed on an earlier posts, the industry has to do a better job of educating consumers and promoting what is available on their data networks if they want to drive usage and revenue. Lowering the cost of entry to the networks might be a good start....

    via M:Metrics

    Sunday, July 24, 2005

    Could Nokia dump Symbian?

    Engadget has a summary of a report from UK analyst firm ARCchart that questions whether Nokia will drop Symbian and go open source. The report from ARCchart offers a nice assessment of the relationship and market.


    Cell Phones Too Complex?

    The Chicago Tribune reports that cell phones are getting too complex for many users. According to research by Forrester, many people don't realize and/or can't figure out the various capabilities of their phone.

    Forrester analyst Charles Golvin says "This means that either consumers have no desire to use some of these basic features, or the user interface and instructions are so poor that even if they should wish to use them, they can't figure them out."

    In addition, the survey found that "less than 10 percent considered a camera to be important when buying a new phone," and "fewer than 20 percent named wireless data services as a critical feature."

    Since the network operators have the most say in which features go into new handsets, capabilities that can drive data traffic and additional revenue per user (ARPU) get highest priority, such as a camera for photo messaging and Internet access.

    Golvin rightfully points out that "There's so much ongoing price pressure on the cost per minute of voice, that were they left to only compete for voice services, they'd see rapidly declining revenues from subscribers."

    On the subject of complexity, the network operators and handset manufacturers need to do a better job of making phones and the data network more user friendly. As long as it doesn't add much extra to material/customer acquisition costs, carriers, manufacturers and even retailers can bundle with each new handset purchase a CD or memory card (disclosure: one of my clients is a semiconductor company) that offers a tutorial on how to use the phone as well as explore the data network to find content and services. The cd/memory card can also include ringtones, wallpaper, music, video, game demos, etc that users can sample and then access the network to purchase and download.

    In theory everyone wins. Customers have more knowledge of phone features and network services, which in turns leads to a better user experience, and more revenue for carriers...

    via Chicago Tribune

    Saturday, July 23, 2005

    Kids with Cell Phones

    The Sacramento Bee reported earlier this week that "kids ages 10 to 14 are the fastest-growing segment of the population getting cell phones, according to Lewis Ward, a senior research analyst for IDC."

    Ward expects the segment to grow 22 percent next year and that kids even younger are getting wired too. "With adults, those who are going to get them already have them," Ward said. "So it's a function of reaching younger and younger demographics. ... It's a relatively untapped market."

    I'm not going to delve into the sociological impact of this trend, but it's easy to see why it is happening. Many kids today are technology sophisticates having grown up with computers, the Internet, video games, Game Boys, etc. For them, a cell phone is just another mobile device.

    For example, my 9-year-old son, AKA Gadget Geek Jr, plays video games (computer and PS2), has had every version of Game Boy except the Nintendo DS, owns a iPod Shuffle, and has saved enough to purchase a Sony PSP. He oftentimes gets dragged along in my never-ending search for the next cool gadget, and loves to play with the various devices I have picked up over the years. Like father, like son I guess. (Disclosure: my 7-year old daughter has shown little interest in gadgets so far but recently inherited her brother's Game Boy Advance SP and now asks to play games on my cell phone when she's bored, so there is still hope)

    My son has been clamoring for a cell phone for some time now. For him, a cell phone isn't just for calling people. It is a customizable mobile device that also plays games, movies and music, takes pictures, records video, sends messages and surfs the net.

    But as Yankee Group analyst Linda Barrabee says, "Kids under the age of 10 have three places to call - mom's cell phone, dad's cell phone and home." And since both my wife and I work out of the home, there is little need for my son to get a cell phone at this time.

    This won't stop my son from asking, but I have my eye on a better smartphone that can access high-speed data networks and has wi-fi so you never know....

    Via Sacramento Bee (site registration)

    Wireless data plans

    Earlier this week Jupiter analyst Julie Ask posted on her blog that Vodaphone was planning to offer a pre-paid mobile data plan that didn't lock users into a monthly payment or annual subscription. I'm not sure if paying by the byte is the way to go but it's still better than the by-the-byte monthly plans out there.

    IMHO, the network operators need to make the all-you-can-eat data plans more affordable, especially for the high-speed data networks like Verizon's EV-DO network.

    Ask rightfully states that unless you're a frequent traveler or your company is paying, it is hard "to justify $60 to $80 per month in data access fees"

    My Cingular GPRS unlimited plan is $25 a month. The speeds seem slower than the old 14.4 dial up days so I can't wait to get my hands on a smartphone with both high-speed data and wi-fi capabilities like the Samsung i730. However, $44.99 a month for Verizon's EV-DO is just too expensive, especially when it's not available in the San Francisco Bay Area yet.

    The carriers need to lower the unlimited prices to home broadband prices. This will drive adoption, network traffic and ultimately revenue for their services, since it allows users to explore the network and try new things....

    via Julie Ask's Jupiter Blog

    iTunes Phone Seen as Imminent

    Next Tuesday, July 26 marks the one year anniversary of Apple and Motorola's announcement they would jointly develop a cell phone able to play songs from iTunes. Since much has been said but nothing has materialized. Many believe the network operators are the main stumbling block because they don't want to offer a phone that will allow users to bypass their networks and services.

    AmTech Research analyst Albert Lin thinks the time still isn't right for an iPhone because it "doesn’t really make financial sense for carriers." Plus, he notes "Apple’s iTunes offers CD-quality tracks for $0.99. Meanwhile, mobile phone downloads typically cost about $2 to $3 apiece with the carrier pocketing a $1 profit."

    As several in the analyst community have hypothesized, it makes sense if Apple joins the ranks of Virgin, Disney amd ESPN to become a mobile virtual network operator (MVNO) and offers their own iPhones. They have many of the pieces in place and wouldn't have to worry about the issues of content portability and bypassing the operator's network to drive downloads.

    Lin says "Even a few million iPhone users could be profitable. I’m sure if Apple came up with its own phone, there would be up to a million Apple loyalists who’d pay for that premium."

    Makes perfect sense to me but Edward Snyder at Charter Equity Research thinks differently. He warns that "Apple is too small and specialized to handle it on its own. The phone business is like King Kong, and Apple is like Cheetah,” he said.

    With the roll Apple is on, they just might be able to outrun King Kong...

    via Red Herring

    Thursday, July 21, 2005

    IDC Forecasts U.S. Wireless Music Market to Surge by 2009

    IDC expects the "U.S. wireless full-track music downloads market segment -- a component of the overall wireless music market -- to surge to $1.2 billion in revenue" by 2009. This figure still represents less than 10 percent of the current overall music market, I believe.

    IDC notes that "wireless full-track OTA delivery has yet to be launched in the U.S." and the following "have impeded development of this emerging market. Key near-term constraints include: lack of available handsets and 3G networks, digital rights management (DRM) complexity, competition from incumbent services, and business pricing models and practices."

    They might want to add the reluctance of the network operators to offer handsets that allow users to circumvent the network (i.e.Motorola iTunes phone) as well. This combined with unrealistic pricing models (by carriers and labels alike) are the biggest deterrents at the moment. If consumers can downloada full song via iTunes for 99 cents, why should they pay ringtone-like prices to receive the same song OTA to their handset?

    IDC analyst Lewis Ward makes a good point when he says the opportunity lies in providing extras beyond just the OTA full track downloads. "IDC believes that there is opportunity for wireless music services to include a range of bundled services designed to complement full tracks. Wireless devices and networks are emerging as a great new channel for the delivery of not just a la carte tracks, but subscription-oriented packages that include radio and song identification technologies, ring tones, ring back tones, music videos, concert information alerts and more," said Ward.

    Like mobile gaming and video, OTA music download is also a nascent market so it'll be interesting to see how things pan out...

    via Tekrati

    Mobile Video and TV Not Ready For Primetime

    Both Forrester and In-Stat released research this week that pretty much corroborated all the other analyst research out there so far - there is lackluster interest in watching video on mobile phones.

    Forrester analysts Charles Golvin and Michelle de Lussanet found that "among online North American 18-to-21-year-olds, at most 8 percent say they would pay to watch some form of video on their phones, regardless of the content and pricing scheme. Only 5 percent of European mobile users say that the ability to view video content is a feature they ‘would definitely look for’ in a new phone.”

    The survey by In-Stat's David Chamberlain showed similar results. "Only one in eight respondents said they were interested in paying for mobile video. In addition, the handsets of two-thirds of the respondents aren't even capable of receiving mobile video the survey found."

    In my mind, there are several gating factors holding back mobile video in the U.S. The slow rollout of 3G networks, the lack of affordable handsets with good, large screens, and the pain of getting video to the device.

    My Cingular GPRS data service is way too slow to stream video, but my phone does have a miniSD memory card slot, and I have had success transferring video from my PC to my 512MB card. Viewing video on the small 1 3/4" x 1 1/2" screen isn't very good, and the whole process of ripping a DVD, encoding it and then transferring it requires multiple applications and too much time and effort.

    Ultimately it's the journey itself that makes it worthwhile, and the ability to impress my kid's friends by showing them Napoleon Dynamite on my phone. I haven't actually watched anything in its entirety on my phone yet. For now, I think I'll stick to the ten-foot experience my living room offers...

    via TelecomWeb - Forrester
    via Mobile Pipeline - In-Stat

    Namco Does Retro Right (Almost)

    Jupiter analyst Michael Gartenberg posts today about Namco releasing some of their classic arcade games, such as PAC-MAN, Ms.PAC-MAN, Galaxian and Galaga for use on cellphones, smartphones and PDAs.

    As Jupiter and other analyst firms have stated, casual games are currently driving the mobile gaming market and these games fit the bill with their simpler graphics but great gameplay. Perfect for playing 5-10 minutes while riding the bus or waiting on line.

    Unfortunately, I couldn't find a game that works on my Audiovox SMT5600 Windows Smartphone. I like having games on my handset to keep myself or my kids busy when there is a lot of downtime. While Namco had games compatible with numerous PDA and cellphone models, none were avaialble for Windows Mobile.

    This highlights one of the problems facing the mobile gaming industry. Game publishers have to port their mobile games to run on myriad platforms (i.e. Symbian, Palm, JAVA, BREW, etc) and often for each different handset or device as well. And porting costs are on top of the costs to develop the game, which can add up quite quickly. Only time will tell if the current economics can drive the market....

    via Michael Gartenberg's Jupiter Blog