Ovum: Disney and O2 announce family MVNO in the UK

Carrie Pawsey at Ovum writes that "Disney and O2 have announced an MVNO wholesale deal that will facilitate the launch of Disney Mobile in the UK. This follows a similar deal Disney has with Sprint in the US. The US launch is due in June 2006, and the UK operation hopes to launch in time for Christmas 2006."

Pawsey writes that "This deal has been rumoured for some time, so it shows that even in mature MVNO markets like the UK it can still take some time to negotiate the right wholesale deal. This is a good example of a mobile operator using an MVNO as a segmentation tool to reach a segment of the market that is currently under-served. The huge brand value of Disney is obviously much greater than any of the existing mobile operators for that particular segment."

Pawsey brings up a lot of good questions such as:

whether Disney will be able to provide products to please the entire target market? A child's preferences change dramatically between the ages of eight and 14 years-old. Can Disney manage to segment the market and provide handsets and services that will please a princess/Barbie-mad eight year-old as well as a teenager who is very fashion conscious? The other question is whether parents will be willing to update handsets for their children every year as their preferences change, and will Disney have a wide enough range of handsets to please the complete age group? We may find that once the service is launched, the target market narrows.

There is also the question of whether parents want to provide their children with a mobile phone, particularly those aged 12 and under. With many schools banning mobile phones, reports of phone-related bullying and theft, and ongoing concerns over mobile phone health issues, there are many parents that would not want to provide a pre-teenager with a mobile phone.

Will Disney's brand power be enough?

Weekly Roundup

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

• John Delaney at Ovum via the International Herald Tribune about the World Cup is giving mobile video a big kick
• Linley Gwennap at Linley Group and James Schneider at Wedbush Morgan Securities via EETimes.com about shock as Apple shuts door on PortalPlayer
• David Chamberlain at In-Stat via iTWire about Telecom Italia launches DVB-H with Samsung handhelds
• David Linsalata at IDC via the Wall Street Journal about Your Cellphone's Inner Spielberg
• Tim Bajarin at Creative Strategies and Gartner analyst Todd Kort via : ZDNet Australia about Is the Palm OS missing the multimedia boat?

5-Part Review: Bones in Motion BiM Active Mobile Service Comparison Review with Garmin Forerunner 205

Two things before I get into the heart of this post. First, for all those tired of having to read my mindless drivel regarding my obsession with running and gadgets, despair no more. I have started up a separate blog called Running Devices. The title is pretty much self explanatory so if the topic is predominantly running related then you won't have to tolerate here.

Second, originally I was going to post this 5-post review in its entirety on Mobile Analyst Watch since it deals with a location based service currently offered by Sprint Nextel. However, I got lazy and decided I didn't want to deal with all the hassle since I already posted it on Running Devices.

So instead, I'm just going to post the intro with links at the bottom that will take you to the rest of the review at the Running Devices blog. So without further adieu, here it is....

Dedicated versus converged devices. The debate is ongoing. Which is better? Which one will win out? In the mobile space it's iPods versus music cell phones or text versus telephony. Things are not much different in the world of personal activity monitoring devices. Do you want distance or heart rate monitoring? Is GPS device or a foot pod accelerometer more accurate? If you want both distance and heart rate monitoring then which is more important, measuring distance or your heart rate?

In the end it always comes down to a highly subjective and personal decision. Usage model is king and compromises still rule the day. Adding to the debate is a new mobile location based service from Bones in Motion that combines the mobile world with personal activity monitoring via Sprint Nextel's Power Vision EV-DO network and certain GPS-enabled handsets.

Back in February I wrote about the launch of Bones in Motion's integrated BiM Active web and location based mobile service. Since I'm a dedicated device running geek, I was a bit dismissive of the whole thing. Fortunately, I've been participating in the Sprint Power Vision Ambassador program and consuming 3G data like it's going out of style with the Samsung A920 Multimedia Handset. The folks at Bones in Motion graciously agreed to provide me with a pre-release version of the BiM Active Java app for the A920 handset so I could do a comparison review versus my Garmin Forerunner 205 GPS personal training watch.

Before starting, let me make it clear that I AM NOT THE TARGET AUDIENCE for the BiM Active mobile service. As I mentioned, I'm a dedicated device running geek, who wants specific features and functions, lots of data on my runs and training, and prefers using a PC application to log and analyze the data versus online websites, such as BiM Active and MotionBased.

In my opinion, the BiM Active mobile service is geared more towards recreational athletes, especially women, who:

• like to run, bike, walk and/or hike (duh!)
  
• want to carry a handset while exercising for safety/security purposes
• don't want or need all the functions and data of a more complex (and expensive) device
• would rather pay a monthly charge for a mobile service rather than own a device with its upfront costs
• don't obsess over having to know the absolute exact distance of their activity

In a nutshell, they want something that is simple and easy to use, and records how long the activity took and how far they went. If the distance is off by a bit then it's not a big deal.

WARNING: Potential users should make sure there is Sprint Nextel coverage in the area where they plan to use the service. Depending on the handset, BiM Active can still track GPS data if you go outside of Sprint coverage areas, but to actually start and resume an activity you have to be within Sprint's coverage area.

Here are links to the rest of the review:

• Bones in Motion BiM Active Mobile Service Comparison Review with Garmin Forerunner 205: Introduction
• Bones in Motion BiM Active Mobile Service Comparison Review with Garmin Forerunner 205: Getting Started
• Bones in Motion BiM Active Mobile Service Comparison Review with Garmin Forerunner 205: On the Run
• Bones in Motion BiM Active Mobile Service Comparison Review with Garmin Forerunner 205: Accuracy and Data
• Bones in Motion BiM Active Mobile Service Comparison Review with Garmin Forerunner 205: Review Wrap-up

Technorati Tags: Garmin, GPS, Global Positioning System, Satellite Navigation, Forerunner, Bones In Motion, BiM Active

SigmaTel Is Running Out of Cash?

The Consumer Electronics Stock Blog writes that "following SigmaTel’s 1Q06 earnings report, Wedbush Morgan analysts Craig Berger and James Schneider sent a cautionary note to clients." Key excerpts include:

• SigmaTel (SGTL) reported Q1 results in-line with its earlier pre-announcement, with Q2 revenue guidance of $40-46 million in line with our prior estimate of $42.6 million. Execution issues continue with management citing product transition challenges, a soft end market, and market share losses to low-end competitors as primary factors.
• With a Q1 cash balance of only $51 million and prospects for continued MP3 chip commoditization, we believe the company may need to issue debt or raise cash as soon as Q3 to maintain management’s stated $30 million cash cushion target. Despite this, management plans to continue R&D spending increases until it gains more visibility into 2H’06 business.
• Market share losses to Actions Semi appear to continue with the STMP3600 unlikely to reverse this slide; audio codecs are a bright spot.

Smart mobile devices slip back in Europe

Computer Weekly writes that "shipments of smart mobile devices fell by 10% in western Europe in the first quarter of this year." According to Canalys, there was a "year-on-year decline in the western European market, although the figures showed that growth more than doubled in central and eastern Europe."

Canalys also found that "despite delays in the release of its enterprise-focused E-series smartphones, Nokia increased its overall European market share to 76% from 67%. Both Nokia and second-placed RIM increased their respective device shipments above the market average of 25%.Qtek, the brand used by HTC on its own devices in Europe, saw the highest growth of the top five suppliers, with a 211% jump in shipments. This took Qtek above HP and Palm for the first time."

Chris Jones at Canalys said, "Increased GPS integration in mobile phones, and tighter communication between navigation systems and enterprise databases, such as contacts, calendaring and CRM, are just a couple of areas that smart mobile device vendors will now be exploring.”

Dean Bubley: Enterprise MVNOs are coming - new $200m VC fund

Dean Bubley writes at Disruptive Wireless about his participation at a MVNO conference and the potential role for them in the emerging FMC space. He states "the bottom line was "not very much, to be honest", unless they have strong skills in procuring & customising dual-mode handsets, or unless you take a broader view of FMC to include picocell-based services."

Bubley writes that Michael Mandahl, a partner at VC Brainheart Capital,"is starting a $200m fund specifically targeted at financing enterprise-centric MVNOs." He then opines that:

I think this makes a huge amount of sense. I have long held that existing mobile operators don't "get" enterprise. They don't understand IP, they don't understand IT (many of them outsource their own...), and they certainly can't grasp the fact that PBXs, especially IP-PBXs, are here to stay. Often, they also lack sales and marketing teams that can sell anything other than minutes and BlackBerries (usually with the help of RIM's own sales team). How many CIOs have their mobile carrier's account representative on speed-dial, or play golf with them (OK, that's a rhetorical question).

Enterprise MVNOs are no-brainers. Ideally, they'll be companies with existing strong enterprise relationships. Maybe PBX integrators (Damovo? Dimension Data?), maybe enterprise IT vendors & VARs (how about SAP? or Sage?) or integration/outsourcing companies (probably those that don't have other operators as clients).

TransMedia Puts File Sharing On Phones

InformationWeek reports that "TransMedia plans to open its secure file sharing environment Glide Effortless to mobile phones. Glide Mobile turns mobile handsets into what amounts to a limited portable desktop. Subscribers will be able to access and sshare the same files available to them through their Glide accounts and their PCs."

According to the article, Glide is a hosted file storage and social networking service that lets users store, edit, and share media files -- contacts, documents, E-mail, images, music, video -- through a Flash-capable Web browser. TransMedia's transcoding technology makes cross-platform harmony possible. It converts file formats including Windows Media Video, MP3, QuickTime, and the like into streams calibrated for whatever bandwidth is appropriate for the destination device."

Glide also offers a right management system that "will prevent unauthorized downloads by comparing shared songs against a database of known major and independent label music."

Forrester analyst Ellen Daley expected Glide Mobile to be "more interesting to consumers than to business users. She said, "The ability to access your desktop data sounds compelling, but what we find is what enterprise users want is not access to all their data but to relevant data."

Daley opined that "constrained viewing and input options make mobile phones better suited for specific applications like E-mail than for more general purpose computing." She added, "The mobile device has not replaced the laptop yet."

IDC: Worldwide Handheld Device Market Starts 2006 with Continued Decline in Shipments

IDC has a new report that finds "following a holiday quarter in which worldwide shipments of handheld devices topped two million units, the worldwide market for handheld devices began 2006 with its ninth consecutive quarter of year-over-year decline." According to IDC, "worldwide shipments of handheld devices totaled 1.5 million units, down 22.3% from the same quarter a year ago."

IDC believes the handheld market continues to shrink, because many features can also "be found on mobile phones, and the inclusion of telephony extends the usability of mobile phones beyond that of handheld devices."

Ramon Llamas at IDC said, "A decline in shipments following the holiday quarter is expected of mature markets, and the handheld devices market is no different. After nine consecutive quarters of year-over-year decline, many are wondering how long this trend will continue, and whether the market will see a reverse. IDC believes that the market will eventually hit a size where the rate of year-over-year decline will slow to a sustainable level. That size has yet to be determined, but will be sustained by the core users of handheld devices as well as the enhancements found on these devices."

Here are some vendor highlights from IDC:

• Palm, Inc. Palm started off 2006 in much the same way it ended 2005: as the worldwide leader in the handheld market. With shipment volumes 23.3% lower than a year ago, the U.S.-based company was buoyed by the success of the Palm Tungsten E2 and the Palm Z22 handheld. At the same time, shipments of Palm's line of Treo smartphones continue to increase, surpassing shipments of its handheld devices.
• Hewlett Packard. Also feeling the effects of the declining market, HP's handheld device shipments decreased 30.3% year over year. With both its professional and home office handheld device lines running on Windows 5.0, HP remains the worldwide leader in Microsoft-powered handheld devices. The company's converged mobile device line also had a year-over-year decrease, but new devices are expected to ship later this year.
• Dell. Despite a decline of 33.8% in shipments from a year ago, the U.S.-based company remained the number three vendor worldwide. As the Axim x30 and x50 model lines have reached the end if their product life cycles, Dell has emphasized its x51 lines, which offer greater processing power and features over the other models.
• Acer. Of all the vendors in the top five, Acer had the smallest year-over-year decline at 10.8%, staying ahead of fifth place Mio. The company's shipments within Asia/Pacific remained steady while shipments into Europe declined slightly. The company's latest device, the n300, joins a portfolio of Acer's devices that include expandable memory, Bluetooth, and WiFi features.
• Mio. Rounding out the top five is Mio, whose shipment volumes increased enough in Europe and Asia to post a healthy year-over-year increase and to edge out Medion for the final spot. Mio was the only vendor within the top five to record a year-over-year increase at an impressive 84.4%. The company continued to offer a suite of handheld devices targeted at different segments of the market, featuring Bluetooth, WiFi, and imaging capability.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share, 1Q 2006 (Preliminary)

Vendor	Q1 2006 Shipments	Q1 2006 Market Share	Q1 2005 Shipments	Q1 2005 Market Share	1Q06/1Q05 Growth
Palm	475,000	32.2%	619,253	32.6%	-23.3%
HP	346,000	23.5%	496,755	26.2%	-30.3%
Dell	143,100	9.7%	216,229	11.4%	-33.8%
Acer	110,688	.5%	124,084	6.5%	-10.8%
Mio	104,609	7.1%	56,720	3.0%	84.4%
Others	294,849	20.0%	385,482	0.3%	-23.5%
TOTAL	1,474,246	100.0%	1,898,523	100.0%	-22.3%

Source: IDC Worldwide Handheld QView, April 26, 2006

Notes:

• Vendor shipments are branded shipments and exclude OEM sales for all vendors.
• Handheld devices are pocket-sized, either pen or keypad-centric, and are capable of synchronizing with desktop or laptop computers. Handheld devices are designed to access and manage data including office documents, multimedia, and games.
• Handheld devices do not include telephony but may include wireless capabilities that enable Internet access and text communication. These devices feature evolved operating systems or applications environments such as the Palm OS, Windows Mobile Pocket PC, Linux, or other proprietary platforms with the ability to download, run applications, and store user data beyond their required PIM capabilities.

Virus onslaught sickens smartphones

SearchMobileComputing paints another doom and gloom scenario about the potential havocmobile viruses might cause. According to one anti-virus vendor, the 200th mobile virus in the wild is just around the corner, and might be out there already. The company compares "the mobile virus arena today to that of viruses in the PC world in the 1980s." To put things in perspective, "there are now roughly 165,000 identified PC-based viruses," and hundreds more are created every month.

Jack Gold at J.Gold Associates noted "the threat of mobile viruses isn't necessarily based on the number of them in the wild. Like a bad strain of the flu, the severity of a mobile virus depends on how vicious it is and how fast it can spread." He said, "The issue, though, is not how many, it's how mobile are they. To date, it's been very difficult to spread viruses to mobile devices."

As smartphones become more prevalent then things might change, at least that's what the anti-virus companies would want you to believe. Gold added, "All of this starts to look more like a PC environment."

Craig Mathias at Farpoint Group said, "We can assume this is going to become a bigger problem over time. It's unfortunate, but true. And the more intelligence you put into the local device, the greater the risk for someone to get malicious code onto it."

The article looks at some of the challenges enterprises face securing their devices and one big issue is that individuals are still driving the acquisition process. Daniel Taylor at the Mobile Enterprise Alliance said, "One of the big issues is that for mobile devices, especially user-provisioned mobile devices, security is one of the last things users worry about."

Taylor recommended that "enterprises start setting device policies and roll out a form of network access control that looks into devices and denies them network access if they are not up to date with the latest antivirus software. Such a solution can quarantine devices and push out the latest antivirus updates or move them to a DMZ where they can't infect the network." He said, "Many companies do not have these policies in place for smartphones. The mobile antivirus policy has to be the same as that of a laptop or a PC."

Taylor streesed the importance that "a clear policy is essential," because "enforcing mobile policies can eliminate most of the risk involved when employees start using purchased devices on the network." He added, "The choice for the enterprises is either to say, 'We don't support this device,' or to deploy a mobile management platform that can handle most devices. If you're an IT manager, do you want to be the one telling the employee who just went out and spent $500 on a device that you don't support it?"

Avi Greengart at Current Analysis thought that "some of the talk of smartphone viruses is "fear mongering" by PC antivirus software makers looking to expand their market into mobile." He advised that "what was of most concern about IT having little or no knowledge of users' devices is the threat of loss or theft of data. Worrying about viruses should be secondary." He said, "Far more dangerous -- at least in the short term -- are more basic security problems with mobile devices. A smartphone is easily lost or stolen and often contains proprietary e-mail and contact information. Data loss of this kind is publicized mostly when it happens to Paris Hilton, but it can be just as damaging to a corporation."

Greengart continued, "Since many mobile devices are purchased by individual users, not the IT department, most corporations don't even know how big their problem is and have no way of limiting the damage. Longer term, as mobile devices are built on more robust operating systems and enjoy constant connectivity, they can become attractive targets for virus writers."

FCC Steps Toward DE Reform

Wireless Week writes that the FCC "issued a set of proposed modifications to bid winners' lease and resale of spectrum, and also tightened up eligibility on "designated entity" (DE) participants in spectrum auctions. Additionally, the FCC said it would audit bid winners and impose periodic reporting requirements on DE bid winners to monitor where the licenses where and who was using them."

According to the article, "the FCC's new rules will apply to the Advanced Wireless Services (AWS) auction slated for June 29 as well as other auctions, unless the agency chooses to change them further. The new rules would make a DE winner of spectrum licenses ineligible for that spectrum if the company sells or leases more than 50 percent of its spectrum capacity for any individual license to another company. Winners also would become ineligible for DE classification and would owe the FCC the bid credit amount plus interest if it entered into leasing or transferred its licenses to another non-DE company within five years. Six to seven years into the FCC's 10-year licensing term, a DE would have to return 75 percent of the bid credit amount, plus interest, 50 percent of the bid credit for years eight and nine and 25 percent of the bidding credit in year 10."

Roger Entner at Ovum opined that "this is the beginning of the end" of the old DE practices, where large national carriers used smaller carriers to bid on spectrum that was set aside for smaller carriers." He added, "Everyone except Verizon Wireless used DEs in past auctions as a way to get access to spectrum set aside for small carriers they could not get otherwise. Cingular had Salmon PCS. AT&T had Alaska Native. T-Mobile had Cook Inlet.The new rules would curb those relationships."

Tesco.com mulls 'where's my order?' van-tracking

silicon.com writes that supermarket giant "Tesco is considering introducing a service allowing customers to track the geographical location of the van delivering their online shopping, following the successful rollout of a new satellite navigation system."

According to Tesco,"50 of its drivers with ALK's CoPilot sat-nav following the opening of a new store in south London," which "has a greater delivery area than others in the region, meaning some drivers would not be as familiar with their locale."

Tesco wants to use the GPS functionality in the CoPilot system to "give more information to customers waiting for their tesco.com deliveries."

Dean Bubley at Disruptive Analysis remarked "the falling prices and increasing functionality of GPS units could lead to more deployments of applications and services linked into satellite navigation." He said, "People like geographic stuff - think of how many people have fiddled with Google Earth just because it's cool. The actual technology is a subsidiary to the way [an application] is presented though - if it's clunky, people won't use it."

Tesco chose "CoPilot as it integrates with the Intermec Pocket PCs used by drivers to capture signatures, schedule deliveries and process refunds."

Cisco/Moto Cellular/WiFi Deal is Dead/Gone

Light Reading reports that "a cellular/WiFi roaming technology partnership between Cisco Systems Inc. (Nasdaq: CSCO) and Motorola (NYSE: MOT) has gone the way of the dodo. And the culprit could be carrier reluctance to buy in to some vendor fixed/mobile convergence ideas."

According to the article, the two companies announced plans that "would cobble together technologies that would allow mobile handsets to roam seamlessly between WiFi and cellular networks. And the products were supposed to hit the market sometime this year."

There is some speculation the deal was called off due to some bad blood between other divisions within the two companies, such as the set-top box business in which Ciso acquired Motorola competitor Scientific Atlanta."

Motorola claimed it was due to network operator "uncertainty around the value proposition," and that the company hoped to "support all major PBX systems with its upcoming devices."
Ken Dulaney at Gartner said, "Motorola cannot ignore Cisco's position in the enterprise PBX market and will support them along with Nortel Networks Ltd. (NYSE/Toronto: NT - message board), Avaya and others."

Nokia Unwraps New N-Series Phones

CIOToday.com reports that Nokia plans to release three new multimedia "phones in its popular N-Series line. The new phones, which will hit store shelves this summer, are designed to do it all, potentially displacing the appeal of standalone digital cameras and even portable-media players like the iPod." The three handsets are the :

• the N93 features a 3.2-megapixel camera with Carl Zeiss lens and video-capture capabilities. Able to record up to 90 minutes of video and connect directly to a TV for full-screen viewing, the device is an upgrade to the N90. The N93 will hit stores in July at price of just under $700.
• the N73, Nokia is hoping to offer a reasonably priced alternative to the traditional point-and-shoot digital camera. The multimedia device includes a 3.2-megapixel camera with Carl Zeiss lens and autofocus capabilities. The N73, which will retail for around $480 when it is available in July, also features integrated stereo speakers.
• the N72 will come in two colors: pearl-pink or glossy-black. Among many other notable features, the device includes a 2-megapixel camera and a built-in FM radio. It will be available in June and priced just below $400.

Nokia also "expanded its software and service offerings to go along with the phones. Services include an interactive online community developed specifically for N93 users who want to share their films on the Internet. All three phones include preloaded software to give shutterbugs the ability to upload photos to Flickr, the online photo-sharing service purchased by Yahoo in 2005."

Charles Golvin at Forrester said , "These N-Series devices are intended to displace other devices that consumers own, like a digital camera, because of the high resolution and lens quality, or a portable-music player because of the greater storage capability."

The key word is intend. Reality will probably be more like supplement/complement rather than replace....

Motricity Grabs $40M in Funds

The RED HERRING reports that "mobile startup company Motricity said on Tuesday that it has raised another $40 million. The Durham, North Carolina-based company has now raised over $120 million to make it one of the best-funded startups in the wireless industry."

David Chamberlain at In-Stat thought "the funding shows how digital media over cell phones is becoming mainstream." He said, "I’ve been watching the wireless content business since 1993, but now we finally have fat enough pipes to deliver the content to cell phones."

Chamberlain also believed that "wireless content companies like Motricity are an important part of the ecosystem."

$120 million is a lot of cash to burn through. Hope their investors eventually see some return...

Sprint Nextel Revenues Up, Profits Down

Light Reading reports that Sprint Nextel (NYSE: S) announced "a general increase in operating revenues but acquisitions costs took a bite out of its net profits for its first quarter of 2006."

According to the article, "On the wireless side, Sprint Nextel reported pro forma net operating revenues of $8.52 billion, compared with $7.52 billion a year ago. The company reported 1.3 million new wireless customers for the first quarter, 20 percent of which came from MVNOs and affiliates. Of these, 563,000 were customers who pay monthly bills, 502,000 were pay-as-you-go customers under the Boost Mobile brand, and 273,000 were wholesale customers. Sprint's average monthly revenue per user (ARPU) was $62 for post-paid customers, down 3 percent from the same quarter a year ago; $7 of that was for data services, a 54 percent increase from last year. ARPU for pre-paid customers in the quarter was $36. Post-paid churn for the quarter was 2.1 percent, meaning this was the percentage of customers who switched to other carriers during the quarter. Churn among Boost customers was 5.4 percent."

Phil Redman at Gartner said, "Sprint has been an aggressive price discounter, so it’s no surprise if their ARPU is down, leading to lower earnings."

Cisco Speaks Mobile Enterprise

Unstrung reports on Cisco's (Nasdaq: CSCO)attempts "to extend its dominance in the market through wireless VOIP technology partnerships that should help to improve the quality of voice-over-WiFi services for enterprise users."

The company is teaminfg up with Intel, Nokia , and Research In Motion Ltd. (RIM) to "implement new software updates for wireless voice applications called Cisco Compatible Extensions (CCX), designed to be used in conjunction with Cisco WLAN gear."

According to article, "the updates will be implemented at the system level on client devices and chipsets, promising power-saving capabilities, better roaming, and improved call prioritization, as well as improvements to sound quality thanks to reduced "packet jitter.""

Rob Enderle at the Enderle Group said, "Voice has unique requirements, not the least of which is a critical need to avoid latency, and they appear to be pushing extensions that let the network optimize itself for voice traffic. Cisco is incredibly aggressive on voice and is already arguably the company that owns VOIP. They are working to consolidate and strengthen that ownership."

Jack Gold at J.Gold Associates added, "Cisco, because of its size and weight in the industry can drive some of these 'standards'. Of course, this means that Alcatel, Avaya, Nortel and others may decide to do their own things in competition to Cisco, causing some confusion in the market, and potentially causing a lack of product interaction/compatibility, which [exists] already in this marketplace."

Dean Bubley: Mobile operators vs broadband VoIP providers - FMC & mutually assured destruction?

Dean Bubley posts at the Disruptive Wireless blog how "various mobile carriers are currently looking at ways to block / mitigate / "manage" / measure / bill / generally fiddle about with 3rd party VoIP across their networks," while "various broadband operators are trying the same thing, with assorted types of deep packet inspection gear being used in anger (or used in desperation, spite or stupidity, depending on your point of view)."

Bubley offers up his thoughts "about this when it related to various types of fixed-mobile convergence." He states:

Presumably, it would just as easy for a broadband provider to block a 3rd-party cellular carrier's UMA/SIP/IMS/picocell traffic transitting "their pipes". It doesn't even have to be sophisticated - you could just block all traffic going to another carrier's UNCs or IMS gateways.

I look forward to seeing what happens when (for example....) T-Mobile USA tries to offer UMA-based cellular services over Verizon or AT&T customers' DSL lines....

And I also want to be the first to shout "hypocrites!" at the first operator who tries doing this type of "poaching" when another division of the company is sanctimoniously playing "gamekeeper".

JupiterResearch: Prison Break Mobisodes

Julie Ask at JupiterResearch posts about the buzz surrounding the launch of Fox's new mobisode series "Prison Break: Proof of Innocence." Here is what Ask liked:

• There were four episodes available today. Seven days is a long time to wait between two minute stories. Four two minute snacks is a good number. Also, the video was well done in that there are a lot of close up's. I liked it and could follow it even though I have not seen Fox's show on TV.
• There is theoretical integration among the platforms - TV, Internet and cell one.
• I applaud Fox for going after the automotive industry. Good target audience for pitching new advertising/marketing platforms. Automotive companies are always looking for new and different in the interactive medium.

Here is what she liked less:

• Not clear who is winning with Marketing. Fox is advertising their show. Sprint customers get to trial more content for free. Toyota is advertising their cars.
• I visited the Prison Break section of Fox's web site. I clicked on the Wireless tab. Nothing happened. I "unblocked" the pop-up at the top of the screen thinking that would help. A T-Mobile banner ad showed up. Ok, now we've added conquest advertising to the mix.
• I visited the Toyota web site. I clicked on the Yaris link, but didn't find any references to the campaign.
• I looked for the option to opt-in for the "chance to walk-on" to an episode. Found an opportunity to win a Tiffany necklace, but not tied to the show.
• Finally, Fox should have shared some of it's knowledge about producing for the small screen with Saatchi. They did well to do a 10 second spot, but didn't show us much of the vehicle. I couldn't tell if it was animation or the real deal. Even the mobisode had a better shot of the vehicle. Seems like the short spots will be a new art form for agencies.

I had a chance to check out the first four mobisodes on the Samsung A920 Sprint Power Vision 3G Multimedia Handset. I've never seen the Fox series but the mobisodes were pretty good and engaging. It'd be nice if there was some way you could subscribe to a text message or RSS feed to be notified when new mobisodes were available....

Dean Bubley's Disruptive Wireless: Another 11 UK GSM operators (provisionally)

Dean Bubley writes at Disruptive Wireless that "Ofcom's just announced its provisional list of winning bidders for its low-power GSM licences. The UK now has another 11 GSM operators (excluding O2 which already has a normal licence). Ofcom expects to grant the licences officially next week, subject to payment of the licence fees by this Friday." Bubley notes only two companies didn't make the cut - Zynetix and Orange. Here are Bubley's predictions on what will happen:

• the price for making GSM calls when users are not actually "mobile" but nomadic (ie at home/work) will plummet. This has already happened up to a point, but will now accelerate further, especially given other initiatives like dual-mode Fusion-type service launches and (probably) Genion-style HomeZones
• we're going to see businesses exert a much greater level of power over mobile operators. If large enterprises and government bodies have a choice of 16 mobile operators (and probably countless MVNOs), it seems very likely that corporate cellular tariffs will cease to be such a burden on CIOs' telecom budgets.
• it wouldn't surprise me if various other operators around Europe and elsewhere start to do the same thing & instigate low-power GSM regimes themselves
• it'll probably take longer to get things up and running than everyone expects. There will be technical glitches and delays in network rollout, service development and (as always) user experience tuning. For example, does anyone know what happens when a phone's "network selection" menu has 10+ options shown? Were the menus even designed to cope with that many, perhaps scrolling onto another page?
• there will probably be some interesting international-oriented business models emerging here. Clearly, PLDT is going to do something with its Philippine expats, but there are other bits of cleverness that may emerge - maybe using GSM phones to dial-in to VoIP gateways, or perhaps something with innovative roaming arrangements. I have a meeting this afternoon with a roaming specialist firm, so I'll ask them.
• a lot of companies that have been ignoring picocells and femtocells are going to sit up and take notice. I'm expecting to see that type of functionality being integrated into home gateways & bits of enterprise networking
• lots of network security equipment vendors will have to get their act together. Remember the fuss a few years ago when people were plugging "rogue WiFi access points" into enterprise networks & PCs? Welcome to guerilla wireless v2.0 , only this time with cellular.

Canalys: Asia-Pacific region overtakes EMEA in smart mobile device shipments

Canalys has issued new market estimates that "show some major changes happening in the worldwide market for smart mobile devices (handhelds, wireless handhelds and smart phones), with new names appearing in the global top five."

According to Canalys, "despite a sequential fall in quarterly smart phone shipments, leader Nokia’s year-on-year growth of 60% meant it increased its market share slightly, helped by demand for highly popular multimedia models such as the N70. RIM made substantial gains to strengthen its position in second, growing at 85% and overtaking Palm both globally and in the US market for the first time."

The firm estimated that "Treo smart phone shipments were up 44% on the same quarter one year ago, but the Treo is yet to gain traction outside the US. Palm’s growing smart phone sales were offset by steep declines in those of handhelds. Globally the handheld segment was down 25%, with the top four players in this field (Palm, HP, Dell and Acer) all seeing year-on-year falls, and the only leading handheld vendor to post growth being fifth-placed Mio Technology, up 7%."

Rachel Lashford at said Canalys said, “It is in the converged device arena that we are seeing the biggest changes. In addition to the shipment increases made by Nokia and RIM, Japanese vendors such as Mitsubishi and Sharp have achieved very high volumes of their new Symbian-based FOMA smart phones in Q1, catapulting them into the global top five. With increased shipments from Fujitsu, and a new device from Sony Ericsson, Symbian is enjoying not only significant Japanese market success, but also seeing record global market share.”


Canalys also found that the Asia-Pacific region overtook EMEA (Europe, Middle East & Africa) "in overall quarterly smart mobile device sales for the first time. In Q1 2006, Asia-Pacific represented 46% of all shipments compared to 39% for EMEA and 15% for the Americas."

Lashford said, “The market in volume terms is still dominated by purchases by individuals, rather than formal enterprise deployments. But with RIM’s legal problems receding, Microsoft’s push into mobile e-mail through Windows Mobile 5.0, and arrival of the delayed Nokia E-series devices we expect to see more enterprise activity in the coming quarters, particularly if more operators begin to offer business-friendly, predictable tariffs for mobile data – ones that encourage adoption rather than punish usage.”

Key data from the report include:

• Global shipments of smart mobile devices up 55% year-on-year in Q1 2006
• Handheld shipments fall 25%, Palm still first, but Mio Technology is only growing vendor in top five
• Converged devices up 75%, Nokia leads, RIM gains in second, Japanese vendors take next three places
• Symbian’s global share in smart mobile devices hits new high of 69%, Microsoft is second on 12%

3G today: Broadband on every corner for the enterprise?

InfoWorld analyzes the current state of the mobile broadband market in the U.S. from an enterprise perspective. The article writes that "Verizon Wireless and Sprint Nextel have already rolled out their EvDO (Evolution Data Optimized) service -- Verizon to more than 180 major metropolitan area markets and Sprint Nextel to 219. Claimed download speeds average 400Kbps to 700Kbps, and both companies are quickly ramping up for near nationwide coverage by the end of 2006 or mid-2007. Cingular is off to a semirespectable start with 16 metropolitan area markets and promises to connect most U.S. metropolitan markets by the end of 2007. T-Mobile has no 3G service yet but promises a fast ramp-up in 2007."

The article notes the speeds and feed are increasing too. "Cingular’s HSDPA (High-Speed Downlink Packet Access), already in deployment, is supposed to deliver sustained downlink speeds as high as 1.1Mbps by the end of 2006, and EvDO Revision B could achieve 14Mbps with new client chip sets within a couple of years."

And whiles performance increases, data plan pricing is decreasing and hardware options, from new 3G enabled handsets to notebook PC Card, abound.

Ken Dulaney at Gartner said, “There are few applications, aside from certain verticals, that have the need for 3G performance. The typical business traveler leaves the house, drives to the airport, and has maybe a few minutes at the airport to get on a Wi-Fi hot spot and do some work. He uses his BlackBerry to get e-mail. After getting off the plane he typically rushes to his destination. For these uses, Wi-Fi hot spots and BlackBerrys are fine.”

Dulaney added that "the price of 3G is still high for most enterprise budgets and that carriers have been somewhat misleading, quoting theoretical 3G speeds in unloaded cells and conveniently limiting their quotes to downstream performance when upstream is typically much slower." He also cautioned that "notebook-embedded 3G undoubtedly means trouble switching carriers and added expense when carriers upgrade."

Julie Ask at JupiterResearch, agreed. She said, "3G is great for the few frequently traveling white-collar executives who can convince IT the cost is justified.” She placed 3G enterprise percentage uptake somewhere in the “low single digits” and thought "3G is generally a more reliable connection than Wi-Fi." She said, "Wi-Fi typically has too much interference, and [it’s] on and off. 3G is a closed network."

The article looks at possible enterprise usage and prcing models for 3G and compares it to Wi-Fi. It cites research from Gartner that found "less than a quarter of all business travelers used Wi-Fi hotspots while traveling. The primary reasons for this were log-on hassles and cost -- or uncertainty about cost options."

The article then states that "perhaps the greatest advantage of 3G is the simplicity of a single, transparent log-on from anywhere within the sphere of coverage."

Marketers Map Out Their GPS Ad Plans

BrandWeek reports on whether GPS can be used for marketing purposes. The article notes, "during the past two months, Dunkin' Donuts, Cold Stone Creamery and others began appearing on in-car GPS devices to alert drivers to nearby locations and, in some cases, offer special deals."

Samir Bhavnani at Current Analysis said, "Not only can GPS devices tell you how to get there, they can tell you where to go."

The article cites data from NPD Group that finds the number of "GPS owners is growing quickly thanks in part to the fact that prices fell last year from an average of $1,000 per unit to $800. While the user base is well under a million, unit volume sales of GPS devices jumped 152% in 2005."

The article looks at some of the branding and marketing efforts geared for GPS users, such as a promotion beween the Entertainment Book of discounts and the Garmin Nüvi. Ross Rubin at NPD sees "huge potential . . . to almost literally drive traffic to the point of transaction."

NPD also found that "a third (34%) of [GPS] buyers earned between $100,000 and $150,000 annually per a three-month NPD survey. Roughly 45% made $75,000 or more annually. 81% of GPS purchasers were male, of which 29% were ages 45-54 while 23% were ages 18-24. Rubin said, the younger buyers "make a lot of investment in vehicle technology. They want to soup up their cars."

Current Analysis' Bhavnani agreed that while the partnership was a good idea, "in the beginning sales will be challenging because they have to not only be familiar with the Entertainment Book, they have to be in the market for a GPS system."

Soon that cell will be all ears / Voice-recognition technology will cut out the wait time

The San Francisco Chronicle writes about the difficulty of navigating and finding content on carrier decks and how "companies are creating voice recognition applications that allow users to say a search term into the phone and be rewarded in seconds with results."

Roger Entner at Ovum said, "In my opinion, the right way to do it is through voice recognition. If you do it right, you find what you want very quickly in a way that is natural to people. Just talk to the damn thing."

The article cites a study by ChangingWorlds, an Irish provider of artificial intelligence products, and Mobile Metrix, a Swedish research firm, that found last year "almost two-thirds of mobile content was more than 12 clicks away."

The article looks at some of the companies and network operators looking into voice activated services.

For cellphones' future, look to PCs' past

International Herald Tribune writes that "the best way to see into the cellphone's future is to look at the personal computer." Just as "the rise of broadband speeds for Internet access had unexpected consequences in the PC world, prompting companies like AOL to abandon their so-called walled garden approach to online communications and open up to nonmembers. The same is likely to happen to mobile operators and their branded "portal" sites, analysts say."

And many thing that the transition to 3G and beyond will pave the way for increased data usage.

One problem "is that HSDPA is just getting started." Neil Mawston at Strategy Analytics predicted that "by the end of 2006, third-generation cellphones would be 23 percent of handset sales in Western Europe, while HSDPA-capable phones would be 1 percent."

The article points out that "while current 3G phones download information faster than PC dial-up modems, they are not as speedy as PC broadband connections. An HSDPA-compatible phone would, in theory, be five times as fast as a regular 3G phone and as fast or faster than most home broadband connections." Mawston said that "by 2010, 55 percent of mobile phones sold in Western Europe would have HSDPA."

Ring of logic to phone iPod

The Chicago Tribune reports that "Apple watchers and wireless-industry observers think a lot of people would be intrigued" and "expect the iPod maker to launch its own phone and wireless service, calling it a logical extension for Apple and its famous brand."

John Jackson at Yankee Group said, "Nobody has come up with the definitive music experience on a handset yet. It's a very open opportunity. It has powerful potential." He added that the Apple phone rumor mill "has been spinning furiously. On the bulletin board of some (contract manufacturer) in Korea or Taiwan sits a prototype of an (Apple) phone. If (Apple) doesn't do it this year, there's little sense of doing it. Nobody is sitting still."

Regarding the ill-fater ROKR and other Motorola iTunes handsets, Ross Rubin at NPD Group pointed out that they have been "clearly designed not to interfere with the iPod."

Charles Golvin at Forrester Research beleives "the music phone market as an extension of the iPod's market--and a potentially big one. The question facing Apple: How best to crack that market, particularly in North America."

In order to bypass the network operators who control handsets sales in the U.S., many believe Apple will follow the MVNO route. Golvin noted "Apple is like ESPN in that it has a very strong brand. If an MVNO succeeds, brands get pumped up even more." He said, "But your brand is on the line if things go wrong. You're not just selling a device, you're selling a service package. It's a more complex sale."

Mark Stahlman at Caris & Co., believed a phone venture would be a "distraction" for Apple. He said, "It's so different from what they've done to date. Apple has done extremely well when it has had no competition."

Is PortalPlayer in Play?

BusinessWeek writes about PortalPlayer's(PLAY) problems after disclosing that "a forthcoming chip won't be showing up in a planned version of Apple's (AAPL ) iPod nano. PortalPlayer stock promptly shed $9.46, or nearly 42% of its value, and more than $220 million in market value."

Tayyib Shah at Longbow Research said, "I don't know what Apple's plan is for the rest of the year, if it's planning a refresh of the current generation of iPod nano, or if there's something different coming." He noted that "PortalPlayer is still selling chips to Apple for the current line of iPod nano, and in a video-playing version of the iPod."

Christopher Chaney at Stanford Financial Group said, "Apple's main competition is a bunch of no-name manufacturers, and when you're dealing with them, you have to be price competitive. PortalPlayer may have just failed to be more aggressive on the price."

Chris Crotty at iSuppli ventured that "Samsung, which makes chips that might be a suitable replacement for the PortalPlayer chip, may have offered Apple an attractive package deal involving the chip and flash memory." He said, "Samsung has gotten more aggressive with offering deals to some customers to take both chips together."

Crotty added that "Apple may have cast a disapproving eye on PortalPlayer's having landed a deal recently to supply chips to a line of MP3s made by rival SanDisk (SNDK)."

Some think PortalPlayer might be an acquisition target. Stanford Financial Group's Chaney surmised potential acquirers could be "Texas Instruments (TXN), which recently launched a media processor called DaVinci aimed at video applications, and has $5.3 billion in cash and short-term investments, Broadcom (BRCM ), which has a chip in the newest video-capable line of iPods and $1.7 billion in cash, or Marvell Technology Group (MRVL ) which has about $920 million in cash."

Chaney said, "I think among this group of chip companies there's a period of merger and acquisition activity coming up."

Nokia falls short of wireless goals

The San Diego Union-Tribune writes about Nokia's long-time testy relationship with Qualcomm, and how "Nokia might finally capitulate and become a Qualcomm customer – sort of." The article notes Nokia's recent announcement with Sanyo "to establish a separate company that would focus exclusively on CDMA phones."

Regarding Nokia's stance toward Qualcomm, Michael King at Gartner Group said, “I do think this is them sort of going uncle." According to Strategy Analytics, currently, Nokia has about 12.9 percent of the CDMA phone business.

Albert Lin at American Technology "capturing more of the CDMA phone business." He said "Nokia had expected Texas Instruments to come through with CDMA chips that could match Qualcomm's products. The problem, in part, was that Texas Instruments focused on a different variation of Qualcomm's next-generation technology, called CDMA2000 EV-DV, but wireless companies like Sprint eventually went with the technology Qualcomm was pushing, CDMA2000 EV-DO."

Lin said, “They just skipped over that technology,” of the wireless phone companies. Lin thought "the rise in popularity of those next-generation services and CDMA2000 EV-DO is part of the reason Nokia had to figure a different way to tackle the market." He added, “When you are looking at 15 percent of the market is EV-DO, it's sort of hard to stay No. 1 when you have zero percent of that market."

Ed Snyder at Charter Equity Partners beleived "Nokia's decision to join up with Sanyo for CDMA phones is both a tacit admission of defeat in the CDMA business as well as an acknowledgement that the market has fundamentally changed." He said, “They are saying that CDMA is not as important as it was three or four years ago."

Ovum: Amdocs acquire Qpass

Jean-Charles Doineau at Ovum writes about Amdocsacquisition of Qpass, "a content-billing vendor specialising in mobile content micro-billing. Qpass will cost Amdocs some $275 million in cash."

Doineau thinks the "acquisition makes a lot of sense for Amdocs. It consolidates the billing and billing mediation footprint of the company in the US, building upon the company's strategy to enable the "digital supermarket". Qpass has become famous over time by securing almost 100% of the US GSM market for mobile content delivery solutions. Over time, it has been one of the few companies offering a managed service delivery platform (SDP) solution with real market success."

Doineau concludes:

After high expectations of a "digital supermarket" developing as part of mobile service providers' offerings, expectations have now become more realistic. Most of the service providers that had been betting on the mobile supermarket business model are now getting a more realistic approach and are outsourcing some of their own SDPs to managed services companies. Newcomers in that field are looking for a turnkey approach, mixing both contents and distribution enablers. That's exactly what Qpass has been setting up since the very beginning, certainly paving the way in the industry.

Weekly Roundup

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

• Ed Snyder at Charter Equity Research, Ben Bollin at FTN Midwest Securities and Albert Lin at American Technology Research via Chicago Tribune about Motorola emits set of mixed signals
• David Linsalata at IDC via the New York Daily News about Generation text
• Mark Lowenstein at Mobile Ecosystem via The Boston Globe about Cellphone GPS services find their way into market
• Chris Ambrosi at Strategy Analytics and David Linsalata at IDC via Advertising Age about Nokia Names Craig Coffey as VP-Marketing
• Andrew Seybold at Outlook 4Mobility about The CTIA Show--IMS and Different Realities
• Edward Snyder at Charter Equity Partners and Albert Lin, at American Technology Research via San Diego Union-Tribune about Qualcomm revenue continues to climb
• Harry Wang at Parks Associates via E-Commerce Times about Get Ready for 'Cellcasts'
• Roger Entner at Ovum via Unstrung about Cingular's results
• Mattias Cullin at HQ Bank and Poul Ernst Jessen at Danske Securities via the New York Times about Nokia Earnings Climb 21%; Advanced Phone in Demand

Alltel Offers Cellphone Plan With Free Calls to 10 Numbers

The New York Times reports that Alltel announced a new service plan, which will allow customers to "make free calls to any 10 numbers regardless of the cellphone or land-line carrier of the person being called. The "My Circle" plan, a first among major carriers, is premised on statistics that show that many consumers make most of their calls to about half a dozen numbers. Alltel expects that if customers can call these popular numbers free, they will have more minutes left over to call other people."

The article note other network operators "have recognized the same trend, but their plans typically provide free calls only to customers who use the same wireless provider."

The Alltel "My Circle" plan "will be available to customers with plans that cost at least $59.99 a month and offer 1,200 minutes. Customers can choose any 10 numbers, whether on a wireless or convention phone network, and the numbers can be changed at any time on a special Web site."

Alltel operates in 36 states, including most of the Southeast, Midwest, Southwest and Rocky Mountain states. Alltel also provides service in some parts of Connecticut.

David Chamberlain at In-Stat said, "They make it look a heck of a lot better than it really is. We buy such big buckets of minutes, and the minutes and prices are going up, but we're not really using many more minutes."

In Advertising Age, Roger Entner at Ovum said, "It's very big," and "other carriers are likely to take a wait and see attitude before trying to match the offer." Entner noted that "although Alltel is a regional carrier strong in suburban and rural areas, and is not located in large cities such as New York or Los Angeles, it is No. 1 or No. 2 in the markets it serves." However, he said Alltel's growth "hasn't been spectacular."

At BusinessWeek, Albert Lin at American Technology Research noted that "the average mobile user in the U.S. spends only about $40 a month on voice service." Lin thought "Alltel's hope, that people will want to drop other carriers and migrate to it, isn't likely to be rewarded."

Lastly in Sci-Tech Today, Ovum analyst Roger Entner pointed out that "My Circle," "is aimed at eliminating irksome "overages," the high fees of about 45 cents a minute that hit customers when they exceed their monthly rations." He said, "About 20 percent of wireless subscribers go above their allowances at least once a year, generating about 15 percent of wireless revenue." Entner added that "overages have fallen in recent years from about 20 percent of revenue as carriers have increased the minutes in monthly plans. Still, they remain a wireless customer's pet peeve."

Chris King at Stifel Nicolaus remarked that the $60 monthly plan minimum is pricey and might discourage "people who don't regularly go over their bucket of minutes." Entner countered that "the feature is designed for heavy users who typically buy higher-priced plans."

Apple Q2 2006 Earnings Conference Call Transcript (AAPL)

Seeking Alpha has Apple's (AAPL) Q2 2006 Earnings conference call transcript with the prepared executive speeches and the Q&A with the financial analysts...

Strategy Analytics: Global Mobile Phone Shipments Will Reach 1 Billion Units in 2006

According to Strategy Analytics, "global mobile phone shipments grew an impressive 31 percent year-over-year, to reach 229 million units during Q1 2006." Due to this strong performance, the firm upgraded "its global mobile phone shipment forecast to 1.00 billion units for the full-year 2006."

Neil Mawston at Strategy Analytics said, "Total global handset shipment growth of 31 per cent annually, driven largely by emerging markets such as India, is at its highest rate for almost two years. We expect strong demand to continue throughout the coming months and we forecast that full-year sales will reach a record 1.00 billion units worldwide by the end of 2006 - this represents 22 per cent growth from 817 million in 2005."

Chris Ambrosio at Strategy Analytics added, "It is important to note that strong shipment growth is not equating to healthy profits for all vendors. Motorola was the star performer in terms of volumes, but the growing need to compete in low-cost markets adds fuel to the theory that it has reached its profits-ceiling. Samsung and LG are also both feeling this profit pressure. This is a strong illustration of the need for design and platform balance, in order to maximize profits as a global competitor. Otherwise, profits rest in niche products aligned to emerging mobile data demands, as demonstrated in Sony Ericsson's recent strong quarter."

Other keys findings include:

• The share gap between Nokia (33 per cent) and Motorola (20 per cent) stands now at 13 points, down from 19 points in Q1 2002;
• LG opened up a 1 point share gap over Sony Ericsson at the cost of profitability, struggling to balance growth with carrier-customization demands.

Exhibit 1: 2006 Global Shipments and Market Share Estimates - Top 5 Vendors

Global Sell-In ( M )	Q1 '05	2005	Q1 '06
Nokia	53.8	264.9	75.1
Motorola	28.7	146.0	46.1
Samsung	24.5	102.9	29.0
LG	11.1	54.9	15.6
Sony Ericsson	9.4	51.1	13.3
Others	46.6	197.2	49.8
Total	174.1	817.0	228.9
Global Share	Q1 '05	2005	Q1 '06
Nokia	30.9%	32.4%	32.8%
Motorola	16.5%	17.9%	20.1%
Samsung	14.1%	12.6%	12.7%
LG	6.4%	6.7%	6.8%
Sony Ericsson	5.4%	6.3%	5.8%
Others	26.8%	24.1%	21.8%
Total	100.0%	100.0%	100.0%
Total Growth YoY	10.8%	20.1%	31.4%

High-End Handsets Driving Nokia Revenue And Margins

Forbes.com reports that Piper Jaffray analyst T. Michael Walkley is raising his price target for Nokia (nyse: NOK) after it's strong quarterly earnings. Walkley said, "Nokia noted solid handset trends, with particularly strong share gains in Latin America, Middle East, Africa and China offsetting share declines in Europe."

He also noted that the "company is seeing strong demand for WCDMA handsets," and believed the company "increased its leadership share." Walkley said, "With Nokia's growing share of WCDMA handsets that we believe carry above corporate average operating margins combined with our belief the WCDMA handset market doubles in 2006, we believe this will contribute to gradual improvement in Nokia's handset operating margins."

Walkley came away impressed "with Nokia's overall mix of higher-end products which led to a higher average selling price." He said, "Nokia noted its higher inventory entering the second quarter and its planned increase in marketing for the second quarter were due to its strong pipeline of new products the company is launching in the upcoming months. We believe Nokia continues to improve its mid-tier and high-tier product portfolio and the new products will help support strong operating margins."

Dean Bubley: Under-the-wire.... Nokia direct-to-consumer U.K. online shop

Dean Bubley writes at the Disruptive Wireless blog about Nokia's new "direct to consumer Online Shop in the UK, selling SIM-free "vanilla" handsets for "those who may wish to upgrade to a new or more featured device model or have an additional mobile device". It's planning on launching similar sites elsewhere in Europe later in 2006."

Bubley believes "growth in handset volumes in saturated markets will increasingly be driven by "second phones" - currently a market poorly catered-for by operators." He also thinks "Nokia must also be irked by the trend towards 18 month contracts and slower upgrade cycles. It presumably also wants to wean certain countries' customers off of handset subsidies - especially when the carrier decides to subsidise a competing product & bundle it with theirs."

Bubley wonders if "this move to sell direct would annoy the mobile operators, and represent a return to the "them vs. us" arms race between handset vendors and carriers, around customer and UI ownership," but then points out that in the U.K. "SIM-free phones have been available from Carphone Warehouse, Expansys and other places, maybe this isn't such a big deal after all."

In the end, Bubley states:

I actually think this is pretty important, especially as I continue to hear that operators are "conspiring" to reduce the accessibility of WiFi-enabled handsets. Looking at the site, it seems to be an avenue to push both exclusive variants of handsets (eg Black 8800), existing models that operators aren't pushing / customers aren't buying (eg N90). Even more interesting would be if Nokia did a direct-to-enterprise online shop for its upcoming E-Series devices.

Something like this probably wouldn't fly in the U.S. where the network operators call the shots regarding handset sales. I wish it wasn't the case because there are plenty of cool handsets that never see the light of day over here because the carriers don't pick them up...

Ovum: Is time running out for FMC voice?

Angel Dobardziev at Ovum writes about a recent FMC conference in Amsterdam in March 2006 where he thought "interest in FMC, far from waning, is actually growing." After hearing presentations from both technology vendors and network operators, he thought "there was real pragmatism among the operators in terms of both fixed-mobile convergence (FMC) and fixed-to-mobile substitution (FMS). Operators are keen to deploy solutions that will meet the challenges and opportunities posed by their current market position, and maximise value today - be it in growing revenues or reducing costs."

Dobardziev cites some examples of efforts from Deutsche Telekom and BT and said "the most interesting insights came from Telecom Italia." He writes that:

Telecom Italia has a clear vision of its convergent service roadmap, which will have a UMA-based device first, and a SIP WiFi/cellular device later. It has also thought carefully about how and when it is going to achieve it. Under its'One Company ' model Telecom Italia will integrate its sales and customer-service operations, but it has also prepared a roadmap for the integration of its fixed and mobile networks. It plans to waste no time in doing this: by the end of 2008 it aims to have an integrated network with an IMS service core and IP transport layer connected to multiple access networks. Add to this its estimate that this will provide savings of 30-35% of its current opex, and one could be forgiven for thinking that this sounds slightly ambitious. However, having watched Telecom Italia innovate to deliver one of the best performances among European incumbents over the past few years, it is placed better than anyone to deliver on such ambitious plans.

Dobardziev then writes that the "lack of WiFi/cellular devices is still holding back operators. With a lack of standardised SIP solutions for FMC, which many fixed-led players would dearly love to deploy, they are forced to take UMA as 'with shortcomings, but ready now '. The marketing and the positioning of the services is yet to be worked out for many players, while the focus is only slowly moving from voice to multi-access data services." He concludes with:

In light of its painfully slow development, and taking into account the rampant FMS in many markets, is the window of opportunity closing for FMC, particularly for multi-access voice? Consider this: Vodafone Germany managed to sign up 250,000 Zuhause customers in three months, while it took KT over 18 months to reach 187,000 users of its OnePhone service. Could it be that by the time the right FMC devices hit the market in volumes at the right price with the right marketing, most consumers (albeit not enterprise users) will have decided that cellular is all they need?

Sprint Scoops Up UbiquiTel

Light Reading reports that "Sprint Nextel Corp. (NYSE: S) announced that it has paid $1.3 billion for UbiquiTel Inc. (Nasdaq: UPCS), a wireless affiliate based in the thriving metropolis of Conshohocken, Pa." According to the article, "UbiquiTel is one of several companies that sued Sprint last year, arguing that Sprint's 2005 merger with Nextel -- and its plans to merge the two brands -- violated certain affiliate agreements. With this new deal, Sprint and UbiquiTel have agreed to stay any pending litigation."

Phil Redman at Gartner said, "Seems cheaper than litigation. After the Nextel acquisition (and even before) there was unrest in the affiliate markets. The business model wasn’t working. Now Sprint gains full control, just not top-tier markets."

The article notes "Sprint has chosen acquisition over litigation as an affiliate strategy. The company has been scooping up its affiliates, either squelching legal action or avoiding it. Sprint Nextel has paid $427 million for IWO Holdings; $287.5 million for Gulf Coast Wireless; $4.3 billion for Alamosa PCS Holdings; and $1.3 billion for U.S. Unwired. Sprint Nextel also bought former Nextel affiliate Nextel Partners for $6.5 billion.There are four remaining Sprint affiliates: iPCS, Northern PCS, Swiftel International, and Shenandoah Telecommunications Co. -- a.k.a. Shentel."