Friday, March 31, 2006

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.”

Thursday, March 30, 2006

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 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 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!

Wednesday, March 29, 2006

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

(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.

Tuesday, March 28, 2006

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 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.

Monday, March 27, 2006

Disney hires BuderEngel ad agency for $50 million MVNO campaign 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."

Saturday, March 25, 2006

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"?

Friday, March 24, 2006

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, 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."

Thursday, March 23, 2006

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