Sprint Nextel Readies 3G Upgrade

E-Commerce Times reports that Sprint Nextel "announced aggressive plans for the expansion of its 3G network, which now covers over half of the U.S. population with mobile broadband data services. By the end of 2006, the high-speed wireless network is expected to reach an estimated 190 million people nationwide and in Puerto Rico, making it the largest mobility network."

Sprint is planning to upgrade its network to EV-DO Revision A that will provide downloads and uploads up to 10 times faster to "enable richer applications and services such as high-speed video telephony, music on demand, video messaging, large file uploads and high performance push-to-talk capability."

Yankee Group analyst Gene Signorini believed Sprint had "an aggressive plan to achieve mobile broadband service leadership by broadening its footprint and deploying advanced technology that drives mobility." He said, "This announcement keeps Sprint in the forefront in meeting the demand for mobility services. Given the importance of high-speed data services as a revenue source, this is a bold and rewarding move."

The U.S. 3G market is heating up as Verizon plans to roll out its EV-DO Revision A upgrade at some point while Cingular expands "its higher speed coverage to most major U.S. metropolitan areas this year."

JupiterResearch analyst Michael Gartenberg said, "Everyone is moving in a race to get consumers onto the faster networks and take advantage of those enhanced services, so look to continue to see more of these types of announcements in the future. It will be interesting to see what the competition announces next week [at the] CTIA Wireless Show."

Bob Egan at TowerGroup thought Sprint's aggressive move "should further accelerate the company's momentum in wireless broadband services." He said, "Enterprises and consumers alike have an insatiable appetite for network access availability, speed and quality. This is an important move by a company who is very serious about raising the industry bar and meeting the important and dynamic requirements of its business and consumer constituencies."

Strategy Analytics: Competition Heats Up the Enterprise-grade Mobile Email Market

Courtesy of Tekrati Research comes a new report from Strategy Analytics that finds the competitive dynamics of the enterprise wireless email market are shifting quickly. The firms predicts that "RIM will remain the uncontested mobile email leader in 2006 despite Nokia and Microsoft doubling their market shares. For niche players, enterprise wireless email is an increasingly challenging market."

Strategy Analytics said "RIM holds an estimated 63 percent of the corporate wireless email market," but thinks that both Microsoft and Nokia/Intellisync can increase their "combined 15 percent market share to easily double in the next 12 to 18 months."

Cliff Raskind at Strategy Analytics said, "While enterprise mobile email will approach one quarter of total wireless enterprise expenditures in 2006, we still see an accelerated need for consolidation in an adolescent mobile email solution space that will ultimately be ruled by heavyweights such as RIM, Microsoft and Nokia. These are companies that possess broad solution scope, global reach and staying power. Even if RIM yields 10 points of market share, it remains in very good stead. For niche players however, retrenchment will be key as the competitive landscape changes. Visto must reinforce the value of effective white-labeling, Extended Systems/Sybase must rely on its IT expertise and SEVEN must continue to secure prime device real estate to continue its out-of-the-box strategy."

Cell Phones May Soon Add Scanning Technology

TechNews writes that in an attempt to keep their products from becoming commodity items, handset manufacturers just might start adding scanning functions to their handsets. Kenneth Hyers at ABI Research said, "There are some rudimentary scanning functions now available in cell phones and those features should improve over time."

The article notes that "once a phone is outfitted with a camera, the transition to scanner is fairly straightforward. The key is adding optical character recognition (OCR) features to the phone, which allow small amounts of text to be captured and digitized." Companies ,such as NEC, Realeyes3D and scanR, "have been piloting products that let users transform their camera phones into scanners, copiers, or fax machines."

Hyers said, "In Asia, it is becoming common for professionals to scan business cards into their camera phones and build electronic rather than paper Rolodexes." The article looks at other potential applications such as photographing advertisements, barcodes and other codes.

Ira Brodsky at Datacomm Research said, "I think adding Common Short Codes to print advertising is the best option. A user just has to send a text message to get an SMS message with embedded link back to a Web site." This will require advertisers to embrace the standard.

Another problem is the power of the existing camera phones. Neil Strother at NPD Group said, "Currently most camera phones support VGA (Video Graphics Array) and that only works with one third of a megapixel. I have not seen many individuals using their digital cameras for scanning, so I don't expect much interest in camera phone scanning."

ABI Research's Hyers countered, "I think the scanning functions open up some interesting possibilities to content suppliers as well as hardware manufacturers and therefore will be promoted. Vendors need to put a few more building blocks into place, so it won't be until 2007 or 2008 when we will see a lot of scanning functions built into camera phones here in the U.S."

JupiterResearch: Pay-As-You-Go EVDO

Julie Ask posts at the Jupiter Analyst Weblogs that Verizon will be "offering daily EVDO rates for those with EVDO embedded in some laptops." She likes the idea because after surveying prosumers (those who travel for business, those who travel frequently for business), Jupiter found:

not many travel frequently enough to justify an EVDO subscription as measured by number of days on the road multiplied by $10 - the common fee for Wi-Fi which is often the alternative. Also, great idea for driving trials. Folks will LOVE this technology once they use it.

Daily rates are a good idea and I agree folks will love it when they try it. Of course, adoption will be limited until there are more laptops out there with embedded EVDO, since the cost of a EVDO card doesn't really justify ad hoc daily usage.

A more cost-effective alternative for enterprises just might be to outfit employees, who occasionally travel, with EVDO-enabled handsets from Sprint and then sign them up for the $15 all-you-can-eat Power Vision data plan plus the $25 a month plan that lets you use the handset as a modem via a USB cable. As discussed here at Dan Taylor's Mobile Enterprise Weblog, only four days on the road justifies the cost, plus the handset can also be used for voice...

NPD Group: Challenging Carriers with Content

Drew Hull at NPD Group writes that "more than 90 percent of mobile content sales in the U.S. today come directly from wireless carrier stores, via handsets or through commercial Web sites. That’s why content owners and aggregators are gearing up to challenge this carrier dominance and are now aiming to sell content directly to consumers (D2C)."

With network operators not wanting "to give up the tremendous leverage they have over the value chain," Hull states that "companies hoping to operate successful D2C content stores must not only build a superior and differentiated offering, but also compel consumers to change their current purchasing behavior."

Below is a summary of NPD's Blueprint for Direct-to-Consumer Success:

Building store traffic is the first hurdle:

• Trusted brands like Apple, Sony, Disney, NBC, MTV can leverage their existing customer relationships and rely on the trust they have built with those customers. Others with less well-known brands and smaller customer bases will need to launch campaigns that are expressly designed to build awareness and consumer trust.

Converting Traffic to Purchases:

• Stocking content can take the form of a very narrow offering built for a specific customer group, or a very broad selection that offers something for everyone. In either case, the content must be top-notch. Also, successful companies must have real music ringtones, top game titles, high-quality images and video. Providing samples and demos of the content is a simple way to show what’s available to consumers and ease the decision to purchase. Without high-quality content, consumers will turn around and walk right out the door – likely never to return.
• With regard to pricing, recent NPD data shows that high prices are one of the biggest inhibitors for people who have never purchased mobile games or ringtones. In addition, many consumers prefer to pay once to own content (39 percent) versus paying a monthly recurring subscription for content (seven percent).

Converting One-time Buyers into Repeat Buyers:

• There are many things that go into building long-term, loyal customers who make repeat purchases, and the most crucial step is providing a quick and easy purchase and download process. This means following the rules:
• Short-codes and content IDs must be simple to remember and triple-tap into the phone.
• After the message is sent, the opt-in messages and purchase confirmation must be quick and easy to get through.
• Finally, the content must download into the correct locations on the phone and not harm or disrupt the device itself.
  

Hull concludes that:

While the business blueprint put forward in this bulletin is simplified, the challenge remains daunting. However, if each of the checkpoints is addressed and met, we might finally be able to say with some truth: “this is the year off-portal content will take off.”

JupiterResearch: EMEA 3G reality - part 2

Thomas Husson revisits his comments on the European 3G scene from the end of last year at the Jupiter Analyst Weblogs. He starts that "looking at recent figures published by operators, I estimate the number of 3G phone owners to be around 23M in Europe" and finds that:

• Italy is the clear leader and passed the 10M mark
• UK ranks second with over 4M
• 3 remains the leading operator in Europe, having launched 18 months before the main operators and having been agressive as a new entrant. However, growth is slowing down in the UK. In June, the subsidiary of Hutchinson Whampoa had 3.2 M customers. It reached 3,6 in March 2006, but those figures include the newly launched subsidiary in Ireland. Is there a churn issue ?
• Vodafone performed well and reached its 10M target globally before end March 2006 as announced. However, this figure includes the Japanese subsidiary.

To put things in perspective, Husson says "the penetration rate is below 7% of the European mobile population. Again, no doubt 3G will come (there are still some voices to claim that Wimax is a threat) but it will need a few more years to fully reach mass-market as explained in our 3G report. Japan passed the 50% mark recently, almost 5 years after launch, but the increase has been dramatic in the last few months."

Husson then makes a few more points:

• Operators have smartly used music, TV & Video to sell 3G and forgot about WAP, 3D games, higher bandwidth
• Video calling is still promoted but market education will take a long time, as long as the installed base is not there even if you get 2 phones for the price of one. I have personally tried the service and the user experience is funny but not that convenient. You have to choose between a voice call and a video call and cannot switch from one to the other. However, the video call button has introduced a new Direct to Consumers business : video short codes. This channel will be the new IVR and not surprisingly, adult content is being promoted; You don't have to connect throught the househould Internet but simply and directly from your personal device.
• Quality even for voice calls is not always there. I have some friends who have been particularly disappointed at home (poor indoor coverage yet). It would be interesting to compare satisfaction on battery life as well.
• HSDPA will be launched this year, mainly for business users but no this is not trully "mobile ADSL" for consumers. Not yet. But speed will be there and some clever sponsorship have been signed in Formula 1. Ever heard of the newly called Vodafone McLaren Mercedes...
• Mobile broadband will really emerge when the "all you can eat flat-rate" offers will be there. Bouygues has launched such a tariff in France. T-Mobile has announced one and many will follow, partly replicating what happened in the Internet world.

Sony's UMD movies on the chopping block

vnunet.com reports that "movie studios and retailers are starting to abandon Sony's Universal Media Disk (UMD) for movies." According to the Hollywood Reporter, "the US' largest retailer Wal-Mart has drastically cut back the shelf space for UMD movies and is considering to stop selling UMD movies alltogheter."

The publication also noted that "Universal Studios and Paramount Pictures have ceased to offer movies on the small storage disks, and even Sony has cut but the number of titles that it releases on UMD."

Michael Gartenberg at JupiterResearch pointed out that "the UMD movies have always had a difficult value proposition because they are priced similar to DVD movies, but can only be played on a PSP." He said, "Sony has to build on that as a platform and get more ways for UMD to be viewed on different devices."

Gartenberg did stress that the "UMD will stick around for sure for PSP games. But for the device to succeed as a movie player, Sony will have to introduce additional accessories that for instance allow consumers to hook up the devices to a television."

Was anyone really surprised by this? Making consumers pay again for a movie just so they can view on a PSP makes no sense, especially when there are ways to transfer from DVD to a MemoryStick Duo Pro via the PC for free. Sure it's time consuming and a pain, but it's also free.

I'll stop Sony bashing just long enough to say that Syphon Filter: Dark Mirror for the PSP is so far living up to its outstanding reviews. It offers great gameplay and innovative use of the PSP's controls that should be adopted for future PSP games. Let's hope this is the defining game for this portable platform and does for the PSP, what Halo did for the XBOX...

Management tool can handle several devices

SearchMobileComputing writes about the latest version of iAnywhere's Afaria Frontline solution, which hopes to make device management and security simpler by enhancing "support for Research In Motion Ltd.'s widely popular BlackBerry, full management and security support for Windows Mobile 5.0 devices, and other additions."

According to the article, with the latest version of Afaria, "IT can manage BlackBerry devices from the same administrative console as other mobile devices; they can also be managed from a Microsoft Systems Management Server (SMS) console through Afaria's integration with Microsoft SMS."

Jack Gold at J.Gold Associates noted the "Afaria updates come at a time when managers of large deployed bases of various devices crave a centralized management console to enforce device policies, instead of managing each type of device individually from different consoles."

He said, "As more and more users come online, this becomes an issue. This gives a company the ability to implement a single policy for all users in the organization, and that's not a bad thing."

Gold also pointed out that "adding management capabilities through SMS allows devices to be managed in a new way." He said, "What they've done here … is they built a link between SMS and all of the devices in the field that you couldn't manage with SMS before."

According to Jack Gold, "making device management a one-step process instead of several steps will be attractive to companies with large deployments." He concluded, "The bigger deployments know they need this. To the companies with 50 devices, it won't be that important."

Nokia Raises Forecast For Cellphone Market

The big news so far today is that Nokia "raised its forecast for the global cellphone market this year as developing regions continue to outperform expectations." The company "expects the market to grow by 15% or more in 2006 from the 795 million units it estimates were sold globally last year. The Finnish company previously forecast growth of 10% or more in 2006."

Wall Street Journal reports emerging markets, such as India and China, are fueling demand. Mattias Cullin at Hagstroemer & Qviberg said the new forecast "implies a significantly stronger growth trend in the first quarter than the company and the market previously projected."

Cullin noted "most analysts had predicted the handset market would grow around 11% to 12% in 2006." He added, "The news will lead to increased estimates for Nokia."

With a majority of growth coming from emerging markets, can Nokia increase revenue and average selling prices? Greger Johansson at Redeye said that average selling prices are "usually negatively affected when volumes increase. The news is still marginally positive."

In Reuters, Kulbinder Garcha at Credit Suisse said, "This indicates obviously a very strong start to the year for the handset industry."

In order to take advantage of demand in emerging markets, yhe article mentions that "Nokia also unveiled three new phone models, priced at 45-75 euros excluding taxes and subsidies, and said it expects to sell them all in tens of millions."

Richard Windsor at Nomura Securities said, "It is interesting that the level of interest in these devices will be very low, but their actual importance is really high. These phones are going to be the bulk of their low-end over the next 12-20 months and their functionality is very important."

However with lower cost phones also comes lower average selling prices. eQ Bank analyst Jari Honko said, "It is difficult to estimate how the average selling price of Nokia's phones will develop. Of course these launches will push the price down."

RAZR’s Now No. 1 in Europe

The RED HERRING picks up on the report from Telephia that the Motorola RAZR "doubled its market share in Europe to become the best-selling device on the continent." While the RAZR 6.2 percent market share in Q1 was an increase of 100 percent, Telephia didn't break out whether it was enough to boost Motorola's overall sales in Europe. Bernard Brenner at Telephia said, “Consumers see Motorola again as a serious player."

According to Gartner, "Nokia is a clear leader in Europe with around 40 percent of the market, about double the share of its next-closest competitor." Motorola is battling with Samsung for the 2nd spot.

Ben Woo at Gartner said, “It is clear that RAZR has made the Motorola brand cool again. Previously the image was that they had old-fashioned products.”

JupiterResearch: American Idol: "I want my ring tones!"

Is this another example of a mobile marketing effort gone awry or a user with a handset that can't download ringtones? Julie Ask at JupiterResearch chronicles another mobile marketing mishap after one of her colleagues attempted to get American Idol ring tone via Cingular. Ask makes a "request to Cingular, American Idol and whatever vendors are on the backend of delivery: "PLEASE LET THIS WORK!" You have an amazing opportunity to help grow this market and be a true leader in integrated, interactive marketing and entertainment. Please execute."

Below is an excerpt of the IM with her colleague:

JupEmployee: FYI---tried getting the american idol ringtones onto my cingular [read your blog late ]..text message arrived, i clicked on link and received WAP server errors 6 straight times...and rude 'boing' tone to indicate error [well, thats my phone setting i suppose]

Me: you have cingular?

JupEmployee: yep

Me: nice

JupEmployee: I tried dowloading ringtones on it last week..cant believe its such a pain...after i choose ringtone, i twiddle thumb waiting for SMS with it..got it 40 hours later..six copies of it.

Not a good sign, eh? Could it be the handset is not compatible? Just wondering, although I still haven't received any Winter Olympic updates from NBC yet. I guess I have to wait until 2010....

Ovum: EU discloses plans for regulation on international roaming

Stefano Nicoletti at Ovum chimes in on the recent proposal from the European Union to regulate roaming. He writes that "International roaming regulation has been a long-running saga. It has been discussed by regulators for many years, but no concrete actions have yet been enforced, meaning that we are still paying hefty charges when travelling abroad." Nicoletti provides some historical background and then opines:

Retail charge controls are out of the scope of the current EU regulatory framework directives, and are a very intrusive way of regulating. To our knowledge, mobile retail rates are not regulated anywhere in the world, with the exception of Korea, which is traditionally a strongly regulated economy. Therefore, if they are going to be introduced, we believe they should be used as a temporary measure and withdrawn once the market shows more competitive behaviour. In the end, the best way to serve EU citizens is to make sure that market forces work effectively, rather then imposing intrusive regulation.

It's a heavy-handed regulatory approach overall, which reflects the fact that the EU will not delay its intervention any longer. The timescale has also been tightened: a short consultation period until April and an approval process in June. The regulation will have to be approved by the Parliament and the Council of Ministers to become immediately effective. However, there could be some slack in the implementation at national level.

He concludes:

We expect the industry to react strongly and challenge this decision, which could take away pretty much all their roaming revenues, but it now seems that everything has been decided, so it might be too late!

Nokia Plays Catch-Up in Race Over Music-Player Cellphones

The Wall Street Journal (subscription required) reports that Nokia "is playing catch-up in the cellphone industry's rush to add music players to cellphones." According to the article, "technical glitches mean that Nokia will be pitching its latest handsets this summer into stores already awash with rivals' models. In particular, Nokia's N91 and mass-market 3250 phones will have to compete with a range of models from Sony Ericsson -- owned by Sony Corp. and Telefon AB L.M. Ericsson."

The move into the music playing handset market is part of Nokia's attempt "to sell more lucrative, high-end phones and to stanch a drop in selling prices. The average selling price of Nokia's models fell below €100 ($120) for the first time in the fourth quarter, compared with around €150 only three years ago. " Mattias Cullin at Hagstroemer & Qviberg said, "This is one thing that gives upside potential for Nokia. Eventually upgrades to more advanced models can help reverse the downward trend for average selling prices in the industry."

Many are predicting that music handsets will take away sales from dedicated devices like the Apple iPod. The article cites research from iSuppli, which "estimates the total 2005 market for music players was 129 million units, or $14 billion, and Apple Computer Inc. sold 32 million of its hugely popular iPods for $6.2 billion that year."

Nokia will have its hands full trying to take on Sony Ericsson, Samsung and Motorola in this space. Ben Wood at Gartner thought Nokia needed "to unveil more models in the high-end N series range or risk being further stuck behind the competition. Presented in April, Nokia's flagship N91 music phone has been dogged by delays because of problems with handling digital rights of copyrighted material and technical issues."

The handset, "which stores around 1,200 songs and has a megapixel camera, is expected to sell for €700, compared with Sony Ericsson's W950i, which has a more durable storage technology but no camera and is expected to sell for €500."

Some folks believe "the 3250 is the most important of Nokia's new models. It has enough storage for 300 songs and a megapixel camera." However it's not enabled for 3G networks and will "be priced at €350 before subsidies or taxes."

The big question is whether Nokia will be able to successfully brand its mobile music experience. Wood warned, "They have some time, but it's not unlimited."

Analysts Make Call: Apple iPhone Near

Investor's Business Daily jumps on the rumored iPhone story and adds to the rumors. From starting their own MVNO to designing snazzy new feature-rich handsets, the article seems to cover the gamut.

Gene Munster at Piper Jaffray said, "An iPhone would be huge for the company. There's a market for high-end phones. People like iPods as iPods. But there's also a group who would like an iPod married to a cell phone."

Munster thought an "iPhone might sell for $300 to $400, much like high-end cell phones and smart phones." He also predicted there was "a 75% chance that Apple will roll out a wireless service by year's end."

UBS analyst Benjamin Reitzes wrote in a research note that "Building on success with iTunes, Apple can create a phone that allows for the easy loading of content — music, video, photos and more — by docking to a PC or Mac. Consumers clearly want content, but lack true 'plug and play' phones."

Let the rumors fly....

Dean Bubley: VoWLAN? Vo3G? Yesterday's news. Try new VoxMAX! Now with added range!! Er, maybe.

Dean Bubley writes at his Disruptive Wireless blog about "xG Technology, which claims to have a proprietary approach to RF modulation, which enables it to create wireless broadband networks with hugely better range/power/bandwidth characteristics than all the other more mainstream alternatives (cellular, WiFi, WiMAX, TDD, Flash-OFDM etc)." Bubley writes that "It sounds too good to be true, but I still have a sense that there's something very clever there somewhere." The company is focusing on "creating dual-mode WiFi/xMAX VoIP phones and base stations, intended for "grassroots" (ie disruptive) VoIP service providers." After speaking with the company, Bubley writes:

Apparently, the initial devices will be pitched at the US market, using the 900MHz "ISM" unlicenced band. The xMax chips will use FPGAs, available to the company from August. The firm is working with an ODM to design the hardware and software, and the inclusion of WiFi is to enable the transmitter to avoid having to work through walls, using customers' own local connectivity where available. There are no immediate plans to add cellular radios, so to start with, these devices will be aimed at metropolitan/regional operators... or indeed private companies and individual users.

Bubley thinks the "company risks falling into a trap. It appears to have some cool technology - but is not necessarily going about commercialising it in the best way." He says:

Unfortunately, in some ways creating the RF and silicon bit of a phone is "the easy bit" - even if its based on ultra-clever radio technology. The tricky stuff is in making the rest of the phone exploit that radio - having a decent voice performance, a good & intuitive user interface, bulletproof security, and having useable & effective applications like contact book and call register & SMS. The other tricky elements are around creating a service - not just rolling out cheap base stations, but the server platform, marketing, billing and customer support. There's no point having a cheap network if every customer has to make 13 phone calls to an agent asking how to configure the phone to use it properly.

Bubley believes "trying to get the "phone" bit of the technology working in less than 6 months is, er, challenging," and is taking a wait-and-see approach. He does conclude that:

For wireless VoIP, the devil is in the detail. And details like spelling your own company's URL correctly in the original draft of the press release are the starting point. It's also notable that the company's website lacks a "careers" section for all of you enthusiastic handset UI engineers to browse.

Hmmm. Companies with limited info on their website scare me....

In-Stat: Multimedia, Data-Rich Mobile Phones Rapidly Taking Market Share in Asia

In-Stat has released a new report that finds "cutting-edge mobile phones—phones integrated with various multimedia and rich-data functionalities—are rapidly increasing their share of phones shipped in the Asia Pacific market." One example is of the "252.3 million mobile phones shipped in the region in 2005, 53.4% had camera functions." In-Stat attributes the "plunging price of such models in emerging markets" as greatly promoting their adoption.

Victor Liu at In-Stat said, “Digital cameras, including both digital still camera and video camera, will remain the most popular function of cutting-edge phone. By 2009, 67% of mobiles sold in Asia Pacific will have camera functionality.”

Key findings include:

• Phones with music-playing capabilities accounted for 23% of phones sold; that figure is above the global average of 13.6%.
• By 2009, the functionality and quality of music playing on mobile phones will be greatly enhanced, with music phones likely to be in direct competition with stand-alone music players.
• Mobile digital broadcasting TV phones, and cellular phones with alternative wireless broadband connectivity, were introduced to early adopters in South Korea and Japan in 2005.

Telephia: Motorola RAZR Doubles Market Share to Acquire Lead in Europe

File this under another analyst firm press release not on their website. According to Telephia's Q1 2006 European Subscriber and Device Report, the Motorola RAZR is "posting higher market share in Europe, with a 6.2 percent share or nearly 5.3 million mobile consumers who bought a wireless device during the last three months. This is up from RAZR's 3.1 percent share secured in Q3 2005. RAZR's market share was especially strong in the United Kingdom, Italy and Spain, claiming a share range from 7.5 to 9 percent. The RAZR claimed a 6.1 percent share in its Q1 2006 report for the U.S., illustrating a global demand for devices rich in visual and technological innovation and creative design."

Other key findings include that "while Motorola had the most popular model, Nokia dominated total volume, claiming five of the top eight models in Europe. The Samsung SGH-D600 (#4) and the Sony Ericsson K750 (#5), which are both two mega pixel camera phones focusing on superior multimedia functionality, grabbed a share of 2.2 and two percent, respectively, equaling more than 3.6 million mobile phone consumers who bought the phone."

Kanishka Agarwal at Telephia said, "Operators need to have a more heterogeneous, segmented handset portfolio that balances consumer demand for reliable voice, innovative design, multimedia, and 3G capabilities. This is a shift from Q1 2005, when the bulk of top selling models were focused on superior voice quality."

Table 1: Top Mobile Phone Models in Europe

                                      Pan Europe    Pan Europe
                                       Share (%)     Share (%)
Handset Model                                Q1 2006(a)    Q3 2005(a)
1. Motorola RAZR series (V3, V3x)                   6.2%          3.1%
2. Nokia 6230 (6230, 6230i)                         3.4%          5.2%
3. Nokia 6101                                       2.6%          0.3%
4. Samsung SGH-D600                                 2.2%            NA
5. Sony Ericsson K750 series (K750, K750i)          2.0%          2.2%
6. Nokia 6630                                       2.0%          2.3%
7. Nokia N70                                        1.9%            NA
8. Nokia 6680 series (6680, 6681)                   1.7%          1.3%

Source: Telephia European Subscriber and Device Report, Q3 2005 and Q1
2006

(a) Telephia Pan Europe market share data includes total share from
six European countries: United Kingdom, Germany, Sweden, France,
Italy, and Spain. 

JupiterResearch: Cheated on Coke Credits on my Cell Phone

In her never ending quest to try out mobile marketing initiatives, Julie Ask posts about her latest effort at the Jupiter Analyst Weblogs. Unfortunately, it seems like mobile marketers are shooting themselves in the foot with there current attempts. Ask leads off with:

Ah, mobile marketing ... I'm really trying to like it and give it a boost. Campaigns like the one being run by Coca Cola are making it hard right now. It seems as though folks are still operating under the "customer expectations are low so we don't have to execute that well right now in the mobile medium."

Here are her likes of the campaign:

• Integrated with online experience to collect consumer information, preferences, etc.
• Frequent touch points - each soda offers an opportunity to interact with the brand
• Low hurdles for point redemption for prizes

And here is what she thinks is not working from the standpoint of mobile marketing:

• Only 3/5 bottle cap codes that I attempt to redeem through text messaging are actually accepted. Others are labeled as "duplicates" or "invalid." ??? I'm reading them the best I can from the cap - not so easy. Not sure why they are being so hard on me for three points here and there.
• I set up an extensive profile online. They know my age, gender, where I live, and that my interests include sports, travel, diet coke and entertainment. About a week after setting up the account (or longer), I received a "generic welcome to coke rewards" email. Not impressive given how much they know about me.
• Within my profile, there is not consistent information about my mobile phone number and carrier - one portion of my profile says they have no idea what my phone number/carrier is and another portion of the website (my profile) has the information. I've registered my cell phone twice now by sending a code to a short code. In the mean time, I've signed up for mobile alerts/coupons/offers, but have received nothing. Are they waiting until I've completely forgotten that I've signed up?

She concludes that there is "a lot of energy in the right directions and good ideas - just waiting to see what they eventually do with it."

This seems to be another example of one of my major pet peeves with things that are both mobile and non-mobile related. A lot of effort seems to go into the "strategy" but very little focus is on executing the tactics properly. ..

visiongain: Apple iPhone Launch is Imminent with Helio?

Before jumping into the news here, one word of marketing advice to analyst firms announcing new mobile-related research. Make sure the release is on your website. I would think it is much more effective from a business standpoint to drive traffic to your site than some place that just picks up press releases. Just my 2 cents.

Anyway, according to a press release from visiongain picked up at VOIP Magazne, "the next product to be released by Apple is the much-rumoured "iPhone". The Apple-branded mobile phone is likely to debut this spring with the launch of Helio."

Pam Duffey at visiongain said, "The odds are extremely good that Apple will launch an iPhone this spring in tandem with Helio's launch in the US. There exists a relationship between Apple and Helio management that goes back to the ROKR iTunes phone, and Helio has declared a target audience identical to iPod's existing market. Helio's top rank executives have also publicly voiced frustration with mainstream carriers and appear to be on a crusade to radically shake-up the industry."

Helio is a U.S. MVNO partnership between EarthLink and SK Telecom. Duffy added, "The iPhone will most likely be produced in South Korea by an existing handset maker, and made available exclusively through Helio. The iPhone will likely be as disruptive to the existing carrier market as the iPod was to the mobile music industry. When the iPhone adds VoIP capability, it will be even more disruptive to carriers."

Content and Pricing Limit Mobile Video Adoption

Electronic News cites a "new study from JupiterResearch which notes that 41 percent of mobile phone users are interested in some form of video service on their handsets." The study says the "growing demand for video will generate $501 million in revenues by 2010, up from $62 million in 2005."

Although Jupiter notes that "adoption of the technology has been slow to take hold with only 2 percent of mobile phone users claiming a subscription," Jupiter said, "17 percent of mobile subscribers said they were interested in watching “live” television on their cell phones while 11 percent indicated interest in short video clips."

Julie Ask at JupiterResearch said, "This consumer interest bodes well for the mobile industry as vendors use different business models to try and tap into this consumer demand. The challenge is not interest but rather finding the correct mix of premium content and price points that is lacking in today’s offerings.”

David Schatsky at JupiterResearch added, "Longer term adoption will depend more on business models and content offerings than on the technology or devices. Our research shows that there’s a strong consumer interest in consuming mobile video. Consumers are just not interested in paying large fees for mediocre content."

JupiterResearch:The French and DRM - What's This Really About?

I haven't been tracking the proposed French law regarding DRM and Apple too closely, because frankly I'm not sure what it's all about. I guess I'm not the only one. Michael Gartenberg posts at the Jupiter Analyst Weblogs that he has been avoiding the issue because he's not sure he "totally understands the law, what it's trying to acheive or what the law really says." Gartenberg writes:

If it's interoperability, all music whether bought from Apple or Napster or anyone is interoperable. All that content can easily be burned to disc and then imported as MP3 to any device

If the issue is all digital content needs to be interoperable, does that mean that my PC can't be sold in France since it won't run Linux or Mac OS software or my PS2 illegal since it won't play Nintendo games?

Is it about not selling DRM protected content in France? If that's so, no record company will allow their content sold in that country.

Or is it just about trying to force Apple to give the French government access to their DRM technology to allow the government to level the playing field? If so, it's likely Apple would pull out of the French market.

Gartenberg concludes that "What's really scary is this law is something that could be adopted by the entire EU. David Card and I chatted about that this morning and we both believe that saner heads would prevail. On the other hand, given the EUs treatment of Microsoft, maybe not.

Dean Bubley: Roaming and the EU.... not far enough

Commenting on the European Union's proposed roaming legislation, Dean Bubley posts at his Disruptive Wireless blog that the EU's proposal is laudable, but needs to go further. Bubley notes that as an independent wireless analyst, he pays his own cellular and WiFi charges so he is "acutely conscious of cellular roaming charges, and their complete disconnection from any form of reality."

He writes that "despite pronouncements from the GSMA about "8% per year price cuts", and isolated tariffs like Vodafone Passport, typical charges bear little relation to the underlying costs of international voice traffic interconnection, as the success of myriad carrier-grade international VoIP services indicate." He also opines that:

It's a real pity that the EU's new & otherwise laudable proposals on roaming do not also include recommendations on data roaming, which is possibly the most egregiously-priced communications service on the planet, often overpriced by between 10x and 1000x sensible rates. In some cases, it's cheaper to use satellite data downlinks than GPRS or WCDMA roaming.

He also calls "on some form of worldwide authority - the ITU or WTO - to follow the EU's lead on this." Bubley concludes that:

It's just a pity that the EU's website is so opaque that I cannot easily find out where to add my comments to their ongoing consultation.....

Vendors Ease Mobile Device Data Interchange

TechNewsWorld writes about the growing importance of data syncronization as "businesspeople and consumers are becoming more reliant on handheld devices for the obvious conveniences they offer.

Jack Gold at J. Gold Associates said, "We are starting to see users do more with their handheld devices than simply check e-mail. Increasingly, these products support mission-critical activities, such as exchanging sales information with ERP (enterprise resource planning) applications."

The article looks at the challenges of getting mobile devices to "exchange data with other systems," and notes "there is now growing sentiment in favor of a standard approach to data interchanges." David Via at Ferris Research said, "The need for a data synchronization standard is becoming clearer as users work with complex mobile media, such as video clips."

Several enabling factors are helping the proces, such as more powerful devices, bigger, sharper screens, more memory and faster data networks. Gold said, "Companies are discovering that providing their executives with handheld systems can be more helpful than buying them laptops. About one quarter of executives now use handhelds, and our research expects that percentage to increase to more than half of all business executives in two to three years."

The article looks at some of the data challenges and the efforts the mobile industry is taking to address them, such as Microsoft's ActiveSync, Palm's HotSync and RIM's Blackberry Connect. Via noted that "Typically, the protocols work only with the vendor's systems but not with any other device."

This is why some are "working on a standard data interchange language, dubbed Synchronizations Messaging Language (SyncML). The Open Mobile Alliance, a group formed in the summer of 2002, has been charged with developing this standard. The ad hoc consortium has become the gathering place for development of all important mobile device standards."

The SyncML standard is gaining traction, but "it still needs to clear more hurdles." Via concluded, "Long term, suppliers are expected to abandon their proprietary data synchronization options for SyncML, but it could take a couple of years before users will be able to make that transition."

iSuppli: China maker leaps to second place among MP3 player market’s chip suppliers

Chris Crotty at iSuppli pens a column for DigiTimes that states the fastest-growing company in the MP3 player market is not Apple or Samsung, but "actually China’s Actions Semiconductor, which supplies system-on-chip (SoC) semiconductors used to control MP3 players."

According to Crotty, "Actions in 2005 increased its shipments of such SoCs to 49.8 million units, up a staggering 308% from 12.2 million units in 2004. The company’s revenues from MP3 player SoCs correspondingly soared to US$147.9 million in 2005, up from US$54.1 million in 2004."

Based on this growth, Actions is:

• slightly behind rival SigmaTel, which shipped an estimated 50.8 million units in 2005
• PortalPlayer, the SoC supplier for all models of the Apple iPod, except the shuffle, retained its number-three rank with 26.6 million units
• Another 9.1 million units from the remaining suppliers made up the rest of the market.

Actions' spectacular rise can be attributed to "the fast-expanding low-end segment of the MP3 market, which is based primarily in China. The company’s SoCs sell for around US$3 each, compared to an industry average of US$5.67 in 2005. Despite that low average selling price, Actions still enjoys margins in the 55-60% range."

Crotty writes that the company is also effectively marketing "its products through distributors and resellers to the many MP3 player manufacturers based in China. Six main distributors account for 80% of Actions’ revenues, and distributors overall account for 97% of sales."

Of course with success, patent infringement litigation is sure to follow. Crotty states that "SigmaTel in January filed suit in the US against Actions and its customer, Sonic Impact Technology, for patent infringement. Actions has only filed nine patents in China compared to nearly 300 filed or held by SigmaTel in various key countries. Soon after the U.S. court filing, SigmaTel followed up with a complaint to the International Trade Commission (ITC). SigmaTel this week said that ITC has ruled that Actions infringed two SigmaTel patents."

He also remarks that "the dispute has essentially prevented Actions from exporting its products to the US. It is also possible SigmaTel will try to bar Actions from selling into other countries besides the US."

While SigmaTel is being "squeezed between PortalPlayer on the high end and Actions on the low end," Crooty writes that the company "is fighting back with two new chip. However, one of the new chips, the 36xx platform has a new architecture, which is also targeted at the higher end market. This could limit adoption and "securing design wins could take time."

Crotty writes that Actions is beefing up R&D efforts and branching into "mixed signal and mobile video technologies." While "PortalPlayer continues to benefit from its strong relationship with Apple," Crotty says the company "recently scored notable design wins with SanDisk, Philips and Sirius," and is working on wireless technologies as well as "working diligently to add video decoding functionality into its controllers. The present flagship iPod relies on a Broadcom chip for video, and PortalPlayer is likely eager to win that socket as well."

ABI Research: Ringing in the Changes: The Explosive Growth of Mobile Music Downloads

According to ABI Research, "the market for full track music downloads to mobile devices was twenty times larger at the end of 2005 than it was twelve months earlier." A new report found that "global revenues from over-the-air (OTA) downloaded full track songs last year were $251 million, up from $12.4 million in 2004. ABI Research forecasts that by 2011 this figure will be $9.3 billion."

Ken Hyers at ABI Research outlined five prerequisites for a successful mobile music download service:

• A 3G network capable of delivering the product
• A distribution mechanism: effectively a mobile music store that can deliver the content to the customer, verify that the handset can accept the content, and ensure that users are paying for it
• An agreement between an operator, one or more record labels, and possibly a content aggregator; (in North America, operators - there are currently only two in this field, Verizon and Sprint - tend to partner directly with record companies, while overseas, content aggregators are frequently included in the equation as middlemen);
• A robust DRM scheme that also allows users to move tracks easily between devices; and
• Handsets with sufficient memory and feature-sets to support music downloads and transfers. This demand pleases handset manufacturers, who are only too happy to build high-margin extras into their new products.

Hyers said, "You also need people willing to buy OTA content,. Over-the-air downloads will be relatively less successful in North America because of the high penetration of PCs. Overseas (particularly in Asia), PCs are less prevalent and the mobile phone is more so. There wasn't even a Japanese iTunes store until Q4 of 2005. That's part of the reason KDDI sold 30 million mobile tracks last year in Japan alone."

Motorola’s Sleek Q Smartphone Should Pressure Palm, RIM

The Consumer Electronics Stock Blog picks up a recent client research note from Bear Stearns analysts Andrew J. Neff, Bill Hand and Ted Chung about the status of Motorola's "much-anticipated Q smartphone, and its implications to competitors Research In Motion and Palm. Here are the key points:

• MOT Q smartphone launch set for April per MOT website. According to MOT’s website, it appears that the Q smartphone (which had been delayed several times) with embedded QWERTY keyboard is scheduled to become available in April — which implies that the launch could coincide with CTIA tradeshow next week (4/5-4/7). The previous references on the website noted availability in the first quarter.
• With its sleek design (about one-third the thickness of PALM Treo or RIMM BlackBerry) and compatibility with third-party enterprise email solutions (e.g., Good Technology, MSFT, Intellisync, etc.), if Q is priced aggressively as expected — around $200-$300 with carrier subsidy vs. Treo 700w at $399 — it could potentially lead to pricing pressure for both PALM and RIMM.
• MOT Q is expected to become available through Verizon; timing/launch of GSM/GPRS/EDGE not certain. Stock impact: negative for PALM (aggressive pricing, although Treo has first-mover advantage), marginally negative for RIMM (pricing pressure but RIMM has superior email offering).

The operative words here are should and could. The Q is already late and new rumors are sufacing it could slip even later than April (the web site now says shipping soon as opposed to April). Plus, given Motorola's past track record with smartphones (i.e. MPx, MPx220), etc) has not been great, I think I'll just wait and see if and when Motorola can deliver a Quality product...

E.U. plan would cut roaming charges on wireless

Investor's Business Daily picks up a MarketWatch.com article that reports the European Commission "unveiled proposals to curb the amount that phone companies can charge consumers when they're traveling abroad in a move that would scrap a significant source of revenue for the likes of Vodafone Group."

Phil Kendall at Strategy Analytics said, "It's a pretty major recommendation. If the commission can push it through, it will have a major impact as roaming is a hugely profitable business. It's pretty bad news for the network operators."

The initiative "endorses ceilings on wholesale and retail roaming charges." According to Goldman Sachs, network operator Vodafone " makes as much as 10% of total sales from roaming."

According to the article, "consumers would no longer be charged for receiving phone calls while abroad, and customers wouldn't pay a higher tariff just because they are traveling. Indeed, data compiled by the commission show that for a four-minute call, roaming prices vary from as little as 0.20 euro for a Finnish consumer calling home from Sweden to 13.05 euros for a Maltese customer calling Latvia."

In addition, "the proposed changes to the E.U. regulatory framework would also ensure that operators don't charge their peers in neighboring countries substantially more than the actual cost. Such modifications would counter operators' claims that they are merely passing on the high prices demanded by overseas local networks. The proposals need the approval of the European parliament and E.U. governments. Telecom ministers are scheduled to discuss the initiative on June 8."

Obviously the network operator are not too happy. Goldman Sachs told clients the "new pricing scheme may reduce earnings per share by up to 6% starting in 2007." Strategy Analytics' Kendall warned that "it could take years for the legislation to come through." He opined, "I do expect to see a lot of litigation over this."

visiongain issued a press release giving their thoughts on the proposal. The firm said, the proposal "is undoubtedly a positive step for the consumer, but generally mobile operators will not be happy about the news. Deriving between 10-18% of revenues from roaming services, operators will be hardest hit should the European Commission's proposal become legislation." visiongain notes that:

The major problems behind the roaming issue are that charges to the end-user are deemed too high and customers are often not aware of the price of calls. Confusing tariffs and disparities between countries have contributed to this. For example, British tourists in Italy are charged 50% more for calls than French tourists. In addition, charges vary so much from country to country and operator to operator that consumers are confused as to how much they will be charged for making a call. All of which is unacceptable to the European Commission, which has the backing of European Telecoms Regulators in EU countries.

visiongain then states:

Moves to reduce roaming charges are long overdue, as consumers have been paying excessively for too long. European operators are expecting the end of inflated and disparate roaming charges, but this must be seen as a call for increased competition in the market, before regulation is imposed. As the premium points that mobile operators can charge extra for are gradually being eroded by competition trying to attract new subscribers and reduce churn, it is only a matter of time before roaming becomes a serious point of competitive advantage.

visiongain concludes with:

operator's would actually benefit from being more open about roaming charges. If roaming charges are more transparent and simple, subscribers abroad might actually use the service more frequently, this would potentially offset revenue loss from decreased tariffs. Furthermore, the operator's image with their customers would receive a much-needed boost, and would reduce churn for an operator.

The move by the Commission is a good starting point for solving the roaming problem, from the consumers' perspective. But visiongain believes that operators need to be more proactive in providing a solution to this problem and using it as a competitive advantage rather suffer the political intervention that could further harm voice revenues.

Strategy Analytics: MicroSD Eclipses Rivals in Cellphone Memory Card Format War

According to a new report from Strategy Analytics, "over the next five years, sales of slotted phones--cellphones with a removable memory card slot--are expected to grow at an annual average rate of 52 percent, with almost three-quarters of all new phones sold in 2010 likely to include a slot. Meanwhile, sales of memory cards for cellphones are expected to grow at a rate of 53 percent over the next five years, reaching almost 1.1 billion cards by 2010."

Stuart Robinson at Strategy Analytics said, "MicroSD has rapidly become the format of choice for new mobile phone designs, with design wins far exceeding those for MMCmicro and Sony's new micro-sized format, the M2. While the M2 will quickly replace the larger Memory Stick formats, it will remain a long way behind the microSD format and some way behind the MMCmicro format in cellphones."

Stephen Entwistle at Strategy Analytics added, "In 2005 the average capacity of memory cards sold for use in cellphones was 112MB per card. By 2010 we predict that this will have increased to around 1.6GB, equivalent to an annual average growth rate of over 70 percent."

How about miniSD? So far there are way too many memory card formats. Cna't the industry just standardize on one? It would make things a lot easier...

JupiterResearch: Back from Budapest

Thomas Husson posts at the Jupiter Analyst Weblogs about a recent trip to Budapest, the first time he has been to the city in ten years. Husson writes that from a mobile perspective:

a quick glimpse on shops and TV ads, let me think the usual suspects have entered the market has well. Market leader is...T-mobile Hungary with more than 4M subscribers at the end of 2005. Vodafone (rolling out its worldwide ad campaign NOW : "make the most of NOW, anywhere, anytime") is number 3 with almost 1.8 M subscribers after Pannon (slightly over 3M). According to those numbers, more than 8 out of 10 people in Hungary own a mobile phone. The penetration rate is already higher than in France.

Husson notes that early morning TV ads on the Hungarian MTV channel were "for ringtones and logos are clearly there. Out of 6 ads, 3 for Jamba and 3 for LaNetro Zed*, promoting you at least 10 ringtones and asking you to send an SMS to a 5-digit shortcode."

Husson was in the city for a "conference on mobile CRM, loyalty and retention strategies organized by IIR," and his "role was to give an overview of the role of mobile services in loyalty progammes." Husson writes that:

Most loyalty managers concentrate on voice, handsets and brands, the 3 main customer acquistion and retention tools. Few of them already integrate mobile services. In exchange of a certain anmount of bonus points, SFR allows its clients to benefit from ringtones and even recently to test new services such as mobile TV. This is an interesting trend to reward consumers and initiate the use of multimedia services. Music and video are currently acqusition tools but no doubt they will be part of anti-churn and loyalty schemes once usage is firmly established. Mobile operators begin to allow their customers to store content and personal contacts on a server or on a MegaSIM, in case they change/lose their cellular.

He concludes with:

I am sure labels, pay TV companies, Internet companies providing e-mail/IM services and adress books will have a significant role to play. The rise of Direct to Consumers and Off-Portal will stimulate the appetite of CRM companies. A good example for that is the recent rumor of Amdocs acquiring Q-Pass (according to FierceMoCo)...No doubt the audience of such a conference will be significantly different next year !

* LaNetro Zed is a discreet but profitable mobile content company, which generated 25M euros EBITDA margin out of revenues from 136M euros in 2005 ! Actually, they acquired the mobile content pioneer ZED (their consumer brand) from TeliaSonera back in September 2004. The reason for such a profitability is that they claim to own the intellectual property of up to 85% of their content, so they have no royalties to pay...By the way, they will soon enter the French market having recently partnered with Netsize.

Disney hires BuderEngel ad agency for $50 million MVNO campaign

RCRNews.com picks up an AdAge article that reports Walt Disney "has hired San Francisco agency BuderEngel & Friends for an anticipated $50 million-plus launch" of its MVNO this summer. According to the article, "Disney Mobile’s primary strategy is to target moms wanting to control cellphone use and access." The service will purportedly "include a number of exclusive control features, such as "control over the number of minutes used and when they are used."

Disney Mobile’s Web site bills it as “a phone that gives moms what they need and kids what they want.” Other selling points listed on the site include “simple, straightforward controls for ease of use; countless customization options for personalization; usage controls that let you tailor your phones to your family’s needs.”

Disney is targeting the service and handsets at "moms with kids ages from 8 or 9 on the younger end to about 14, perhaps a little older for girls." The article cites a July 2005 Harris Interactive study that finds "12 percent of 8- to 12-year-olds have cellphones, while 49 percent of teens age 13 to 15 have cellphones." According to NPD Group, "Of children 13 to 17, 62 percent are on family plans, while 15 percent are on prepaid plans and 23 percent are on standalone monthly plans."

Julie Ask at JupiterResearch said, "by the time kids are 10, they want the phone their parents have. Yet, "There are horror stories of parents with huge cellphone bills."

Maybe even younger than that, and I'd posit that they want the same handsets their older siblings or teens are using...

To make inroads against RIM, Palm steals its strategy

The Globe and Mail reports on Palm's efforts to take on Research In Motion on its home court in Canada. The artilc looks at the challenges building partnerships with the network operators.

Carmi Levy at Info-Tech Research Group noted that "Phone companies are notoriously risk-averse operations." He said, "Palm needs to show the carriers that it has a strong enough platform and that it is worth their time to work with Palm."

Levy points out that "one of Palm's disadvantages is that it doesn't make its own software to push e-mails out to the wireless devices." he thought "The trouble with this model is that Palm forces customers to be IT experts." Levy believed Palm's partnership with Microsoft would "likely pave the way for warmer relations with the telecoms."

With network operators carrying many different handsets, some are more profitable than others. The article notes this "discrepancy causes telecoms to favour some products over others, and the BlackBerry is a frequent favourite."

Rob Sanderson at American Technology Research said, "There is a big difference between supporting a device on a network and promoting that device."

For Palm, "gaining a foothold in the business market is essential for Palm, because the consumer business is fickle." Levy said, "In the consumer market, you're always going to be playing the fashion game. But in the enterprise market, your customers may stay with you for years. If you are just playing in the consumer space, you are doomed."

According to Palm's latest earnings call, "35 per cent of Palm sales came from business customers last quarter, up from 30 per cent the previous quarter." Vivek Aryaat Merrill Lynch attributed the gain to tje "temporary effect of RIM's now-resolved litigation issues."

Gaming, Gadgets Spur Sales

Yahoo! News writes that "consumer gadgets -- MP3 players, video game machines and the like -- have become the fastest-growing source of sales" for semiconductor companies." The article looks at some of the factors impacting the industry.

Richard Gordon at Gartner said, "The hottest segment is digital consumer. And digital music players like the Apple iPod have been the hottest product. That will continue to be the case this year."

While the chip field is no longer a booming industry with revenue growth slowing from an annual rate of 17% a year as late as 2000 to rising at 11% a year currently, Gordon noted it's still growing "faster than most industries."

He said, "The global economy grows at 3%," and "chips are still a growth market compared with the overall economy." According to Gartner, the firm predicts the "2006 chip forecast to 9.5% growth over 2005. That would put sales at $258 billion."

World wireless revenue to surpass fixed

United Press International reports that according to Gartner, "global service revenues from wireless phone service will surpass those of fixed lines for the first time by the end of 2006." Philip Redman at Gartner predicted that "by the end of 2008, a majority of all telecom revenues will be from wireless phones." He said, "The growth of the telecom industry is reliant mainly on the services and mobile sectors; infrastructure will experience only a limited upside."

Redman remarked that "chief among the money-making services is the time spent actually talking on the phone. Data services, like mobile Internet, games, ringtones and text messaging may experience high volume consumption, but are also relatively low-cost." The biggest money makers will be handset sales. "By 2009 Gartner expects that mobile companies will sell more than 1 billion handsets every year and that by 2010 the low-end models will cost less than $25 each."

Redman forecasted that "3 billion of the world's 6.5 billion people will be mobile users by 2010." He said, "Fifty percent of the world will be covered by wireless. But not 50 percent of the area -- we, as people, tend to like to live near each other. It's pretty incredible."

Redman added: "What do you think the world's teledensity -- the percentage of people who have access to a phone -- is right now? Twenty-five percent? Less? Less than 10 percent of the people in the world have ever made a phone call, and by 2010 almost half of them are going to have a cell phone."

Redman also predicted that "by 2009, 99 percent of all new (telephone) voice connections will be wireless, while 70 percent of the total existing voice connections will be wireless worldwide,." He said, "That's why AT&T bought Bell South -- because of Cingular."

On the topic of converged devices, Redman didn't "foresee combination devices like the phone-MP3 player pushing traditional MP3 players out of the market." He said, "There are too many tradeoffs," citing "limited memory and decreased sound quality offered by the MP3 phones."

Weekly Roundup

A roundup of mobile analysts in the news for the week ending March 25:

• Nicholas McQuire at Yankee Group via XChange about fixed mobile convergence
• American Technology Research analyst Albert Lin via the San Jose Mercury News about VeriSign buying mobile phone billing company m-Qube
• Rob Enderle at The Enderle Group via Inman Real Estate News about mobile trends in real estate
• Julie Ask at JupiterResearch about Ad-Supported Wireless Services
• M:Metrics analyst Seamus McAteer via USA TODAY about comedy and mobile
• Praveen Chandrashekhar at Frost & Sullivan via TechNewsWorld about Developers Eye Growing 'Hands Free' Mobile Technology Market
• Nintin Gupta at Yankee Group via the Boston Herald about cell phones to play with TV
• Roger Entner at Ovum via USA Today about used and pay-as-you-go cellphones
• Mark Lowenstein at Mobile Ecosystem about how to avoid becoming the "dumb pipe"?

Palm's Profits Jump As Treo Sales Double

Yesterday, Palm announced its Q3 earnings, reporting profits "jumped sixfold" and sales climbed 36 percent to $388.5 million. "Treo shipments doubled from a year ago to 564,000." The Consumer Electronics Stock Blog has a full transcript of the earnings call. Not only the scripted parts from the execs, but the Q&As with the financial analysts, which makes for a nice read.

In Bloomberg.com, Rob Enderle at the Enderle Group said, "The market looks very strong for them. RIM has given them that opportunity."

Over at CIO, Todd Kort at Gartner said, "The downside is that 80 percent of their sales are in the U.S., which is actually kind of dangerous. The U.S. buys 40 percent of all PCs in the world, but only 5 or 6 percent of all smart phones,."

Kort thought "Palm could see its total market share slip. Worldwide growth in sales of smart phones is slated to increase from 46 million last year to 96 million this year, while Palm grows only from 1.95 million to about 3 million. That would reduce Palm’s market share from 4 percent or 5 percent to 3 percent."

However, the Treo's "average selling price (ASP) of $511 per smart phone, compared to just $197 per handheld," helped power "Treo sales to represent a record 74 percent of Palm’s revenue for last quarter."

Kort added, "Clearly their future is with smart phones, and as that mix moves toward the higher ASP, it will give them better gross margins and improve their financial picture."

MarketWatch takes a look at Palm's past, present and future. Albert Lin at American Technology Research said, "Palm took Apple's Newton idea and perfected it. Aside from the elegance of the great technology for handwriting recognition, the Palm OS was absolutely state of the art in the way it made technology simple and reliable."

Regarding the company's IPO during the boom and its subsequent troubles, Lin said, "Palm hired an incompetent CEO, Carl Yankowski, who cared more for his own ego than any of his customers." This opened the door for other players such as Research in Motion. Lin added, Palm allowed RIM to "steal a market that should have been Palm's."

Which leaves us with the market today. Palm is in a better position given the most recent quarter's results and the market for enterprise mobile space is starting to heat up. Will Palm have the goods to succeed?

visiongain intelligence: Contract manufacturers will put added pressure on handset makers

According to new research from visiongain intelligence, "the increasing demand of operators to customise and brand their own handsets will benefit contract manufacturers in the mobile handset industry." Visiongain estimates that "outsourced handsets will account for 36% of total shipments in 2006, a figure that will rise to 47% of all mobile devices by 2009."

visiongain states that "Flextronics, the leading contract manufacturer, produced 47 million handsets in 2005, putting it close behind the world’s fourth largest handset maker, LG, which made 53 million phones that year, and ahead of Sony Ericsson."

visiongain analyst and Adam Walkden said, "Own-brand handsets are one way for operators to increase data usage, and the trend towards greater customisation will have an impact upon the manufacturing side of the industry. OEMs need to re-assess their relationships with operators and become more accommodating in terms of cross branding and customisation. Only by doing so can they compete with the ODMs and EMS providers who are willing to work closely to meet all the operators’ needs.”

visiongain pointed out that another opportunity area for ODMs and EMS providers was "the burgeoning low-cost handset market," because "ultra low-cost and low cost handsets can be made more cheaply by contract manufacturing, leading more OEMs to outsource the production of such handsets as emerging market growth continues."

Walkden added, "We are also seeing moves towards increasing handset production in India as a result of more favourable government initiatives. Once the dark horse of handset manufacturing, India will experience a dramatic increase in the number of handsets shipped from the region."

Pyramid Research: A Case for Mobile TV without the Mobile Operator

According to a new report from Pyramid Research, "one of the key risks mobile network operators (MNOs) face with Mobile TV [is] becoming casualties of a dis-intermediation process that would minimize their role in the Mobile TV value chain or remove them altogether. MNOs missed the mobile music boat; clumsiness towards Mobile TV could have a more negative impact."

Nick Holland at Pyramid Research said, “With Mobile TV, MNOs have a 12-18 month window of opportunity, an advantage they better not squander with inadequate pricing and quality of service."

Pyramid points out that while "MNOs provide the fastest route to market since they have a large subscriber base that demonstrates an affinity for portable electronic products," Broadcast Mobile TV "does not require the operator’s cellular network to work."

Holland concludes, “MNOs must solidify their position in the mobile TV value chain before their role becomes minimized. They will have the main mobile video offerings in the marketplace for another year or two, just as 3G starts reaching some level of maturity. The more they build video watching patterns around the handset, the less vulnerable their position in the value chain will be.”

JupiterResearch: Commercial text messages with potential!

Julian Smith at JupiterResearch writes about the market for "using SMS text to send promotional mobile marketing messages direct to consumers." Smith states there is growing interest, but "successful, large scale implementations of this type of customer acquisition activity have been few and far between to date (both in Europe and the US)."

One of the challenges is "persuading consumers to opt-in, by offering up their mobile numbers and permission, in exchange for the occasional offer or promo delivered to their handset." Smith says that "Jupiter estimates spend on SMS mobile marketing to reach a total of €111 million by the end of 2006 across Europe. Small fry in comparison to the explosion in paid search, for example, which will total €1.6 billion by the end of this year!"

Smith than looks at an "interesting new development from Miva in the UK" that might change things. He says:

The pay-per-performance contextual ad network has just launched a new pay-per-text service in collaboration with The Number's 118 118. At present when a consumer dials up the directory enquiry service to find out the details of a company or service provider they are delivered the details back as a text message. With this new advertising platform relevant and related marketers will be able to add a couple of lines of additional text promoting their complimentary service. So taxi services could be promoted alongside restaurant details. Or car hire services alongside airline details. Or home insurance against emergency plumbers. This sounds like a win / win for both advertisers and consumers. The advertiser gets directly in front of interested consumers, when actively searching a related business, while the consumer gets added value information, non-intrusively incorporated into their text message, that they are happy to receive.

This new type of co-branding / sponsorship advertising model could help drive investment in the SMS channel. It could also help boost the revenues of directory enquiry businesses - 118 118 texts tens of millions of directory callers with their details every year!

Europe First for Microsoft Push

Unstrung writes that "Orange Business Services, the enterprise arm of cellular operator Orange UK will launch Microsoft’s push email update for Windows Mobile 5.0 next, but analysts suggest that U.S. carriers will not be far behind with the much anticipated update." According to the article, Orange "will launch the service with the Orange Mobile Manager, a tool that enables IT departments to update current Windows Mobile 5.0 devices without manually configuring each one."

It is expected that in the U.S. "the Messaging and Security Feature Pack (MSFP) update required will be mainly issued by the carriers rather than the device vendors themselves."

Cingular Wireless LLC , Sprint Nextel Corp. (NYSE: S - message board), T-Mobile USA and Verizon Wireless all offer Microsoft-based smartphones to subscribers.

Todd Kort at Gartner said, “Chances are good that a range of devices will offer MSFP within a few days of each other whenever MSFP is officially launched,. [But] there is no telling who will be first to market with MSFP or when.”

Gartner analyst Ken Dulaney pointed out that "Those devices support MSFP but that is not a carrier email solution for Exchange. It is just the device side."

Kort added, "The Orange offering is undoubtedly just a rebranded version of a product from Visto, Intellisync, or Seven."

Personal handyphone systems to be 15 pct of China mobiles by 2010

Forbes.com picks up an AFX story that covers a report from Pyramid Research, which predicts "Personal handyphone systems (PHS), a low-cost limited-range mobile service, will account for 15 pct of China's mobile phone market, or around 120 mln users, by 2010."

According to Pyramid, "PHS services, which are offered by fixed-line providers, have enjoyed success in China as 'the poor man's substitute' for mobile services, with prices at least 70 pct lower than those offered by China Mobile or China Unicom."

Pyramid expects "the price difference between PHS and mobile services to narrow" once 3G is intorduced in China and another carrier joins the fray. However, Pyramid thought "fixed-line carriers will continue to offer PHS services here as they are a good source of revenues from low-income users."

The Pyramid report said, "Therefore it is not surprising that both (fixed-line providers) China Telecom and China Netcom revisited plans to invest in improving PHS service quality and introducing new applications offered over the PHS network." According to the report, Pyramind expects "Five year growth rates between 2006-2010 are expected to slow to seven pct, compared to the 120 pct growth seen between 2001 and 2005."

Texting PayPal Payments

InternetNews reports on PayPal's move to take payments mobile, allowing customers in the U.S., U.K., and Canada "to make payments and transfer funds over the phone and through SMS text messaging."

After activating the PayPal Mobile service via their Internet account, "customers can send a text to "PayPal" (729725) from their phones and enter the dollar amount they want to send to a particular vendor, charity or user ID number. PayPal will then contact the mobile user to confirm and complete the transaction."

David Chamberlain at In-Stat was cautious about the prospects and wad "not sure exactly what people are willing to pay for using such a thing." He said, "I just don't know that we've got a huge market for it."

JupiterResearch analyst Edward Kountz saw the "benefit of PayPal Mobile from a global standpoint." He said the service will enable PayPal "to reach new customers both in the U.S. and abroad." He pointed out that "overseas, Internet access is often more common through mobile devices than desktop PCs."

Kountz added, "I think this is an important announcement. Technology is finally catching up with the vision."

Since I have a PayPal account for eBay purposes, I activated PayPal Mobile and the process was pretty simple and seamless. I have funds in my PayPal account and I'm always looking for ways to use it beyond just eBay.

For some reason, I'm too lazy to transfer it back to my regular bank account. Maybe it's because I treat it as found money after selling off old gadgets, video games, etc, on eBay. My PayPal funds also help justify some of my gadget purchases.

Anyway, I haven't tried making a mobile payment yet, but if anyone wants to send me money then feel free to contact me....

iSuppli: Cell Phone Premium Content Market to Reach $40 billion by 2010

Courtesy of Tekrati comes news of a report from iSuppli that predicts the "global market for cell phone premium content, including music, gaming and video, is expected to expand to more than $43 billion by 2010, rising at a compound annual growth rate of 42.5 percent from $5.2 billion in 2004.

Mark Kirstein at iSuppli said, "After years of hyper growth, mobile-phone markets in several major regions around the world are maturing, resulting in slower subscriber growth and declining Average Revenue Per User (ARPU) for wireless communications carriers. Meanwhile, new 3G networks offer increased bandwidth, but require compelling applications and content to drive revenue and provide a return on investment to operators. Against this backdrop, mobile-service carriers and content providers are establishing new business models to capture the growing opportunity."

According to iSuppli, "mobile music, led by ringtones and ringtunes, represents the largest and fastest-moving premium-content segment in the wireless world. The market in 2005 grew rapidly over the $3.8 billion revenue mark achieved in 2004, as the industry made a major transition from traditional polyphonic ringtones to ringtunes."

Kirstein believed "mobile video offers perhaps the most significant long-term opportunity in the mobile-content market," since "the market for mobile video is still at the nascent stage, even in Asia." iSuppli noted that "mobile TV will depend entirely on new phone deployments. Even with reasonably strong adoption of mobile-TV technology and subscribers, the installed base of TV-capable phones will only represent 12 percent of the total by 2010."

Slingbox Goes Mobile

The cool news for today is that Sling Media has "announced the availability of a beta version of SlingPlayer Mobile, a software product that allows users of the company’s flagship product, Slingbox, to view shows on their home TV from a mobile device."

The Slingbox is a hardware box that "allows users to view programs on their home TV from an Internet-connected PC anywhere in the world." Now Slingbox owners can partake in mobile video goodness and bypass the network operators as long as they have devices running Windows Mobile Pocket PC 5.0 and 2003 Second Edition that are Wi-Fi enabled and/or subscribe to a high-speed wireless data plan.

In the RED HERRING, Roger Entner at Ovum pointed out that the technology "will test the limits of the cellular network." He said, "If you love TV, this is a must have. Now you can fight with your spouse over the remote control from different countries, but this could be a nightmare for network service providers.”

Entner noted "TV streaming can be very demanding on cellular networks," and suggested "users would probably be better off choosing a Wi-Fi connection rather than a much more bandwidth-sensitive cellular connection."

He added, “The first time 100 people at a football game pull out their PDAs to watch a rival game, you will see the small print on your unlimited service cellular agreement get bigger. But it could be a revenue opportunity for stadium owners to offer Wi-Fi for a few dollars.”

Entner commented, "The whole business of watching TV from remote locations is extremely cool. There will be bandwidth issues initially, but people are getting used to the idea of being able to watch full-blown TV away from home.”

Michael Gartenberg posts at the Jupiter Analyst Weblogs that he has "been using the Slingbox Mobile client since it's been in early beta." He writes:

I've used it stuck in traffic in taxis, sitting in airports and other places where using a laptop just isn't practical. It's now available in a public beta at their website. If you're a Slingbox owner and you have a Windows Mobile Pocket PC or Pocket PC phone, check it out. It's a clean, elegant way to get your TV content on your mobile device and opens up some new scenarios for watching on the go. Best part, is it's free if you bought and registered your Slingbox before April 26th. Nice way to reward the early adopters. Look for a Windows Smartphone version to follow shortly.

From talks with the folks at Sling, Gartenberg finds current mobile usage is around "what’s commonly referred to as “video snacking” – watching a short video in a short period of time. This is great for when you are waiting in line somewhere, or have just a few minutes to kill, and I see consumers either watching produced, short-form content, or specific types of live TV, such as sports highlights or scores, as well as news updates."

He opines that "overall, this notion of placeshifting is highly disruptive technology, even more so on the phone than on the laptop."

Lastly in the San Francisco Chronicle, Roger Entner at Ovum thought "the mobile application for the Slingbox will deliver a shot in the arm for Sling Media as it fends off competitors." He said, "I think it opens up another customer segment, especially with more and more business users using PDA phones. For people who love television, it's a must have. This is really an 'ooh' and 'aah' application."

This is really cool stuff and the Slingbox is inching its way up my droolworthy gadget list. The best thing about getting a Slingbox, other than being able to watch my DirecTV and Tivo from the road, is all the other gadgets I can get to make things just right.

First I'll need to get a second DirecTivo receiver box or DirecTV's new DVR equivalent for my bedroom so I can use it solely for the Slingbox. This way I won't interrupt the family's viewing habits in the living room.

Second, I'll need to get a new handset. As I test Sprint's Power Vision EV-DO network, I'm having the same epiphany I had when I went from dialup to DSL. Highspeed rocks. It's hard using my GPRS handset now to find things on the network. So I'll need a 3G-enabled Windows Mobile handset that has Wi-Fi as well, such as the Sprint PPC-6700 (HTC Apache via UTStarcom).

So to get a Slingbox and take advantage of the mobile aspects, I can upgrade in other areas and buy two other gadgets as well. Isn't technology great....

Carving up big market for tiny televisions

The International Herald Tribune writes about the three main competing mobile broadcast technologies aiming to become the dominant standard. The article thinks "a single standard will probably be adopted for most geographic areas, with phone makers, broadcasters and mobile carriers in a region agreeing to use the same technologies."

So far in South Korea, "the government is subsidizing the development of a technology called Digital Multimedia Broadcasting, or DMB," while Nokia is backing Digital Video Broadcasting- Handheld, or DVB-H, which might help it "become the standard in Europe and large parts of Asia outside of South Korea and Japan."

Adrian Drozd, at Datamonitor said, "We see DVB-H winning out over all, but there will also be limited space for some of the other technologies. DMB has a head start, but from 2007 onward DVB-H should get momentum and become the dominant technology."

According to the article, "DVB-H trials are under way by mobile phone networks in Spain, Germany, Britain, Italy, France, Singapore, Malaysia, Australia, the United States and other countries. The first commercial rollouts, including one by Hutchison Whampoa's 3 Italia, are scheduled to coincide with soccer's World Cup in June in Germany."

Qualcomm is pushing a third standard called MediaFLO that is predicted to "take a large slice of the U.S. market, and Japan has a fourth standard that is unlikely to expand much beyond its borders."Datamonitor predicts that by 2009, "69 million people worldwide will subscribe to mobile television services generating total revenue of $5.5 billion."

The firm also forecasted that in 2009, "90 million DVB-H phones will be shipped, compared with 28 million DMB, 30 million MediaFLO and 18 million with the Japanese standard."

The article then looks at the pluses and minuses of each technology.

Microsoft's Push Comes to Shove

Unstrung writes about Microsoft's efforts to "one day challenge Research In Motion (RIM) for dominance of the mobile email market, but, despite the launch of the first "direct push" email devices, the Windows Mobile operating system isn't up to the task yet."

Gartner analyst Todd Kort said, "The press seems to be giving Microsoft the benefit of the doubt that their release 1.0 of wireless email software will be competitive with the Blackberry in terms of security, manageability, and battery life,. But I have strong doubts about this."

Kort predicted "Microsoft's wireless email problems will be resolved with the next software revision, expected sometime next year, as well as more and better hardware that exploit it more fully."

He cited three key weaknesses in the software as it stands:

• Mobile Outlook is still too hard to navigate on a mobile device.
• Windows devices still use too much battery power compared to the Blackberry.
• The security and manageability features in the 1.0 release are inferior to those on the Blackberry.

Kort commented that "Smart companies using Windows Mobile devices will choose GoodLink rather than the Microsoft push email offering, at least until the next Microsoft rev."

Companies wanting to use Microsoft push feature will have to jump through some hoops to get it, installing Exchange Server 2003 Service Pack 2. They will also have "upgrade Microsoft Mobile devices with the the Messaging and Security Feature Pack (MSFP) for Windows Mobile 5.0."

David Via at Ferris Research said, "The OS update process for mobile devices is very device- and manufacturer-specific. I am seeing fewer and fewer device manufacturers even offer major OS updates, like from Windows Mobile 2003 to Windows Mobile 5." Via thought "many users will just go ahead and buy new devices, as they're known to do every two to three years."

Kort concluded that "about the time Microsoft improves its email offering and fixes mobile Outlook, enterprises will begin entertaining the idea of mobilizing additional applications beyond email, such as CRM, SFA, and field services. This is when Microsoft will become a threat to RIM."

Ovum: Vodafone Japan sold to Softbank: that'll do nicely

Robin Hearn at Ovum offers up his thoughts on Vodafone's sale of "its underperforming Japanese operation to Softbank, the Internet and media player, for £8.9 billion." Hearn thinks the deal makes sense, and writes:

Vodafone had struggled with its Japanese unit for some time and attempts to turn it around had met with limited success. The marriage of a willing buyer and seller at a sensible price means that Vodafone can walk away as positively as it can have expected to. What's more, returning the bulk of the cash from the deal to investors should buy Vodafone's embattled management a bit of breathing space after a very turbulent couple of weeks.

Hearn points out that Vodafone's "top end is stuck on 9% for the year, as is the longer-term growth guidance of 5% to 6.5%. And it's this that Vodafone now needs to concentrate on. Selling Japan gets rid of an irritation, but it does not make everything else ok. There's still plenty of pressure in its core markets, and the company must now focus on generating growth in those markets that pay in cash, not just experience." He concludes that:

Now that Japan is gone, attention that had been divided between it and the US will now be focused squarely on Vodafone's stake in Verizon Wireless. But the circumstances of Vodafone's positions in the US and Japan are completely different. Would Vodafone actually be better off selling its stake in Verizon Wireless? Ultimately, what counts is that marriage of willing buyer and seller. And so far it has not materialised.

Dean Bubley: VCC gaining traction

Dean Bubley post at his Disruptive Wireless blog "about VCC emerging as the key SIP-based approach to fixed-mobile convergence." After spending two days at the FMC Summit in Amsterdam, Bubley notes that VCC "has come up over and over again - not just from vendors, but from some of the largest operators in Europe."

Bubley has "the distinct impression that standardisation [of VCC] is the only thing standing in the way of ditching UMA in favour of SIP." He writes:

This fits with my understanding that low-level UMA deployment is pretty cheap. It has severe limitations, but it works OK as essentially an extended trial technology - enabling the carrier to get some detail and experience about customers' preferences and key operational practices (billing, marketing, bundling, user interface, pricing, coverage etc). It's also got some handsets already shipping.

Conversely, VCC/SIP fits better with operators' medium-term strategies around integrating quad-play services, many of which won't use a mobile core network, unlike UMA's Voice & GPRS. I'm being told that these services will integrate a dual-mode handset (or even a WiFi-only one) with IPTV, Internet services, gaming, and a whole slew of hybrids.

Bubley concludes that:

My only concern is that none of the handset manufacturers have yet nailed their VCC colours to the mast. To be fair, it isn't standardised yet. And there are some handset software suppliers already advocating it (the MobileIgnite alliance members, for example). However - if there's anyone out their in handset-land that's relaxing after getting their UMA platform sorted, I'd suggest knuckling down and getting VCC on the roadmap ASAP. The same goes for chipset suppliers and SIP software client specialists.

Telephia: Mobile TV and Video Attracting a High Percentage of the Coveted Young Adult and Male Audience

According to a new report from Telephia , while Mobile TV and video usage is growing slowly, it "is attracting a higher proportion of the young adult and male demographi. The report found that "1.5 percent or roughly three million wireless subscribers in the U.S. streamed TV or played video content on their mobile devices in Q4 2005. Historical data from early 2005 show penetration of 1.4 percent."

Telephia's data showed that "younger mobile subscribers, age 18-24 have the highest penetration for mobile TV and video usage, securing a 3.3 percent rate, doubling since the beginning of 2005. Overall, men are more likely to stream TV and play video content on their wireless devices than women, showing a penetration rate of 1.8 percent or more than 3.5 million wireless subscribers during Q4 2005. Female mobile subscribers who accessed mobile TV and video content over their handsets had a rate of 1.2 percent in Q4 2005, equaling 2.5 million consumers."

Kanishka Agarwal at Telephia said, "During this early adopter stage, audience demographics play a significant role in directing mobile companies how to best develop mobile TV and video content offerings. The key for providers is to be able to understand the needs of these individual groups and supply targeted content that they will pay for."

Penetration Rates of Mobile TV/Video Activity (U.S.)

                                Penetration Rate (%)
Demographic Segment       Q1 2005    Q2 2005    Q3 2005    Q4 2005
------------------------------------------------------------------
All Subscribers             1.4%       1.4%       1.4%       1.5%
Youth Subscribers           1.8%       2.9%       2.9%       3.3%
Male Subscribers            2.2%       1.9%       1.7%       1.8%
Female Subscribers          1.1%       1.0%       1.2%       1.2%
------------------------------------------------------------------
Source: Telephia, Q1 2005-Q4 2005

The report also found that "V CAST (from Verizon) and MobiTV subscribers spend roughly $40 more per month as compared to non-TV subscribers. During Q4 2005, V CAST and MobiTV subscribers spent an average of $94 in total monthly charges in comparison to non-TV subscribers who had an average total monthly spend of $54."

Agarwal added, "The revenue stream for mobile TV and video content is very strong and shows upward promise. The combination of price, quality, diversity of content, and handsets capable of viewing content will be instrumental in the long-term growth."

JupiterResearch: American Idol Ringtones via the Direct Channel

Julie Ask posts at the Jupiter Analyst Weblogs about American Idol's use of mobile marketing to push the program and ringtone sales. Ask describes how host Ryan Seacrest taught "40 million American viewers how to download a ringtone without utilizing the carrier's deck," and instead use Cingular's messaging services.

She concludes that:

Wish I had a Cingular handset so I could try it out. The ability to vote and buy ring tones associated with American Idol probably won't be a reason to switch carriers, but Cingular certainly has a captive audience each week. Impressive also that Ryan could give those instructions "live."

Rob Enderle: Palm Turns 10

Rob Enderle posts at Technology Pundits about Palm turning ten years old. He seems to have a certain fondness for the company referring to the company "as one of Apple’s children, started mostly by ex-Newton folks the Palm Pilot became what the Newton would have become had Apple stuck with the offering."

Enderle notes that Palm was as "hot as the iPod is in its day it set the bar for a device that did the basics well enough to capture the interest of investors who shot the value of the company well above most multi-nationals when it initially went public. However, under 3Com it began to languish and spun out as two companies, one for software and one for hardware, and showed us what probably would have happened had Apple followed the same path."

Enderle goes into some history of the two companies, Palm Source and Palm One, and then looks at the survivor Palm One, which has reverted to just Palm. He compares current Palm to Apple and states "the hardware for both Palm and Apple appears to be the more compelling. (Reasons come down to support, interoperability, and compatibility all of which appear to trump user interface and security – security is starting to look like a wash now anyway)."

Enderle points out that now "Palm faces some interesting times ahead as they morph into a stronger Microsoft partner and learn how to extend that platform. Their primary competitors are increasingly HP, Dell, RIM, Danger, Motorola, Nokia, and Samsung and, like many of these companies, their primary partners are becoming Intel and Microsoft."

Enderle concludes with:

Today is Palm’s tenth anniversary and it finds them in transition to the next big thing. That could well be Origami, a Microsoft/Intel/VIA project. Origami is probable the next big evolution for the Newton and I can think of no other company more qualified to make it a hit. The question is, will Palm go down this path or find another unique to them.

RIM's Unified Theory

Unstrung writes about Research In Motion's efforts to "reassure its existing enterprise customers and to fend off the growing threat from devices running Microsoft's Windows Mobile 5.0," after its long drawn out patent battles.

Since settling its lawsuit with NTP on March 3, RIM has announced "a partnership with Google for instant messaging via Google Talk," made "an aggressive marketing effort for its new line of Blackberry 8700 devices," and aquired Ascendent Systems , a San Jose-based provider of mobile VOIP systems."

According to the article, the "Ascendent acquisition is squarely aimed at RIM's long-range goal: taking Blackberry beyond enterprise mobile email and making it the single mobile device for unified messaging and business applications."

Ellen Daley at Forrester said, "Before I met with [RIM], I thought Microsoft would win the applications battle just because they're Microsoft. But I am continually impressed by RIM's focus on the engineering side, on building seamless technology and making it all work for the user. They really do have the best technology."

On the subject of getting applications from third-party vendors to run on Blackberries or Windows Mobile devices, Daley said, "It's not all about pushing Microsoft applications out to mobile devices, but other apps as well. I haven't seen them be agnostic like RIM can afford to be -- and after all, the interoperability idea is not exactly in Microsoft's DNA."

So RIM has engineering and technology going for it. Now it just needs to improve on its customer skills, and realize the IT department is the customer, and not necessary the "crackberry" end users....

Wireless USB: Footlose & Cable-Free?

Unstrung looks at the potential of wireless USB in the enterprise that goes beyond replacing cables to allow "automatic synchronization between a slew of different devices." Underpinning wireless USB is ultra wideband (UWB), which "should allow transmission of data at 480 Mbit/s at a range of several meters." Of course, there are issues with the direction the various standards are going as well as how the technology can help enterprises.

Charles Golvin at Forrester Research said, "Look around and ask yourself how many people use USB and the number of USB devices they connect, then consider the added convenience of removing all those USB cables, and I think you have a much more compelling case for wireless USB than using Bluetooth as a proxy would indicate."

Rob Enderle: The Game Developer’s Conference

Rob Enderle posts at Technology Pundits about some of his thoughts from the Game Developer's Conference. Here is the mobile related one:

Phones as Game Platforms

A new platform that is getting a lot of play this year for games is the Cell Phone, expected to be a $1Billion business in 2006 these are games that have performance that is generally better then the old Atari game systems and their capability is increasing dramatically year over year. Typically costing a couple of bucks for a game we already are seeing reports of finger injuries with folks playing too much at one time. (Kind of reminds me of the Jetson’s for some reason).

Enderle concludes with:

Overall, however, the game industry has been in kind of a funk as a result of the lack of compelling new hot games and the delay in the Sony PS3 which may slip out of 2006 (they are having major cost problems), this show brings with it a lot of hope that 2006 will be a banner year for the industry. Whether or not the revenue is there, one thing is clear, games are going to have an ever increasing impact on our lives going forward.

Analyst expects widescreen iPod; Current 60GB iPod 'at risk'

iLounge picks up a recent research note from Shaw Wu at American Technology Research that states "Apple could be phasing out its current high-end iPod to make room for a new widescreen video iPod."

Wu believed that "a new widescreen video iPod with Bluetooth headphones could be introduced during Apple’s third quarter." Wu said, "The most interesting development here is that Apple has notified its distributors that its high-end $399 60GB iPod is ‘at risk’ until the end of April, meaning it could be discontinued and/or replaced around that time frame. As we have mentioned before, our checks indicate that Apple has been working on a widescreen iPod (we believe now likely with Bluetooth headphone capability). Timing is not certain to us but we believe this product could be ready as early as the June quarter.”

On the iPod nano front, Wu also noted that the nano "appears to be experiencing the greatest seasonal decline within the iPod family," with the exception being “decent sales” of the new 1GB model. Wu added, "We believe Apple may need to increase storage capacities and/or cut prices to re-generate interest. Declining prices in NAND flash and additional capacity coming on board should help Apple facilitate these moves."

Wiz Founder’s Wireless Gamble

RED HERRING writes an article about another MVNO joiing a crowded marketplace. This time it's the founder of the Nobody Beats the Wiz retail electronics chain Marvin Jamal, who is taking a crack at mobile via the Cool Prepaid service on Cingular's network.

According to the article, "Cool Prepaid is targeted at consumers who will buy prepaid phones, including the youth segment, and is already selling phones through a partnership with Sears."

Roger Entner at Ovum noted that "an MVNO launching today focusing on the prepaid and youth market is late to the game." He said, "I really wish that MVNOs would come up with a new idea. MVNOs are about segmentation and focusing on a specific segment of the market. Prepaid and youth have four or five competitors including offerings by the carriers themselves.”

Another ding "against Cool Prepaid is that analysts and executives contend that MVNOs launching now should start targeting wireless content services offered over third-generation networks, rather than jump into the prepaid market."

LG hopes to win European GSM market with "chocolate" phone

Reuters.com reports that LG Electronics "will start shipping its "Chocolate" mobile phone in Europe by early May, in an attempt to break through in the GSM markets where it lags far behind its direct rivals."

According to the article, "LG has already sold 300,000 of the chocolate-coloured slider models with touch-sensitive keypad controls in its South Korean home market since the launch in November."

LG is the number 4 handset manufacturer worldwide, "mainly as a result of its strong position in CDMA phones popular in the Americas." However, in the larger GSM handset market, "LG is only half the size of global No. 5 Sony Ericsson."

Ben Wood at Gartner said, "The model caters to the replacement market where fashion is as much a factor in purchasing decision as function, but it remains to be seen whether European users will adopt it with the vigor that Korean consumers have embraced it."

Photo via MobileKorea.tv

First Look: Sprint Power Vision 3G Multimedia Handset - Samsung A920

Last week I wrote that I had the good fortune to receive from Sprint a free multimedia 3G handset, the Samsung A920, as part of their Sprint Power Vision Ambassador Program. Since then I've been playing around with the handset (with the help of my 10 year old son), and testing the Sprint Power Vision EV-DO data network and services.

This post will focus on my initial thoughts regarding the A920 handset. More importantly, I then plan to write about Sprint's EV-DO network at a later point in time to try out their Power Vision services .

Before jumping in, I wanted to set the stage that I consider myself a smartphone user. I previously owned a Treo 180 and then moved from the Palm platform to Windows Mobile with the Audiovox SMT-5600. For my next phone, I'm considering a Windows Mobile 5 handset, either the Cingular 8125 (HTC Wizard) or Sprint PPC-6700 (HTC Apache), but I just haven't been able to pull the trigger. Unfortunately, there always seems to be something better on the horizon.

So while I might be a bit biased, this is a nice chance to try out a handset geared towards the consumer market. Without further ado, here are my thoughts on the Samsung A920:

Pluses

• Sound/reception: In my house, which sometimes gives my SMT-5600 on Cingular trouble, the A920 has performed very well so far. Sound quality is clear and loud enough.
• Size/clamshell: The A920 has a nice small form factor. This is my first time using a clamshell and I like it, since it fits easily in my jeans pocket and I don't have to worry about accidentally dialing someone. The HTC Star Trek is starting to look even more attractive to me, knowing it will come with Windows Mobile 5.
• Screens: The A920 has a sharp and bright color LCD screen and it is pretty sweet compared to my SMT-5600. The external screen on the clamshell is a added bonus too so you can the time, info or who is calling without having to open the handset..
• Bluetooth: Setup was easy to connect to my headset and everything works. Sound quality was fine also.
• Voice command: At the press of a button on the handset or Bluetooth headset, you can activate a voice command, such as look up so-and-so, call John or even call a specific number. I found the voice recognition to be fairly accurate.
• Camera: I'm not a big camera phone user, but the A920's 1.3 mega pixel camera takes decent shots. There is a flash although I'm not sure how effective it is.
• Music: The Java music player from Groove Mobile sounds good although I wish you could customize the sound (i.e. Bass, Treble, etc). Stereo headphones are included with the handset, which is nice bonus.

Minuses

• Keypad: The keys seem a bit small for my hand and it's taking a bit getting used to.
• Battery Life: So far the battery life has been somewhat disappointing. With moderate talking (60 minutes a day) and medium use of the 3G data network and multimedia features, I've always have to charge the phone by the end of the day. I have to turn off Bluetooth (when I don't need it) and the GPS location feature to reduce battery drain. Since the A920 is billed as a multimedia phone, battery life with the standard battery could be an issue if you are a heavy data or multimedia user.
• Speakers/Headset: The speakers sound a bit tinny, but are not bad really. The volumes levels are very loud. Maybe I'm just getting too old, but I'm having trouble finding a suitable level to listen to music.
• USB cable: A USB cable is included, but its use seems limited to only allowing the handset to act a modem for a PC/notebook. I wish the USB cable could be used to manage files on the microSD (TransFlash) memory card and synchronize contacts, calendar, etc. As it stands now, I have to use the SD card adapter and a memory card reader to get files on and off the microSD card. For contacts, I have to manually enter names, numbers, etc, which is a pain.

While Sprint was nice enough to bundle a 32MB microSD card with the A920, it's like purchasing a new digital camera. You still have to make a separate purchase to get enough memory to store all your content. Luckily flash prices are dropping and I was able to get my hands on a 512MB SanDisk microSD card for less than $40.

Now it's time to start trying to fill the memory card with pictures, music, apps, and video. And that's where the Sprint Power Vision network comes into play. I'll post about my experiences using the EV-DO data network and services over the next couple of weeks...

BT offers fixed-mobile convergence to small firms

ZDNet UK News reports that BT has launched BT Business Plan with Mobile package that "combines fixed-line and mobile phone calls in a single bill." The BT offering "comes just weeks after Orange launched its own converged product."

Ovum analyst Jeremy Green predicted that "This will no doubt increase the pressure on other UK mobile operators, and perhaps UK fixed suppliers too, to prepare their own fixed-mobile bundles for business customers. This is also the first real sign of some proper initiative from BT on using its position as both a mobile virtual network operator and the leading fixed operator to create some value-added propositions for business customers."

According to the article, the "BT Business Plan with Mobile gives businesses a 5 percent discount on their landline and mobile calls," and "also includes a range of price-caps on landline calls up to an hour in length — calls to UK mobile phones will be capped at 25p, UK landline-to-landline calls will be capped at 10p, most landline calls to the US will also cost 10p, while landline calls to the European Union and Pacific Rim countries will cost 20p."

Green thought "BT's offer could be a "no-brainer" for firms who were simply looking to save money." He said, "That said, it looks to us like they will have to work that much harder to better the BT package than was the case for Orange's initial offering."

Report: Apple choosing manufacturers for 'iPhone'

iLounge covers the most recent rumors that Apple is working on an iPhone. According to Johnny Chan at J.P. Morgan, Apple is working on “an iPod with phone functions” and "could use Taiwanese electronics manufacturer Hon Hai Precision to build the device."

Ellen Tseng at Morgan Stanley said, "Apple still hasn’t decided whether to give the contract for what’s being referred to as an ‘iPhone’ to Hon Hai or to another manufacturer," while another analyst in Taipei, who declined to be identified ,said "Taiwan Green Point Enterprises, which makes plastic cases for the iPod, is in talks with Apple for a role in the phone."

Bill Shope at J.P Morgan believes "Apple will introduce the phone by the fourth quarter of this year," and Piper Jaffray analyst Gene Munster told clients that "he estimates there to be a 75% chance that we’ll seen an iPhone in the next 12 months."

If an iPhone does ever see the light of daym then analysts predict Motorola will be impacted the most due to its relationship with Apple.

Firm Raises ’06 Phone Forecast

RED HERRING reports that Strategy Analytics is raising its forecast for cell phone sales and "now expects 943 million phones to be shipped in 2006, representing about 15 percent growth from 2005. In January, Strategy Analytics had forecast the number would be 930 million. The firm retained its projection that 1 billion phones will be shipped in 2007, an 11 percent increase from 2006."

Neil Mawston at Strategy Analytics pointed out that "the January report was based on extrapolations from 80 to 85 percent of the data. When the rest of the actual numbers were tallied, they added up to a slightly higher number than expected." Strategy Analytics also raised its fourth-quarter shipments total of 245 million by 1 million.

Even as the numbers get higher, Mawston noted that
"cell-phone growth is slowing. Growth slowed from about 32 percent in 2004 to about 25 percent in 2005 and is expected to drop to 15 percent in 2005."

He said, "But 15 percent is still a healthy number. Growth is still ticking along reasonably well. 2005 was the year of the emerging market," while more mature markets were still “plugging along quite healthily."

The article cites research from other firms that are predicting "a growth slowdown, but at different rates. In October, for instance, iSuppli said it expected 2005 growth of 13.6 percent."

Lessons learned from the NTP-RIM dust-up

Computerworld writes an article on what lesson can be learned by IT managers now that the NTP/Research in Motion patent battle is over.

Jack Gold at J. Gold Associates said, "The first lesson learned is don’t panic. Markets have a way of adjusting without massive disruptions of service." Gold also "urged managers to remember that anytime a company buys into a proprietary service, it risks problems if the supplier goes defunct. And he stressed that companies should have workable contingencies in place." Gold said, "Not having a contingency plan is a dangerous position to be in."

Ken Dulaney at Gartner advised that "even before asking a potential vendor for a guarantee, IT managers should ask a series of tough questions before signing off on deals." Dulaney suggested asking "whether the patents are pending or have already been granted." He said, "The only reason they mention patents, usually, is to try to impress you."

Dulaney added, that IT should also "ask whether a vendor has been to court over a patent." He said, "I’d discount their claims about a patent totally until they’ve been to court" and have won the right to the patent there.

Dulaney added, "Anytime you purchase a vital product you must ask: ‘Has anybody notified you that you are in violation on your patent?’ Or better, ‘Do you expect anybody to say you are in violation?’ That kind of question is becoming important as part of [the IT manager’s] valuation of technology. That’s what NTP vs. RIM taught us."

Both Dulaney and Gold agreed that the "U.S. patent process failed miserably. Gold said, “There’s a huge need for patent reform. The patent system in the U.S. is broken.”

Dulaney concurred saying the U.S. patent process is “woefully broken.” Dulaney said, "The U.S. Patent Office has to ensure that the technology under consideration hasn’t happened before and the likelihood of being sure is less and less as more and more patents are filed around the world."

Dulaney pointed out that "in many other countries, a patent office will ask for outside comment" with "many more eyeballs looking for prior art. We’re placing too much of a work burden on our patent office.”

Gold commented that "IT managers need to keep users and company executives informed about what’s happening with the technology, so they don’t rely on unreliable outside information." Gold said, "No offense, but I read some really bad press reports on this case."

I'm sure enterprises learned a painful, time-consuming lesson, when they had to scramble and burn precious cycles to come up with a contingency plan in case RIM's Blackberry service was shut down. It didn't help that RIM wasn't being very suppportive of its customers during the process.

The bigger question is whether RIM learned anything from the whole fiasco. If they drop the hubris and starting treating their enterprise customers better then maybe it will be a $612.5 million lesson that was well-learned.....

Microsoft takiing another shot at handheld market?

The San Jose Mercury News is reporting that "Microsoft is designing a product that combines games, music and video in one handheld device." According to the article, the project, which will compete with the Sony PSP, Nintendo DS and Apple iPod, is being led by some of the top talent at Microsoft who launched the XBOX 360 such as J Allard, Greg Gibson, and Bryan Lee.

With little much to go on, rumors say it might take a year or two before the portable hits the market. Anita Frazier at NPD Group stated the obvious when she said, "That would certainly be an interesting development in the market."

It'll be interesting to see where Microsoft goes with this "project". With their XBOX Live and gaming prowess, maybe they can take a run at Sony and Nintendo although two years is a long time to wait....

EQO Brings Skype to Cells

RED HERRING writes that "Canadian startup, EQO Communications, introduced a mobile service on Wednesday that enables Skype users to exchange instant messages in addition to making VoIP calls over a wireless network."

According to the article, "the service works on more than 40 models of phones that run J2ME (Java 2, Micro Edition), including Nokia, Motorola, and Sony Ericsson phones. Users can communicate with any of the Skype users on their buddy list or conduct multiparty chat sessions."

Tole Hart at Gartner commented that he "sees the value of the service for Skype users, but doesn’t think it will save them much money on their phone bills because it still requires the wireless carrier’s phone network."

Hart said, "It’s kind of like an extension of Skype, but it’s more a matter of convenience. It could save you some money on international calling in some areas, and in Europe in certain countries where you’re using international roaming. But it’s more about being an extension of Skype. They want adoption and they don’t want to anger the carriers."

Hart also pointed out that "Skype uses a large amount of bandwidth, which could also affect call quality." He added, "The wireless networks right now, as far as data goes, are not set up for Voice over IP, so your experience might not be that good either. Basically, if you like using Skype, it gives you a way to access it on the mobile phone.”

JupiterResearch: Bluetooth "MOBITUBES"

Thomas Husson at JupiterResearch posts about the recent Jupiter Plug IN conference in London, and the discussion about "a lot of new innovative services being launched in the mobile music space : SMS tones, streaming offers, mobile podcats, live music TV channels."

Husson points out an interesting initiative from Sony BMG that is promoting an edited version of a new single from French artist Patrick Bruel. The single "is available for free around 8 Orange shops. In front of an interactive shop window (technology provided by Kameleon), users receive an SMS inviting them to download the song via bluetooth." Husson thinks there are two interesting issues around this newly called "mobitube":

• the song is available via bluetooth and not protected against copy, which means it can be shared via P2P. The Guardian wrote an article about this trend. As I explain in the article, there is no reason why illegal file sharing would not be available on the mobile platform, all the more as it is in itself a P2P platform. Even if the industry has learnt from the Internet experience, it remains a potential threat.
• the song is available for SFR and Bouygues Telecom customers. That is a really clever strategy from Orange to attract churners and customers to its shops. Ed Kershaw, from Vodafone, stated the other day at Jupiter's Plug IN panel on mobile music that mobile music is not only a customer acquisition tool for 3G, because 3G is a way to sell music and because customers are not forced to download the song. I do agree. However, it sounds like it is used to drive traffic to shops...!

Two Articles on Growing Role of Satellites in the Mobile Industry

A couple of lengthy pieces on the growing role of satellites in the mobile industry. The first by Northern Sky Research looks at how satellites are becoming a key enabler for next generation mobile TV networks such as MediaFLO, Satellite-DMB (S-DMB), and DVB-H+.

The other article from ARCchart is from Caroline Gabriel at Rethink Research. Gabriel writes about past failures in mobile satellite services, such as Iridium, and examines "Mobile Satellite Ventures (MSV) hooking up with Boeing to create a $1bn network – one that could, in theory at least, challenge mobile WiMAX operators in some of their markets, and which is already said to be vying with WiMAX for the affections of Rupert Murdoch’s News Corporation, who is looking for a broadband data strand to add to its satellite television services."

Weekly Roundup

A roundup of mobile analysts in the news for the week ending March 18:

• Niek van Veen at Forrester Research via TIME Europe about Now You Can Take Your Shows on the Road
• Neil Strother at NPD Group via InternetNews.com about ScanR Turns Cell Phone Pics Into Usable Documents
• Roger Kay at Endpoint Technologies Associates via Associated Press about Measuring the need for a pocket PC
• Albert Lin at American Technology Research via MarketWatch about LBS mobile services are growing
• Forrester Research analyst Ellen Daley via Computer Weekly about the balance between effective security and business benefit of mobility for enterprises
• Forrester Research analyst Charles Golvin via Unstrung about Google: Anywhere, Anytime, Anyhow
• John Jackson at Yankee Group and Michael Gatenberg at JupiterResearch via Processor about the smartphone revolution
• Roger Entner at Ovum via Atlanta Journal Constitution about Cingular name to disappear when AT&T buys BellSouth

Verizon Stuck With Vodafone In Wireless Arm, For Now

Cellular-News reports that Vodafone "fresh off its agreement to sell its Japanese wireless business to Softbank Corp. for US$15 billion," has "dashed Verizon's hopes - at least for the moment - of buying out the 45% stake in Verizon Wireless it doesn't own." Vodafone Chief Executive Arun Sarin said, "We are happy with our position in the U.S. and have no current plans to exit."

Roger Entner at Ovum said, "Both want the other to leave, but it's such a fruitful business that the one leaving would be severely hurt. I don't see the ownership structure change any time soon."

Entner added, "I can understand selling the Japan business when you're losing your shirt with no hope of winning it back. Verizon Wireless is the one that's really doing well here. Why sell a winner?"

According to the article, "few believe that an AT&T Wireless business backed by a combined AT&T will significantly cut into Verizon Wireless' base of loyal customers. Analysts generally acknowledge Verizon Wireless as the strongest wireless carrier, with industry-low turnover and higher margins and average revenue per user."

David Dixon at RBC Capital Markets said, "There's no immediate pressure. The AT&T deal won't accelerate (Verizon's) plans." Dixon opined that "eventually, Verizon will need to take full control of Verizon Wireless to enable the same kinds of cost savings AT&T will churn out with its integration of Cingular. But that may not occur for another year or two."

Two potential acquisitions for Verizon include Alltel and Qwest Communications. Albert Lin at American Technology Research said, "The nightmare situation is for AT&T to buy Qwest." Lin argued that "Qwest's market may actually be an attractive place for Verizon to expand its super-fast fiber network, since the area likely would be less demanding than a metropolitan site in terms of construction costs and community demands."

Nokia Connects in China and India

BusinessWeek looks at how Nokia has been "making all the right moves in the key markets of China and India." According to the article, Nokia is the top brand in both countries. "In China last year, it had nearly 31% of a crowded market, well ahead of the 10% controlled by No. 2 Motorola. Nokia's sales in Greater China (the mainland, Hong Kong, and Taiwan) jumped by 28%, to $4.5 billion. The region today is the company's biggest market, accounting for 11% of global revenues, compared with 8% in the U.S. In India, Nokia has a 60% share, with sales last year of about $1 billion. By 2010 the company expects India to be its No. 2 market."

Nokia is also making major investments in both countries to ensure it stays on top. Neil Mawston at Strategy Analytics said, "China and India are critical to Nokia's overall strategy and they can only get more important."

The article notes that only "a few years ago, Nokia faced big troubles in both countries. In India, growth was sluggish. Nokia was an early mover -- the country's first cell-phone call was made on one of its handsets -- but regulation hindered expansion. In China, Nokia not only trailed Motorola but was threatened by ascendant domestic players such as TCL and Ningbo Bird."

Ted Dean at BDA China said, they "were caught off guard by the rise of the domestic vendors. Suddenly, Nokia was struggling."

Nokia turned around their efforts in both countries and also benefitted from "rivals' missteps. Motorola was slower in reacting to the threat from the Chinese locals and has had a tougher time bouncing back." Chris Han at Norson Telecom Consulting said, "Motorola didn't change its strategy for a long time." In addition, the "Chinese upstarts, meanwhile, have suffered sharp reversals due to disappointing quality. In India, Motorola didn't focus on the market early enough. Today its share there is just 5% or so."

Forrester: Sony wakes up

Paul Jackson and Jaap Favier at Forrester Research contribute a special commentary on Sony's recent announcements at CNET News.com. The first announcement was about the PS3 delay and the second was about enhancements to the Sony PSP line.

Jackson and Favier state "this is the first sign that Sony is watching what its competitors are doing and responding accordingly. If it can live up to these promises, Sony's success will guarantee its continued dominance in home consoles and will significantly increase its market share in the portable console space." Here are their PSP related points:

• The PlayStation Portable will become a true network appliance. In addition to announcing a price reduction on the PSP to $199 that kicks in March 22, Sony also announced that it will support video VoIP (voice over Internet Protocol) phone calls by October--utilizing an EyeToy-like add-on camera and, presumably, Sony's Instant Video Everywhere technology. Sony also announced support for a future GPS module and RSS feeds. This means that the PSP moves from being a so-so Web browsing device to a full-fledged network appliance.
• Sony's online strategy is starting to emerge. Microsoft has made much of the success of downloadable games on Xbox Live Marketplace, and Nintendo's strategy for the Revolution centers on downloadable back-catalog games. But Sony had been silent on its plans for digital distribution of content--until now. Now, not only will the PSP support the downloading of more casual Flash-based games, but it will also play downloaded PSOne titles via an emulator. While business model and game storage questions remain, this represents a step in the right direction for Sony--and leaves us eagerly awaiting details of the online services it will offer for the PS3.

Jackson and Favier believe "Sony remains in the driver's seat--for now. After a period of damaging uncertainty, Sony has reclaimed the initiative with these announcements." As a result they think:

• Reducing the price and increasing the gaming and communications capabilities of the PSP will boost sales and answer critics who point to poor sales of Universal Media Disc (UMD) movies as an indicator of the failure of the device's nongame functions. (UMD is the optical media format used by the PSP.)
• Digital distribution will hit the mainstream. This time last year, the digital distribution of game software seemed a distant dream: Retailers had a strong hold on consumers' wallets, content producers were paranoid about piracy, and platform owners were reluctant to support network services. But now we have seen the successful digital distribution of PC games like "World of Warcraft" and the launch of casual download services, such as GameTap and Xbox 360 Live Marketplace, that have sold thousands of copies of games. We've also witnessed digital distribution announcements from both Sony and Nintendo. Thus, this year will be the one in which digital distribution starts to become a viable business model for the video game industry.

Until the PSP gets better text entry capabilities, I wouldn't go so far as saying it will be a full-fledged network appliance. As for the fate of the UMD for movies, just reducing the price of the device isn't going to help sales of the floundering format. They need to drop the price of the content, find a better way to get the content onto the big screen, and/or value package UMDs and DVD at the point of sale.

Do I really want to own two copies of the same movie? If I have a choice then buying it on DVD and then tranferring a copy to the MemoryStick Pro Duo is more palatable then owning a UMD disc that can only be played back on the PSP...

SoftBank Buys Vodafone Japan

After weeks of speculation, the RED HERRING reports that the deed has finally been done. "SoftBank acquired Vodafone’s 97.68 percent stake in Vodafone Japan for ¥1.8 trillion ($15.5 billion) on Friday and Vodafone said it would distribute £6 billion ($10.5 billion) to shareholders. Vodafone will receive approximately £6.8 billion ($11.9 billion) in cash from Tokyo-based SoftBank when the transaction closes."

Gerhard Fasol at Eurotechnology Japan was "optimistic about the deal and believes it will have implications for Yahoo Japan as well." He said, "SoftBank is closely linked to Yahoo Japan, and Yahoo is very, very strong in Japan and has very strong content. SoftBank has also acquired former Japan Telecom’s fixed-line business, and they also lead in broadband. So now SoftBank has become Japan’s No. 3 largest, fully integrated telecom operator and is among the world’s largest universal telecom operators, plus a thriving auction business.”

According to the article, "the transaction will take place through a takeover bid. Under the agreement, SoftBank is obligated to launch a takeover bid for Vodafone Japan and finalize its financing by April 4. If SoftBank fails to the launch the takeover bid by then, it will be obligated to pay damages of ¥60 billion ($517 million). Vodafone expects the transaction to be completed in the first quarter of the fiscal year ending March 31, 2007."

Buying Out Vodafone Could Cost $50 Billion

Investor's Business Daily writes that it "could take a $50 billion offer for Verizon Communications to wrangle away Vodafone's 45% stake in Verizon Wireless." This is the figure Wall Street is predicting.

It has reportedly mulled a $40 billion offer for Vodafone's stake. But that's probably not enough to get a deal done, analysts say.

Berge Ayvazian at Yankee Group said, "The issue is valuation — if the price is right — and whether Verizon wants to put up the cash that's needed to buy them out. From Verizon's perspective, $50 billion is a big number — especially if they're taking on debt."

The recent move by AT&T to buy BellSouth will "give AT&T 100% ownership of Cingular Wireless," and "Verizon needs to keep pace with AT&T, goes the thinking on Wall Street."


UBS Research thinks "a $50 billion offer would convince Vodafone to sell. But that figure doesn't include about $8 billion in debt that Verizon Communications would also assume." Also "Verizon owns a 23% stake in Omnitel, a wireless firm in Italy. Vodafone owns the rest. Verizon would sell its Omnitel stake to Vodafone as part of a Verizon Wireless deal."

Verizon would also probably have to hike its $36 billion in long-term debt "by $20 billion to $25 billion to acquire Vodafone's wireless stake."

Roger Entner at Ovum said, A Verizon takeover "would get really expensive. Verizon would like to buy out Vodafone. Vodafone would like to buy out Verizon. The most likely scenario is still that nothing happens."

JupiterResearch: A Second Grader's Cellphone - the Migo

Apologies for the following rant, but this post from Julie Ask at JupiterResearch really rubs me thee wrong way on several levels. Ask writes about the 7 year-old daughter of her former B-school classmate, who has a cellphone - a stripped down Migo handset that Verizon offers. The cellphone was her Christmas present.

Ask writes that the girl is an "extremely precocious and responsible second-grader. She is very well read, and she prefers reading to video games and TV." Us cynical parents in the real world can easily decipher this to mean that her over-achieving and very ambitious parents are severely limiting her fun time, and most likely believe their little angel is a borderline genius. It's also easy to see that she is the oldest or only child.

Anyway, the presentation of the dialog with the 7 year old bothers me, the father's attitude bothers me and Ask's conclusion bothers me. You can go to the post to read the dialog.

Ask writes that when her former classmate told her about the second-grader's cell phone, she said, "Why does she need a cell phone? You drop her off. You pick her up. She goes to school three blocks away from where you live. She doesn't go anywhere on her own otherwise." And here is the dad's answer:

It COSTS me NOTHING AND it makes her HAPPY. I would be an idiot not to. It's five dollars a month. It's nothing. Besides, it means my child cries five days less a year when my wife is late to pick her up from school. Why WOULDN'T I get her a cell phone?"

Now get this. He also said "it was her favorite [Christmas] present by far." I'm guessing by now you are building a nice mental picture of the Silicon Valley exec and his pampered little princess. The girl only uses the phone to call her mom immediately at the end of school everyday to see when her limo will arrive. That's it. And from what her mom says, "it gives her daughter a lot of comfort to know that she can reach her parents anytime."

Is anyone else bothered by this? When do you think the girl will start going to therapy due to her future separation anxieties?

Just to point out, the five times of the year mom is late does not mean princess is abandoned on some random street corner in the middle of the hood. She's at school that's probably in a nice neighborhood, which means she waiting in front of it with other students, parents and dismissal aides.

I know it all depends on the usage model, and in many cases it might make sense for a 7 year old to carry a cell phone for emergency purposes (i.e. both parents work, etc). However in this case, the girl is either at school or with her parents so there really is no need for one.

The last thing that bothers me is Ask's conclusion. After writing about this family, she states "our own data confirms that the scenario described above is pretty typical. Parents become interested in buying cellphones for their children and adding them to their plan in case of an emergency. The decision becomes very easy with the low price points (value proposition.)"

I call BS that this is typical for a second-grader. Maybe for kids a bit older, such as 10+, and even then it is highly dependent on the family situation. I do agree parents are interested, but for pampered little second graders? Come on now.

So why do I think Jupiter's data is off (without actually seeing it)? Because my daughter is in second grade. We live in an area where the schools are top-notch, the population is well-educated (graduate degrees outnumber bachelor's degrees), and there are a ton of over-achieving and highly ambitious parents trying to fast track their kids to the Ivies or Stanford.

And you know what? I don't know of a single second grader in my daughter's school that has a cell phone. Of course that doesn't mean they aren't out there. I'm sure a couple have managed to avoid my astute handset RADAR, but they are definitely an exception and not the norm. And let's be thankful for that....

Mobile Phone Makers Engage in Technological Arms Race

TechNewsWorld covers a recent report from Strategy Analytics about a new chip material, silicon-on-sapphire, that "is starting to make an impact on the way mobile phone handsets are produced, helping to fuel a technological "arms race" in the mobile industry."

The report examined "whether silicon-on-sapphire technology was a stop-gap measure for the manufacture of radio frequency (RF) switches, or whether it was a "disruptive technology" that was changing the marketplace. The researchers, to their surprise, discovered that the technology was indeed helping to reshape the switch market."

Asif Anwar at Strategy Analytics said, "After evaluating this technology, we have concluded that Peregrine's SoS RF switches offer advantages that could displace GaAs in dual-mode WCDMA handsets. GaAs vendors have already moved to address p-HEMT switch shortcomings with improved performance. They have also developed switches with higher complexity -- not yet available in CMOS on SoS."

Chris Taylor at Strategy Analyticsthought that "the chip will succeed in switches for mobile phones because antennae for the phones require complex switch modules, which draw a lot of electric current. The silicon-on-sapphire technology is well-suited to that application."

The article notes a "number of advances in mobile components technology, including radio frequency technology for mobile phones. A variable capacity, or vericap, micro-electromechanical system (MEMS) developed by WiSpry, is claimed to be the first practical RF MEMS for mobile phones."

Taylor said, "If it performs as claimed, the vericap would reduce the number of passive components needed in handsets and enhance the performance of antenna switch modules (ASMs) and transceiver modules."

Carolina Milanesi at Gartner pointed out that "High-end handsets battle it out in the areas of design and technological features. She said, "The survival of the fittest depends more and more on economies of scales, or very carefully cut-out niche markets."

Dean Bubley: Mobile phone penetration ceiling

Dean Bubley posts at the Disruptive Wireless blog his thoughts on comments yesterday by the CEO at Texas Instruments, who predicted 4 billion mobile phone subscribers within 5 years.

Bubley thinks these numbers are overly optimistic and goes through the math:

There are 6.6bn people on the planet. About 1.7bn are less than 15 years old. Let's say 5bn adults (yes, some children will have phones, but some adults are too probably old/infirm which should balance this out). But something like 1.6-2.0bn people have no access to electricity - although these are probably disproportionately young, so there is probably a maximum of 4bn adults with the ability to charge up a cellphone. Assuming they can pay for one (maybe 3bn live on <$3 per day), or live within areas with cellular coverage, that is.

Given these calculations, Bubley opines:

100% penetration of the theoretical target market? I don't think so. Maybe we'll get to 4bn cellular subscriptions, or devices owned (which, let's face it, is what TI is interested in from the point of view of selling chips), perhaps growing to 1.5 per person in the developed world. But cellular users? No way.

visiongain: 2006 Will Be the Year of Mobile Advertising Experimentation

According to visiongain, "2006 will be a year of experimentation for the emerging mobile advertising market." visiongain predicts that "the next five years will see a shift by major brands from simple SMS mobile marketing to more sophisticated multimedia advertising. By 2007, brands will know what works, and mobile advertising will become mainstream by 2008."

visiongain forecasts that "from 2005, when the nascent market garnered $255 million in Europe and the United States, mobile marketing and advertising in these two geographical areas will grow to exceed $1 billion in 2009." The firm attributes this to the increasing availability of multimedia content.

Marcia Kaplan at visiongain said, "The mobile phone is a very personal device that most people carry with them 24 hours a day. It affords advertisers an opportunity to present very targeted and time-sensitive information that is of interest to the user. That is a key advantage. With customer permission, advertisers can collect valuable demographic and behavioural information to hone the marketing message."

She added, "3G technology enables the delivery of richer content to mobile phone users, but there is a limit to how many additional charges and subscriptions mobile phone users will accept. At some point, content will have to be sponsored or partially subsidised by advertising. We are also seeing the emergence of ad-subsidised MVNOs, which plan to offer free airtime in exchange for targeted advertising to subscribers."

Cell providers hope to score off March Madness

With March Madness just getting started today, the Orlando Sentinel writes that "Cingular, Verizon and Sprint all hope to drive revenue growth by tempting cell-phone customers to spring for a variety of NCAA Tournament-related features, ranging from scores and game summaries to coaches' analyses and video highlights." Getting the content won't come cheap as the network operators will try to charge for as much as possible to drive ARPU.

Jeff Kagan said, "The bottom line is, customers like extra features, so the carriers are rushing to bring new features to the phone."

Linda Barrabee, at Yankee Group added, "Voice has been commoditized and the [customer] spend is not rising." According to Lewis Ward at IDC, "for the cellular industry as a whole, voice still rules, but data revenue grew from 6 percent of all revenue in 2004 to 8.5 percent last year and is expected to reach 12 percent this year." Yankee Group predicts "wireless data could account for more than 21 percent of revenue by 2009."

Charles Golvin at Forrester Research said, "The carriers have invested heavily in data networks, and need to leverage that investment. Plus, the NCAA Tournament is well-suited to mobile content. It's timely, enabling you to find out how your team fared, and it plays to a community dynamic of people in office pools."

The article then looks at the various efforts by Cingular, Sprint and Verizon to take advantage of interest in the NCAA basketball tournament.

Kagan concluded, "Broadband makes for new opportunities that go well beyond traditional voice. In fact, you don't even see voice much in ads now, but you do see users watching TV or movies."

3G subscribers near 46 million in Japan

Here's some more good data points about the Japanese mobile market from Yaromir at the Japan's Cellphone Edge blog.

He notes that the "Japan 3G user base grew to 45.9 million in February, surpassing the number of wireless users with 2G handsets (44.8m). This milestone was achieved because of energetic efforts by three major carriers to switch their 2G subscribers to 3G services."

In terms of which network operators are leading the push to 3G, here are some more facts:

• DoCoMo outshined KDDI au in a second time in a row, adding 828 thousand subscribers to its 3G FOMA service, while KDDI au signed only 309 thousand 3G customers.
• KDDI au reported 96% or 21.1 million of its customers are now subscribed to 3G service (this includes both CDMA2000 1x and EV-DO services).
• DoCoMo has switched only 43% (22m) of its customer base to 3G.
• Vodafone added 195 thousand 3G subscribers, ending February with 2.7 million (18%) 3G users.

Kingston Targets Flash For the Enterprise

InternetNews reports that memory maker Kingston Technology is targeting USB drives at the enterprise, but will need to overcome the fear many companies have that "ousted or disgruntled employees will plug them into computers and make off with sensitive corporate information to use it for ill gains."

Kingston is introducing DataTraveler Elite Privacy Edition, "a USB Flash drive that locks down data with 128-bit AES encryption, a powerful security protocol," stores up to 4 gigabytes (GB), and "is tailored to meet security and compliance requirements for businesses. If the drive is ever lost or stolen, the integrity of the data stored on the device remains intact."

According to the articel, "the drive also features a complex password protocol and a mechanism that locks out attackers after 25 consecutive failed password attempts, ensuring information is accessible only by authorized users." Pricing starts at $48 for 256 megabytes, to $347 for the 4GB gadget.

Gartner analyst Joseph Unsworth pointed out that enterprises depending "on keeping certain data sacred, such as those in financial, government and health care markets, need products that use robust encryption technologies like AES." He said, "The reason why a lot of U.S. companies aren't rolling out Flash drives is that they're scared of them. There's a lot that can be at risk there. Having the IT manager partitioning out these drives and giving administration rights is going to be important. IT managers are going to want to be able to manage these products and help minimize the risk associated with them."

In a broader sense, Unsworth pointed out that "market evidence suggests the enterprise presents a big opportunity for the Flash drive makers, which include SanDisk, Kingston, Lexar (soon to be Micron) and Toshiba."

According to Unsworth, "51.7 million USB Flash drives shipped in 2004. Only 21 percent were purchased through the enterprise channels, while 67 percent were purchased from the consumer channels. But during that same year, 51 percent of PCs were bought for the enterprise."

Unsworth remarked that "while there isn't a direct correlation between USB Flash drives and PCs, USB drives are still centered around the PC." He stated, "So that spells a very large opportunity given the installed base of PCs in the enterprise and the fact that enterprise is not as price-sensitive as consumers. They're willing to pay for increased security because, there is a lot at risk here for some of these companies."

Switched On: Origami is a paper tiger for now

Ross Rubin at NPD Group writes his regular "Switched On" column at Engadget and takes apart the Microsoft UMPC. Rubin is in fine form as he shreds the Origami Project with his snarky and witty commentary. He starts off by stating:

Here we go again. In its unending capitalistic quest, Microsoft is determined to figure out how to sell people their nth computer. Today, its ideal consumer's computing inventory looks something like this -- a couple of desktops around the home, a notebook for those mobile jaunts, a Media Center PC for controlling the television experience serving up Windows Media files to an Xbox 360 or lesser Media Center Extenders, and at least a Windows Mobile Pocket PC or Smartphone device.

But, he's only just getting started. He writes that "UMPC also continues Microsoft's inexplicable obsession to foist some kind of tablet-based product into consumers' hands even after the stunted growth of Pocket PC, the slow penetration of the highly touted Tablet PC (Microsoft's most hyped hardware platform ever), and the abysmal disaster of Smart Displays."

He thinks "Microsoft is applying its flagship operating system in an optimized form factor to take the place of many dedicated products that could range from portable video players to GPS systems. But just as Media Center has had challenges inching out less expensive and simpler products in the living room, the UMPC will need to fold itself into some tight places in order to win customer acceptance as a media playback and communications device."

He then comments that:

Integrated high-speed wide-area wireless connections could tip the scales in favor of these neoNewtons, but such connectivity isn't cheap, and so the question remains, “for whom?" UMPC is at least a year ahead of its time. According to traditional Japanese rules of origami, one is supposed to fold paper, but not cut it. However, price cuts will be necessary if the UMPC is to appeal to, say, desktop users who needs only occasional portability or the desktop replacement notebook users looking to lighten their load. Subtract from that customer base those more interested in dedicated devices such as iPods. PSPs and GPS devices, or a $150 portable DVD player to distract the rear-seat rugrats.

Rubin concludes:

Previous ultraportables have started north of $1,500. Microsoft's hardware partners will need to get ultramobile PCs going for a third of that price point to exceed the slow PDA and ultraportable categories that these jacks-of-all-trades lie between.

Bourne Research: Device Drivers a Major Hurdle to Growth of MEMS Sensors in Cell Phones

According to Bourne Research, "cell phones have long been targeted as a major end-use application for MEMS (MicroElectroMechanical Systems) sensors, and accelerometers in particular, but widespread integration hinges on the development of device drivers, not the sensors themselves." MEMS suppliers are having a difficult time moving into the consumer electronics space, because unlike the automotive industry, customers don't want to write their own code for device drivers.

Marlene Bourne at Bourne Research said, "At this point, it appears that cell phone manufacturers are still not convinced that MEMS sensors are worth spending the money necessary to create the device drivers needed, mostly because there's uncertainty about whether consumers will like MEMS-enabled features enough to pay more for them. As a result, handset manufacturers currently expect a total solution, one which MEMS sensor suppliers are unable to provide, nor can they do so on their own. Partnerships will be required, but those have their own issues."

Bourne Research beliieves "the need for device drivers provides an opportunity for those who specialize in embedded software development; however, partnerships with MEMS suppliers may be difficult to put into place - for both start-ups and large semiconductor players alike. Given the potential system-wide impact of MEMS sensors on cell phones, and the number of device drivers required to accommodate all of the possible functions, it's a tough challenge; and there's a lot at stake for MEMS suppliers - integrating sensors into just ten percent of all cell phones shipped annually would be a major coup for the industry."

Groups Bid for Vodafone Japan

The RED HERRING reports that "two private equity firms from the United States, Cerberus Capital Management and Providence Equity Partners, are seeking to acquire the British telecommunications giant Vodafone’s Japanese unit for about $15 billion."According to the article, the "deal could be the largest leveraged buyout ever in Asia, rivaling a similar bid from Japanese Internet service provider SoftBank."

The two firms are offering an all-cash deal as opposed to Softbank, which includes stock.

Gerhard Fasol at EuroTechnology Japan said, "The challenge with Vodafone KK is the enormous size. Vodafone KK is the third-largest mobile telco in Japan, and because of Japan’s size, this is one of the largest telcos in the world."

Fasol added, "For people in Europe, it looks as if Germany is Vodafone’s largest market, but this is not so; it is Japan. Therefore turning this around is a very huge challenge.”

Fasol pointed out that "Vodafone Japan KK has been losing market share for about four years, and other problems have accumulated. He said, "The main problem is that even after a sale or LBO, large investments in infrastructure are necessary."


Other firms might join the bidding and the stakes might go higher. Fasol believed the "overall deal could be far more complex than a straight cash sale." He added, "I could well imagine a solution where all participate, including SoftBank and the private equity firms. SoftBank brings a lot to the table, but they are clearly stretching putting up all this cash."

Another possible scenario is a "leveraged buyout of the entire Vodafone organization." Credit Suisse analysts Justin Funnell, Chris Legg, and Paul Sidney recently wrote in a research note that "Such a deal in concept is enticing, with potential buyers for a range of assets, including Japan, [Verizon Wireless], Australia, Switzerland, Belgium, and possibly France. There would seem on paper sufficient upside to potentially persuade a boardroom that has been in flux of late to accept a cash offer."

The analysts speculated that "a bidding group would need to raise £92 billion ($162 billion) of sub-investment grade debt to do such an LBO."

IdaRose Sylvester: Sony delays PS3 launch to November

IDC analyst IdaRose Sylvester writes at her personal blog, Consumer Semiconductor Girl's Place on the Web, about Sony's not so "surprising" delay for the PS3. Sylvester correctly points out that:

Sony's absolutely inability to execute in the consumer space over the last five years is tragic. Their only great product and great launch success is the PSP, the gaming portable. It is a fantastic device, and I adore mine, although there's precious little gaming content for the 35 year old female analyst crowd. What I want is puzzle games, like Boggle.

As I commented on her blog, I agree the PSP is a fantastic device, and it is hopefully getting better given the upcoming upgrades recently announced. However, I also believe the precious little gaming content extends far beyond just the 35 year old female analyst target audience.

As I noted many times in the past, my 10 year old son rarely plays his PSP due to lack of content. He has four games (Wipeout Pure, Twisted Metal, SOCOM and Virtua Tennis), and only plays the last two on long car rides, and even then he'd rather play his sister's Nintendo DS. And the only reason he has the tennis game is because I picked it up for a CD-like price at Fry's. IMHO, Sony has been very slow in getting developers to offer compelling content for beyond the Grand Theft Auto crowd. With that said, the new Syphon Filter: Dark Mirror game for the PSP has so far gotten some very good reviews so I'll definitely have to check that out :-)

On the otherhand, my 8 year old daughter still wants to play her Nintendo DS everyday after 2+ months, and she has only 2 games - Nintendogs and Animal Crossing: Wild World. I think this is due to a combination of factors - compelling content from Nintendo and the fact that girls have been neglected for way too long by the video game industry. Most of the stuff out there for girls, whether for consoles, portables or PCs, is frankly crap, so it's probably no surprise that she finally has gotten the gaming bug...

Losing Its RAZR's Edge

SmartMoney.com looks at the prospects for Motorola's stock after a great run in 2005 when the stock soared more than 40 percent due in great part to the success of the Razr. It doesn't expect the same for 2006 citing "product cycle, competitive environment and, most importantly, expectations."

John Slack at Morningstar said, "Expectations are high for Motorola now. There weren't any expectations for Motorola a year ago." Plus, the Razr is no longer the "it" phone as it was last year with Casey Ryan at Nollenberger Capital Partners saying "RAZRs are now more of a value phone."

And with competitors entering the ultra-thin phone stakes, Edward Snyder at Charter Equity Research said, "It's certainly going to be the case that the competitive environment gets tougher this year."

The article then notes the slower sales of newer handsets such as the Rokr, Slvr and Pebl, the delay of the Q, and last week's quality problems found in the Razr. However with all these issues, Morningstar's Slack thinks "there's still room for operational efficiencies, particularly from outsourcing and tightening up the supply chain. That would be a great return, of course, but he's not counting on a surge like last year's."

On the other hand, Nollenberger's Ryan doubts "Motorola will be able to increase market share — as it's repeatedly said it wants — and grow margins."

Japan wireless subscribers: February data

Yaromir at Japan's Cellphone Edge points out some more interesting data from the Japanese mobile market.

He writes that the "number of Japan’s wireless subscribers increased by 334,700 in February, driving the total user-base to 90,767,700 active users." Key highlights include:

• KDDI au posted the largest net additions, signing up 275 thousand users.
• These high results were undermined by losses at KDDI’s struggling 2G unit – Tu-ka, which reported almost 115 thousand subscribers leaving the company.
• NTT DoCoMo signed up 162 thousand new users
• Vodafone lagged behind with twelve thousand of net adds.

For total number of subscribers:

• NTT DoCoMo continued its domination with 56% market share, which translates into 50.6 million wireless subscribers.
• KDDI was in a distant second place with au unit taking 24% (22m) of the market share
• Tu-ka unit being down to 3% (2.9m)
• odafone slightly improved its performance, having 17% of the market share with the total customer base, reaching 15.1 million.

Good Stuff Coming to the Sony PSP or Will They Find a Way to Screw It Up?

Finally some good news from the folks at Sony regarding the PSP. On the same day they announced the launch of the flagship PS3 would slip to November, Russell Beattie notes that Sony plans the following for the PSP: "an Eye Toy, a GPS receiver, allow downloadable games bootable from your memory stick, incorporate Flash in the next update (wow), a PS1 emulator, and a drop in price."

This is all very cool stuff and I can't wait to see if and when it comes out. However, given Sony's recent track record, I'm also waiting for the other shoe to drop. It wouldn't surprise me a bit if they botch this somehow and find a way to screw over the customer. Time will tell...

Apple: Frugal to a Fault?

TheStreet.com writes that much of Apple's "recent financial -- and stock -- success has resulted from merely holding the line on one of the sources of that innovation: its spending on research and development." According to the article, "what the company has spent on R&D has risen only modestly. As a portion of overall sales, such expenses have actually fallen by more than half. Last year, Apple spent 3.8% of sales on development, and it spent just 3.2% in its most recent fiscal quarter. The company spent $534 million on development in fiscal 2005, which was 24% more than it spent in fiscal 2001."

Van Baker at Gartner said, "Ultimately, for them to sustain their growth and be successful in the long term, they're going to have to move in new directions and tackle some new product lines that they don't have and haven't historically done. That's going to take significant investment."

Crawford Del Prete at IDC added, "At some point, that reaches stasis. They can't take it down to 1.5% or 2% of revenue."

Texas Instruments Chief Sees Phone Sales Outpacing Estimates

Bloomberg.com reports that Texas Instruments Chief Executive Officer Rich Templeton predicts "mobile-phone users will double to 4 billion people within five years, more than analysts expect, as demand rises in India."

According to Templeton, TI "is focusing on new markets as competitors Qualcomm Inc. and Intel Corp. seek to eat away at his business, courting top customers such as Nokia Oyj."

Richard Crable at Loomis Sayles & Co. said, "People generally have been underestimating the degree to which cell phones will find traction in the emerging market," and Templeton's phone sales estimate is "higher than what people are expecting."

According to Credit Suisse 4 billion phone users won't hit until 2012, while RBC Capital Markets predicts "numbers won't reach that level until 2013 or 2014."

Templeton's goal for TI is "50 percent gross margin, or sales left after production costs. The margin improved to 48 percent last year from 29 percent in 2001. The company is outsourcing more manufacturing and building fewer plants, which can cost $2 billion each, cutting depreciation costs."

Crable said, "Once upon a time, people would have laughed in their face" if they suggested a margin that high. "They are managing the ship more tightly than in the past."

On TI's statement that it can maintain similar profit margins on chips for low-cost handset as for higher-end models, Apjit Walia at RBC Capital Markets said, "I don't believe that. It drags down the margins."

In the emerging markets of India and China, TI's top customer, Nokia, is cleaning up. According to Piper Jaffray's Michael Walkley "Nokia has 70 percent market share in India," and he estimates that "nine of the top 10 models in China are Nokia."

Sprint 3G Indahouse

Since starting this blog last summer, I've had a great time following an industry that is a personal interest of mine and spewing forth a ridiculous amount of posts that track what analysts are saying about the mobile devices, content and services markets.

And during this time, I've been able to build up a small audience of hopefully like-minded readers, who also want to know what the analysts are saying about this fascinating space. So many thanks to all those folks tolerant enough to read Mobile Analyst Watch and listen to my endless babbling about the world of mobility.

Lately, in addition to tracking the analysts, I've branched out to review a couple of mobile devices and services. The series of reviews about my newly purchased Garmin Forerunner 205 was so much fun that I've now got the review jones, and I'm looking around for another project to tackle. Unfortunately, I blew my mobile gadget budget on the Forerunner 205.

In the past, I've always looked on enviously as analysts, such as Michael Gartenberg at JupiterResearch, who got to play and test out the latest devices. Sounded like the gadget geek's dream job. As luck would have it, I too get to live the dream, at least for a short time.

As it turns out, someone at Sprint, in a moment of temporary insanity, deemed I was worthy enough to try out a Samsung A920 3G multimedia handset and the Sprint Power Vision EV-DO network. As part of the Sprint Power Vision Ambassador program, I get to geek out on all the Power Vision mobile services and content for the next several months.

This comes at a great time because I've been thinking of getting a new handset and possibly switching carriers so now I get to try a new network operator. I currently use Cingular and its poky GPRS data network, and have been dying to jump on the whole 3G data thing.

I'll plan to write up several posts that look at the usage model for the services and content instead of focusing on the handset itself, which is my first ever clamshell. I'll also enlist the help of my 10 year-old son, some high schoolers and maybe even a college kid on the block to get a younger person's perspective as well.

Lastly, even though I'm generally a stingy bastard when it comes to paying for mobile services above and beyond unlimited data access, I will try to remain as impartial as possible. And after playing around for a couple of hours with the handset and Power Vision, there are definitely some services and content that I wouldn't mind paying for. Of course, the cost will be critical and with some of the pricing I've seen it really adds up fast. Anyway, I look forward to trying out all these new mobile services from Sprint...

Here are links to other reviews in this series:

• First Look: Sprint Power Vision 3G Multimedia Handset - Samsung A920

RAZR Phones Return to Shelves

The RED HERRING reports that Motorola’s "RAZR cell phone reappeared on some shelves Tuesday after being pulled from Cingular Wireless and T-Mobile stores last week because of a manufacturing defect."

Edward Snyder at Charter Equity Research noted that the problem was caused by "a switch that connects calls when the phone is opened fluttered on and off, causing the phone to be disconnected as if the flip phone were closed."

Handsets were pulled from stores last Friday so Cingular and T-Mobile could return the affected phones. Motorola claimed it only concerned a limited number of phones and both network operators were starting to sell the Razr again this week.

Regarding the impact on Motorola due to the glitch, Charles Golvin at Forrester Research said, "My sense was it was a minor hiccup, a little bit of a bad press day for them,. But I doubt it will have a big impact on sales. I think, for consumers, it’s lost in the fine print."

Snyder concurred, stating “Strong sales of new models and continued popularity on RAZR should yield good year over year results for the company." However, Snyder did caution saying, "We do not expect any material impact to financials, but remain concerned about supply chain management at Motorola. Last quarter’s supply chain of parts to SLVR and PEBL phones do not appear to be isolated incidences."

When it comes to smartphones, you definitely have to wonder about Motorola's supply chain and product lifecycle management capabilities. Lots of examples, such as the never launched MPx, the ill-fated MPx220 and the long-awaited Q, which was announced last summer and is still not here yet. During that interim, a number of handsets have been launched (i.e. Treo 700w, Sprint PPC-6700 (HTC Apache), T-Mobile MDA and Cingular 8125 (HTC Wizard)) that have taken away any advantage the Q potentially had if it was released on time. Oh well....

Multimedia Cell Phones Drive Quest for Next-Gen Power Options

With the huge advances in technology over the past 20+ years, I have always wondered why cars don't get better gas mileage and batteries don't last longer. I won't touch on the former, but TechNewsWorld writes about the impact of "higher data rates and sophisticated features such as digital cameras, mobile video and advanced gaming" on the power consumption of today's handsets. Bob Egan at The Tower Group said, "As they look at improving their handsets, cell phone suppliers are bumping up against current power constraints."

The article writes that the "problem has arisen because there is a disconnect between battery power improvements and cell phone advances. Whereas cell phones have been following Moore's Law, which predicts significant performance boosts -- often a doubling of processing power -- every 18 months, battery power enhancements have been occurring at a rate of less than 10 percent per year."

Alan Varghese at ABI Research said, "There are a lot of new technologies that could address battery problems, but it is unclear now which will capture the market's attention."

The article looks at some of the new technologies that hope to improve battery power for mobile devices, including more efficient lithium ion batteries, direct methanol fuel cells (DMFC), micro polymer electrolyte fuel cells (PEFC), and enhanced battery management systems.

Sara Bradford at Frost & Sullivan said, "Power management has been an area of focus, and handset vendors are delivering systems that closely monitor power usage and deliver only the amount of power needed."

ABI Research's Varghese noted that "Since tight coupling between handset components is crucial to reducing power consumption, companies that offer discrete power solutions are going to suffer at the hands of those offering integrated platform solutions."

Frost & Sullivan's Bradford added, "Vendors have cleared a number of technical hurdles but still must address some more obstacles before any of the new battery options become available. Major vendors are using different types and amounts of fuel to power batteries of different sizes, so it will not be easy for them to deliver the volumes and scale necessary to drive down pricing."

This means new power technologies will probably roll out to high-ent handsets first. ABI Research's Varghese said, "New battery functions will show up first in high-end devices used by businessmen. These users are more willing to pay extra for the functionality than consumers."

Frost & Sullivan's Bradford concluded, "because there are so many questions surrounding the next-generation products, I don't expect a clear-cut solution to battery problems to arrive for a couple of years."

Wireless penetration in Japan surpasses 100% in the 15-64 age bracket

Yaromir at Japan's Cellphone Edge has uncovered some more interesting stats on the saturated Japan mobile market. He notes that "according to the Statistics Bureau of Japan, the population of the country stood at 127,740,000 at the beginning of February 2006." In the 15 to 64 year old age bracket there are 84,330,000 people.

He then writes that according to TCA, "the total number of Japanese wireless subscribers in February was 90,767,700," which is more than the number of people in the critical 15-64 bracket. So what does this mean? It means the key market segment is very mature and saturated.

Of course there are still folks without a handset as well as those who own two or more, maintaining separate accounts for personal and/or business use. But as Yaromir points out, "Japan’s market growth will depend on the replacement sales and further penetration into the youngest and oldest age groups. Tough times await the numerous domestic handset makers and wireless operators."

Aite Group: Walk-in Bill Payments: The Prepaid Storm

The Aite Group has issued a new report that predicts "by 2010, over 1.3 billion walk-in bill payments will be performed in the United States, including cell phone top-up, up from about 1.0 billion in 2005. Walk-in bill payment processors will generate US$1.9 billion in revenues by 2010, up from US$1.1 billion in 2006."

Gwenn Bézard at the Aite Group said, "Strong growth in prepaid mobile phone top-up volumes will contribute in reshaping the walk-in bill payment by turning top-up processors into a major distribution force. We expect further consolidation between mobile top-up processors and postpaid bill payment providers."

The report predicted zzz'strong growth for cell phone top-up at the point-of-sale," and also remarked that "walk-in locations' share of total prepaid mobile top-up volumes will fall from 92% in 2005 down to 79% by 2010. Virtual top-up (when the reload is made directly from the handset using bankcards or ACH) will grow its market share as an alternative to the walk-in channel from 10% in 2006 to 21% by 2010."

Bézard added, "Although the prospects are still remote today, in-store and virtual top-up methods have the potential to lead wireless phone carriers or related players into merchant acquiring, threatening banks' and card networks' market positions."

Ovum: Gent leaves Vodafone, but the circus is staying in town

Robin Hearn at Ovum writes about the resignation of Sir Christopher Gent "from his position as Life President of Vodafone, an honorary title bestowed on him in recognition of his role in creating the company."
While there is a lot of conjecture surrounding the company and its CEO Arun Sarin, hearn writes:

Gent's position may have been purely symbolic, but it is strange to think of a Vodafone without him. After all, it was he who propelled it to global eminence, and the two names still run hand in hand. However, the market today is not like it was then. It is no longer an uncharted frontier where the fearless could ride into the unknown in search of bigger and bigger game. Now it's all about the numbers. Which is exactly why Gent first stepped aside for Arun Sarin in July 2003, when Vodafone needed to make a cohesive group from the spoils he had bagged.

Hearn doesn't analyze Sarin's performance at the helm of Vodafone, and writes "the job of bringing all those disparate elements of the Vodafone empire together in an increasingly competitive and challenging climate has been much more difficult than any of the Vodafone management, now or then, would have ever thought." Hearn concludes with:

So then, Arun Sarin clearly likes a challenge. And just in case he needed another one, his job has been made that bit more difficult over the past couple of weeks by perpetual reports of boardroom struggle and strife. Last week's departure of Peter Bamford, the chief marketing officer, has added fuel to this fire, along with the imminent departures of Sir Julian Horn-Smith and Lord MacLaurin himself [from the Board]. Some are saying that Sarin is leading a purge of the old guard, and of course the departure of Gent, the spiritual leader of the group, could be seen as the ultimate prize. But we're slightly more circumspect. We do not yet know what to expect of Lord MacLaurin's replacement, John Bond, and we certainly do not know how his relationship with Arun Sarin will develop over its first few months. This has some way to go yet, so take your seats.

JupiterResearch: iPod envy

Michael Gartenberg writes at Jupiter Analyst Weblogs about his search to "see if there's something on the market that can do what the iPod does and do it as well." Gartenberg is still looking.

He writes that "even getting one of the ex-Pixo guys to help with the new Samsung flash player didn't seem to help all that much. As we get close to the end of the first quarter in 06, it's still Apple way ahead here."

Gartenberg then goes on to post some quotes from someone at Microsoft, who has come to the acceptance that the iPod is where it's at. Gartenberg concludes with:

As for me, we'll have to wait to see how the Urge service shakes out when it's released and if there's a proper set of devices along with it that are appealing enough to get users to try it out.

Dean Bubley's Disruptive Wireless: residential picocells... it's going to be a while yet

Dean Bubley posts at his Disruptive Wireless about using picocells "for low-cost use in homes and offices, rather than the more "infrastructure grade" base stations announced by various competitors around 3GSM."

Bubley writes that he has "heard the home picocell (I've heard the term "femtocell") concept mentioned a lot recently. Often, price points in the range $100-300 are mooted - essentially in the same range as a home gateway. While I can certainly appreciate the attraction of these devices, aiming to compete with WiFi based home VoIP and dual-mode solutions, I am uncertain about the viability of the business model for carriers, as well as some other technological issues." He then offers some reasons why:

1. As with UMA, I can only see opportunities where the femtocell is integrated with an operator-provided ADSL/cable gateway (which will also need WiFi in it for commercial acceptability). Otherwise all the same issues with firewalls, integrating with 3rd-party routers etc will emerge, getting the box to "play nicely" with the PC and so on will emerge. Given these devices are unlikely to ship in numbers until late 2007 at the earliest, they will need to work around a huge number of existing "legacy" devices - or else carriers will need to persuade people to bin them and start again.
   
2. There are various problems with managing the radio planning, especially if the service is so successful that operators end up with 100s of customers - and therefore cells - in a small area. This will be exacerbated by the impossibility of getting people to position the boxes in specific places in the home - some will be on the floor, some near windows, some by metal filing cabinets and so on.
3. These femtocells will be "single operator". I wonder how many households will be prepared to standardise on just one mobile carrier. Not most families - maybe one parent has a company-provided mobile, and one kid has a cartoon-branded MVNO phone, and another gets another prepay phone as an Xmas present from someone. Student/shared households are also unworkable: "great room for rent, suit young professional, all bills included, must be vegetarian and use Vodafone".

Bubley concludes with:

Maybe I'm wrong, but even on a cursory glance, this looks to be another of those great FMC concept technologies, where the devil is in the detail. Which would also explain why the greatest amount of noise about femtocells is emanating from small, very tech-savvy but boffin-tastic (and mainly British) companies like ip.access, and its emerging competitors Ubiquisys and 3waynetworks. Discussions I've had with major infrastructure vendors have generally been more skeptical of the home femtocell opportunity, although Motorola was a bit more positive.

Samsung looking to expand lead in Europe

Reutersreports that Samsung "aims to become the clear No. 2 cell phone vendor in Europe in 2006," after "introducing three new models including a thinner successor of its fast-selling D600 slider model."

The company is currently battling with Motorola for the number two spot in Europe. Samsung competes for the No. 2 spot in Europe with U.S.-based Motorola. In 2005, Samsung was second, but is facing seriously competition from the sucess of Moto's Razr.

According to various analysts, Samsung's "European market share was between 14 and 15 percent in 2005, above its global 12.1 percent market share."

At CeBIT, the company launched the D870, "successor of its D600 black slider phone, which was one of the top two sellers in the European market in 2005 alongside Motorola's RAZR phone."

Ben Wood at Gartner said, "The D600 has been a staggering product for Samsung. But that market segment is getting more crowded now with lots of phones with similar features."

The company also "unveiled two expensive new handsets, one with a high resolution 10 megapixel digital camera with optical zoom and another with a hard drive that can store thousands of songs on an 8 gigabyte hard disk."

Bear Stearns: Current Apple Weakness Is A Buying Opportunity (AAPL)

The Consumer Electronics Stock Blog picks up a recent research note from Bear Stearns analysts Andrew J. Neff, William Hand and Ted Chung that downplayed "current 'investor anxiety' for Apple (AAPL) in light of reports that falling NAND memory pricing signals weakness in iPod sales." Key points from the note include:

• While there is concern surrounding demand for AAPL’s iPod and Macs, it appears to us that much of the concern – based on Asian channel checks – reflect already expected seasonal patterns and reductions as component supply has improved. While we are carrying high estimates, we remain positive on the stock at current levels and reiterate our Outperform rating.
• Despite recent channel checks from Asia which imply iPod weakness, we remain positive as: 1) NAND order cancellations may relate to AAPL diversifying its vendor base and over-ordering to avoid supply constraints; 2) ODM production cuts likely reflect rationalization of optimistic targets entering the qtr and AAPL’s anticipated seasonal declines; and 3) our checks don’t suggest slowing demand.
• The sum total of these points suggest that iPod appears to be tracking down about 20-25% seq, which is still better than Street at ~9-10mm and in line w/ our 10.5mm est. While the Intel transition remains a near-term issue, the CPU biz is now only ~35% of revs, Adobe software w/ native Intel support could come by year end, and AAPL-branded software (Aperture, Final Cut Pro) is due by end of March.
• While we’re concerned about multiple reports of order cutbacks, we’re maintaining our ests for FY06 of $2.41 (incl. $0.14 in options) on revs of $22.2bn (up 60% YoY) and for FY07 of $3.01 (incl. $0.24 in options) on revs of $27.1bn (up 22% YoY). For 2Q06 (March), we’re maintaining EPS of $0.55 on revs of $5.1bn and above-consensus iPod units of 10.5mm – guidance is EPS of $0.38 on revs of $4.3bn.

Should Vodafone buy BT?

ZDNet UK News reports that "speculation over the future of Vodafone intensified on Monday after Sir Christopher Gent resigned as life president amid allegations that he been part of a conspiracy to remove chief executive Arun Sarin." The article writes that "Vodafone is poised at a very important point in its history. With chairman Lord MacLaurin also leaving in the summer to be replaced by Sir John Bond of HSBC, it may be time for the company to consider appointing someone from outside the mobile world."

Also suggested in the article is that Vodafone "could even look to purchase a fixed-line company such as BT." Dean Bubley at Disruptive Analysis said, "Vodafone painted themselves into a corner with their mobile-only strategy. I think they should buy BT — this gives them a platform for future growth. But if they are going to do it, they must do it quickly — they need to do it before everybody starts implementing their core strategies. We know that BT is a candidate for private equity and Vodafone needs a fixed voice and data strategy."

Regarding Vodafone's investment in Verizon in the U.S., Bubley thought "buying a share in Verizon was exactly the wrong thing for Vodafone to do." He said, "The future is in other markets like China, or even Japan. Verizon sits very uncomfortably there."

Bubley added,"Sarin is a mobile man, he comes from the world of mobile. The problem with people who spend that much time in mobile-land is that sometimes there is the hint of the ostrich about them. They think that to be any good, something has to be mobile and that may not be the right attitude at this time."

Tony Lockat Bloor Research, agreed that "Gent's sudden departure takes place at a challenging time for Vodafone." He said, "A lot depends on who replaces him on the board, but not so much who it is but what kind of person they are. Is it someone hands-on, or someone who is going to be right for the City. In the medium and longer term, that becomes more important."

Lock added, "The convergence of mobile and fixed-line and the whole issue around IP is crucial. Shareholders and customers will need to know how a new chairman plans to deal with those issues."

Regarding Gent, Lock said, "It wouldn't surprise me at all to see him turn up somewhere and soon. Customers don't notice or care about these things. In the medium to longer term and especially among the larger customers you will see some concern. The issues around where Vodafone goes next need to be sorted out. People will want to know."

TDG Research: The Appeal of Mobile Video: Reading Between the Lines

Dale Gilliam at TDG Research writes a thought piece on mobile video and takes a look at the latest headline grabbing survey on the topic, this time from RBC Capital Markets. Gilliam picks apart RBC's leading questions, such as "I am not interested in watching TV programs or movies on my handheld device, True or False"

He writes that "Not surprisingly, 76% of respondents answered "true" - in other words, they were NOT interested in watching TV programs or movies on their handheld device." While the press ate up the results, Gilliam comments that "black and white/true or false research is not the best way to understand consumer interest in novel services such as mobile video."

Gilliam then proceeds to pick apart the research, outlining the three problems he has with the survey and supports his arguments with data points derived from TDG's research on the subject. He concludes with:

evaluating the appeal of novel services such as watching video on a handheld device is much more complicated than asking a simple true/false question. Too often evangelists and naysayers grab on to simplistic research in order to prematurely extol or condemn emerging services such as mobile video. That's too bad, especially when detailed research is available to evaluate accurately the nature of these new opportunities.

Dean Bubley: Symptoms of terminal decline?

Dean Bubley writes at his Disruptive Wireless blog that "sometimes semantics are telling." He states that when he speaks about cellular devices, he use terms like "handset", "mobile phone", "phone", or "cellphone".

However, Bubley notes that "almost every time I speak to someone involved in cellular networks , either from an infrastructure vendor or operator, they typically use the word "terminal". Almost nobody else does."

He thinks this is a legacy philosophy, highlighting "the traditional "centralised" telecoms operator way of thinking, and ignores the implications of Moore's Law on the "smartness" of handsets and their resident applications and growing capabilities." Bubley also believes:

this is the backward philosophy is the notion that services should "work seamlessly across different access technologies", with the network trying to create an illusion of a lowest common denominator. Instead, I believe that handsets should pay close attention to "seams" and modify their own behaviour and optimise for the pecularities of different networks. I'll post more on this specific issue later, as I see it as a fundamental flaw in IMS.

Nokia opens handset unit in Indian market

Reuters.com reports on Nokia formally opening "its first Indian handset factory on Saturday in a bid to increase its stranglehold on the world's fastest growing wireless services market." According to the article, "Ultra low cost phones -- less than 2,000 rupees ($50) -- are fuelling demand in cost-sensitive India, where more than 4 million new users are entering the 85.4 million strong wireless secto