Monday, October 31, 2005

Vodafone, Sky Order TV to Go

Technology News writes that Vodafone and British Sky Broadcasting Group struck a deal that will provide mobile television service in the UK with news, music videos and other entertainment. Sky MobileTV will give 3G users access to 19 mobile channels, including Sky News, MTV, Cartoon Network and Discovery, as well as live mobile coverage of England's cricket team.

Mike McGuire at Gartner said, "There's a lot of interesting early interest, but there are a lot of caveats. In the U.S., in the European Union, and in Asia-Pacific, there are so many options for people to get rich media, you have to be careful."

"What is the big, unanswered question is what is the demand going to be for this content, and what content will people be willing to regularly pay for?" he added.

Telenor Agrees to Buy Vodafone Sweden for $1.24 Bln

Bloomberg reports that "Telenor ASA, Norway's state- controlled phone company, agreed to buy Vodafone Group Plc's Swedish business in a transaction valued at 1.04 billion euros ($1.24 billion)."

According to the article, "Vodafone Sweden is the third-largest mobile-phone company in Sweden, with 1.5 million subscribers and a market share of about 15 percent." Vodafone will receive about 970 million euros and record a charge of about 500 million pounds ($885 million).

John Delaney at Ovum remarked that Telenor needed to fuel growth due to intense competition and falling revenues from it traditional telco services. He said,, "One of the easy ways for Telenor to reverse that trend" is through increased roaming revenue. "People tend to travel between Norway and Sweden a lot more than they do between the U.K. and Sweden.''

Gartner: Worldwide PDA Shipments Increased 21 Percent in the Third Quarter of 2005

Following on the heels of IDC's numbers last week, Gartner offers its take on the worldwide PDA market. Gartner estimated "shipments totaled 3.45 million units in the third quarter of 2005, a 20.7 percent increase from the same period last year. The market is on pace to reach 15 million units shipped in 2005, surpassing the record 13.2 million units shipped in 2001."

Todd Kort at Gartner said, "The rapid spread of wireless e-mail and use of GPS-enabled PDAs, which offer most of the functionality of dedicated car navigation systems at a fraction of the cost, is propelling the PDA market to record growth. This growth is most noticeable in Europe. In fact, Europe is catching up with North America in terms of usage of PDAs in vertical markets and cellular PDAs."

Gartner's definition of a PDA differs from IDC in that they count devices with telephony features while IDC doesn't. In other words if it's a data-first, voice-second device then it's a PDA.

Table 1
Worldwide: Preliminary PDA Vendor Shipment Estimates, 3Q05 (Units)

Company 3Q05 Shipments 3Q05 Market Share (%) 3Q04 Shipments 3Q04 Market Share (%) 3Q04- 3Q05 Growth (%)
Research In Motion 862,000 25.0 565,000 19.8 52.6
HP 548,338 16.0 692,113 24.2 -20.2
Palm 478,575 13.9 748,950 26.2 -36.1
T-Mobile 206,800 6.0 51,000 1.8 305.5
Nokia 200,000 5.8 - 0.0 NA
Others 1,149,633 33.3 801,744 28.0 43.4
Total 3,449,346 100.0 2,858,807 100.0 20.7
Notes: Totals do not include smartphones, such as the Treo 650 and BlackBerry 7100, but include wireless PDAs, such as the iPAQ 65xx and Nokia 9300. Columns may not add to totals shown because of rounding.
NA = Not applicable
Source: Gartner Dataquest (October 2005)

Table 2
Worldwide: Preliminary PDA Vendor Shipment Estimates by Operating System, 3Q05
Company 3Q05 Shipments 3Q05 Market Share (%) 3Q04 Shipments 3Q04 Market Share (%) 3Q04- 3Q05 Growth (%)
Windows CE 1,693,471 49.2 1,375,866 48.1 23.4
Research In Motion 862,000 25.0 565,000 19.8 52.6
Palm OS 515,175 14.9 850,821 29.8 -39.4
Symbian 200,000 5.8 - 0.0 NA
Linux 24,300 0.7 14,500 0.5 67.6
Others 150,400 4.4 52,620 1.8 185.8
Total 3,449,346 100.0 2,858,807 100.0 20.7
Notes: Totals do not include smartphones, such as the Treo 650 and BlackBerry 7100, but include wireless PDAs, such as the iPAQ 65xx and Nokia 9300. Columns may not add to totals shown because of rounding.
NA = Not applicable
Source: Gartner Dataquest (October 2005)


M:Metrics has announced its latest Benchmark Survey for the month of September, which found there is a pent-ip for demand for mobile video "although only one percent of mobile subscribers viewed video on their phones in September."

According to M:Metrics, "6.1 million mobile subscribers said they were likely to view mobile video in the coming year. In comparison, 5.3 million downloaded a mobile game in September."

Mark Donovan at M:Metrics said, "The fact the more people intend to watch mobile video than the number who are downloading games today is very encouraging for this market. Mobile video is still very much an early adopter phenomenon, with males under 35 demonstrating the highest propensity to have used it. However, the key enablers of this market - high speed networks, video-enabled devices and a widening array of video content options - are moving into place. A key question is whether we'll see video move from being a lucrative niche application into a truly mainstream phenomenon."

M:Metrics found that "twenty seven percent of the 1.6 million subscribers who accessed a short video clip in September did so at least once per week, and 51 percent of the 1.4 million subscribers who viewed streaming video accessed it multiple times throughout the month. About 10 percent of mobile subscribers said they were likely to view a TV or video clip in the coming year, and 6.5 percent expressed interest in subscribing to a live TV service."

Donovan added, "The data indicates that people are curious about mobile video and have the phones that are capable of delivering it to them. The challenge for the industry now becomes one of raising consumer awareness of mobile video and ensuring that programming is packaged and priced in a compelling way."

US Mobile Subscriber Monthly Consumption of Content and Applications
M:Metrics Benchmark Survey: September 2005
Activity Projected Monthly
Reach (000s)
Percent US
Mobile Subscribers
Sent or Received Text Message 55,762 30.8%
Retrieved News and Information Via Browser 19,642 10.9%
Purchased Ringtone 15,624 8.6%
Used Photo Messaging 14,929 8.2%
Used Personal E-mail 10,748 5.9%
Used Mobile Instant Messenger 9,457 5.2%
Used Work E-mail 6,129 3.4%
Purchased Wallpaper or Screensaver 5,927 3.3%
Downloaded Mobile Game 5,315 2.9%
Source: M:Metrics, Inc., Copyright 2005. Survey of U.S. mobile subscribers. Data based on the month of September 30, 2005, n= 13,398. Note that due to a change in measurement definitions, month to month changes cannot be computed using our previously reported Benchmark data.

Sprint Launches Music Service, Fast Network

Two more articles on the Sprint news. While the new OTA music download service is getting a lot of play, in my opinion the bigger news is Sprint's very aggressive pricing plans for their EV-DO data network.

In Reuters, Ovum analyst Roger Entner said, "Music could certainly be much bigger if pricing was more in line with what you find on the Internet." The article cites Ovum's forecast that "the U.S. wireless music download market to be worth $1.5 billion in five years, compared with $104 billion for the total U.S. mobile services market in 2004."

Over at Technology News, Lewis Ward at IDC noted "the Sprint Music Store is an industry first in terms of over-the-air full track downloads and it really showcases what's possible with state-of-the-art networks."

Ward said, "The new high-speed entertainment services offered via the Sprint Power Vision Network represents another key milestone in the development of consumer wireless services. Sprint already enjoys the highest revenue per retail subscriber in data-oriented services in the industry and will likely woo many more customers with these new, innovative services."

Inside Digital Media analyst Phil Leigh was a bit more negative towards Sprint's pricing scheme for music downloads. He said, "The price of $2.50 per track is too high. I suspect that's because the labels are demanding higher prices. The labels are indicating that they are not happy with price of items sold on iTunes. That's the principal reason Sprint is charging so much. But because of the price I don't think there will be must interest."

Leigh added, "I think the labels will hold the line until they realize that digital downloads are not going to take off without lower pricing. There is no justification for these higher prices. It doesn't cost them anymore. It actually costs them less to produce an MP3 file."

Have to agree with Leigh. The music service news is really just noise. The big news is Sprint's EV-DO pricing plans from "$15 to $25 a month for unlimited use of data services such as video and digital radio, with more video clips included in higher-priced plans."

Sprint has significantly dropped the barrier to entry for 3G data networks and Verizon and Cingular will have to take note. Now there really is nothing holding back consumer adoption other than the price of a new handset. In my case, I pay $25 a month for Cingular's poky all-you-can-eat GPRS service so I'm just itching to get my hands on Sprint's PPC-6700 (HTC Apache), which offers EV-DO and Wi-Fi....

Cingular Accelerates Its Pace To Improve Data Network Quality

Investor's Business Daily reports about Cingular's efforts to catch up with rivals in wireless data speed, revenue and coverage.

Cingular is behind Verizon and Sprint rolling out its 3G network and generates less data revenue per customer than Sprint and T-Mobile. According to Cingular, the company has upgraded Seattle, Phoenix and Dallas with faster data technology this year and will do so in an additional 12 to 17 markets by year's end.

Adam Zawel at Yankee Group said, "There will be some leapfrogging in the battle for the highest throughput." While Verizon and Sprint are relying on EV-DO networks, Cingular is going with HSDPA (high-speed downlink packet access).

"HSDPA promises the highest average speeds to date," Zawel added.

Pricing will be critical for Cingular as Sprint has really lowered the cost of entry with their aggressive all-you-can-eat Power Vision plans for EV-DO that start at only $15 a month. The Sprint PPC-6700 (HTC Apache) is looking like a better and better deal...

Cell Firms Woo Gays, Potheads

You gotta like the headline from this article in the RED HERRING about a survey from Danish firm Strand Consult that recommends mobile operators need to target narrower audiences with multiple brands to stay competitive.

The report said, “For the largest mobile operators in the world, it has even been a goal to create one single super-brand that should work across national, regional, and global areas—in the same way as the major religions that exist across the world today. But this infatuation in a single-brand strategy seems to be losing momentum.”

Examples of further segmenting the audience include Sonofon, a Danish mobile operator, which has a discount brand, CBB Mobil, a women’s brand,, and on Thursday launched Gaymobile. In addition, earlier this month, Dutch PhoneMe launched a sub-brand targeted at cannabis users — PePtalk —w ith the motto: “Pep Your Addiction.”

Charles Golvin at Forrester Research, said “When a technology or service begins to reach some kind of saturation level, then the providers start competing on a very different level, having to go after their competitor’s market instead of trying to acquire new customers. We’re going to see a lot more separate brands launching under the same service providers.”

“Larger carriers tend to think in segments like value or high-end, consumer or enterprise. And those are much bigger segments than what MVNOs are targeting,” added Golvin.

Sunday, October 30, 2005

Sprint to Launch Service That Sells Song Downloads

As usual, the rumors have been flying around the Internet. Now the Wall Street Journal reports that Sprint Nextel will launch an over-the-air music-downloading service, which offers subscribers hundreds of thousands of songs at $2.50 a pop.

Mike Goodman at Yankee Group said if Sprint Nextel gets "a couple of thousand downloads in the next six months, I will be surprised. There is a market for mobile music, but I don't think there is a market for $2.50 downloads."

Sprint is the first U.S. carrier to offer OTA music downloads, and $2.50 for a full track notwithstanding, no one really knows if U.S. consumers even want to download songs directly to their handset. Japan's 20 million downloads since last December shouldn't be used as a gauge for the U.S., since a lot less people in Japan have PCs at home. Personally, I'll stick to 99 cents at iTunes and transfer songs to my handset...

12% Willing to Pay Extra to Watch TV on Cell Phones covers a new report from Strategy Analytics, which concludes that MobiTV on Sprint TV Live is the highest rated Mobile TV service in the USA, with a five point performance gap over Verizon Wireless’ VCAST. The results are based on hands-on consumer testing.

The report found that "VCAST was rated 22 percent higher than MobiTV for Audiovisual Quality," but the majority of consumers were willing "to sacrifice video quality for access to real-time streaming of “live” TV. Also, users perceived that MobiTV service offers more preferred content from trusted TV channel brands than VCAST."

Kevin Nolan at Strategy Analytics said, "While most consumers found the streaming quality and frame rates so poor that they would only consider watching Mobile TV services for short periods at a time, they valued Mobile TV services for access to fast-breaking news and up-to-date information while on the move. For this reason users found Sprint’s live MobiTV offering more appealing than the pre-recorded ‘made for mobile’ clips offered by VCAST.”

David Kerr at Strategy Analytics added, "1 in 8 US cellphone users would pay $10 per month for unlimited TV access via mobile phone. However, potential users are acutely aware of the limitations of the current generation cellular TV offerings in terms of access/download speed, audiovisual quality, and impact on battery life. Until operators address these limitations, they will be unable to fully monetize the potential of TV services via the cellular network."

The fours "Cs" are critical - content, convenience and cost all in the right context....

Saturday, October 29, 2005

Weekly Roundup

A roundup of mobile analysts in the news for the week ending October 29:

  • John Jackson at Yankee Group via Mac News about convergence and obsolescence
  • Roger Entner at Ovum via E-Commerce News on the high return rate of the Rokr phone
  • John Delaney at Ovum via about Cingular pushing Oz e-mail to users
  • Forrester Research analyst Ellen Daley via InformationWeek on making business communications easier
  • Tim Bajarin at Technology Pundits on which company should CE vendors fear most? Microsoft or Apple?
  • Joe McGarvey at Current Analysis via Communications Technology on SBC and Cingular's IMS Moves
  • Ken Dulaney at Gartner via E-Commerce News about the Supreme Court denial of RIM's stay request
  • Michael King at Gartner via the San Diego Union-Tribune on Digital Orchid
  • John Jackson at Yankee Group via Technology News on handheld device shipments down for seventh straight quarter

In-Stat: Wi-Fi Finally Comes to Cell Phones

Gemma Tedesco at In-Stat writes a positive review of the Audiovox PPC-6700 (aka HTC Apache) Windows Mobile Pocket PC Phone from Sprint. Tedesco luckily got her hands on her husband's handset long enough to say:

The PPC-6700 is a good sign of things to come for embedded Wi-Fi in cellular handsets overall. Even as a data access technology, Wi-Fi brings much value to a smart phone device. But at a street price of approximately $700 in the US, this type of device is still quite limited in its audience.

In-Stat expects that the embedding of Wi-Fi into cellular handsets will be a slow uptake, with penetration into the hundreds of millions not expected until the 2008-2009 time frame. For standard cellular handsets to offer embedded Wi-Fi, Wi-Fi chipsets will need to keep falling in price, and continuing chipset integration will need to occur. This is something that is definitely happening in the Wi-Fi IC market currently, with Wi-Fi chipset vendors really starting to focus on meeting the specific demands of the cellular segment.

Friday, October 28, 2005

Cell Phones For The People

BusinessWeek writes that although a lot of attention is paid to high-end handsets, "increasingly, the real action is at the unglamorous end of the scale, among bare-bones Nokia and Motorola models priced under $50. Sales of such phones, which often handle just voice and text messaging, could grow 100% annually for the next five years."

According to the article, "of the 1 billion cell phones expected to be sold in 2010, half will be in developing economies. Most will cost less than $40 -- still out of reach for the poorest one-third of the world's population but affordable for the middle third." John Jackson at Yankee Group said, "This market is wicked big."

Neil Mawston at Strategy Analytics added, "This market is suited to mega-vendors with economies of scale. Nokia and Motorola will own this segment." The article notes that Samsung, LG and Sony Ericsson are still focused on the mid-to-high end market and haven't announced their strategy for sub-$50 handsets. Carolina Milanesi at Gartner opined, "Samsung needs to do something because its share is not growing."

One concern is what will happen to the handset manufacturers' margins if they tackle the low-end market. Albert Lin at American Technology Research commented, "These phones can actually have higher margins than new high-end models."

Top Tech Companies Complain to EU about Qualcomm

Reuters reports that six firms -- Ericsson, Nokia, Broadcom, Panasonic Mobile Communications, NEC and Texas Instruments on Friday accused Qualcomm of stifling competition in the mobile phone chip market in a complaint filed with European regulators. The complaint said Qualcomm is trying to exclude rivals from the market for chips based on a high-speed wireless standard being used in phones in Europe and other parts of the world.

Charter Equity analyst Ed Snyder said, "Uncertainly always pressures valuations. It seems unlikely that the EU is the venue that can change the history of licensing agreements with Qualcomm."

Harris Nesbitt analyst John Bucher added he had not seen the complaints, but said, "If the complaint is that they're charging one company a higher royalty rate than another that does not appear to me to be anti-competitive. That's symptomatic of licensing practices in a number of technology industries."

Motorola To Debut Handheld Computer

Top Tech News reports that Motorola will offer in November the first in a new line of off-the-shelf, handheld computers for mobile workers. The first device, called HC700-L, will include a color touch-screen display, Wi-Fi Bluetooth and the Microsoft Windows Mobile platform. "It has been designed and tested to military environmental specifications to withstand the rigors of everyday use."

According to Motorola, the target audience is "small and mid-sized businesses or agencies where workers are often sent into the field to collect data, make sales or do other transactions."

Paul Dittner at Gartner noted that Motorola has produced customized handheld devices for companise such as FedEx, DHL and the U.S. Postal Service in the past, but this is their first entry into the off-the-shelf market. He said, "In addition, because it is standard, it is possible to provide better customer support for the devic. When you have many difference software configurations for different customers, it is more difficult to provide customer support. The downside to this approach is, of course, it is not a custom device and may not fit the potential buyers' needs."

Carmi Levy at Info-Tech Research Group added, "Now, it [Motorola] can extend its investments and its experience across a wider range. As more generic classes of hardware manufacturing become increasingly commoditized, I would expect vendors to continue to seek out areas of specialization where they can still generate adequate returns while servicing key markets. This is at the core of Motorola's decision to move forward with this line of products."

Jupiter: In Praise of the ROKR and What Went Wrong

Michael Gartenberg posts his thoughts on the Motorola Rokr and why the launch went wrong at the Jupiter Analyst Weblogs. Gartenberg recently got his hands on one to test and thinks "a lot of the criticism of the ROKR is off base but that doesn't mean that it will be a hit or the criticism will stop." As a phone, he thinks the Rokr is pretty good but is way overpriced. Gartenberg points out that a similar phone to the Rokr has:

a perceived value in the US of about $0. Yep, we don't pay for phones like that here, we get them for free. The value of a 512mb flash player is about $99 (issues of song limits have been a little overblown, with 512mb, I only had room for between 95-98 songs at any given time). Add in a screen and perhaps the integration of one device and perhaps there's a little more value added but not much more. Priced at $249, WITH a 2 year contract to Cingular and the ROKR is just overpriced for the US market
Gartenberg also mentioned that expectation levels weren't set properly from the start and launching at the same time as the nano, "a slim, sexy, iPod with more than 10x capacity at the same price point at the ROKR" was a losing proposition. He concludes:
Bottom line, the ROKR isn't a bad device and if you're looking for a music phone, it's head and shoulders above competing products from Sony Ericsson (who's 512mb music phone will set you back $399 and lacks all the iTunes elegance). It's also a good deal if you already own an iPod and want a complementary device for the scenarios where using an iPod isn't the best experience or you only want to carry one device. What Motorola needs to do, however, is go back and look at the marketing and strategic issues surrounding how this phone was introduced and address those issues. Next time around, it could be a home run instead of merely a single.

Nintendo Puts Handwriting on DS Wall

Technology News writes that Nintendo will provide game developers the ability to employ handwriting recognition technology from Zi Corporation to create software for the DS handheld video game system.

JupiterResearch analyst Michael Gartenberg said, "The DS is very feature-rich, but it takes time for the software to match the hardware specifications. So the DS has WiFi and it has touch-screen and dual screens. The challenge is to come to market with technology in a way that's usable -- not just as another feature."

According to the article, Nintendo has hinted "about creating games that would allow users to play its titles on one screen while sending text messages on the other."

Gartenberg added, "The one thing Nintendo does know how to do is to make software that takes advantage of the hardware. The DS titles are somewhat unique in that they take advantage of secondary screen, the touch screen and the WiFi connection. It will be interesting to see what Nintendo might have planned for a device that integrates handwriting recognition."

Nintendo has demonstrated so far the ability to leverage the strengths and features of the DS. The jury is still out on the Sony PSP, which has great potential but lacks compelling content. Hopefully this will be rectified this holiday season. Interestingly enough, the homebrew community has done a good job of unleashing some of the PSP's potential, but Sony continues to squash this nascent movement....

IDC: Mobile Middleware Hit Milestone in 2004, Will Continue To Increase In 2005-2009 Forecast Period

IDC has issued a new report that finds in 2004 and 2005, the mobile middleware market "has now cracked the half billion-dollar mark and witnessed a mobile middleware vendor breaching $100 million in revenue. IDC currently forecasts this market to increase to $1.4 billion in 2009, representing a compound annual growth rate (CAGR) of 21.0%."

Stephen D. Drake at IDC said, "Organizations today are no longer in the early education stage but are rolling out real mobile deployments and are recognizing the strategic advantages of deploying such solutions."

IDC defines mobile middleware as consisting of a "software platform that includes server and/or client software that either extends the reach of existing IP or other mission-critical applications, or offers the ability to develop new applications for mobile users leveraging a variety of wireless devices. Mobile middleware may include the platform, front-end applications, and development tools as sold in a single offering. Mobile middleware software vendors offer their platforms to enterprise customers, wireless operators, device manufacturers, or other channel partners."

Thursday, October 27, 2005

Orange Targets Businesses with New Windows Devices

InfoWorld Nederland writes that Orange SA is adding two new Windows Mobile 5.0 products to its line of devices geared toward business users. Orange will offer the SPV C600 (HTC Tornado) smart phone and the SPV M3000 PDA (HTC Wizard) on Orange's EDGE networks. The SPV M3000 also includes Wi-Fi, a camera and a camcorder.

Although the two new devices do not take advantage of Orange's 3G network, it does allow the carrier to reach a broader audinece. Rachel Lashford at Canalys said, "EDGE tends to be deployed in areas where 3G is not deployed."

Noting the challenge businesses have supporting smart phone from an IT perspective, Lashford added, "It's something we've seen for a long time with handhelds and it's the same with smart phones. They're still predominantly bought by individuals."

Design Critical to Mobile Satisfaction

Technology News writes about a recent J.D. Power survey that fins "ease of use and design -- not features -- are critical components to consumers' satisfaction with their cell phones." The survey finds that as more features are crammed into handsets, this is becoming even more important.

Rob Enderle at the Enderle Group said, "Buyers are becoming more mature in their buying behavior and are acting in ways that reflect that maturity. They know what to ask for now. It's not a case of which phone has the coolest features any more; it's which phone provides the kind of image that I want to have and has a set of features that I can figure out how to use."

"Previously, a buyer could be convinced to buy pretty much anything that was trendy at the moment by a salesperson or a television ad," he maintained.

The survey found that handsets from LG and Sanyo were tops in customer satisfaction. "Both provide phones that are relatively inexpensive and provide a feature set that encompasses what people want to do and is easy to discover and use," Enderle noted.

According to the Power survey, the most used features are speakerphone (22 percent), text messaging (19 percent), gaming (15 percent) and photos (14 percent).

All of this sounds pretty obvious, right? Well it isn't judging by the myriad handsets and mobile devices out there that just don't fit the bill. I admit that I'm guilty of featuritis envy. My first reaction to the Razr was "That's it? It's only a phone. What happened to all the other cool features?" Good thing for Motorola that I don't design handsets for them...

IDC: Despite New Product Introductions, Worldwide Market for Handheld Devices Continues to Decline

IDC's latest report on the worldwide handheld device market finds that shipments declined for the seventh consecutive quarter, decreasing 16.9 percent year over year and 8.8 percent in 3Q05 to 1.6 million units. While the overall market declines, IDC notes the industry is still pushing ahead with new products and features.

Even as the overall market continues to trend downwards, device manufacturers are steadily pushing forward with new product introductions, software upgrades, and solution deployment, particularly GPS. Given these improvements and the upcoming holiday season, shipments are expected to increase sequentially but decline year over year in the fourth quarter. At the same time, the growth of converged mobile devices, which combine voice and data capabilities in a single form factor, is placing heightened pressure on the handheld market. Those vendors who offer both devices are starting to see shipments of converged mobile devices equal or surpass shipments of handheld devices. IDC defines handheld devices as not including telephony but could include wireless capabilities that enable Internet access and text communication.

Ramon Llamas at IDC said, "The combination of tremendous competition from converged mobile devices with waning consumer demand for handhelds is forcing manufacturers to search for new or improved solutions that leverage existing hardware and software capabilities. Offering solutions beyond PIM, such as GPS, and reaching out towards first-time users are important steps, but will not necessarily bring about a return to growth. Finding and expanding more solutions to modern mobile consumers and enterprises have become imperatives for the handheld market to drive growth."

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share, 3Q 2005 (Preliminary)



3Q 2005 Shipments

3Q 2005 Market Share

3Q 2004 Shipments

3Q 2004 Market Share









































Source: IDC, October 26, 2005

iSuppli Ups 2005 Handset Forecast to 810 million Units

DigiTimes reports that iSuppli has raised its 2005 handset unit forecast by 9.5 percent and expects global handset shipments to total 810 million units, up 13.6 percent from 713 million in 2004.

Scott Smyser at iSuppli noted greater-than-expected strength in handset subscriber growth, esepcially in emerging regions, "where low-cost GPRS phones are popular."

He also added that "much of the growth in the handset market is being driven by upgrade sales, as existing subscribers move up to new handsets."

iPod shuffle still selling well?

AppleInsider writes that according to a research note from American Technology Research analyst Shaw Wu, the Apple iPod Shuffle might still be selling well despite newer offerings in the product line. Citing information from SigmaTel, which supplies digital music decoder chips, and Asustek, the iPod shuffle manufacturing partner, Wu believed "shuffle sales may be turning out better than expected." He also noted "strong promotions and sales of the players through online mega-retailer"

In a separate research note, Wu claimed demand for the "iPod nano now appears to be uniform, with sales of "whites" catching up with "blacks" and even 2GB models catch up with 4GB models." He also said sales of the video iPod were strong "with demand causing lead-times to stretch to one week and in some cases two weeks for black models."

Jupiter: The Music Phone Dilemma

The headline seems appropriate because there seems to be a music phone dilemma at Jupiter too. The other day Joseph Laszlo concluded his post about the Motorola Rokr music phone with these words:

Still, though, it's early days. We do think that over the long haul, there'll be more music-capable cellphones in the US than standalone MP3 players. Even if the ROKR doesn't rock, other music handsets will.
In a later posting, David Card kicks off a post about music phones at the Jupiter Analyst Weblogs by stating,
If anyone's still puzzling over why Jupiter remains lukewarm on music phones, Wired has a really solid story detailing the supply-side challenges. Carriers, handsets, labels, and Apple.
While their stand towards music phones might be confusing, there's no confusion over how they feel towards the music industry. Card points out a quote in the Wired article from a Warner music exec, who said, "The price associated with iTunes' launch was really about establishing some traction with consumers where there had been complete failure to show that people would pay any price. Where you don't have that artificial price depression, people are willing to pay more to get what they want, when they want."

Card rightfully lights into the reality-deprived exec by remarking:
"Artificial price depression"!?! Hey, I'm a believer in price discrimination -- for early access, for big stars, maybe -- but come on, the labels and publishers are keeping 65 cents of the 99 already...darn good margins. Consumers have been telling us consistently during three years' worth of surveys that 99 cents is the sweet spot.
Sometimes you really have to wonder what they are smoking in the music biz. The sooner the industry realizes ringtones are an anomaly the better off they'll be. Honestly, what consumer in their right mind will pay ringtone prices for a full song? Maybe a buck fitty at the max if it's something special, but otherwise it's 99 cents or free...

Wednesday, October 26, 2005

In-Stat: Consumer Electronics Is Major Growth Area For Hard Drives

In-Stat has issued a new report that finds the drive for greater storage capacity will lead to shipments of hard disk drives for Consumer Electronics devices to grow from 40 million units in 2004 to an estimated 240 million units in 2009. In-Stat predicts "significant growth may come from portable devices such as PDAs, digital camcorders, and mobile phones."

Stephanie Guza at In-Stat said, "Alternative storage solutions, such as improved Flash, will continue to compete against small form factor HDDs. Nevertheless, HDD manufacturers are primed for impressive growth in the CE segment, especially as shipments of 1-inch HDDs escalate due to growth in the portable CE space."

Key findings include:

  • The 1-inch-and-smaller HDD market will win out over the forecast period and represent 50% of all HDDs shipped to the CE segment by 2009.
  • Total worldwide shipments of hard drives will increase dramatically over the next five years, growing from approximately 304 million in 2004 to 500 million in 2009.
  • As a result of demand for storing increased amounts of data on smaller, portable devices, HDD manufacturers have strengthened efforts to introduce products utilizing perpendicular recording.
I can see an increased use of hard drives for portable video, audio and possibly gaming devices, but have a hard time believing HDD-enabled cell phones will be more than a niche market due to design, durability and cost issues. Non-volatile memory and/or memory card slots seem to be better suited for the job.

To put it in better perspective, Strategy Analytics predicts the global handset market will reach 800 million units this year. Even if the overall market for hard-drive enabled CE devices hits 240 million by 2009 and the handset market stays the same, at most handsets with drives will be 30 percent of the total market. Not bad, but not mass market either...

Juptier: Motorola: ROKR May Not ROK

Joseph Laszlo posts at the Jupiter Analyst Weblogs that expectations for the Rokr weren't set properly from the get go. He noted that he "went to an analyst event just after the ROKR announcement and asked the Motorola rep there if she had one of the "ITunes phones," before catching myself...and if I can do that, I think there's something to the observation that consumers may not be thinking quite correctly about what ROKR is and does."

Laszlo concludes that "still, though, it's early days. We do think that over the long haul, there'll be more music-capable cellphones in the US than standalone MP3 players. Even if the ROKR doesn't rock, other music handsets will."

EarthLink Mobile Venture Renamed 'Helio'

The MVNO venture between EarthLink and Korean giant SK Telecom has been renamed Helio and will be aimed at the young, high-tech demographic. In ZDNet, Iain Gillott at iGillott Research commented on the potential of MVNOs. He said, "I think we will have a few that survive, and others will go by the wayside. We already have a lot of people going after that high-income, high-tech, comfortable-with-gadgets group."

Julie Ask at JupiterResearch countered, "They have great resources, and they are going after a target segment that I think will be profitable for them."

Yahoo! News picks up a Reuters article on the new MVNO. Forrester analyst Charles Golvin said, "I have a reasonable level of confidence they have the right level of precision in their targeting. Its more of a problem for Verizon, Cingular and Sprint because their focus is more broad."

On the subject of Helio's distinct brand from its parents, Golvin stated, "Brands by themselves, and especially new brands, you can't really judge it on their own. It's how it's presented." Golvin did note that "many of the 18 to 32 year-old consumers Helio is going after may not be conversant in Greek myths."

NPD Group: U.S. Mobile Phone Sales Reached 31.6 Million Units in Third Quarter 2005

It's that time of the year again when the various research shops release their quarterly market figures. Next up on the list is the NPD Group, which announced that "mobile phone sales to consumers in the U.S. reached 31.6 million units in the third quarter of 2005," representing growth of seven percent from the second quarter and an increase of more than 30 percent compared to sales during the same period in 2004. NPD estimated total third quarter 2005 consumer sales of slightly more than $2 billion.

Neil Strother at NPD said, "The handset market was very robust in the third quarter. These numbers reflect strong replacement demand among consumers, coupled with more limited growth from new subscribers.”

NPD reported that manufacturers’ third quarter 2005 unit sales and market shares were as follows:

Company 3Q 2005
Unit Sales
(in thousands)
3Q 2005
Market Share
Motorola 9,458 30%
LG 5,077 16%
Nokia 5,032 16%
Samsung 4,883 16%
Sanyo 1,522 5%
Kyocera 1,378 4%
Sony Ericsson 1,150 4%
UTStarcom/Audiovox 952 3%
Siemens/BenQ 506 2%
Others 1,625 5%
Total 31,583 100%

The top-selling handset models during third quarter 2005 were the following:



















Canalys: Worldwide Smartphone Market Soars in Q3

Canalys has issued a new report that finds the market for converged smart mobile devices continues to soar. Key highlights include:

  • Global shipments of smart mobile devices up 75% year-on-year in Q3 2005
  • Handheld shipments fall 18%, while converged devices more than double in volume
  • Leader Nokia ships record 7.1 million smart phones, up 142% year-on-year
  • Palm shipments down 2% overall, but Treo smart phones up 71%, overtaking its handhelds for first time
  • HP re-enters top five as hw6500 series wireless handhelds perform well
The report analyzes the performance of the top five vendors - Nokia, Palm, RIM, Motorola and HP.

Canalys estimated that Nokia's "year-on-year growth of 142%" was almost twice the market average, and EMEA "accounted for just under 70% of the vendor’s smart phone shipments in Q3." For the first time, shipments of Palm’s Treo smart phones overtook those of all its handhelds combined, and represented 53% of its shipments globally. Canalys noted that Palm is "still the only vendor other than Nokia shipping more than a million smart mobile devices each quarter."

Canalys also found that RIM's growth was slowing. analyst Rachel Lashford said, “Despite pioneering the market for enterprise push e-mail solutions and doing a great job of signing up new operators in many countries the company [RIM] is coming under increasing pressure from a number of hardware and software vendors, all chasing this lucrative segment."

Strategy Analytics: 800 Million Mobile Phones to Be Shipped Worldwide in 2005

According to the latest research form Strategy Analytics, "global mobile phone shipments grew 25 per cent year-over-year, to reach a record 209 million units during Q3 2005," while at the same time, "worldwide industry ASPs (Average Selling Price) fell 11 per cent annually during the quarter."

Neil Mawston at Strategy Analytics, said, "A record 209 million mobile phones were shipped worldwide in Q3 2005. Following 566 million units during the first 9 months of the year, we expect the full-year total to surpass the 800 million level for the first time ever. Q4 will be yet another record quarter and the cell phone market is on track for $120 billion in total annual wholesale revenues by the end of this year."

Chris Ambrosio at Strategy Analytics added, "In stark contrast to the 25 per cent upward growth in shipment volumes, global wholesale handset ASPs declined 11 per cent year-over-year, to reach $146 during the third quarter of 2005. These intense pricing and profit pressures within the mobile phone industry are going to cause consolidation-pressure to reach critical mass among smaller vendors, such as Ningbo Bird and Panasonic, who will struggle to maintain increasingly expensive development efforts in either low-cost phones or feature-rich 3G handsets through the next several years."

Verizon and 3G

In a article about Lucent's upcoming earnings, one of the "biggest concerns for Lucent watchers is that there may be some slowdown in wireless infrastructure orders as big customers like Verizon Wireless review next year's budget."

UBS analyst Nikos Theodosopoulos recently wrote, "There is risk of Verizon cutting back on wireless spending in 2005 and 2006."

Charter Equity Research analyst Ed Snyder didn't mince words when writing about Verizon in a recent note. He said, "Verizon did not cut EV-DO pricing by 25% because demand was too brisk. On the contrary, the value for 3G in general and EV-DO in particular is underwhelming, just as it has been with deployments in Asia and Europe."

I might not agree with everything he says, but Snyder does tell it like he sees it....

Agreeing to Disagree About Silicon Labs

The recent introduction of Silicon Lab's AeroFONE chip for mobile handsets seems to have gotten Wall Street up in a tizzy. According to Silicon Labs, "the new chip saves handset manufacturers money and space because it combines certain functions. It also offers handset makers more flexibility in the software that they can choose to install in the phones." reports on the run up in Silicon Labs stock and gets differing analyst opinions on the cause. Sandy Harrison at Pacific Growth Equities thought the rise was attributed to short sellers scrambling to cover their positions. Harrison said, "I think it's a short squeeze. If you look at the handset market, in general, it's been positive, but you had a disappointment from Skyworks Solutions (SWKS) a few weeks ago and TriQuent Semiconductor (TQNT) was just about in lin. Sometimes people get it in their minds that when a stock trades down it will be a disappointment, and when it wasn't they had to buy; hence, the short squeeze."

Satya Chillara at American Technology Research thought it was due to the AeroFONE announcement. He commented, "The announcement about the new single-chip AeroFONE is why people are getting excited today. The earnings are history, and the fourth-quarter guidance is so-so."

Edward Snyder at Charter Equity Research disagreed. He opined, "I don't think the new [AeroFONE] chip has much to do with it. I think people are getting ahead of themselves. Silicon Labs is a profitable company, generating a lot of cash with a solid business model. But, I think the Street is getting too enthusiastic and not looking at the math driving all this. And analysts may not understand the handset market as well as the computer market. The idea that Silicon Labs will take share back in handsets is possible, but not as probable as the Street is giving it credit for now. We bumped it up to Buy because I don't think anything will slow the stock down this quarter. I think revenue growth may slow in 2006, but I think investors will view the positive and keep it going up for the coming quarter."

Tuesday, October 25, 2005

Covering All the Bases

Australian IT writes about the challenges trying to "transition from calls, calendars and email to a wider range of applications on handheld computers has proved more complex than expected."

Forrester analyst Carl Zetie said, "Email is easier to adopt from a technology perspective, but its measurable business value can be amorphous at best."

The articles cites mobile device interfaces as one reason why enterprise take up is lagging. Ken Dulaney at Gartner said, "Voice and handwriting recognition are key," and proposes a simple test of handheld utility: "Can a physician in an operating room use a computer without looking up?"

The answer is still no. In the battle for the mobile platforms, Dulaney suggested "If you are on PalmOS for an application, it's probably time to think about something else," while "Symbian as a platform really depends on Nokia; everyone else is kind of irrelevant."

Ellen Daley at Forrester added, "The prospect of Linux on PDAs and smartphones remains appealing in innovation terms, but it has had little market impact in corporations."

While the Blackberry leads in email, Dulaney questioned "its ability to handle complex applications in the absence of a persistent network." He opined, "We don't recommend building offline applications on the BlackBerry at this point."

In-Stat: Over One Third Of Consumers May Use Wireless As Primary Phone In 2009

A new report from In-Stat predicts that "between 23% and 37% of US wireless subscribers will use a wireless phone as their primary telephone by 2009." The report found that "about 9.4% of US wireless subscribers already use a wireless phone as their primary phone."

David Chamberlain at In-Stat said, "Those who are considering wireless substitution for landline are primarily motivated by lifestyle issues, as long as they don’t have to give up much in terms of quality, reliability, or services. Wireless carriers can stimulate substitution by continuing to attract customers to advanced wireless features and educating them about availability of number portability."

Key findings include:

  • Consumers who are most likely to consider replacing their landline phone with wireless are those who are already heavy wireless users. Demographics do not offer much insight into the likelihood of wireless substitution.
  • Among those with a wireless and landline phone, resistance to wireless substitution has dropped dramatically since In-Stat’s 2003 survey.
  • Barriers to landline replacement, particularly in-building coverage and perceived inconvenience (such as losing DSL or having to change the phone number), are resolvable with other technologies, continued network build-out, or consumer education.

New iPods Make Some Add-ons Yesterday's Hits

ZDNet reports that the cottage industry spawned by the iPod has hit a speed bump with some existing iPod accessories now being incompatible with the newest players. Obviously, for folks upgrading from older models this could be an inconvenience. Current Analysis analyst Sam Bhavnani said "The benefits of what they are offering far outweighs the negative of potentially having to buy a new iTrip," he said.

On the topic of Apple's new Made for iPod program, which will require acccessory makers to pay Apple a fee, Bhavnani thought this might impove communications. He said, "Apple may be more up front with them then they have in the past about the road maps. Instead of letting them know right around the launch, maybe they will give them a little more lead time."

What Makes Collaboration Work?

CIO Magazine writes about collaboration between companies and profiles the partnership between Apple, Cingular and Motorola regarding the ill-fated Rokr music phone. Roger Entner at Ovum has followed this collaborative effort with great interest and thought the Rokr "has been the red-haired stepchild for Apple, and the situation has been a “nightmare” for Motorola and Cingular." Entner said, “Clearly the Nano overshadowed the Rokr. If you look a the Apple website, it’s Nano, Nano, Nano. In the bottom corner is the Rokr.”

On why the companies partnered in the first place, Entner opined, "There’s been a resurgence of the brand in a miraculous way. [Motorola] wants to wow people with its devices." So while Moto thought it might be building something cool, Entner remarked "[Apple] didn’t want to make it too successful. Look at the device: This is literally last year’s phone...with some new software on it."

The article thinks the Rokr is "actually the result of thorny business issues and defenses against tons of potential lost revenue, and not related to any technological shortcoming. In the end, the trio of companies was so against cannibalizing one another’s revenue flows that they were thwarted in creating something that was innovative enough to be worth the trouble."

Entner added, "There’s a difference between partners and collaborators. In this game, Cingular and Motorola were more collaborators than partners. Usually between carriers and handset manufacturers there’s more of a partnership." Entner also noted that “The carrier owns the relationship in this country,” which probably wasn't to Apple's liking.

However, with all the bad blood, supposedly there will still be a version 2.0 of the Rokr. Entner said, "If the [next version] looks and feels like a Razr, then you have an iconic device...that would kick it out of the stratosphere."

iPod Faces Stiff Competition in Crowded Video Market

Playlist writes that the Apple video iPod is playing catch up against video players from other vendors, such as Archos, Creative, and iRiver.

Ross Rubin at NPD Group said, "I think the most important thing to keep in mind is that what Apple did was take one of its most popular models, the 20 GB iPod—in many ways the flagship product—and forget video for a moment, basically they kept it at the same price added 50 percent more storage, a better screen and made it thinner. Certainly millions of customers are going to buy this product regardless of whether they have any intent to use the video features, and so because of that [Apple is] going to become the leader in the video player market."

However, for consumers looking for specifically for a portable video player, Rubin said, “Let’s say they do care and are buying a product with video features, then it becomes a far more competitive field. Someone who’s looking particularly for video might be willing to accept a somewhat larger form factor than what the iPod with video offers, and in terms of a feature basis they’re probably a little behind. But they were on the music front too."

Jupiter: Samsung's "Shuffle"

Nate Elliott at JupiterResearch compares the Samsung YP-U1 with his Apple iPod Shuffle. Elliott is a fan of the Shuffle due to its "portability, ease of use, integration with the software I use for my larger MP3 player (an old 20-GB 3rd-gen iPod)."

However, Elliott thinks the lack of screen is a minus in his book, because "I want to choose what plays next. Ever want to hear just one song? Try finding it in a list of 200 without a screen." He also wants to be able to shuffle between two playlists and had high hopes for the YP-U1, but in the end was not impressed with Samsung's implementation of "the screen and buttons." Elliott concludes:

It seems like CNet was thinking the same thing. The YP-U1 rates a 6.9, while the Shuffle scored a 7.3. Bottom line? Neither device is perfect -- and hey, I don't expect a perfect device for under 70 quid -- but the Shuffle is marginally better. I guess the answer to my two-playlist dilemma is to just go buy another Shuffle....

Monday, October 24, 2005

More Talking about the Rokr

It seems to be open season on the Rokr. CNN/Money picks up the latest research note from American Technology Research analyst Albert Lin, who claims the Rokr is being returned at a rate of three to six times the industry average for cell phones. Lin believed this was probably due to the first customers being ever-demanding early adopters, who were disappointed with the capacity and software bugs.

Added John Bucher at Harris Nesbitt, "The more complex a product, the more likely you are going to find a return, whether there is a real defect there or not." Bucher added, "I have a sneaking suspicion that Motorola is making money on this product."

Lin commented that "There has to be some friction because I think Motorola did not want the ROKR to be hobbled with 100 song limits. I think Apple was emphatic about that because they were trying to move slowly in the mobile phone world to make sure they don't set a precedent for something that could damage iPod sales."

Ittai Kidron at CIBC World Markets remarked "The next generation of phones to have that functionality will see much more broad adoption," adding that the ROKR's sales figure "is not disappointing by any means. It's a start, and it's a good start, but there is still a long path. Don't forget the RAZR was slow for couple quarters when it came out. Things take time to marinate."

Over at Investor's Business Daily, Eddie Tapiero at Strategy Analytics said, "This is just the first generation of music capable phone. We expect a lot of improvements in future models." On the topic of bluetooth headset and sound quality, Tapiero added, "People would like to use Bluetooth in cell phones for their music as well as conversations. But they're disappointed it's in mono, not stereo."

Rob Enderle said, "People wanted something iPod-like and ended up with a design nowhere near Apple's. One of the top reasons why people like the iPod is the design." Regarding the Rokr 100 song capacity and newer phones coming out with hard drives, Enderle pointed out that "Considering how a phone gets treated, having a hard drive in them doesn't make much sense to me."

Have to agree with him. From a durability and cost perspective, hard-drive enabled handsets will probably be a niche market...

Jupiter: Always Keep Your Phone with You While in the Loo...

Thomas Husson posts at the Jupiter Analyst Weblogs about a recent survey for TeliaSonera that maps SMS relations among Swedes. According to Husson, Sweden is the most sophisticated mobile market in Europe, and the survey provides "new proof of the extent to which mobiles are now part of our everyday life." Here are some of the results:

  • almost 90% have flirted with someone by SMS
  • 2/3 of people read their partner's SMS messages
  • when a partner is in the toilet or shower, 47% immediately grab their partner's mobiles to read messages...
  • 14% answered they had already broken up with someone with an SMS message

Informa: Games Market to Score Big in 2007

Informa Telecoms and Media has issued a report that predicts the global games industry will be worth $35.3 billion in 2005, 5.3% higher than in 2004, and will reach $58.4 billion by the year 2007. According to Informa, "mobile games is the fastest growing 'new' games sector, and is expected to generate revenues of $2.6 billion in 2005." Below are the numbers by sector:

Global Games Market Value by Sector ($ million)

2000 2005 2010
Console Hardware 4,791 3,894 5,771
Console Software* 9,451 13,055 17,164
Handheld Hardware 1,945 3,855 1,715
Handheld Software* 2,872 4,829 3,113
PC Software* 5,077 4,313 2,955
Broadband 70 1,944 6,352
Interactive TV 81 786 3,037
Mobile 65 2,572 11,186
Total 24,352 35,248 51,292

*sales and rental

Source: Informa Telecoms & Media

What's Inside the Video iPod

Ina Fried at CNET blogs about another teardown of the Apple video iPod that was performed by Wall Strret firm Jeffries & Co. The report (pdf) looks at the various companies and components involved in the manufacturing to the iPod and comes up with a BOM cost of $143.50, which is $7.50 or about 5 percent less than the figure iSuppli came up with last week.

The Jeffries' report breaks down the estimated cost of each component as well as analyzes the potential financial/market impact on the publicly-listed component providers.

Yankee Group: Five-Year Forecast for Consumer Portable Device Adoption

Yankee Group has issued a US Portable Entertainment Forecast, which predicts consumer portable device adoption and spending through 2010. Key findings of the forecast include:

  • By 2009, the portable game business will be worth $2.3 billion
  • One-half of all portable music players will be phone hybrids by 2009, yet these phones will account for only one-third of the portable music service revenue
  • Dedicated digital audio devices will continue to be used more exclusively for their single purpose
  • Game hand-held devices and phone hybrids will garner near equal share of revenue by 2009
Mike Goodman at Yankee Group said, "Within this new market dynamic, it will be crucial for companies to have a firm grasp of consumer behavior and the competitive landscape. The major players must understand who will lead and who will follow in order to successfully plan future strategy and appropriately target their investments."

Linda Barrabee at Yankee Group added, "The US Portable Entertainment Forecast comes at a crucial time for the industry. Now more than ever, companies need focused analysis and targeted data to determine opportunities for new product introduction and to distinguish between oversaturated and underserved markets."

One Chip For All?

The Austin American-Statesman reports that Silicon Laboratories is set to introduce a new product, AeroFone, which pushes it closer than any other company to putting the essential electronics of a basic cell phone on a single chip. The company already offers a successful radio transceiver chip,the Aero.

Will Strauss at Forward Concepts said, "This moves them up to be a world-class contender for the cellular market now. This moves them up to rank with the big guys in the industry, like Texas Instruments."

Allen Leibovitch at IDC thought the AeroFone chip is evidence that Silicon Labs "is on a growth path. They are still on the way up in terms of maturity. In wireless it is going to be tougher and tougher to survive with just a point product (like the company's radio transceiver chip), and Silicon Labs understands that," Leibovitch said.

Forward Concepts' Strauss added, "This absolutely elevates their stature. People are going to be looking to Austin more than in the past for wireless solutions. There is a hotbed of neurons there."

Motorola's ITunes Phone May Flop as Handset-Return Rates Soar

Bloomberg reports that the Motorola Rokr music phone may be a flop. According to American Technology Research analyst Albert Lin, "as many as six times more customers are returning the Rokr phones than is normal for new handsets. Lin said, "There's an overall disappointment with the product."

The Rokr is not the only music phone in Motorola's plans. Lin added, "ITunes is a small subset of Motorola's music strategy. As far as their financial focus, they're much more interested in other devices, and by the end of the year, it's iRadio that's going to be front and center."

Paul Sagawa at Sanford C. Bernstein & Co. said, "Beyond the flash of the iPod name and the newly proud Motorola marketing machine, you'd be hard-pressed to say the Rokr is a good product."

Sunday, October 23, 2005

Dean Bubley: The Multimedia Delusions of "Old Mobile"

Dean Bubley posts his thoughts on the potential of mobile content distribution at his Disruptive Wireless blog. Bubley thinks a lot o the talk is "another attempt by the increasingly-cloistered "Old Mobile" industry to pretend that it can defend its worldview against growth of the Internet, home broadband, IP, iTunes, Bittorrent and various other emerging multimedia technologies." He presents two factors why the industry is over-optimistic:

firstly, mobile devices have multiple ways of getting content on and off the device - cellular, WLAN, memory cards, Bluetooth, USB etc. They're also getting smarter - full operating systems like Symbian and Windows Mobile, better Java and so on. Basically, the user will find it easier to play arbitrage games, getting cheaper/better/more convenient content via the PC or other sources, without DRM limiting their content portfolio to a single device or mobile carrier (fancy losing your music or video library when you switch operators?)
secondly, an ever-increasing population is getting used to broadband home Internet access. This is rapidly setting an expectation that there's a lot of "good free stuff" available, with even more "premium but not that expensive stuff". That expectation didn't really exist in massmarket perception 2 years ago, and is now growing incredibly rapidly - more rapidly than the use of mobile content on phones. I believe that these attitudes will rapidly extend to the mobile world, and will undermine the supposed value of the "conversation" around mobile content.

Saturday, October 22, 2005

Weekly Roundup

A roundup of mobile analysts in the news for the week ending October 22:

  • Roger Kay at Endpoint Technologies Associates via the Dallas Morning News on a new era for screens big and small
  • Linda Barrabee at Yankee Group via the New York Times on mobile videos
  • Albert Lin at American Technology Research via Bloomberg on Nokia and Motorola's improving market share and profits
  • Jim Penhune at Strategy Analytics via Investor's Business Daily on the video iPod's impact on cable
  • NPD Group analyst Neil Strother via The Washington Post on the Palm and RIM deal
  • Yankee Group analyst Mike Goodman via Technology News on wireless Nintendo DS gaming at McDonald's
  • Charles Golvin at Forrester Research via KTLA on a computer glitch that killed phone service in the O.C.
  • Rob Enderle via Computer Graphics World on iPod maker's mini-malaise
  • William Choi at Kaufman Brothers via The New York Times on Motorola's earnings
  • Dean Bubley at Disruptive Wireless on wireless "policy management" and "packet inspection
  • Gerry Kaufhold at In-Stat about Apple video iPod
  • Nate Elliott at JupiterResearch via BusinessWeek on the Sony PSP's video efforts and the new iPod

The Carnival of the Mobilists - V.2

Russell Buckley and Carlo Longino at MobHappy have set up The Carnival of the Mobilists, a collection of illuminating, erudite posts about the mobile scene from the past week, and all gathered together in a central place.

Each week The Carnival of the Mobilists will be hosted at a different site, and the second edition was just posted on Oliver Starr's The Mobile Technology Weblog. They must have been short of content or waived the erudite and illumintating rule just for me, because they selected my tongue-in-cheek comments about Nintendo, McDonald's and unhealthy American kids :-)

I suggest you check out The Carnival of the Mobilists, because it offers up a lot of good insights on the mobile scene that oftentimes won't get covered here due to no analyst linkage. Enjoy.

Friday, October 21, 2005

New iPod and Adult Content?

Mobile. Video. Porn. It's been a couple of weeks since the last article on the topic, but the subject never dies. It's like a bad rash. This time Technology News writes about the current lack of mobile video content and how pornographers are ready to fill the void.

Yankee Group analyst Mike Goodman said, "The degree to which the adult industry adopts iPod or PSP content is going to be an important factor in how the market grows for mobile video. The porn industry makes new markets -- entirely new markets, time and time again. When they adopt it, that market grows."

Michael Gartenberg at JupiterResearch noted that purveyors of porn were quick to unleash adult content for the new video iPod, and said, "I don't think Apple can do all that much. If a company wants to sell adult entertainment, there's not much Apple can do."

Goodman commented that although Sony or Apple might not publicly endorse the market, they also wouldn't discourage anyone either. Goodman added that mobile video "is one of those markets that is black and white. It is either going to be very successful, or it's going to die, but it will take two to three years to figure out where it's going to go. Porn is going to be a very important factor, because porn makes markets."

Worldwide Mobile Phone Market Breaks 200 Million Unit Mark in 3Q05

IDC's latest Worldwide Quarterly Mobile Phone Tracker finds that "worldwide mobile phone shipments rose 19.1% year over year and increased sequentially 8.8% in 3Q05 to reach 208.3 million units" with the top 5 vendors reaching all-time-high shipment levels.

Ramon Llamas at IDC said, "Last year, quarterly mobile phone shipments didn't reach 200 million units until the end of the fourth quarter when vendors were keeping the channels' shelves stocked for the holiday rush. As vendors announced new products earlier this year and accelerated their time to market, we've already reached this milestone."

Andrew Brown at IDC added, "The dominance of the handset subsidy model and 12-month upgrade cycles in Western Europe combined with the introduction of a number of highly publicized, multimedia-oriented high-end handsets to drive demand in a mature market that is witnessing saturation of subscriber growth."

However, Geoff Blaber at IDC noted the challenges the inudtry still faces. He said, "As the mobile phone market becomes increasingly segmented in Western Europe, vendors are under pressure to expand their portfolios in order to comprehensively fulfill market demands with regard to air interface, form factor, technical specifications, multimedia capability, software, and ASP. Although new handsets will substantially assist market volume growth, the challenge for vendors is to meet differing segment requirements without over-extending the portfolio and adversely affecting margins."

IDC ranks the top handset manufacturers by shipments and market share along with highlights for each vendor for the quarter. However as Dean Bubley recently noted, volume market share numbers aren't the best metric for evaluating the market. Handset manufacturer revenue figures, margins and average selling prices would provide more value in determining the health of the industry.

E-Commerce News writes about IDC's report and picks up on this revenues/margins theme. John Jackson at Yankee Group said, "If you look at margins, they are relatively flattish. That would indicate that the majority of volume growth is either coming from lower-end models as it has been, or these vendors are challenged to build incremental margins and to progressively higher tier handsets."

Jackson went on to comment on consolidation in the industry. He added, "We are already seeing the signs of consolidation, whether it is with larger vendors like Siemens exiting the business, or smaller vendors, like a number of Taiwanese and Korean and Chinese companies that have left the business over the last quarter or two."

The Numbers Inside the New iPod

BusinessWeek writes about iSuppli's latest teardown of the new video iPod, which reveals Apple is working with a new supplieri, chipmaker Broadcom, for handling video.

According to iSuppli analyst Chris Crotty, he estimated the BOM costs for the latest iPod at $151 for the 30 GB version, which retails at $299. Crotty said, "This is in line with what we have seen with other iPod products from Apple."

Crotty noted that the win is new for Broadcom, but is by no means permanent since current Apple audio chip supplier PortalPlayer offers video chips too. Crotty commented, "In this case, the Broadcom chip is just for video and the PortalPlayer chip is just for audio," "Right now, Apple is keeping the functions separate. Over time, you'll see more chips that do everything. But now it's probably more cost effective for Apple to do it with separate chips."

Crotty predicted the market for chips devoted to the portable media player product category -- in which video-ready players will become increasingly common -- may reach $6.4 billion by 2009. On the topic of displays, Crotty remarked Apple might have some upcoming problems. "We know that Apple has only one source for the display of this iPod. And we also know that it is supply-constrained," he said.

DoTablets Face a Convertible Future?

ZDNet UK Insight writes about the potential market for tablet PCs and laptops with screens that can flip around. According to IDC, tablet PC shipments are expected to hit 9.7 million units by 2008, which is up 708 percent from the 1.2 million units expected to ship this year. Convertible notebooks are expected to make up the majority of those shipments. IDC also predicts more than 100 million notebooks will be sold by 2008.

IDC analyst Richard Shim said, "Manufacturers and consumers are still trying to figure out what to do with tablets and if they make sense for their daily lives."

Roger Kay at Endpoint Technologies Associates, who has questioned in the past whether there is a broader market for tablet PCs, noted there is usually a price premium in the range of $300 for a tablet PC over a typical notebook. He thought that as "manufacturers ramp up their tablet production during the next two years, that premium could drop to $75."