Research In Motion F1Q07 (Qtr Ending Jun 3, 2006) Earnings Conference Call Transcript (RIMM)

Seeking Alpha offers up the full conference call transcript from Research in Motion's (RIMM) earnings call yesterday....

Strategy Analytics: Touch Screen Phones Ready for Take Off

Strategy Analytics is predicting that "the touch screen user interface in mobile phones will start to see significant growth by the end of 2007, assuming that the right conditions are present. By 2012, 40 percent of all phones may incorporate touch screen technology."

A recent report from the firm concluded that "the mobile phone market is almost ripe for an explosion in touch sensitive user interfaces and, when it comes, it will be capacitive technology that dominates."

Stuart Robinson at Strategy Analytics said, "The touch screen market in cellphones is nearly ready to take off, but before it can do so certain conditions must be met. First, the cost of touch screen technology must shrink from $5-10 dollars to under $3. Second, revenue-generating applications must be developed to differentiate touch screen devices from menu or icon driven phones. Finally the market requires a catalyst, such as the presence of an iconic touch screen phone in a Hollywood blockbuster, to generate demand."

Strategy Analytics forecasts that "touch screen interfaces for mobile phones will remain at under 2 percent of total devices until such a catalytic event occurs, predicted to be at the end of 2007, at which point rapid growth will ignite interest in touch screen phones, growing the market to around 40 percent by 2012."

Stephen Entwistle at Strategy Analytics added, "We expect most demand to come from finger-sensitive technology built into high-end feature phones. This will be a significant shift from today's wireless PDA segment, where most stylus-driven touch screen devices can be found."

Parks Associates: Women Dominate Mobile Phone Gaming

Parks Associates has issued a new report that finds "women represent 59% of all U.S. consumers who play games on a mobile phone. Furthermore, women comprise 61% of all those playing mobile phone games 1-4 hours per month and 58% of all those playing for more than four hours per month."

According to Parks Associates, "these findings concur with the overall demographic makeup of Internet gamers, where women are the majority due to their penchant for online trivia and card games. Men, on the other hand, hold the majority among gamers who play intense action and role-playing games, and there is not a comparable group of male users in the mobile gaming space."

John Barrett at Parks Associates said, “Women are the foundation of the gaming market, and as an industry, we need to cater to their preferences. This effort is key to future revenue growth because right now women generally spend little on gaming even though they like to play games and often have disposable income. The industry just needs to find a game they are willing to pay for.”

I have to agree. My 8 year-old daughter is still a portable gaming junkie after receiving a Nintendo DS for her birthday in January. And now her friends are too, and all because there are compelling and fun games that are not necessarily geared specifically towards girls but are appealing to them nonetheless.

As for women and casual games, there seems to be opportunity there as well. My wife has never liked playing games on the PC, PlayStation 1 & 2, XBOX 360, GameBoys or DS. She just wasn't interested. For her most recent birthday, one of the gifts I gave her was the DS game Brain Age, because it also has Sudoku, which my wife enjoys playing in the daily paper.

At first she gave me one of her, "what am I going do with this?" looks, but over time she started playing and now most evenings she borrows my daughter's DS to unwind with a few games of Sudoku. I'm sure if I purchased her a DS Lite with the new Sudoku Gridmaster game, she would complain at first before settling in for several games a day...

Sprint Nextel already looking to 4G

Silicon.com reports that at the Yankee Group Research's Wireless Leadership Summit, Sprint (S) was talking up 4G and "emphasised that 4G is on its way and will have an enormous impact on Sprint Nextel's business model."

According to the article, Sprint's 3G EV-DO network is just the beginning. "The company is also planning to use its large holding in the 2.5GHz frequency band to provide new 4G wireless services. Sprint Nextel is still testing several technologies but a front-runner in the race is WiMax, which supports peak data download speeds of about 20Mbps, with average user data rates between 1Mbps and 4Mbps. Additional spectrum and the development of new 4G technologies will become important as carriers add more bandwidth-intensive applications such as mobile TV."

Linda Barrabee at Yankee Group said, "Voice will continue to be a killer application for the mobile operators for a long time. So they need to be careful about what they put on that network."

She added, "When you have spectrum assets in your back pocket, that's a differentiator that gives a carrier options, especially when it comes to mobile TV. But what is also needed is a business model that allows them to leverage those assets to deliver commercial services."

JupiterResearch: Verizon Wireless Launches Free Contact Backup (and Other Cool Stuff)

Joseph Laszlo at JupiterResearch comments on Verizon Wireless (VZ) offering an incentive to get folks to pay bills online. Verizon is "offering a suite of services under its "worry free guarantee" package gratis. This includes low cost phone replacements and free upgrades, and most importantly, optional server-based backup for phone-based contacts." After providing a personal anecdote, Laszlo states:

I asked this friend about online backup of contacts and she said she had heard about the existing program but the $1.99/month charge "added up quickly." VZ (and the other carriers) should totally be giving this away for free--tying it to online bill pay seems very fair. I can't think of a better loyalty builder, especially for uber-communicators like my friend...

Oh yeah, VZW's also going to start pro-rating early termination charges, which is pretty amazing, too. Just less immediately relevant. Said Denny Strigl, "We believe dissatisfaction with flat early termination fees is tarnishing the entire industry." Now that's throwing down a gauntlet!

Verizon Wireless To Lower Exit Fee

The Washongton Post writes that Verizon Wireless (VZ) "would reduce the $175 in fees its customers pay to get out of cellphone contracts, setting a precedent among major carriers at a time when consumers and regulators are putting pressure on the industry to change its practices. Starting this fall, new and existing Verizon Wireless customers will be able to pay less to terminate their contracts, depending on the amount of time remaining."

The article noted "early termination fees ranked third among complaints by wireless consumers in the first quarter of this year, according to the Federal Communications Commission."

Roger Entner at Ovum said, "If the other [carriers] don't follow, it gives Verizon a huge leg up. It's smart -- they're targeting other companies' subscribers."

This is a nice goodwill gesture for Verizon customers, but I'm having a hard time seeing how it gives them a leg up on targeting their competitor's customers. Doesn't the prorated termination fee make it easier for Verizon customers to jump ship? I'm still waiting for the carriers to starting paying customers to jump like back in the days when the long distance companies were sending checks left and right to get consumers to switch service. Can the mobile operators be close behind?

One GPS Giant Too Many?

Sci-Tech Today pens an article about the growing consumer market for GPS navigation devices following the entries of Philips Electronics. and Sony (SNE).

Ron Stearns at Frost & Sullivan "pegged the automotive portion of the consumer GPS business at $922 million and reckons consumers will buy more than 1.2 million units this year. Add in outdoor units aimed at hikers and boaters and you hit more than 4 million units and $1.8 billion in sales. And both market segments are growing." Stearns expected "by 2010, combined unit sales (both automotive and outdoor markets) of 8.3 million and $2.7 billion in revenue."

The article notes that Garmin (GRMN) "is now the dominant player in the U.S. market with share just shy of 50 percent," while "TomTom controls more than half the market in Europe, and Garmin struggles with share of about 10 percent over there."

Rich Valera at Needham and Co. said, "I will confess I was among those concerned about this turning into a commodity business, especially when Sony came in. But Sony's product is really mediocre, and there's nothing to really differentiate it from Garmin or TomTom or Magellan."

Valera added, "Garmin and TomTom waged an all-out marketing battle last year, and TomTom showed itself extremely effective at getting share. They got about 25% [of the market], which is a huge improvement over low single digits the year before that, and most of that was at Magellan's expense. Garmin was mostly flat."

Jon Braatz at Kansas City Capital opined, "It's going to be a big market, and I'm not surprised to see companies other than Garmin and TomTom wanting to get into it. But I haven't seen anything yet to indicate that there's anything disruptive here. The market is big enough to support a few more players with prices staying firm."

Hard to see this being any more than a niche market with devices starting around $300 a pop. Just to add some perspective, Frost & Sullivan forecasts total GPS unit sales of around 8 million by 2010. That number is now a slow quarter for iPod sales and Nokia alone sold more than 76 million cell phones in Q1 2006.

You would have to think the handset has the best chance of taking GPS navigation to the mainstream if they can price the service at a reasonable level and/or offer a price per usage model for those people who only need it a couple of times a month....

Palm F4Q06 (Qtr Ending June 2, 2006) Earnings Conference Call Transcript (PALM)

The good folks at Seeking Alpha have compiled the complete conference call transcript from Palm's (PALM) earnings call today. A good read for the scripted exec speak plus the unscripted Q&As with the financial analysts...

Analysys: Many mobile TV broadcasting options will not be financially viable

A new report from Analysys finds that "despite high expectations for mobile TV and radio services, only a small number of broadcasting technology options will be financially viable."

Dr Alastair Brydon at Analysys said, “There is a strong chance that mobile users will not spend a substantial amount on mobile TV and radio services, or video-on-demand and other mobile broadcasting services.”

According to Brydon, “Sharing a broadcasting network with a number of other mobile operators will be essential. With a shared network, either DAB-IP or DVB-H could yield attractive returns." He noted that "while DAB-IP is potentially the cheapest solution, it is only appropriate in those few markets where DAB has been deployed extensively. Furthermore, only a limited range of DAB handsets and broadcast channels may be available. DVB-H is currently attracting the most interest from mobile operators in Western Europe and is the most likely to achieve significant economies of scale on both infrastructure and handsets."

Dr Mark Heath at Analysys said, “While a shared DAB-IP or DVB-H network could provide a strong financial return for a large operator, some may want their own broadcasting networks, to differentiate themselves from competitors."

Heath added, “TDtv would allow mobile operators to reuse existing cellular base stations and operate in already-licensed TDD (Time Division Duplex) spectrum, making it considerably cheaper. While DVB-H is also viable, operators must try to avoid high spectrum costs and the use of the more expensive L-band spectrum, which would require significantly higher take-up and revenue per service user to achieve a good return.”

iAnywhere Bundles Up

Unstrung writes about Sybase's (SY) launch of its new iAnywhere suite into a mobile software market that's in a state of flux. The article notes the "major players like Microsoft (MSFT), Nokia (NOK), Research In Motion (RIMM) and Sybase are trying to expand beyond their mobile email or management roots and offer more integrated packages to corporate users."

Sybase's new iAnywhere Suite "brings together its mobile email, security, management, and development tools in "a modular package" for the first time," which the company claims "will make it easier for users to manage mobile devices and applications across the enterprise."

Jack Gold at J.Gold Associates said, "Oracle has been going through the same pains with all of its acquisitions. Intellisync/Nokia have used the same basic argument in its marketing for mobile middleware, although I don't think it offers the same level of capability as does iAnywhere. RIM has already started moving down this path, with MDC built on top of BES [BlackBerry Exchange Server]. It will likely add more components in the future."

Ellen Daley at Forrester Research said, "I think it is good that they did this, as many companies were confused on how to buy and use them." She explained that Sybase had "a lot of disparate stuff."

Daley added, "I actually see this demand as very spotty -- some types of companies want this, but with existing software vendors extending their products out in a mobile way, application vendors like Siebel and endpoint management vendors like Altiris, I don’t see very high demand for this. But this is the old debate about mobile middleware in general all the way back from 2000 when VCs invested tons of money in companies like Brience and Everypath, and they did not go anywhere."

Commenting on iAnywhere's modular approach, Gold said, "Most companies do not buy complete mobile middleware suites right off the bat. They are more interested in buying point solutions to fill their needs. What iAnywhere is trying to do is, say, buy only the components you need, but when you are ready to expand to other components, it will be easy because they are all integrated and built on the same framework."

On Sybase's overall corporate direction, Rob Enderle at the Enderle Group opined, "Sybase is struggling to find relevance in a market literally dominated now by Oracle and where even Microsoft and IBM may be somewhat trivialized."

I try to follow as many mobile analysts as possible, and those talking about the mobile enterrpise mostly stick to commenting on handsets and email. A lot less is said about mobile enterprise software. From a vendor perspective, no one is really stepping up as a thought/market leader in this space, which makes the above analyst quotes on Sybase's iAnywhere suite even more telling.

Could it be only time before the enterprise app giants such as SAP and Oracle (with Microsoft too) come to dominate the mobile enterprise space as well. Will one of the SaaS players like SalesForce.com join them? Over the last 10 years we've seen a countless number of software vendors rise and then mostly fall, while SAP and Oracle get bigger and bigger. It'll be hard to bet against them once their apps go mobile, since there seems to be not much standing in their way...

Bear Stearns: Earnings Previews for Palm (PALM) and Research in Motion (RIMM)

It's that time again when the public companies start stating their earnings from the previous quarter. SeekingAlpha picks up two research notes that Bear Stearns analyst Andy Neff sent off to client previewing today's close of market earnings calls for Palm (PALM) and Research in Motion (RIMM).

In his note about Palm, he wrote:

PALM 4Q06 EPS after market close – expecting solid results but guidance may be tempered. Pre-options EPS of $0.23 vs. $0.19 a year ago (First Call is at $0.23) – revenues of $405mm, up 21% YoY, (First Call is at $402mm) on Treo shipments (sell-in) of 610,000. While we expect PALM to report strong result with potential for upside surprise, our negative view of the stock is due to mounting concerns about intensifying competition and aggressive pricing in the smartphone market. Due to its high ASP ($512 in 3Q06) and device-only model, we see potential for significant ASP compression as handset market leaders with established carrier relationships (NOK, Samsung, RIMM, etc.) enter the smartphone segment on mass in CY2H06 with comparably (or better) designed handsets at much lower prices as witnessed in recent launch of MOT Q.

Regarding Research in Motion, Neff wrote:

RIMM 1Q07 EPS after market close – expecting results in-line with our above-consensus estimates but will net sub adds rejuvenate? Pre-options EPS of $0.67vs. $0.56 a year ago (First Call is at $0.65) – revenues of $610mm, up 34% YoY, (First Call is at $602mm) on total net sub adds of 675,000. While we expect RIMM to report in line with our above-Street estimates and provide guidance in line with our below-Street estimates, key issue for RIMM is whether its net sub adds growth rate will rejuvenate.

While RIMM also faces competitive challenges, we believe that RIMM is more insulated in the near term given 1) its proprietary software/services business (i.e., needs BlackBerry handsets to get BlackBerry service) and 2) RIMM’s ASP is already at similar levels to its competitors (i.e., $350). However, as a proprietary solutions provider, RIMM does face long-term challenges from emerging device-agnostic, standard-based solutions from Microsoft, Good Technology and others.

JupiterResearch Finds That Wireless Carriers Need to Focus on Customer Experience to Capitalize on the Popularity of Mobile Communities - JupiterResea

According to JupiterResearch, "mobile communities have emerged as a popular, though unproven strategy for wireless carriers to drive data usage." The firm predicts "near term revenue will stem from increased usage of data services while ad-based models offer longer term potential."

Julie Ask at JupiterResearch said, "Wireless carriers that have not launched a marketing campaign or service tied to MySpace in an attempt to generate marketing buzz, acquire young customers, or drive data usage, are in the minority among wireless carriers today. Shifting familiar online experiences to the cell phone and enhancing them with location, messaging, personalization, and presence has emerged as a popular though unproven strategy for wireless carriers to drive data usage."

Jupiter pointed out that "consumers experience mobile communities on their computers for free and expect the same on their cell phones. A focus on consumer experience, not revenue, will assist adoption of mobile community services in the near term."

David Schatsky at JupiterKagan said, "Cell phones are still primarily used for personal or one-to-one communication. Services relying on unique features of the cell phone offer better, though modest revenue prospects."

Cingular plans simultaneous video/chat within year

Reuters.com is reporting that "Cingular Wireless plans within the next year to offer a service allowing customers to share videos with each other and talk at the same time." The article states it's part of the netwrok operator push to drive more mobile data usage.

Yankee Group analyst Linda Barrabee thought "Cingular's service may appeal to young cellphone users or parents showing-off clips of their children. But the success of such a service would depend on price and how well the company explains it to consumers." She said, "It goes back to marketing and price points."

We all know how good the carriers are at pricing mobile content and services at a reasonable level. Yeah right....

Forrester Research: Mobility Management, Tighter Security, And Migration To IP Dominate 2006 Plans

Forrester Research has issued new research that finds "gaining control over wireless environments is the highest telecom priority for North American firms, according to a new survey of 1,500 telecom decision-makers. Enterprises and small and medium-size businesses (SMBs) ranked setting wireless policy and centralizing management of mobile devices as the top two telecom initiatives for 2006. Budgets reflect these priorities: In 2006, SMBs plan to spend closer to one-third more on both mobile voice and mobile data services than in 2005. Fifty-six percent of enterprises expect spending on mobile voice to increase, and 63 percent expect mobile data spending to increase."

Forrester noted that "companies of all sizes spend nearly one-quarter of their telecom budgets on wireless services, and that number continues to grow. The percentage of large companies that have increased mobile data spending has doubled since 2005, and 19 percent of the enterprise workforce now uses mobile data applications. SMBs expect 23 percent of their workforce to use mobile data by the end of 2006." Key highlights include:

• SMB adoption of wireless email (28 percent) and calendaring (25 percent) lags behind adoption in enterprises (71 percent and 66 percent, respectively).
• Wireless email adoption is set to grow for SMBs, with 26 percent rolling out or piloting these services in 2006.
• With adoption of mobile email exceeding 70 percent, large companies are now turning to evaluating and deploying mobile line-of-business applications such as mobile sales force automation, logistics, and customer relationship management (CRM). Adoption levels vary widely by industry.

Telephia: 27 Percent of U.K. 3G Subscribers Download Full Track Music Onto Their Mobile Phone Via Various Methods

According to Telephia, "Twenty-seven percent of U.K. 3G mobile subscribers download full track music on their mobile phones. Full track music download penetration is more than 11 percentage points higher among 3G subscribers, as compared to non-3G subscribers at 16 percent. On average, 3G subscribers in the U.K. download 4.1 music tracks per month and spend an average of 8.3 hours per month listening to full track music on their mobile phones."

Telephia found that "many 3G subscribers prefer to use their PC for storage and transfer of music to their mobile phone, revealing that the PC remains an essential part of the music experience. Forty-four percent of 3G subscribers would prefer to transfer computer music files that have been ripped from their home music collection to their phone. Only fourteen percent of 3G subscribers prefer to download full track music to their phones over the wireless network from an operator's site and/or a non-operator site. Moreover, 3G subscribers want seamless play capabilities for all music file formats, with 18 percent wanting their mobile devices to work with all music types, including MP3, Windows' WMA, and Apple's AAC."

Bernard Brenner at Telephia said, "The popularity of downloading full track music on mobile phones has increased. But even with faster speeds on 3G and the growing amount of music content available through a wireless connection, subscribers still rely heavily on their personal computers as the central hub of their music activity."

The lead is a bit misleading because they make it seem that 3G users in the UK are more apt to download full music tracks over the air (OTA), when in reality it's via a variety of methods. It would also be nice if they had some data on consumer price tolerance for OTA downloads. Faster 3G speeds means little if you're gouging the customers for the privilege to download OTA. It's no surprise consumers rely hevily on PCs for their music since it's much cheaper to acquire music (it's even free if you're into that thing)...

Table 1: Method for Downloading Full Track Music to Mobile Phones
(U.K.)
                                         3G           Non-3G
Download Method                               Subscribers  Subscribers
----------------------------------------------------------------------
From a computer, ripped from home music
collection                                           44%          49%
From a computer, downloaded from a peer-to-
peer site                                            19%          12%
From a computer, downloaded from a paid
website                                              14%          14%
Over the air from an operator's site                  10%           5%
Over the air from a non-operator's site                4%          11%

Source: Telephia 3G U.K. Report, Q2 2006

AmTech analyst sees delays in next iPod releases

MarketWatch reports that Apple (AAPL) may have to delay the introduction of new iPods dues to changes in its supply chain. Shaw Wu at American Technology Research wrote in a research note that he is cutting his "12-month price target on Apple's stock to $75 a share from $101, citing what he said was evidence that the company's next releases of iPod nanos and video iPods might be delayed for up to two calendar quarters."

Wu commented that "Apple might postpone iPod releases because the company's switching from PortalPlayer (PLAY) to another supplier for its system-on-a-chip technology, used to manage and store digital files in the iPod."

Wu believed "Apple's going to use integrated video and audio processors from Samsung instead of PortalPlayer." He also noted that "it remains likely that the new iPod nanos will come with 4 gigabytes and 8 gigabytes of NAND flash storage, compared with current models that hold 1GB, 2GB and 4GB of storage. Wu expects Apple to release the new iPod nanos in the December quarter, or one quarter later than previously anticipated."

Wu estimated that for "Apple's 2007 fiscal year, the company will earn $2.45 a share on $22.1 billion in revenue, while consensus forecasts are for $2.58 a share on revenue of $23.6 billion."

W.R. Hambrecht analyst Daniel Amir predicted that "Apple's strength in the flash-memory digital media-player market should result in greater sales of iPods in the upcoming third quarter." He estimated that "Apple should see third-quarter iPod sales of 9.7 million units, up from a projected second-quarter forecast of 8.2 million."

Amir opined that "consumers appear to be waiting for a new upgrade to the iPod to be released before buying." He stated, "We do expect to see a pickup in sales, especially as we get closer to the launch of Apple's new products in September."

"Free" key to driving wireless Web traffic

RCRNews.com reports "while content providers and carriers are rushing to cash in on mobile data, the industry should look to the computer-focused Internet to find blueprints for business models in wireless." According to the article, some analysts believe that "sponsored content and services will pave the way for uptake of wireless data. Carriers are already subsidizing their services with advertising messages on WAP and mobile Web sites, and many believe marketing dollars will ultimately drive 3G services including mobile video and audio."

M:Metrics' Seamus McAteer thought "free, ad-supported services should be supplemented with premium offerings for users who don't mind paying a few dollars to avoid advertising messages." McAteer predicted that "advertising dollars-not subscription fees or download charges-will ultimately support the mobile Internet."

He said, "In every medium, revenues for advertising trumped revenues for paid content. The advertising market is trillions of dollars; the paid content market is billions of dollars by comparison."

McAteer added, "Obviously, the operators are concerned about being disintermediated. They should definitely not just give away ownership of the customer experience to Google and Yahoo; they have a role to play.... This idea of owing the customer, it's kind of an old idea."

Industry cautious over U.K. 4G auctions

ZDNet UK News writes that U.K. "spectrum auctions for so-called 4G telecommunications will not raise anywhere near the amount of money that the Treasury made from 3G in 2000," according to a variety of industry players.

Commenting on past industry overspending for spectrum, Dean Bubley at Disruptive Analysis said, "People are now a lot more intelligent about the timing of when they can launch. There was an assumption that 3G would have immediate returns… operators getting licences this time will have to build a five-year delay into when they can use the network properly."

Bubley added, "People know how long it takes to get networks rolled out and standards nailed down."

The article discusses the efforts of six of the world’s top operators (including Vodafone, Orange and T-Mobile), which "formed a consortium to tackle such issues, dubbed the Next Generation Mobile Network (NGMN) Forum." The Forum is seeking to "provide a set of recommendations for the creation of networks suitable for the competitive delivery of mobile broadband services and cost-efficient eventual replacement of existing networks."

Bubley said, "4G will inevitably be used as a marketing slogan… You will see, in the same way you had GPRS being ‘2 point 5 G’, a lot of 3 point something Gs. Before [developing 4G], the operators need to step back and work on the network. We’re going to get to [super-3G technologies] HSDPA and HSUPA and will have to stop to allow the plumbing of the network to catch up".

Bubley also mentioned that progress on 4G "depends on who’s got patents on what technology", suggesting that "European manufacturers do not want to be beholden to Qualcomm."

Ovum analyst John Delaney thought the definition of 4G was "a matter of opinion." He stated that "there was some consensus that 4G would involve WiMax in some way, but it would definitely involve IP."

LG hopes "Chocolate" will sweeten its handset business

The Financial Times reports that LG Electronics is hoping its new “Chocolate” mobile phone might be a “Razr Killer."

According to the article, "the Chocolate phone, the first model in LG’s premium Black Label series, has become a big hit in global markets including the UK, China and Mexico as well as the home market. More than 1m Chocolate phones have been sold in overseas markets in just seven weeks since its global launch in May. The phone was ranked as the all-time best seller by Carphone Warehouse, Europe’s biggest mobile phone retail chain. About 450,000 units have been sold in the Korean market alone since its debut in November."

Carolina Milanesi at Gartner said, “I think the Chocolate is a nice little phone; wonderful design – the novelty of the LED keys and good usability. It does have the potential to be as successful as the Razr,. The only thing that might have a negative impact on this is that the Razr had the strength of the Motorola (MOT) brand.”

The article looks at LG's efforts to gain share in Europe and tackle the GSM market. However Daniel Kim at Merrill Lynch was skeptical, saying “The likely success of Chocolate phone in the European market cannot save its handset business. LG has no cost advantage in a low-to-mid end market against Nokia and Motorola, while the premium market is already crowded.”

Dean Bubley: Redefining seamlessness

Dean Bubley posts his thoughts on the term "seamless" at the Disruptive Wireless blog. He thinks it's "a nonsense term - at best an irrelevance, and at worst a dangerous distraction." Bubley notes:

Up until now, "seamless" has tended to be used mostly by people talking about handing off voice calls from cellular to WiFi networks, using dual-mode phones. It's one of the features of UMA (which was designed around facilitating it) and it is often emulated/hyped/exaggerated about the various SIP and IMS/VCC based alternatives.

The idea is that the end-user should remain blissfully unaware of what the technology is connecting him or her to the network, even if that connection changes "seamlessly" mid-call.

Bubley thinks "Seamless handover is a nice-to-have - but only if it doesn't introduce problems elsewhere." He writes:

This all fits in with one of the biggest fallacies with IMS - that applications or services should be "bearer agnostic" - ie work the same, irrespective of whether they're connected over 2G, 3G, WiFi, WiMAX, ADSL or a piece of wet string. And that they should be able to switch over "in mid-flight".

This ignores the fact that at the "seam" lots of things change. Bandwidth, latency, price, maybe ownership, control, security, context and lots of other things. While the user should (in some cases like an ongoing voice call) have minimal interaction, the device itself and its resident applications need to be fully bearer-aware to enable a good user experience, especially for data applications. Moving from a low-latency to high-latency connection has a huge impact on software that has complex "hand-shaking" procedures, for example. And moving from an unlimited-data environment (eg home or office WiFi) to one that is tariffed per-MB clearly needs intervention. If I have anti-virus software, for example, I don't want it downloading 5MB of stuff unannounced, especially if I'm roaming. And I want the music application on the device to recognise I'm at home on WiFi, and default to getting MP3s from my PC hard drive, rather than defaulting to the operator music portal.

Bubley concludes with some observations he made at a conference where both BT and DT essentially started to redefine the term "seamless". He states:

Both speakers said that "seamless handover between bearers" was not essential - but that access to certain functions like address book or voicemail was. I agree with this - and if "seamless" is to be more generally used as a marketing-friendly way of saying "multi-access", I may reconsider my views about the credibility of its proponents.

Cellphone Company Makes A Call: Korean Americans

The Washington Post writes how new MVNO Helio is targeting spoiled teens, tech geeks and Korean Americans for its "new $250 ultra-high-tech cellphone."

According to the article, "Korean Americans make up less than 1 percent of the U.S. population, but U.S. telecommunications firms take note of them because their kin across the Pacific are among the most tech-savvy people on the planet. So Helio decided to tap them as a unique market, a laboratory of sorts for germinating products they hope will catch on nationwide."

John Jackson at Yankee Groupe thought "It's a mistake to sort of religiously adhere to the notion that a market like the U.S. is going to faithfully replicate the Korean experience. Are we in a few years going to be consumers who listen to music, download video and broadcast TV on our phones? Of course. But you have to take into account that every market has unique demand-side characteristics and the U.S. is an extremely diverse market."

Seamus McAteer at M:Metrics added, "It is slow, but there's a misconception out there that the U.S. is backwater."

The article focuses on how Korean Americans are using cell phones and mobile services in the U.S....

Good Technology to Support Lotus Notes on Wireless

eWeek's Channel Insider writes that "Good Technology is releasing its new service for IBM Lotus Domino users that will allow wireless PDA and smart phone users to have access to their Notes e-mail remotely. The new product, Good Mobile Messaging for IBM Lotus Domino, will support a wide variety of wireless platforms, such as the new Motorola (MOT) Q, Palm (PALM) Treo devices including the new 700 series, Nokia (NOK) E61 devices and Windows Mobile devices (MSFT)."

Kathryn Weldon at Current Analysis said, "There are 125 million Domino users out there. Most of the middleware vendors do have support for Domino, so it's a must."

Weldon opined that "there are really only two enterprise-grade mobile e-mail providers, Good and Research in Motion (RIMM)." Weldon said, "It's important for Good, so there is pent-up demand for BlackBerry alternatives. There's so much out there that goes beyond BlackBerry. BlackBerry is great for what it does, but it's not the optimal device."

She pointed out that "many other companies need a mobile solution that does much more, such as running third-party applications available on the Treo."

Pyramid Research: Nokia Siemens Networks to Make an Impact as the 3rd Largest Carrier Network Infrastructure Vendor

According to Pyramid Research, the "Nokia (NOK) and Siemens (SI) merger would make Nokia Siemens Networks the 3rd largest carrier network infrastructure vendor after Ericsson-Marconi and Alcatel/Lucent with combined sales of $15.8bn euros (US$19.75bn) and a headcount of about 60,000."

Sergio Cruz at Pyramid Research said, “For Nokia, organic growth to reach the level of scale shown by the major players was not feasible because it would take too much time, so acquisition was the solution."

Pyramid Research points out the consolidation taking place in the carrier network infrastructure industry as well as among the network operators and states that "the new Nokia Siemens Networks will have greater purchasing power and with platform commonality, equipment costs could be reduced by 45% according to the new company’s sources, allowing it to compete in this new environment."

Cruz concluded, "We expect further consolidation to take place because the ‘operating point’ of the industry has changed. The sale of telecommunications equipment is a game of economies of scale and scope. As operators consolidate their fixed and mobile operations, vendors must increase their size to better negotiate contracts.”

JupiterResearch: My Freebox experience

Thomas Husson at JupiterResearch writes about Free in France, which is "launching soon a dual WIFI/GSM phone (around 200 euros) to be used at home through their newly launched Freebox (v5). However, Free's main rival, 9 Cegetel, has already launched TWIN for 199 euros, a dual WIFI/GSM phone working with 9box and with many hotspots (particularly using the FON network)." He states:

Given that 30 to 50% of mobile calls are made at home, no doubt there is an opportunity for alternative operators to try to gain a share of the pie. Integrated operators are also investing the space and Orange is doing well, launching their UNIK service next September at only 99 euros. I think it is still an early market given the fact, that there are still quality issues (battery life, quality of calls themselves, handover, interoperability, coverage,...).

Husson then writes about his experience with Free, and says:

I moved in a new flat recently and decided to go for their LLU offerings, bypassing France Telecom. I had to wait almost a month to benefit from the service. I know this is technically complex, but still. I had to spend hours with their client call center to follow complex procedures. When it finally worked, the TV service did not work immediately and I had to spend half an hour with the hotline again.

I then ordered a WIFI card. I received it only a few days after. Great. There was not even a letter with it explaining how to install it and configure the PC. What about having 10 sentences starting by: "Dear client, we are happy to have you on board. Thanks for having ordered...blabla". So I had to call the hotline again, which is NOT FREE, contrary to that of some competitors in the French market.

Husson advises that Free "continue to innovate but invest in marketing and customer care, or you will have to face churn very soon..."

Yankee Group: Mobility Is on the Rise with European Businesses

Yankee Group has announced "the results of its 2006 Transatlantic Wireless Business Survey of European large enterprises and small and medium businesses, which provides insight into wireless/mobile technology adoption drivers as well as current and planned spending on wireless/mobile products and services." Major highlights include:

• In 2006, large enterprises plan to spend the most on mobile data services including e-mail, remote access/mobile VPN solutions and salesforce automation applications. In contrast, small businesses are investing most in mobile voice services. These investments in voice are expected to grow substantially from 2005. Small business investments in mobile data are also expected to rise heavily from 2005, which is attributed to workers relying more on mobile e-mail.
• The percentage of mobile workers in European small businesses continues to rise as mobile investments become a business priority. More than 50% of small business employees are classified as mobile workers, spending more than 20% of their time away from their primary workspace. This figure grew from 48% in 2005.
• European large businesses are increasingly interested in fixed-mobile integration as a means to control voice costs and consolidate fixed and mobile infrastructure into one managed solution. About 41% of respondents listed this capability as very important in terms of managing their organizational mobile voice programs.
• Large enterprises as well as small and medium businesses in Europe rarely work with just one mobile operator to deliver mobility solutions. More than 45% of large enterprises and 40% of small and medium businesses have relationships with more than one operator.

Nicholas McQuire at Yankee Group said, "The growing appetite for mobile voice and data and services among European businesses presents European mobile operators with excellent market opportunities. Their ability to offer customized, higher value services for mobile data and voice, and to become trusted IT advisors on business mobility, will be crucial for success in this segmented market."

Analysys: Mobile market to reach EUR198bn by 2011

Analysys expects that "the Western European mobile market is forecast to grow by more than 6% per year to reach EUR198.4 billion in 2011. With mobile penetration close to saturation, growth will primarily be driven by rich-media services including music and television."

Dr Windsor Holden at Analysys said, “We are now seeing a rapid acceleration in the number of full-track downloads and in streamed TV usage. Subscribers are becoming more familiar and comfortable accessing both on and off-portal content; as mobile broadband becomes more prevalent this growth is likely to continue.”

Holden added, “Although voice ARPU has been adversely affected by falling termination rates and aggressive pricing strategies, this trend is forecast to reverse from 2007 as 3G adoption increases. Operators are beginning to take advantage of 3G’s greater capacity to offer lower-cost bundles, thereby accelerating fixed–mobile substitution.”

Holden concluded that “While it is likely to further encourage fixed–mobile substitution, fixed operators’ moves towards converged technologies will also result in greater competition within the mobile market."

Key highlights include:

• total mobile services revenue is forecast to grow at a compound average growth rate of 6.2% from EUR138.4 billion in 2005 to EUR198.4 billion in 2011
• active mobile penetration in Western Europe was 96.2% at the end of 2005 and is forecast to grow to 108.8% by 2011, driven by operators’ efforts to penetrate under-served customer segments (such as older demographics), as well as by increased ownership of multiple SIM cards and more machine-to-machine communication
• ARPU levels have now bottomed out and will continue to recover, rising by 20% from EUR31.3 in 2005 to EUR37.5 in 2011.

In-Stat: New Converged Wi-Fi/Cellular Handsets to Take Market by Storm

In-Stat has a new report that predicts "by 2010, shipments of cellular handsets containing Wi-Fi will exceed 132 million devices. Carriers have been reluctant to offer Wi-Fi-capable handsets for several reasons, but Wi-Fi has spread so fast that carriers will not be able to resist much longer."

Allen Nogee at In-Stat said, "In the end, most US cellular carriers will embrace Wi-Fi in their handsets, as carriers know that if they don’t, other carriers will, and these carriers will likely steal away some of their customers. Combo handsets also offer carriers opportunities to provide services such as VoIP over Wi-Fi, lessening impact on their cellular data system." Highlights include:

• More than 20 cellular handset models now have, or will soon be, released with embedded Wi-Fi access.
• A few cellular carriers are planning to offer services that support voice calls over both cellular and Wi-Fi, and some Wi-Fi/Cellular handsets are incorporating VoIP clients for services like Skype.
• It had been assumed that business customers would be first to adopt Wi-Fi/Cellular handsets, but in fact consumers are likely to be more receptive to early adoption of the technology.

Microsoft details unified communications road map

ComputerWorld wrties that Microsoft(MSFT) announced a "unified communications product road map, demonstrating voice, video and messaging capabilities that it expects to ship in the first half of next year." According to the article, Microsoft announced for the second quarter of 2007:

• Microsoft Office Communications Server 2007, which is Microsoft's new name for its Live Communications Server. It will include voice-over-IP call management, as well as audio-, video- and webconferencing and instant messaging communication with and across software applications and devices.
• Office Communicator 2007, a unified communications client that works with Communications Server 2007 to provide enterprise VoIP through a softphone.
• Office Live Meeting, which includes audio and video capabilities for conferencing from a PC and is due out at about the same time.
  

The article said "Microsoft's unified communications strategy involves partnerships with other communications vendors and includes plans for IP desktop phones that run Communicator software. The vendors named were Polycom Inc., LG-Nortel Co. Ltd. and Thomson Telecom. Microsoft also announced interoperability with or partnerships with Hewlett-Packard, (HPQ) Siemens (SI) and Motorola (MOT)."

Zeus Kerravala at Yankee Group thought "the main question about the company's unified communications products is whether they will be ready for corporate use when released." He said,
"Buyer beware. When has Microsoft ever entered a market with a business-ready product out the door? They eventually get it right, but the first versions are usually not corporate-ready. Think back to the Microsoft proxy server, their firewall, Exchange and directory services."

Kerravala believed Microsoft's plans show it could become "a huge threat to all the VoIP competitors. Within a few years, Microsoft could join Avaya Inc. and Cisco Systems (CSCO) in owning about 90% of the VoIP marketplace."

Ken Dulaney at Gartner opined that "Microsoft's strategy will not be fulfilled for five to seven years, but it makes sense because it relies on its installed based of Exchange and Active Directory users, as well as its presence servers. Dulaney said,"IT managers are much more into evolution than revolution these days, so this announcement fundamentally makes some sense."

Telephia: One-Third of Mobile Game Revenues Driven by Puzzle/Strategy Games, With Tetris, Tetris Deluxe and Bejeweled Leading the Pack: Financi

According to Telephia, "Puzzle/Strategy games drive one-third of the total mobile game revenues." In their most recent report, "four of the top five revenue-generating titles fall into the Puzzle/Strategy category, with Tetris, Tetris Deluxe and Bejeweled securing the top spots. Tetris and Tetris Deluxe secured 5.2 and 3.6 percent of the total mobile game revenue share for the quarter, respectively, while Bejeweled posted a 2.6 percent share. JAMDAT Mahjong and Ms. Pac-Man rounded out the top five with shares of 2.2 and two percent, respectively."

Kanishka Agarwal at Telephia said, "Mobile game purchases continue to grow with more than 8.6 million games bought in April, increasing 60 percent since the beginning of the year."

Table 1: Top Mobile Game Titles by Revenue Share (U.S.)
----------------------------------------------------------------------
                                                            Share of
                                                             Revenue
Title                       Publisher         Category           (%)
----------------------------------------------------------------------
1. Tetris                   EA Mobile         Puzzle/Strategy     5.2%
----------------------------------------------------------------------
2. Tetris Deluxe            EA Mobile         Puzzle/Strategy     3.6%
----------------------------------------------------------------------
3. Bejeweled                EA Mobile         Puzzle/Strategy     2.6%
----------------------------------------------------------------------
4. JAMDAT Mahjong           EA Mobile         Puzzle/Strategy     2.2%
----------------------------------------------------------------------
5. Ms. Pac-Man              Namco             Classic/Arcade      2.0%
----------------------------------------------------------------------
6. Galaga                   Namco             Classic/Arcade      1.9%
----------------------------------------------------------------------
7. Downtown Texas Hold'em   EA Mobile         Card/Casino         1.8%
----------------------------------------------------------------------
8. Who Wants To Be A
Millionaire 2005           Cosmic Infinity   Trivia/Word         1.5%
----------------------------------------------------------------------
9. Zuma                     Glu Mobile        Puzzle/Strategy     1.4%
----------------------------------------------------------------------
9. Monopoly Tycoon          Hands-On Mobile   Puzzle/Strategy     1.4%
----------------------------------------------------------------------
9. World Poker Tour -
Texas Hold 'Em             Hands-On Mobile   Card/Casino         1.4%
----------------------------------------------------------------------
9. Frogger                  Konami Mobile     Classic/Arcade      1.4%
----------------------------------------------------------------------
9. JAMDAT Solitaire Deluxe  EA Mobile         Card/Casino         1.4%
----------------------------------------------------------------------
10. SCRABBLE                EA Mobile         Trivia/Word         1.3%
----------------------------------------------------------------------
10. Texas Hold'em by Phil
Hellmuth                   Oasys Mobile      Card/Casino         1.3%
----------------------------------------------------------------------
Source: Telephia Mobile Game Report, Q1 2006

Telephia also found that "Sixty-five percent of mobile game revenue is driven by female wireless subscribers. They are the biggest driver of revenue for the Puzzle/Strategy category; comprising 72 percent of the total share of revenue, while men made up 28 percent. Women dominate revenue generation for all mobile game categories, with the exception of Action/Adventure mobile games, in which men drive 60 percent of the revenue for that category."

Agarwal added, "The casual nature of mobile games provides tremendous appeal to women, who are not traditionally hardcore gamers by console or online gaming standard. The wireless industry has presented a hungry target audience willing to pay premium access to games through their cell phones."

Table 2: Category Share of Revenue and Gender Revenue Share Breakdown 
(U.S.)
----------------------------------------------------------------------
                                           Share of Revenue (%)
Category           Share of Revenue (%)   Male Share     Female Share
----------------------------------------------------------------------
Puzzle/Strategy                    33.8%            28%           72%
Card/Casino                        18.3%            34%           66%
Sports/Racing                      12.9%            39%           61%
Action/Adventure                   12.8%            60%           40%
Trivia/Word                        11.4%            26%           74%
Classic/Arcade                     10.8%            38%           62%
----------------------------------------------------------------------
Source: Telephia Mobile Game Report, Q1 2006

JupiterResearch: Palm OS vs. Windows Mobile - getting the facts correct

Michael Gartenberg at JupiterReearch sets Walt Mossberg straight regarding a Wall Street Journal reader question about "turning on the speakerphone on a Treo 700w to remind us how he likes Palm OS (PALM) more than Windows Mobile."

Gartenberg posts the answer which is pro Palm OS and states:

I personally like both platforms and there strengths and weaknesses in both but in this case, his comments are off base about Windows Mobile and the Q. He is sort of correct, you can turn on the speakerphone on the Q as he described. The Q however, is a bad example to use for comparing the ease of turning on that particular feature since the Q has a dedicated button right on the keyboard that lets you toggle speaker on and off. Couldn't be easier and certainly as good as Palm OS :)

Oh and most Windows Mobile devices just need you to hold down the call button to turn speaker on and off, again no menus required.

Berg Insight: Personal Navigation and Tracking are the Most Profitable Location-Based Services in Europe

Wireless Developer Network picks up a release from Berg Insight announcing the reuslts of a survey among 200 location-based services (LBS) professionals.

Berg Insight asked two sets of questions asked to the 200 respondents, one to operators and another set to vendors and consultancies. They asked the operators "which LBS applications they already have deployed and got not surprisingly the reply that the most common services today are information services such as yellow pages near you and local weather information. On second and third place came navigation services and tracking."

Berg Insight also asked the operators:

which positioning technology they think will be the most important the coming years. The majority, 65 percent, replied a combination of two or more technologies, while 35 percent said A-GPS. It is obvious that satellite positioning is coming up as a preferred technology among operators in Europe and preferably in combination with other technologies such as enhanced-cell id and terminal-based positioning technologies.

Berg Insight also found that the operators believed the important factors to get the LBS market to boom were:

• Built in GPS/Galileo-chips was the most common reply, coming from 75 percent of the respondents.
• About 50 percent replied that more visibility and marketing of LBS is important to make the end-users aware of the services.
• The operators are also looking for more innovative LBS that really can catch the needs of the end-users, which 35 percent of the respondents answered.

According to the vendors and consultancies, "the most important issue to get the LBS market to boom is built in GPS/Galileo chips in the phones (55 percent of respondents), which is the same opinion as the operators expressed. About 48 percent also answered that more innovative LBS that catch the needs of the end-users is important to make the market take off. The third most common issue to be resolved was more collaboration between operators, vendors and application developers."

Dean Bubley: Another problem for dual-mode and UMA

Dean Bubley posts at the Disruptive Wireless comments on the Italian Telecom regulator blocking "Telecom Italia from launching its upcoming dual-mode WiFi/cellular phone, called Unico." He thinks "this move is based on the notion that TI can't offer the product on a wholesale basis, and therefore it's anticompetitive. I'm not sure of the exact details of the regulatory regime around FMC in Italy, and I haven't heard of this sort of thing occurring elsewhere, although various people have discussed issues around FMC single bills being in something of a grey area."

Bubley writes:

I imagine that if the service offers customers some form of benefit (eg better coverage / lower prices) then there will probably be some sort of agreement made with the regulator eventually. However, the timing of this is a bit unfortunate for the already-beleagured UMA enthusiast fraternity, as it is another indicator of the narrowness of the window of opportunity - especially as I've already heard various TI people sing the praises of the next-generation of dual-mode technology, VCC.

Weekly Roundup

A roundup of mobile analysts in the news for the week ending June 24:

• Nick McQuire at the Yankee Group via San Francisco Chronicle about text messaging evolving into a powerful form of silent talking for cell phone users, especially the young
• Linda Barrabee at Yankee Group via the Wall Street Journal about What's a Phone For?
• Ian Fogg at JupiterResearch about Telefonica Give Be Broadband £50m Oxygen
• Julie Ask at JupiterResarch about MVNO's
• Julie Ask at Jupite Research PC World about Web-Enabled Handsets Deliver a Squeaky-Clean Internet
• Dan Bieler and Martin Garner at Ovum about Siemens (SI) and Nokia (NOK) to merge network infrastructure divisions
• Albert Lin at American Technology Research via the Chicago Tribune about Motorola (MOT) seeing stars in cell phone campaign
• Gene Munster at Piper Jaffray via the Washington Post about if Lights Blink on Your Apple (AAPL) iPod Shuffle, It Could Be Bad News
• Charter Equity Research analyst Ed Snyder via Reuters about Qualcomm (QCOM) says Nokia (NOK) pullout will not hurt CDMA

Microsoft Not Likely To Dethrone IPod

Forbes.com writes that "fears a Microsoft (MSFT) digital music player and service could imperil Apple's (AAPL) iPod market dominance are overblown." According to a rececent research note from Shaw Wu at American Technology Research, "such a scenario is unlikely, because Apple’s vertical model is tough to execute with not many companies (if any) succeeding.”

Wu wrote, “Apple has a large installed base of about 50 million iPods and 300 million iTunes users. [Their] competitive advantages are largely defendable including its familiar and easy-to-use user interface, industrial design, brand name and world-class supply chain.”

Wu believed "Apple is pursuing a longer term broader strategy beyond iPods, which means that Microsoft may need to enter other hardware segments, such as PCs, cell phones and home entertainment."

According to the article, "Microsoft is more likely to compete with companies it has partnered with for the past three to four years including Creative Technology (CREAF), Sony (SNE), Samsung, Archos, Toshiba, iRiver, Philips, MTV Networks and others."

Wu added, "The portable entertainment space is a highly competitive business. Profits have been meager to non-existent with Dell and Rio [and] it is yet to be seen if Microsoft can be profitable in making a portable device."

Nokia-Siemens deal gives enterprises better upgrade path: experts

SearchMobileComputing writes about the recent Nokia (NOK) and Siemens (SI) deal, which "according to experts, enterprises using gear from the newly formed Nokia Siemens Networks could soon reap benefits by taking advantage of newer technologies from a convergence heavyweight."

Jack Gold at J. Gold Associates said, "At the end of the day, it makes a lot of sense." Gold believed "combining the assets of both companies will keep the two former competitors going strong."

According to the article, Nokia and Siemens predicted "the pairing will make them the market leader in fixed-mobile convergence."

Gold thought that it should be "business as usual" for Nokia or Siemens users, and "the merger could provide companies a better upgrade path with more options and newer technologies." He said, "It provides them with stability and capabilities they didn't have before. If I were a carrier or user infrastructure person, I'd say, 'Ah, good!'"

Jeff Heynen at Infonetics Research, agreed that "enterprises may be relieved by Nokia and Siemens' shaking hands, which could open a new door to convergence." He said, "As network operators converge their wireline and wireless networks to more efficiently deliver voice, data and video services, manufacturers have to join forces to create the scale and expertise necessary to provide end-to-end support. What this joint venture brings is experience and success in both wired and wireless networks. More importantly, for the world's largest operators, it gives them one throat to choke when the inevitable problem arises."

Infonetics Research analyst Richard Webb added that "the deal will not really affect enterprises today but will eventually help push quadruple play and fixed-mobile convergence into more organizations." He said, "The focus of the Siemens-Nokia deal is on quadruple play broadband and fixed-mobile convergence, both of which have shown up on our recent studies as being very much at the forefront of carriers' strategic thinking. A Siemens-Nokia partnership looks to be a genuine symbiosis, without too much overlap. In our tracking of the radio access network equipment market, Nokia is definitely A-list, especially in the 3G segment, and combining this with the strength of Siemens in the long haul and core and edge fixed networks will create a carrier network heavyweight that could be more than the sum of its parts, a case of 2 + 2 = 5."

Craig Mathias at Farpoint Group opined "the merger was a reaction to the recent Alcatel-Lucent deal and is likely to be one of many joint ventures going forward." He remarked, "The name of the game in a relatively mature business environment -- with a corresponding low innovation rate -- is bulk and lower costs, and that's what's happening here."

Avi Greengart at Current Analysis, agreed the long-predicted coupling "just makes sense." He commented, "Nokia gets the vast majority of its revenue from handsets, so spinning out infrastructure should give its core handset business more management attention. However, neither company wanted to simply sell off their infrastructure units outright because there are synergies that can be attained with their existing line of business."

Daniel Taylor at Mobile Enterprise Alliance stated "the merger shouldn't mean much to enterprise users just now, and it will be carriers that take notice first." He said, "This is about networking hardware and software sold to the carriers. Let's keep in mind that Nokia's strength has been in the handset, not in the back-end telco equipment. The merger of Alcatel and Lucent puts pressure on the smaller players, and two of them have combined in a joint venture."

Taylor pointed out that "Siemens has been looking for a new direction with its business unit after selling off its handset business last year. On the IT side, Siemens already works in a joint venture with Fujitsu."

He also noted that "the merger should not affect the enterprise, because Nokia will still control its dominant handset unit; Nokia still has an enterprise business unit, and Siemens is keeping its own business unit that sells PBXs and networking equipment; and Nokia and Siemens will remain separate companies with distinct enterprise offers and channels for other divisions."

Will variety act boost iMode's European audience?

vnunet.com writes that "O2's iMode mobile portal service now has more than 250,000 customers, after six months of operation, and it has 150 content providers across 13 genres. However, experts were divided over whether the service will eventually be as popular as O2 predicts."

Mark Blowers at Butler Group thought "iMode provides a user-friendly service, which makes it quick and easy to access content." He said, "O2 could get traction that way, but it must be competitive with other ways of [accessing] content from the internet. If the service is cheaper or provides content everyone wants [then it could take off]."

John Delaney at Ovum said, "It falls between the traditional fairly closed content-centric portals [like O2 Active and Vodafone Live] and the internet. It has potential for people who are not just interested in accessing the internet but need guidance and support, and it provides an optimised version of [some sites] such as eBay, which people find attractive."

Delaney denied "the coming .mobi domain for mobile sites would harm iMode's prospects." He believed ".mobi merely presents one of many ways to adapt content for use on mobiles."

InformaTelcoms & Media: Two Billion GSM Customers Worldwide

According to Informa Telecoms & Media,"the milestone of two billion subscribers worldwide will be achieved by the end of June for the GSM family of technologies. A wireless customer in one of more than 200 countries served by GSM will activate their wireless device and become an immediate communications industry 'milestone' - the world's two billionth GSM customer. Globally, there are 2.29 billion cellular users encompassing all technologies, placing GSM as the dominant market leader."

The firm said "Latin America and the Caribbean led the world market percentage growth rate for GSM, adding more than 74 million new customers in the one year period from March 2005 to March 2006 - nearly doubling their subscriber base with a growth rate of 97%. The Middle East followed by Africa are the world regions with the next largest growth rates, respectively. However, China continues to be the largest single market of GSM customers, with 662.6 million as of March 2006."

Devine Kofiloto at Informa Telecoms & Media said, "It took approximately twelve years to reach the first one billion GSM subscriptions, back in 2004, but only two and a half years to hit the next billion GSM/UMTS subscriptions."

Informa projected that "the three billion customer milestone for GSM/GPRS/EDGE/UMTS will occur in 2010, with an expected 700 million of these subscribers using UMTS services."

Nokia Abandons Plan to Develop Cell Phones With Sanyo

In one of the shortest lived joint-ventures on record, Bloomberg reports that Nokia (NOK) "abandoned plans to develop handsets with Sanyo Electric Co. for networks used in North America and Japan, saying spending on the technology probably won't pay off." According to the article, "Nokia also said it will cut development and production of handsets using code division multiple access technology, or CDMA."

The deal was announced in February. Thomas Langer at WestLB AG said, "The best-case scenario would have been that the venture would go well and Nokia would benefit from the profit. Instead, Nokia sees new subscribers in emerging markets adopting GSM."

Langer opined, "The move isn't perfect, but not as bad as it seemed at first glance. The world will go GSM and not CDMA."

Nicolas von Stackelberg at Sal. Oppenheim Jr said, "This is negative for Qualcomm,. It will undermine the CDMA market share further. CDMA will not win in emerging markets."

Strategy Analytics analyst Neil Mawston pointed out that "for the CDMA standard, Nokia ranked fourth globally behind LG Electronics, Samsung and Motorola (MOT) in the first quarter, while Sanyo was sixth behind Kyocera."

Hannu Rauhala at Opstock Securities said, "It's a quite good move actually. CDMA phones make up less thank 10 percent of Nokia's total volume and, according to my calculations, the profitability is lower on CDMA phones than on GSM phones."

According to Carolina Milanesi at Gartner, "unit sales at Nokia rose to 76.1 million in the first quarter from 55 million a year earlier,. Nokia is gaining in North America, where it's No. 2 behind Motorola, and lost market share in some markets in Asia because of aggressive price competition from Motorola and Samsung."

Jussi Hyoety at FIM Securities commented, "There were some high hopes when this was launched. Sanyo has had some problems as we know. It's annoying that this didn't work out."

Gartner: Strong Sales of iPods Will Drive Growth of NAND Flash Market in Second Half of 2006

Gartner predicts that the "strong growth in the portable media player market is expected in 2006, as the market is forecast to reach 187.7 million units, up from 134.5 million units in 2005." It beleives "the demand for portable media players, especially the Apple (AAPL) iPod, is a significant driver of sales of NAND flash memory. NAND flash-based players accounted for 80 percent of the market in 2005. Hard disk drive (HDD)-based portable music players made up the remaining 20 percent of the market."

Jon Erensen at Gartner said, "Digital audio players are rapidly transitioning to multifunction portable media players incorporating music, video, photo and basic game capabilities. The next generation of portable media players will be driven by video playback capabilities, wireless technologies, and integration with consumer electronics and automobile entertainment systems."

Erensen added, "We expect Apple to introduce a new, high-end NAND flash-based iPod by the fourth quarter of 2006, and this player will most likely have 10GB to 12GB of storage capacity. The impact of an iPod with this storage capacity will have significant implications for the NAND flash market."

Commenting on the roles the shuffle and nano have played in buoying the flash-based player market, Erensen continued, "Both of these introductions had a significant impact on the market, with competing vendors reacting by lowering prices and increasing capacities. Apple accelerated the highest available capacity, average capacity and lowered the cost per MB for NAND flash players with the shuffle and the nano, and we anticipate a similar course of events in the second half of 2006,."

Gartner forecasted that "a 16Gb (2GB) device will be available in the third quarter for about $30, down from its current price of about $35. Due to Apple's procurement power and investment, it is conceivable that it could get pricing for a device at $25 or even $20. This pricing would enable capacities of 12GB, leaving enough room for the remaining component and manufacturing costs as well as Apple's margin, while still reaching a $250 price point."

Gartner predicted "a 5.8 percent shortage of NAND flash supply in the fourth quarter of 2006 that will persist into the first quarter of 2007 with a 2.6 percent shortage."

Joseph Unsworth at Gartner said, "If a high-capacity NAND-based iPod is introduced, the severity of the allocation will intensify during the fourth quarter of this year, and our outlook of supply and demand for the first quarter of 2007 could become more severe than initially anticipated. Pricing pressure from Apple also puts indirect pressure on competing consumer products, such as flash cards and USB flash drives, which are still the major drivers of the NAND flash market. All of these products compete for consumers' discretionary spending."


Unsworth added, "If NAND flash demand intensifies in response to an aggressive announcement from Apple, then it is expected that several suppliers will move additional DRAM capacity over to NAND flash in an effort to gain market share and diversify their memory portfolios. If this scenario comes to fruition, the prospects for the DRAM market in 2006 and 2007 could be much better than anticipated."

Michael Gartenberg - Gigabeat S - First Take

Michael Gartenberg writes at the Jupiter Analyst Weblogs about his thoughts on the Toshiba Gigabeat S and whether he thinks it stands up to the Apple (AAPL) iPod. Gartenberg states:

When I first looked at PMC a couple of years ago, I was pretty impressed at the concept but the form factor left a lot to be desired. Toshiba's taken care of that and has got the Gigabeat down to a slim device that's a little smaller than the 60gb iPod but just a hair thicker. It's a very pocketable device. Everything works as it did before and Toshiba has thrown in an FM radio as well. The UI redembles Media Center and is easy to get around. Controls are good and everything is responsive. Pictures transferred well as did some video I had on my machine. Other WMV files did not transcode and just generated an error. Syncing TV content with Media Center worked but is still painfully slow as a process.

He points out two big differences between the Gigabeat and the iPod: Support for subscription music and video services. He writes a little about his experience trying Urge for music and Vongo for video and says both worked pretty well. Gartenberg concludes:

My overall impression is pretty positive. If you're into subscription services video or audio, this is pretty much the device to get. The loose association of brands such as Vongo, Urge, Gigabeat S and Portable Media Center are going to make it difficult, however, for consumers to tie all the pieces together. The simplictiy and integration of the iPod and iTunes, combined with the iPod platform of acessories and add ons is not likely to be threatened any time in the near future.

Microsoft's Windows Mobile OS Gains Traction

TechNewsWorld writes that Microsoft (MSFT) "appears to be gaining ground with its Windows Mobile platform." The article notes that "Microsoft has been in this market for more than a decade, but its Windows Mobile system has been slow to gain traction." Neil Strother at The NPD Group said, "Initially, Microsoft did not seem to understand handheld operating system dynamics as well as it did with desktop systems."

The article looks at some of things Microsoft is doing better and Strother notes, "Smartphones -- those that take advantage of the new data capabilities -- make up a small portion of the cell phone market, but they are a market segment that has been growing."

The article then discusses the challenges Microsoft faces from Symbian and the hurdles it must overcome. Michael Cherry at Directions on Microsoft stated, "Microsoft has done a good job leveraging its Visual Studio development environment, so third parties can build Windows Mobile applications."

Strother added that "Microsoft's big advantage is its products are compatible with its large base of desktop applications." Well sort of in my experience.

Strother concludes that "The handheld OS market is in an early stage of development, so it is now clear which vendor -- or vendors -- will emerge as market leaders. Because of its recent momentum, Microsoft has as good a shot as any of the companies vying for that position."

Dean Bubley: Place-shifting to mobile - IP and arbitrage, again

Dean Bubley writes at the Disruptive Wireless blog about "the growing momentum behind "placeshifting" - ie having access to your home content & applications when you're "somewhere else", either on an Internet connection in a cafe/laptop etc, or potentially on your mobile phone." He notes products like SlingBox that allow consumers to access their TV programming over the Internet and watch it somewhere else. He states:

Of course, the interesting thing here is whether the "somewhere else" in on a mobile device, arbitraging the inevitable trend of mobile-data towards flatrate pipes/large MB bundles, vs. the alleged extra amount people will pay an operator for a dedicated mobile TV "service". Obviously, the mobile TV service should be optimised for device size, user interface etc, but whether it'll stack up competitively against the "best efforts" version is yet to be proved.

He then cites some similar "place-shifting" activities that the network operators don't mind and writes:

Sending an MMS enables a friend to send you a "postcard" of wherever they might be. This arbitrages against the airfare needed to go & see it for yourself. This is an operator service, though. Sending a picture via email is less of a bundled service, more like a pipe-based one again. Push email is obviously in the same category as well, although this has both operator-controlled (ie BlackBerry) and "pipe"-based user-controlled versions.

Bubley thinks "the operators have nothing to complain about TV-placeshifting from a moral point of view. You don't hear about airlines barring carrier execs from flights (or downgrading them from business class to "best efforts" standby), as they contribute to turning them into dumb aluminium pipes & arbitraging them to the wall with MMS, do you?" He concludes with:

.... all of which brings me to the most fascinating version of place-shifting: Vodafone Germany's trial . Nice to see big Red leading the charge on arbitrage for a change, rather than complaining about it & trying to block it. It will be very interesting to see if T-Mobile has a go as well, or whether "placeshifted TV" is added to the list of things that will get your 3G account summarily cancelled.....

ABI Research: More Than Half a Billion Mobile TV Subscribers by 2011 | Press Release | ABI Research

Today is wild analyst predictions day regarding the potential for Mobile TV. After In-Stat predicted the number of subscribers would leap to 102 million by 2010, ABI Research came out with an even huger number, forecasting that "in 2011, mobile TV services will have some 514 million subscribers worldwide, up from only 6.4 million at the end of 2005." The firm beleives that "the fledgling market for mobile television is beginning to build significant momentum, and advertising-supported broadcast services are expected to propel additional growth over the next few years."

Ken Hyers at ABI Research said, "Broadcast will be the preferred method of access to mobile video for most people. Unicast will remain part of the mix, for customers who want to access video-on-demand, but ABI Research believes that the majority of subscription services will be for broadcast content, and that unicast-only subscriptions will not be a significant part of the market."

According to ABI Research, "South Korea and Japan are the early adopters, but European and North American markets are not far behind, with three contenders planning to introduce mobile video broadcast services in the United States over the next 12 to 18 months. MediaFLO (Qualcomm (QCOM)) plans to be first off the mark, having announced its intention to launch services in the fourth quarter of 2006; Hiwire (Aloha Partners) and Modeo (Crown Castle) will follow suit in 2007."

Hyers cautioned, "Most markets will not be able to support more than two broadcast networks due to the high cost of building them, and the fact that most markets only have three or four major mobile operators selling wireless services to subscribers."

ABI Research thought "the most critical factor will be commitment from mobile operators. Hyers said, "MediaFLO has been built for this purpose from the ground up, and will almost certainly be among the winners in the US. Verizon Wireless has already committed to it. Modeo and Hiwire are competing for the business of just three major operators, and one of them will fail. Each has strengths and weaknesses. Modeo plans to be faster to market, and if it signs a major operator quickly, its battle is half won. On the other hand, in Hiwire's favor is its large (12 MHz) and valuable swath of spectrum with more favorable characteristics than Modeo's."

OK, odds are that In-Stat and/or ABI Research will be dreadfully wrong by the time 2011 rolls along with In-Stat predicting 102 mobile TV subscribers by 2010 and ABI forecasting more than a half a billion by 2011. There is a possibility both could be spot on if the "100 million subscribers in 2010" suddenly increases by more than 400 percent in the year 2011. Yeah, that's the ticket....

In-Stat: Mobile TV Broadcast Subscribers to Leap to 100 Million by 2010

In-Stat predicts that "by the end of 2010, mobile TV broadcast subscribers worldwide will reach 102 million, a giant leap from 3.4 million in 2006. Recognizing that using cellular networks to deliver content that millions want to watch simultaneously requires much greater bandwidth than is currently available, carriers are turning to mobile TV broadcast networks, which have a much lower cost per bit for video delivery."

Michelle Abraham at In-Stat said, “The greatest challenge for mobile TV broadcast operators is to acquire the spectrum necessary to offer services,. Spectrum availability may determine which of four standards is chosen, and also impacts the business case for the deployment of a network.”

Highlights of recent research include:

• There are positives and negatives to each standard, but each has a vendor eco-system behind it to enable deployment today.
• 2005 was the year of the first deployments, with ongoing trials in many parts of the world.
• Mobile carriers, mobile TV network operators, and content providers will soon be testing business models to determine what mobile phone subscribers are willing to pay to watch and what advertisers are willing to pay to reach them.

Danger Readies Its Sidekick 3

For the handset fanatics, the big news this week is the impending launch of Danger's Sidekick 3 by T-Mobile. The RED HERRING writes "Danger plans to start selling the device to T-Mobile customers on June 28 and to the general public on July 10. The device is priced at $299 with a two-year contract, $349 with a one-year contract, and $399 with a prepaid service plan. The service pricing will also include the cost of any of T-Mobile’s voice plans, plus an additional $20 per month for an unlimited data plan."

John Jackson at Yankee Group said, “There’s every reason to expect that the Sidekick 3 will be as popular as the Sidekick 2.”

The article looks at the business side of the company and Jackson opined that "given the price at which the company is selling the device, it is not likely their margins on their hardware are particularly high.”

Regarding the new product, Michael Gartenberg at JupiterResearch wrote:

I've been a fan of the Sidekick from day one. They've carved out a nice niche for themselves. They really don't compete with the Blackberry, in fact the Sidekick is really the anti-Blackberry crowd. So what's new in the latest version? Well, it's smaller and lighter than the old SKII, about 20% smaller so it's got a really nice feel in the hand. It's got a new trackball for navigation and adds in Bluetooth, EDGE support and mini-SD for playing music. The batter is also removeable. All in all, it's a nice evolutionary upgrade to a well designed product.

Ovum: Wireless giants point Linux at the mobile mainstream

Ovum's Tony Cripps adds his two cents on "Motorola (MOT), Samsung, NEC and Panasonic joining forces with mobile operators Vodafone and NTT DoCoMo (DCM) to create a consistent Linux-based platform for mobile handsets." Cripps notes that:

Linux's prospects of making a real impression on the mobile telecoms industry have previously been hindered by the inability of its supporters to offer a consistent, natively-programmable platform for developers and service providers to target. Some efforts at achieving consistency in Linux handsets have been apparent, notably the efforts by NTT DoCoMo and handset partners Panasonic and NEC in Japan, and Motorola in the rest of the world. But these have concentrated more on improving Linux's scalability across a range of handsets than on making it an attractive application platform for developers.

He then goes on to state:

Fragmentation at the application layer has been the rule, and the incentive to build a coherent developer ecosystem has been missing. As such, Linux handsets have remained effectively 'closed' to third-party developers - except where courted directly by manufacturers or their operator customers. It has not been possible to compare them directly with genuinely "open" mobile platforms such as Microsoft's Windows Mobile and Nokia's Symbian-based S60.

Cripps concludes with:

With heavy hitters such as Vodafone, Motorola, Samsung and DoCoMo (in particular) backing this initiative, it has to be taken seriously. It may also begin to test manufacturer loyalty to commercial handset software platform players such as Microsoft and Symbian once the first devices come on stream. Nonetheless, considerable challenges remain. Spokespeople for the group said the legal aspects surrounding the technology licensing are not yet settled. What is open source and what is not has not yet been decided. Nor are certification and application testing procedures yet firm. These are not trivial matters and as such Microsoft, Symbian, Nokia and others will not be panicking just yet. But they will be looking over their shoulders.