Wednesday, May 31, 2006

Social Networking Goes Mobile

CIO Today writes a lengthy feature on social networking moving into the mobile space, such as MySpace's recent partnership with Cingular and MVNO Helio offering phones preloaded with MySpace features.

According to the article, Cingular "subscribers get short text messages when new comments or friend requests get posted to their MySpace profile. Helio phones include applications that make it easy for customers to view friends' profiles and post comments and photos onto MySpace."

The article cites data from M;Metrics which found that "33.2% of 18- to 24-year-old Americans post photos to Web sites via mobile phones," but "only 18.7% of these young adults play downloadable mobile games," according to IDC. Mark Donovan at M:Metrics said, "This suggests to me there's absolutely interest in participating in mobile social networks."

The article notes that the ubiquitous handset even more so than the PC is the key market drive for the alway connected target audience.

Jill Aldort at Yankee Group said, "Virtually every online social network application is going to have a mobile component over the next year or two."

And the network operators are eagerly licking their chop to get a piece of the ARPU action and drive data usage. Tole Hart at Gartner predicted that "within two years, at least 5% of all text messages sent through wireless networks may relate to social network interaction. Today, SMS is a $3 billion market in the U.S. The application could also encourage more users to buy unlimited data plans, allowing for mobile Web access."

Charles Golvin at Forrester Research opined, "I don't think there's a lot of opportunity for networks built entirely around a wireless persona. What's going to be much more successful are extensions of existing communities."

Even More Microsoft Handheld Speculation

Following up on The Diffusion Group's prediction that Microsoft (MSFT) will enter the portable gaming market in 2007/8, 1UP.com has a Q&A with Michael Pachter at Wedbush Morgan Securities "to pick his brain on the prospects of a handheld platform from Microsoft." Here is is:

On the prospect of Microsoft entering the handheld market:

It is likely that Microsoft will enter, although it is not a sure thing that they will succeed. My basis for believing that they will enter the market is the reorganization of the Home Entertainment division, and the move of Bryan Lee to head of a new group. Bryan's group sounds like 'convergence,' although the name is something more innocuous. However, when you combine that move with Bill Gates' comments at E3 about how Vista will allow convergence of Xbox 360, PC and mobile devices, it seems far more likely that Microsoft will have a mobile device to offer to consumers at some point in the future.
On what kind of device Microsoft will enter with:
My bet is that it is NOT [a primary gaming device], unless it is some type of hybrid convergence device. I believe that the company is interested in turning the Xbox 360 into a media hub, and they are interested in offering a handheld device that will allow downloading of movies, television programs, music and games. Sort of a reverse-engineered iPod. Although the iPod form factor is exceedingly cool, I think that Apple would have preferred to make the device more game friendly.
So if it's not a primary gaming device, what kinds of games will it play?:
My guess here is that the device will be closer to a cell phone in terms of the types of games (mostly puzzle/arcade games), and less of a PSP-type device. I'm not convinced that Microsoft wants to offer more packaged software; rather, I believe that they want to use the mobile device to drive user activity on the Xbox 360. The handheld I envision would make the Xbox Live experience more satisfying.
On how to introduce the platform, considering Microsoft's necessary focus in 2007 on software for the Xbox 360:
If I'm right that this is not primarily a gaming device, the right way to introduce it is at CES. I'm not sure how far along they are, as I only heard the first rumors a couple of months ago, but think that it is likely close enough to unveil at 2007 CES in January, and launch a year or so later. Again, if I'm right, this is merely a sideshow at E3.

Rob Enderle: Last-Minute Gift Ideas for Dads and Grads

Rob Enderle writes a column for MacNewsWorld about last minute gift ideas for dads and grads. Here are some of his mobile device recommendations:

iPod

  • The new class of iPods is really cool but there is a good likelihood that your dad or grad already has one. If not, the best way to buy one is online at the Apple (AAPL) store. You'll get it faster and you can have it engraved for free. I did this myself for my wife and the engraving, assuming you pick a nice message, makes all the difference in the world.
  • However, the problem with the current generation of iPods is that their "edgy" design makes them very delicate. A relatively inexpensive way to improve this situation is to give an iPod owner an Otterbox. These cases look good and they are waterproof, drop proof, and do a nice job of keeping the iPod looking new. Since my wife destroyed her first iPod by dropping it in a pond, I've realized that the fact that you can actually use the Otterbox while swimming makes it a good investment, both for the protection it provides and for that fact that it means you can listen to your iPod while swimming.
iPod Alternative
  • Apple may dominate the MP3 market but the No. 2 player is SanDisk (SNDK). I've had the company's Sansa for awhile and there are things I like about it that, for me, makes it better than an iPod. It uses an AAA battery (I always forget to charge things or run out of power on planes and hate carrying charging bricks); it has an FM radio (since 9/11 I want a radio with me all the time and need it for the gym anyway); and it even has a voice recorder (which could be very important if you're a guy named Jack on a show called "24"). You can even add more memory.
  • Price for the 1 GB c140 is a reasonable US$109; the 2 GB is $150; and 1 GB SD cards are down to under $59. This works with Janus's subscription services, which makes more sense to me than purchasing music for download does for a lot of reasons right now, and it isn't just like what everyone else has. SanDisk also makes the Sansa e260 which starts at $180, has 2 GB (and can go up to 6 GB) and is better for folks who want to share photos.
Bluetooth Headset
  • By now everyone has a phone and most have Bluetooth wireless capability -- but few dads and grads have wireless headsets. These used to look kind of dorky and were very hard to use. Current models are much better looking and are vastly easier to install. The ultimate headsets are made by Plantronics, two of which really stand out. The first, the Plantronics Pulsar 590A is, when it sits on its stand, desk art. Not only is it the only wireless stereo headset I've used that actually seems to work, it also looks cool and costs around $250.
  • Alternatively, a more usable product is the Plantronics Discovery 640. At a reasonable $130 it comes in a very nice case with accessories, has a unique battery-powered charging cradle that looks like a think pen (did I mention I forget to charge things?) and it is relatively small, as well as comfortable. In silver and black it is an impressive package.
Coolest Phone
  • I just got the new Motorola Q (MOT) and I am incredibly impressed. This is one of a new class of super-smart phones that is up-and-coming for doing e-mail and browsing the Web. Most others I've seen are too big and clunky or make tradeoffs -- as is the case with the Blackberry, which kind of sucks as a phone, for instance. But the Q is the first in this class that I've been really impressed with. It has design elements that are similar to the RAZR, a very nice screen, and there's no need for a stylus. It even has a decent 1.3 megapixel camera with a light for dark shots -- and a 6x digital zoom, too.
  • My typical experience with a phone in this class is that I get more disappointed the longer I have it. So far, with this one, the experience has been one "oh wow" after another. Right now it is compatible only with Verizon (VZ) service in the U.S., which is good for folks living and traveling domestically, not so good for international travelers. However, if you get a chance to wander into a Verizon store to check this thing out, I'll bet you'll be impressed -- and if your dad or grad likes gadgets, he or she will too.

Gadget Obsession: In Search of the Perfect Cup of Espresso?

Several years ago I worked for a software startup that was founded by a couple of academics from Italy. While the company failed after three trying years, I did develop a taste for espresso, which the founders seemed to imbibe at a prodigious rate. The CEO, in particular, seemed to have a double shot of espresso permanently affixed to his hand throughout the day.

So what does this have to do with the world of mobility. Not much really.

But as a mobile/consumer electronics gadget geek, I wonder if others like me are afflicted with the need to have the latest and greatest items in different areas of their life too (and i don't mean upgrading the wife and kids :-) ). For example, I like running gadgets, such as my Garmin Forerunner 205 GPS personal training device. However, I'm not really into cars or power tools, although one of my friends just got a jackhammer, which is way cool.

Back to the espresso theme, my current pride and joy in the kitchen is my Gaggia espresso maker. It's nowhere near top of the line, but it makes a decent espresso drink and I no longer have to schlep to Starbucks and spend $3-4 a day to get my caffeine fix.

I now go to Peet's Coffee every 7-10 days to pick up a quarter pound of freshly ground espresso at $3 a pop. Most of the time this arrangement works out fine when they grind it right, and at home I can produce a nice double shot espresso with a decent amount of crema.

But I have this ongoing lingering doubt that it's not enough. If I only had my own burr grinder then maybe I could be making an even better cup of espresso. I could then purchase freshly roasted espresso beans and grind on demand in search of producing the perfect cup of espresso with a nice head of crema. Mmmm.

So what's stopping me? Only about $285 worth of reasons. I guess my gadget obsession has transcended mobile devices, consumer electronics and gaming and moved to the kitchen. Why should I settle for a $100 or even $200 grinder, when I can get the highly rated Rancilio Rocky Doserless Coffee Grinder for only $285.

I could even spend more if I wanted, but that's the device I have set my sights on. So far I'm waffling and just can't pull the trigger to make the purchase. I mean $285 for a mobile or electronic device is no big deal, but for a coffee grinder?

I'll just have to make do and keep on going to Peet's to get my ground espresso until I can convince myself to take the grinder plunge...

Strategy Analytics: Flash Lite-Enabled Handsets to Grow from 38 Million in 2005 to 216 Million by 2010

Strategy Analytics predicts that Flash Lite is ready for global penetration, "pointing to the triple-digit growth rate in unit sales of Flash LiteTM -enabled phones over the last two years."

Stuart Robinsonn at Strategy Analytics said, "Since Macromedia (now Adobe) redesigned its highly-successful PC-based Flash technology for use on cellphones and other portable devices in 2003, demand has taken off. NTT DoCoMo in Japan offered the first Flash Lite-enabled handsets. They are now available on numerous wireless networks in the Far East, with plans to spread worldwide this year."

Stephen Entwistle at Strategy Analytics added, "Over 100 handsets that support Flash Lite are already available or pre-announced. The top seven handset manufacturers and several others have signed up with Adobe (ADBE) to license Flash Lite on their handsets."

Gartner: Worldwide Mobile Phone Sales in First Quarter are Indicative of Another Strong Year in 2006

According to Gartner, "worldwide mobile phone sales totaled 224 million units in the first quarter of 2006, a 23.8 percent increase from the same period last year. These strong results for the quarter have resulted in Gartner increasing its mobile phone sales forecast to 960 million units."

Carolina Milanesi at Gartner said, "As mobile phone replacements in mature markets such as Western Europe and North America gave little sign of slowing down, strong sales in regions such as Asia/Pacific and Japan contributed to such a positive start in 2006. This strong start to 2006 is indicative of another strong year."

Gartner found that "the top two vendors, Nokia (NOK) and Motorola (MOT), accounted for 54.3 percent of worldwide mobile phone sales in the first quarter of 2006. Nokia was the favored brand in Western Europe, Central Eastern Europe, the Middle East and Africa combined and Asia whilst second preferred brand in the Americas. Wideband code division multiple access (WCDMA) sales played an important role in overall Nokia sales in the first quarter, which favorably impacted Nokia's average selling price for the quarter."

Since 2001 when Gartner started tracking handset sales, Motorola achieved its highest worldwide market share of 20.3 percent. Samsung recorded a year on year drop in market share of -1.0 percentage point and "only grew its share in Western Europe and Latin America falling further behind Motorola at a worldwide level."

Milanesi said, "Although LG, the number four player, has almost half of its market share, Samsung needs to react and work on building a more varied portfolio that includes lower end devices."

Worldwide Mobile Terminal Sales to End-Users in 1Q06 (Thousands of Units)

Company 1Q06 Sales 1Q06 Market Share (%) 1Q05 Sales 1Q05 Market Share (%)
Nokia 76,088.4 34.0 54,960.1 30.4
Motorola 45,518.6 20.3 30,143.3 16.7
Samsung 28,080.5 12.5 24,479.8 13.5
LG 14,508.5 6.5 11,464.2 6.3
Sony Ericsson 13,599.6 6.1 9,905.8 5.5
BenQMobile 7,867.6 3.5 10,209.5 5.7
Others 38,378.2 17.1 39,829.5 21.9
TOTAL 224,041.4 100.0 180,992.2 100.0
Note: This table includes integrated digital enhanced network (iDEN) terminals. It excludes shipments from original design manufacturers to original equipment manufacturer.
* 2004 BenQ Mobile volume refer to Siemens and BenQ sales combined. Source: Gartner Dataquest (May 2006)


Gartner also provided a regional analysis of the handset market for the first quarter of 2006:
  • In Western Europe, sales in the first quarter of 2006 reached 41.1 million units, a 12 percent increase from the same period in 2005. Milanesi said, "While consumers continued to be drawn into shops by new models and New Year's bargains, mobile operators were still able to sign up new subscribers to their networks."
  • In Eastern Europe, the Middle East and Africa, sales of mobile phones to end users grew 30 percent over the same quarter in 2005 reaching 41.3 million units. Growth in this region was driven by strong new subscriber additions in countries such as Nigeria, Russia and Ukraine while countries such as Poland, South Africa and Turkey saw strong replacement sales.
  • In the first quarter of 2006, the North American mobile handset market recorded sales just under 40 million units, up almost 16 percent from the same period last year. This was a record setting first quarter, and the second strongest quarter ever in North America. Hugues De La Vergne at Gartner said, "The prepaid market continued to be a key area of strength as the tier two and three operators have started to pull a greater share of the new subscribers than they had in the past. Another contributing factor to the volume of sales was a continued strong upgrade rate as operators are offering attractive devices to encourage users to replace their dated devices."
  • Sales of mobile terminals to end-users in Latin America were 24.6 million units for the first quarter of 2006, a 31 percent increase from the same period last year. Tuong Nguyen at Gartner said, "Despite strong competition, operators did not add as many connections as they expected - slightly less than 14 million compared to more than 11.6 million the same quarter last year. Factors such as churn, upgrade and replacement partially offset the decline in net additions."
  • In Asia/Pacific, a surge in demand from emerging markets such as China and India, as well as increasing replacement in mature markets, contributed to higher-than-expected growth in the first quarter of 2006. Total handsets sales totaled 64.4 million units in the first quarter of this year, up 36 percent from the first quarter of 2005. Ann Liang at Gartner said, "Low and ultra-low tier phones were a key driving factor for growth."
  • In Japan, mobile terminals sales surpassed 12.6 million units in the first quarter of 2006, a six percent increase from the same period last year. Nahoko Mitsuyma at Gartner said, "Net new additions hit 1.5 million units for the first time in the past two years, supported by aggressive discount packages for air time charges and special terminals targeted at senior users and children."

Ambient Insight: Mobile Learning Content and Services Market Accelerating in the U.S.

Courtesy of Tekrati Research News, Ambient Insight says "the so-called "iPod generation" is one of the most significant long-term factors accelerating the growth of the mobile learning content and services market in the U.S." The firm believes the "largest buyers of mobile learning content and services will be public sector -- local, state, and federal governments -- followed by consumers. The single largest vertical demand is in the healthcare industry."

Ambient Insight pointed out "there is a very large user demographic in place; there are powerful handheld multimedia devices on the market; and the US is rolling out next-generation high-speed wireless technology at a rapid pace. These trends create very favorable market conditions for Mobile Learning suppliers."

Ambient Insights sized the "current market for Mobile Learning products and services in the US at $460.4 million," and "the market is growing at a five-year compound annual growth rate (CAGR) of 27.3% and will reach $1.5 billion by 2011."

Ambient Insight believed "the largest revenue opportunity for suppliers throughout the forecast period is the demand for Mobile Learning packaged content. The second largest revenue opportunity for suppliers is the demand for content development services and content conversion services." Ambient Insights cited several major growth factors drivers in the U.S. including:

  • Content developers and publishers are aggressively converting legacy content and developing new rich multimedia Mobile Learning content
  • The rapid evolution of powerful convergent and connected wireless handheld devices with mobile Web browsers
  • The availability of advanced mobile operating systems, robust mobile application software, and rich client interfaces
  • User interface technology that overcomes the limitations of the small device footprint of most handheld devices
  • The aggressive continuation of the rollout of third-generation (3G) cellular networks in the US that began in 2005
  • The rollout of fixed wireless broadband (such as WiMAX) in 2006-2007

Strategy Analytics: Cell Phones Take 30 Percent Slice of 88 Million Navigation Market by 2010

According to Strategy Analytics, "at the right price points, cellular phone companies and traditional automotive system suppliers are now well-positioned to present a serious competitive response to the low cost, well branded navigation products from TomTom, Garmin (GRMN), Magellan and others. Investment and competitive pressures are also expected to drive consolidation among portable navigation vendors in the next 12 months."

Strategy Analytics believes that "all navigation vendors will soon approach a strategic crossroads as strong latent demand for low cost basic route guidance is increasingly met." A recent survey by the firm of new car buyers across the US and Europe found that "at least 18 percent of drivers require maps or directions more than 20 percent of the time. The vast majority of consumers, however, over 60 percent, only spend five percent of their travel time going beyond familiar destinations."

Joanne Blight at Strategy Analytics said, "There are now indications that Portable Navigation Device (PND) growth is slowing; and the demand from the smaller but highly significant segment of consumers who require route guidance on a regular basis has practically been met by low cost PNDs. The next challenge is to meet the needs of the much larger consumer segment who require route guidance on a far less regular basis. These consumers will require products that combine and integrate navigation with a range of other features, starting with road traffic information, but increasingly requiring entertainment and innovative location-based applications. The automotive and wireless companies are very well positioned to mount some serious competition in this section of the navigation market."

GPS-handsets and 3G networks seems the way to go for the casual user/mainstream market. However pricing will have to come down which is the current problem with most mobile services.

I've tried the TeleNav service on my Samsung A920 Sprint Power Vision 3G Multimedia Handset and the voice navigation was pretty solid the few time I used it. However at $9.99 a month it's expensive for the casual user who might need it 1-2 a month. As I've said before, the $5 range is the mobile service sweetspot.

So for now I'll just stick with Google Local and text directions for free....

JupiterResearch: Coke Caps and Mobile Marketing

Julie Ask at JupiterResearch writes about Coca Cola's mobile marketing program where you accumulate points from bottle caps of coke bottles to acquire stuff. Here is what she really liked about the campaign:

  • The TV commercials were awesome. (Ok, yes, I watch American Idol). Very educational. Everyone should be thanking companies like American Idol and Coca Cola for helping to educate mobile subscribers and build this market. It is reminiscent of Intel helping to build awareness of Wi-Fi with their Centrino campaigns a few years ago.
  • The idea to text in the codes was great. One didn’t have to save the caps or carry them until getting to a PC. They could be redeemed and tossed immediately.
  • I also like the integration with the web site especially that they tracked what product you were drinking. They have not, however, seemed to have done anything with the information yet.

JupiterResearch: Vodafone results

Thomas Husson posts at Jupiter Analyst Weblogs about Vodafones results. He noted that "there was no major announcements at Vodafone's analyst meeting today. Many were expecting either significant layoffs to reduce costs or a major investment in a fixed operator to offer convergent services."

Husson states it was simply a strategy update in line with the 3 new major business units and provides the following comments:jlraxcmb

1) Western European controlled business: cost reduction and revenue stimulation in a maturing market.

Most cost reduction are expected within the One Vodafone programme. There is obviously a scale and scope effect enabling to benefit from economies of scale when you have 170M customers worlwide. By the way, contrary to what is often said, Vodafone is not the largest mobile company in the world. China Mobile is far ahead. Just imagine the power of China when trying to establish its own norms and standards...

Price pressure on voice calls from new competitors (MVNOs, alternative operators,...) and from incumbent ones, cuts on termination rates and on roamimg tariffs, regulatory pressure are a reality.
  • Vodafone has then two options to increase revenues:increase voice revenues by stimulating usage (migrating prepay to contract, fixed-mobile substitution,...)
  • increase data revenues: non-voice represented on average 17% of revenues at the end of March 06 and up to 20% in Germany and in the UK. Excluding messaging revenues, the share of new content revenues is increasing steadily but still limited to a maximum of 24% of non-voice revenues.
2) Vodafone's other business and emerging market portfolio: delivering strong growth.
No doubt the growth will come from fast growing emerging economies were mobile penetration remains low. Sounds like it is more likely to come from Eastern Europe and Asia, given South America is abandonned to Telefonica. The stake in some affiliates (Verizon, SFR,...) will need to be clarified in the coming months but the statement was clear "Vodafone envisages a lower level of merger and acquisition activity in the future".
3) New Businesses: delivering converging services.
Vodafone had been quite successful with its Vodafone Zuhause offering (448K registered customers at the end of March 06) in Germany. According to Mark Mulligan, VP of Jupiter Research, who just come back from Italy, Vodafone Casa (another homezone tariff) is currently heavily promoted in Italy. If it is not necessary to acquire a company in the IP world (their "infrastructure light" approach), Vodafone will need to announce major partnerships with ISP or alternative fixed operators to be able to reach its target: "Vodafone anticipates that its Mobile Plus Strategy will account for approximately 10% of Group revenues in three to four years". This sounds ambitious when an integrated telco such as France Telecom only announced 5 to 10% of its revenues to derive from convergent services by 2008...

Tuesday, May 30, 2006

The Diffusion Group: Microsoft to Enter Portable Gaming Market in Late 2007/Early 2008

The Diffusion Group predicts that "Microsoft (MSFT) will likely leverage its Xbox franchise to enter the portable game console (PGC) market in late 2007 or early 2008." According to TDG, "Microsoft is expected to embed a portable multimedia player in a handheld gaming platform similar in many respects to Sony's PSP."

Thomas Wolf at TDG said, "Microsoft has been waiting on the sidelines until its gaming console and software business reached sustainability, all the while watching closely how Nintendo and consumers in general would respond to Sony's PSP. With global PGC revenues expected to reach $3 billion annually by 2008, and with only Sony and Nintendo active in the PGC space, Microsoft has before it an incredible opportunity. It has a critical brand presence in the console space, the breadth and depth of gaming titles, and the marketing clout necessary to enter this space and win decent market share."

TDG thinks "Microsoft has been evaluating two options regarding its portable gaming strategy: licensing a version of its Xbox OS for others to build portable hardware designs upon, or introducing its own branded PGC."

Michael Greeson at TDG said, "While licensing the software is consistent with Microsoft's larger strategy, and no doubt Microsoft has endured many failures in regard to hardware plays, the success of the Xbox presents Microsoft with a unique opportunity. Microsoft owns an established and highly-regarded hardware brand, meaning that they can enter the PGC market from a position of strength, a privilege not enjoyed by any other player except those already active in the PGC space."

Sounds like a good move if it's seamlessly integrated with XBOX Live...

Dean Bubley: Voda data revenues

Dean Bubley posts at the Disruptive Wireless about the Vodafone's results and strategy review. He deconstructs some of the data services revenues:

  • The company's non-messaging data services revenues have increased 60% in the year, up from £516m to £832m. This is on a base of 27m Voda Live! handsets at the end of March, plus 7m Live 3G.
  • More interestingly, it had 648k 3G Mobile Connect PC data cards, and a handful of other "business devices" (presumably 2G cards and maybe some 3G-integrated laptops). It also had 426k Blackberries in use at the end of March.
Bubley then dissects how much of Vodafone's revenue comes from business vs. consumer use of 3G & other data services. He states that:
looking at last year's numbers, the company had about 500k Connect cards (although more 2G ones), so it seems like an average of 600k during the year seems reasonable. At (and this is a hand-waving estimate) £40/month on average (which doesn't assume much international roaming), this equates to £288m. I suspect that some users are much higher than than £40/mo, while others in large corporates probably negotiate discounts. And let's say £25/mo for the push email part of the Blackberry service - so, at an average of maybe 300k users during the year, that's another £90m or so.
Bubley also estimated that "perhaps £380m of the total £832m data revenues is from corporate users. Sure, there's a lot of guesstimates in that, but I reckon I'm being conservative if anything - I could easily believe the number's actually well north of £400m. In other words, 34m Voda Live users (OK, probably an average of 32m across the year), of which maybe 5m were 3G, have contributed a grand total of £450m. Maybe £1-1.50 ARPU per month, probably more likely to be 50p-£1 for 2G, and £1-£2 for 3G users"

Virgin Mobile introduces ad-subsidized calls

Reuters.com writes about Virgin Mobile USA's SugarMama service that will allow customers to earn" up to 75 minutes of free calls per month if they spend an equal amount of time looking at ads and replying to these ads via text messages."

Forrester Research analyst Charles Golvin believed "advertising will be "extremely important" to wireless providers as they deliver video and news to phones," but thought "it was not clear if many customers would want ad subsidized calls because cellphone calls are already cheap."

Golvin said, "If you give somebody the choice whether you can have free content with advertising or you can pay for the content they'll chose the former. Realistically the price of voice is pretty darn cheap on a mobile phone these days so giving somebody three free minutes of mobile voice is not a compelling proposition for most mobile users."

Apple deal a boost for Nike

Playlist writes another article on the recently announced Nike+iPod Sport Kit. This collaboration between Nike (NKE) and Apple (AAPL) will enable certain Nike shoes to wirelessly send training data to an iPod nano.

The article states that "while both companies will benefit from their newly announced collaboration on products for athletically minded consumers, it is Nike that stands to see the greatest benefit, by running alongside the red-hot iPod."

Ross Rubin at NPD Group said, "I think Nike has more to gain. The athletic shoe market has stronger competition at this point, and many Nike shoe buyers would have purchased an iPod anyway.”

Michael Gartenberg at JupiterResearch said, “I think it’s one of those deals where it really works out well for both parties. It gives Nike the ability to associate with a very strong brand like Apple that meshes well [in terms of] demographics. People running are spending a lot more time listening to music than they did in past. For Apple, it extends the iPod as a platform, not just as another portable media player, and creates a strong brand identification. It’s multiple wins for both companies.”

The article mentions Nike's previous failed attempts to "penetrate the MP3 player market for several years" and its relationship with Philips including the upcoming PSA 610, "an MP3 player made by Philips with a 4GB hard drive and GPS sensor built-in expected to ship in June."

Rubin and Gartenberg both thought that "although the Apple deal will raise Nike’s profile in the MP3 player market, it doesn’t necessarily signal the end of Nike’s relationship with Philips."

NPD's Rubin said, “The Nike-Philips relationship is a brand-licensing agreement that has served a niche. With music being such an important part of the exercise experience, though, Nike expands its reach by capitalizing on Apple’s great market share.”

Gartenberg added, “I can’t imagine the folks at Philips were too happy about it, but how unhappy they were and what they’ll do remains unclear at this point. But at the end of the day, a relationship with Apple is one many companies would like to have and build off of.”

Responding to comments that some think the deal represents a loss of focus for Apple, Gartenberg opined that "I think Apple is already a digital lifestyle company and the core of that is the personal computer—from Apple’s perspective that’s the Macintosh. The experience doesn’t stop and end at iPod. It goes back to iTunes Music Store with athletic playlists, uploading statistics to the Web, finding an online community of runners to interact with. If anything, it means more uses for a computer, not less.”

Gartenberg added, "I think that certainly anything is possible. The iPod is clearly becoming more than a personal media player, it is becoming a platform. A lot will depend on how well this first one does.”

Rubin also pointed out that "Nike isn’t necessarily limited to working with Apple. Not only might that mean that other Nike-branded MP3 players might integrate with the Nike+ Web site, but that iPod integration could possibly come to users of other athletic-shoe brands."

As a long-time runner, I think Nike and Apple are going after the casual, personal fitness lifestyle crowd personified by Runner's World magazine. It's a bigger more mainstream market where style and fashion is more important than form and function so being locked into only Nike running shoes shouldn't be as big of an issue.

This Apple/Nike partnership should also serve notice to the other players in the personal training gadget space, such as Garmin (GRMN), which seems to be targeting its Garmin Forerunner GPS devices
at the narrower more-serious running niche market.

As Jupiter's Gartenberg noted, the iPod is becoming a platform. It's a risky strategy to ignore this, and by extension, Mac users as well.

While Garmin currently owns the GPS personal training device market, by not supporting Macs (other than a beta agent for its MotionBased website) they are definitely not endearing themselves to a very loyal customer base...

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Investment Banks See Strong Growth for iPod

MacNewsWorld reports that financial analysts are bullish on the future of the Apple (AAPL) iPod. Credit Suisse First Boston analyst Robert Semple wrote in a recent client report, "We believe Apple is still in the early stages of its product expansion and that the company can grow its iPod units at least 20 percent for the foreseeable future."

Semple added, "Europe remains the biggest opportunity for Apple, in our opinion, based on its penetration rate of only 7.1 percent and similar demographics and buying patterns to the U.S." However, "[Apple has] opened only six retail stores in the UK and nowhere else in the region, choosing instead to leverage reseller partners."

Semple expected the "iPod to continue to deliver strong growth, but its position as the leader in both flash and drive-based digital music players will eventually be limited by the growth of the music player market."

JupiterResearch: High-end Service with Low-end Marketing

Julie Ask posts at the Jupiter Analyst Weblogs about the high-end MVNO, VOCE. She states:

About three weeks ago I signed up on their web site to get information about the service. Just this past week, I received a plain text email (i.e., no color, no graphics, etc.) stating that something would be arriving in the mail shortly. I had forgotten that I had even requested information. Hmmm. The long list of email marketing basics (e.g., personalization, event-triggered, timely) … it didn’t meet any of them.
Maybe VOCE believes the high-end target audience expects snail mail and slow service?

Earn Cellphone Minutes by Watching Ads

The New York Times reports that Virgin Mobile USA will announce a program, called SugarMama that "lets people earn one minute of talking time by watching 30-second commercials on a computer or receiving text messages on their phones, then answering questions to prove they were, in fact, paying attention."

According to the article, "Virgin Mobile, a relatively small cellphone carrier with four million mostly young customers, is aiming the program at teenagers, who can earn up to 75 minutes of free talk time a month. The company says that the program, scheduled to be available on June 14, is the first ad-supported cellphone service in the United States."

So far "Virgin has signed up three advertisers: Pepsi, Microsoft's Xbox game console and a youth antismoking campaign called Truth." Customers can sign up via the Virgin Mobile website.

Roger Entner at Ovum thought "the kinds of consumers willing to swap their time for airtime were not likely to be big spenders." He said, "If you're too cheap to buy a minute of air time, how are you going to afford an Xbox?"

Ed Snyder at Charter Equity Research noted that "adding to Virgin Mobile's challenge is the fact that airtime is cheap and getting cheaper." He said "a minute of airtime typically cost from 3.5 cents to 10 cents, down from more than 25 cents a decade ago."

Ovum: Siemens Industry Analyst Conference 2006

Dan Bieler, Tony Lavender and Peter Hall at Ovum write about Siemens Industry Analyst Conference 2006. The conference focused exclusively on the Siemens Com division. They write that:

For us the most fundamental question, how Siemens plans to address its margin problem at Com, has not been answered sufficiently. Given the scale of the challenges at Com, we would have welcomed greater financial transparency. In light of the absence of more financial details on the various divisions, the impression remains that the restructuring plan is still not fully formulated and that little progress has been made. The details on intended cost savings of €2 billion in the current financial year were scarce. The bulk of savings are to come from procurement. But we remain doubtful whether the division can meet the margin targets set by Siemens' CEO in the current financial year.
Ovum notes that "Enterprise is the division weighing most heavily on the margins of Com. For several years this division has not received the attention it should have been given. Some cost cutting has already taken place and further cuts are planned in a number of areas...Carriers, meanwhile, is facing fewer immediate challenges. Not only were we told that the margins are close to the target for Com already, but the product and service portfolio and the go-to-market strategies are set up to meet existing and emerging market demand. In particular, the migration to next-generation mobile networks and carrier Ethernet should offer new opportunities for the division. Here, Siemens makes good use of the talents of its employees."

Ovum concludes:
Com remains a building site. We are not yet convinced that Siemens has a credible long-term strategy for Com in place. Given the time the company had to work on the task, this is somewhat concerning. The sale of mobile devices to BenQ was just a first step. Further radical steps might be unavoidable. However, a failure to act now will do nothing to resolve the challenges ahead.

Monday, May 29, 2006

Hello XBOX 360, Goodbye Sony!

The migration is complete. My 10 year-old son successfully finished selling his Sony PSP and Playstation 2 consoles and games on eBay and earned enough money to acquire a new XBOX 360 with some games and accessories.

The mark of any good gadget is how much you need to spend on accessories, and boy do they add up for the 360. Wireless controllers, cooling fan, rechargeable batteries and charging systems, plus I decided to upgrade the power strip and video cable for our home entertainment set up. Ouch!

My son ended up with a good selection games: The Elder Scrolls IV: Oblivion, Burnout Revenge and Ghost Recon: Advanced Warfighter. I hope this holds him for awhile since the games are more expensive now, up to $59 a pop.

The 360 has been pretty impressive so far. As my son said, it offers better gameplay and graphics, good integration with online gaming via XBOX Live, a content marketplace and societies (i.e. gaming communities).

Another unexpected benefit was Windows Media Connect, which allows the 360 to wirelessly access all the songs on my notebook, except for the DRM-protected songs purchased at iTunes. We can now listen to music on our stereo via the XBOX 360. Sweet.

The only problem now is the TV. We have a 6 year-old Sony CRT TV, but with prices falling for flat panel high-definition TVs it looks like the 360 will be the driver for upgrading the TV at some point too.

As usual, the gadget spending never ends...

Ovum: Yin and yang: Vodafone, BT and the logic behind a mega-merger

Mike Cansfield at Ovum points out BT's "enthusiasm for fixed-mobile convergence (FMC)" while "noting that it had little to converge with its fixed operations." As he looks forward to Vodafone's (VOD) strategic announcements due next week, he thinks the "symmetry with BT's position is striking. Vodafone is a completely mobile company that has also identified FMC as an opportunity. Vodafone's UK operator is starting to look like the 'yin' to BT's 'yang', and so a merger would be an obvious way to solve both operators' biggest strategic problems at a stroke."

Cansfield presents arguments for and against for both companies. Here are the arguments in favor of BT merging with Vodafone:

  • mobility. Mobile and broadband are the two main growth markets in consumer telecoms, and BT's inability to benefit from the former has been a disadvantage for several years
  • geography. Vodafone is concentrating more on Europe following the sale of its interests in Japan, with an exit from the US a strong possibility. Whilst the fit is not perfect, this maps well onto BT's European business
  • technology and networks. BT's 21st Century Network will be an IP core with IP multimedia subsystem (IMS) at the service control layer. IMS is widely recognised in the industry as the standard that will drive the convergence of mobile and fixed networks. As separate networks disappear, so will the rationale for separate companies.
For Vodafone, the arguments in favour of a mega-merger are:
  • strategy. A deal would move the focus away from problems in Japan and the US onto Europe, where political and economic consolidation are established trends. As a result, it would be swimming with the tide and not fighting it
  • customers. Enterprise customers, particularly corporates (although not exclusively so), are trying to bring mobile into the managed communications environment that has existed for their fixed services for many years. In short, a merger would be popular with enterprises as it would make this easier
  • services. This deal would open up new markets for FMC services, in both telecoms and media. The opportunities to cross-sell are obvious, as are the possibilities for boosting customer retention through service bundling.he arguments against are:
Cansfield arguments against BT and Vodafone merging are:
  • complexity. BT divested itself of its mobile business in 2001 to simplify its business, and since then the company's performance has gone from strength to strength, as last week's results show. A return to complexity would distract BT from its successful path. Vodafone has no fixed experience outside of its German subsidiary Arcor, and it has been trying to offload this unwanted part of the Mannesmann takeover since 2001
  • scale. Any such deal would create a gigantic business that would attract the attentions of regulators and governmental bodies. Even if the parties agreed, there is no certainty that approval for such a deal could ever be secured
  • past experience. The poor record of mega-mergers in general, and past failures by both parties, would dilute any enthusiasm for such a transaction.
Cnasfield concludes that "the arguments in favour of a merger are strong at the business level, but logic does not always win out in business. It seems to us that the practical barriers to such a deal may cancel out the logical arguments."

Sunday, May 28, 2006

Dean Bubley: Quadplay, FMC and multiple gateways

Dean Bubley posts at the Disruptive Wireless blog about a "problem emerging with the new class of quadplay and FMC services. Most of them need some sort of "box" in the home, usually with WiFi included for local-area connectivity." Bubley writes the culprits are:

  • the usual DSL/cable router
  • TV set-top box for cable/satellite/digital terrestrial
  • an operator-custom FMC gateway for dual-mode phones (probably integrated with the router)
  • operator-provided residential pico/femtocells (again, possible integrated into a router)
  • cellular-backhauled fixed modems
  • some sort of WiMAX termination
  • anything integrated with the TV/gaming/audio system using WiFi
  • probably a bunch of other things I've forgotten about
Bubley states"the problem comes with households with multiple people. All the operators I speak to have the vision of being the sole household quadplay provider, with one "Hub" gateway box for all the family's services." However he thinks this is unrealistic. What happens where one of the parents gets a work-provided mobile from another operator? Or if one of the kids really likes an MVNO like Helio which gives dual-mode phones? Or if people upgrade to a Fusion-type device and it comes with a free hub?"

Bubley concludes that the:
Bottom line is that some (most?) families are likely to get multiple FMC/gateway/picocell type boxes. Do they keep switching them over? Buy an ethernet hub & connect all of them? "daisy-chain" them via WiFi?

Saturday, May 27, 2006

Weekly Roundup

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

  • John Slack at Morningstar and Carmi Levy at Info-Tech Research Group Daily Herald long-awaited Motorola Q makes its debut (MOT, VZ, RIMM)
  • IDC analyst Kevin Burden via the San Francisco Chronicle about key challenger in smart-phone battle (MOT, VZ, PALM, RIMM)
  • Ross Rubin at NPD Group via USA TODAY about Apple , Nike exercise iPods to track workouts (AAPL, NKE)
  • Ovum analyst Roger Entner via USA TODAY about rural cellphone firms pinched
  • Carrie Pawsey at Ovum about Eircom accepts Aussie bid
  • Philip Marshall at Yankee Group via Techworld.com about most convergence projects will fail
  • Ted Schadler at Forrester Research and Yankee Group analyst Nitin Gupta via Sci-Tech Today about Nike, Apple Put Best Foot Forward (AAPL, NKE)

Friday, May 26, 2006

Carriers Restrict 'Unlimited' 3G

Light Reading reports that not all U.S. network operator's all-you-can-eat 3G data packages are just that - unlimited. According to the article, both Verizon Wireless (VZ) and Sprint Nextel (S) "acknowledge that they reserve the right to cut off customers who are unreasonable in their interpretation of unlimited."

Craig Mathias at the Farpoint Group said, "The raw capacity of an EVDO revA channel is 3.1 megabits per second. The problem is how many users can they keep happy on any given channel at any given time. If everyone is downloading music at the same time, there's going to be a problem. One of the reasons that EVDO is working so well now is that there aren't that many users."

The article states that "Verizon Wireless' unlimited data plan for 1XEVDO modem users is in fact extremely limited, although the terms don't list a specific limit of megabytes." This comes as little surprise and the article outlines some of things that Verizon deems unreasonable.

Sprint is less strict in its definition and enforcement of unreasonable unlimited access. In fact it recently "certified the use of wireless access routers from Junxion Inc. , Kyocera Corp. (KYO), and Linksys which allow multiple users to share a cellular connection over WiFi."

Nokia Bets on Open Source for Cell Phone Browser

TechNewsWorld reports that Nokia (NOK) "released its S60 mobile browser source code under the open source BSD license this week, claiming the move will promote handset platform consistency and avoid the fragmentation that has held back mobile browsing."

According to the article, "the source code for the S60 WebKit browser engine is being made available to open source developers on the Webkit Open Source Project site, and includes user interface (UI) reference implementation and other features for mobile performance enhancements, including a memory manager, mouse pointer, text search support, mobility support for dynamic HTML and its scripting language, and preservation of Web page layouts on mobile screens."

The "Nokia's S60 browser, to be included initially in ESeries and NSeries devices as well as the Nokia 3250 music smartphone, is based on WebCore and JavaScriptCore components of Apple's (Nasdaq: AAPL), and is being offered by Nokia through a partnership between the two companies."

Gartner analyst Phil Redman said, "There are so many varieties of operating systems and platforms to the same software segment." He pointed out that "none of the platforms, including Java or open source software, appear to be emerging as industry favorites, and this comes to the detriment of the whole industry."

Redman remarked, "Just like the PC world, it's not going to be big business unless [vendors] have one platform they can all run their applications on."

Forrester: TechPotential: Thinking About Benefits

Josh Bernoff at Forrester Research posts at the Devices, Media, And The Future Of Everything blog about new devices. He states those that fail are because "people aren't thinking carefully enough about the benefits of technology. Consumers adopt stuff because it helps them to do something useful, fun, or interesting. Sometimes it seems like technology companies, from Sony to Microsoft to startups, build products because they can."

Bernoff beleives it's all about timing. He states that "for new consumer technologies, the timing is right if the product can be immediately useful to people based on the technology they already have. iPod takes flight when people have a lot of MP3s already. Home networks build on broadband and multiple PCs."

Here are some rules for new technology and benefits that Forrester beleives hold true:

  • Benefits must be simple extensions of existing behaviors. The Apple (AAPL) iPod took off in 2002 because it extended established behaviors: listening to music on the go and collecting digital music on computers. Benefits vary widely — some products enhance entertainment, while others save time or money — but no matter the benefit, timing is crucial. For example, Research In Motion (RIMM) wisely delayed the launch of its BlackBerry product by a year to 1998, waiting for enough users to adopt the POP3-enabled email systems that its product needed to work properly.
  • Benefits must be in line with costs. Sales take off when costs match benefits and not before. When digital cameras cost an average of $590 in 1999, only 300,000 sold. By 2000, the average price had fallen to $354, and more than 4 million sold. Contrast this with WebTV, whose $21.95-per-month fee was out of sync with a benefit — Internet access on the TV — that was of little value to the consumers who could comprehend it. The cost-benefit equation varies based on the economic situation of the buyers. Career-oriented professionals are quite willing to pay $40 per month for broadband, while less-affluent consumers waited for $150 DVD players before surging into stores.
  • Benefits must be more visible than the technology. In 1998, home networks demanded the technical expertise of a network administrator. But when Windows XP shipped in 2001, the benefits of wireless routers became more visible than the technology, and the market grew. Marketing must help make benefits obvious. TiVo's initial marketing promised to help consumers "take back control of their TV," but few could translate this into a clear benefit at the time.

Mobile platforms: BlackBerry -- Mobile e-mail's 'gold standard'

SearchMobileComputing.com has started a weekly in-depth series that evaluates the pluses and minuses of the various mobile platforms on the market. This week it looks at the BlackBerry, which many say is "great for mobile e-mail, but its functionality as an application device needs some fine-tuning."

Currently, BlackBerry is riding high in the mobile platform space due to its mobile e-mail capabilities. Todd Kort at Gartner said, "It's been kind of the gold standard for mobile e-mail."

Jack Gold at J.Gold Associates opined that "when it comes to choosing mobile platforms and devices, an e-mail-centric business can benefit from BlackBerry, but if a company is looking for more than mobile e-mail, like application integration and other advanced functionality, then BlackBerry may not be the right choice."

According to the article, the BlackBerry's strengths are that "It's highly secure, it integrates well with other platforms, it works with several carriers, and it can be deployed globally. It is easy to manage, has a longer than usual battery life, and has a small form-factor with an easy-to-use keyboard."

Gartner's Kort said, "Everyone else falls down in at least one of those categories." Kort noted BlackBerry's speed as a mobile e-mail provider, and that "BlackBerry Enterprise Server, the back-end software that allows the handsets to send and receive e-mail, pushes the e-mail out to the device," while "Microsoft Mobile is a sort of "fast pull" e-mail system, which means that the device has to retrieve the e-mail instead of its being pushed to the device by the server."

Kort also pointed out that "One of the great things about BlackBerry is they have coverage in many major countries. You can go roaming anywhere on business and still access your corporate e-mail."

Dan Tayloy at the Mobile Enterprise Alliance agreed that "BlackBerry's global support is a strong selling point." He also noted that RIM and BlackBerry have "done an excellent job of making a device that works especially well in managing e-mail in a mobile environment. The company holds patents for the thumbwheel and QWERTY keyboard found on the company's devices, and anyone who's used a BlackBerry will agree that it's an excellent device with great performance and battery life."

When it comes to integration with business-critical applications, the BlackBerry struggles. Kort said, "They don't have a huge library of third-party software. Too many people buy a BlackBerry and never get any third-party software. In the minds of most people, it's positioned as an e-mail-only utility."

Avi Greengart at Current Analysis added that "the popularity of the BlackBerry has meant that there are some third-party programs written expressly for it, including Google Maps, but the total number of general productivity and consumer options is minuscule compared to the library of applications for the Palm OS, Microsoft and Symbian."

Taylor concurred saying, "RIM has a well-developed partner community of companies developing applications to run on BlackBerry, but the BlackBerry device cannot support 'thick' applications like those on Symbian and Windows Mobile smartphones."

According to Taylor, "large-footprint client applications are not suited for BlackBerry. With BlackBerry deployments, most of the application is sitting on a server, with a small, lightweight client application on the mobile device. A WIN32 application is too large -- BlackBerry requires something much smaller because much of the computing is done elsewhere."

Taylor said, "The BlackBerry is an upgraded pager that has remained focused on e-mail and long battery life. Adding applications means adding computing power and losing battery life. In order to keep the battery life, the device remains light on the computing power, which means that the network must always be there."

Taylor noted that "Many companies choose to mobilize workers in an occasionally connected model that relies on WLAN connectivity and cradle-based synchronization. Because RIM's sole sales channel for BlackBerry is the wireless operators, the company does not have a way to provide devices or solutions to pure enterprise mobile solutions that do not have an associated carrier service. This is the way companies like Symbol and Intermec remain strong players in enterprise WLAN, RFID, warehouse, shop floor, and logistics applications."

Greengart noted the BlackBerry scroll wheel and user interface (UI) "could be things of genius or great sources of frustration." He said, "The BlackBerry UI is geared toward quick access to e-mail. A scroll wheel is great for moving quickly through multiple messages but is possibly the worst control mechanism for initiating and ending phone calls. RIM has addressed this specific complaint on some recent models by adding dedicated 'Send' and 'End' keys, but the general tilt of the UI remains.

Greengart continued, "Without a touch-screen or five-way navigation pad, scrolling around the calendar, entering appointments, and navigating from application to application are compromised. For frequent users, RIM turns this into a strength by incorporating numerous keyboard/scroll wheel shortcuts. Similar to WordStar or WordPerfect back in the CP/M and DOS days, once you memorize these unnatural behaviors, you can be surprisingly productive -- far more so than if you have to pull everything down from a menu, like in Windows Mobile, or even the often elegant simplicity of the Palm OS layout."

Greengart also though the lack of open operating system could be a plus or a minus. He said, "For IT managers, it means the device can be locked down, without the threat of rogue programs, viruses or productivity-sapping MP3 players,."

Overall, Taylor said, "So the strong pieces of the BlackBerry model [are] excellent mobile e-mail and strong support from the carrier community, [but this] is also a liability as RIM tried to take the device into occasionally connected enterprise computing environments where WLAN connectivity dominates."

Gold added that "BlackBerry is a good choice for e-mail-centric users who also want some application capability. It's a good device for doing e-mail, but it would be a bad choice if what you're looking for is a way to deploy business-critical applications to mobile workers."

Telcos could lose out on mobile IM

ZDNet UK News writes that "instant messaging has a bright future on mobile phones, but handset vendors and existing IM giants have a big lead on the telcos. Analysts have warned that mobile operators may fail to capitalise on the full benefits of instant messaging (IM), which has the potential to overtake text messaging in popularity in the mobile space."

John Delaney at Ovum said, "The main replacement for SMS will be mobile IM." According to the article, Delaney cited a "faltering of growth" in the SMS market at the Global Messaging Congress in London, and that mobile IM "does it better, but if operators price it right it doesn’t do it any cheaper. IM will gradually take over from SMS in the next five years in Europe".

James Enck at Daiwa Securities believed "network operators could lose out in mobile IM because of their traditional approach to interoperability." He said, "If implemented in way that carriers typically do, which is to pretend that the rest of the world doesn’t exist, then it’ll be a big failure. Presence in IM is certainly very compelling to the end user but, if you think about the revenue model for cellular operators, a lot of their money is made from a lack of transparency."

Enck said, "SMS is the most profitable product in the history of telecoms" and pointed out that the main efforts towards interoperability were being made by "IM giants", and "independent players who have a solution on the software side."

The article cites recent "IM interoperability agreements between MSN and Yahoo (YHOO), and -- through Google’s (Goog) recent investment in AOL -- between Google Talk and AOL’s client." It aslo discusses efforts by handset manufacturers, such as Nokia (NOK), to work beyond the network operators.

Enck added, "It’s not just the major usual suspects [such as MSN], but community interests and social networks who’ve got a major lead on the carriers in this space."

Ovum's Delaney insisted that the success of mobile IM would require "the co-operation of the operators and [having] them involved in revenue participation," but would depend "on the operators deciding to embrace IM in a way that they haven't been thus far".

Thursday, May 25, 2006

3G Embedded Modems the Latest Craze in Wireless

TechNewsWorld writes about the trend towards embedding new notebooks with "an integrated adapter that supports a variety of transmission speeds."

Allen Nogee, at In-Stat/MDR said, "Laptop vendors are interested in embedded 3G modems because it offers them the potential to differentiate their products and cellular carriers think it may encourage a few more users to rely on their services."

At this time, succes is still uncertain because "Prices for these devices are high, and currently, the modems lock customers into specific carriers' services, an unappealing option. Since cellular services have not been as functional as alternatives, such as broadband and WiFi they have not garnered widespread acceptance."

The netwrok operators are hoping that as 3G data networks become more commonplace, things will change. Ken Dulaney at Gartner said, "The uptick with cellular data services has not been as significant as carriers had hoped, so they have been looking for different ways to market their services."

The article notes that "simpler management may be another benefit. Since employees are working with the same modem and same cellular carrier, corporate IT staff should have less trouble pinpointing problems." Lower costs will help as well as Jack Gold at J. Gold Associates pointed out, "3G modem cards have been expensive, ranging in price from US$200 to $300." This is for enterprises to justify when the cost of the notebook itself is around $1000.

The article lists some of the notebook manufacturers now bundling Verizon Wireless and or Cingular Wireless EVDO/ UMTS and/or HSDPA connectivity with their notebooks such as Lenovo, Hewlett-Packard's (HPQ) and Dell (DELL).

However being locked into a specific carrier is slowing down adoption. J. Gold Associates' Gold said, "Since most users plan to keep their laptops for two to three years, they would have to upgrade their computers a couple of times, so we are recommending that they avoid the internal cards at this time."

In-Stat/MDR's Nogee opined, "I don't think the embedded modems will lead to many additional sales for hardware vendors."

The $50+ data service costs aren't helping either. Gartner's Dulaney noted, "If you think about it, how often would most users work with a cellular data service: maybe an hour or two when they are sitting at an airport. There are faster, less expensive options available to them, such as WiFi and broadband, if they really need to access to data."

In-Stat/MDR's Nogee said, "Eventually, the embedded modems will become more common, but in the short term, there does not seem to be many compelling reasons to buy them."

On the cost issue, I noted a while back that a more cost-effective alternative for enterprises just might be to outfit employees, who occasionally travel, with EVDO-enabled handsets from Sprint (S) 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. Then workers have a phone plus can access data when the need arises...

Telephia Launches Audience Measurement Panel for Mobile TV

Telephia (pdf) announced the formation of a mobile television user panel to provide "detailed measurement of the attitudes and behaviors among the rapidly growing mobile TV audience." According to Telephia, "more than two million or 1.4 percent of the U.S. wireless user base subscribed to a mobile video plan during the first quarter of 2006. The average U.S. mobile TV subscriber spends $40 a month more on wireless services than non-TV subscribers."

Sid Gorham at Telephia said, "Mobile TV represents a huge revenue opportunity for companies in all parts of the communications and entertainment value chain. To execute successfully on this exciting opportunity, the industry needs detailed research that tracks the evolving behavior and preferences of the mobile TV user. Our clients are particularly interested in using audience measurement data to target advertising and interactive commerce."


Telephia pointed out that "the Hispanic and Black/African-American demographic groups made up 23 and 19 percent of the mobile TV subscriber base in the U.S. during Q1 2006, respectively. This is approximately double the share these groups represent of the broader mobile user population."


Gorham added, "The early popularity of mobile TV with these groups continues the demographic trend we see in the adoption of all advanced mobile data services. Mobile TV will allow marketers to reach this audience with a wide range of innovative advertising and commerce approaches."

Table 1: Demographics of Mobile TV Subscribers, Wireless and Non-Subscribers (U.S.)
Mobile TV Wireless Non-
Demographic Group Subscribers Subscribers Subscribers
----------------------------------------------------------------------
White 47% 72% 76%
Hispanic 23% 10% 8%
Black/African-American 19% 11% 8%
Asian or Pacific Islander 7% 2% 2%

Source: Telephia, Q1 2006

JupiterResearch: News Flash: Teens Have Angst

It must be all thing Korean this week at JupiterResearch. Yesterday, Julie Ask wrote about T-Mobile, Helio and Koreans in the U.S, and now David Card posts at the Jupiter Analyst Weblogs about a recent "South Korean study correlating heavy mobile phone usage with teen angst.

According to an article in the LA Times on the topic:

A survey of 575 South Korean high school students found that the top third of users — students who used their phones more than 90 times a day — frequently did so because they were unhappy or bored. They scored significantly higher on tests measuring depression and anxiety than students who used their phones a more sedate 70 times daily.
Card then points out "the study was overweighted toward boys, and the top third heavy users were communicating by cellphone on average about every 10 minutes during waking hours. The vast majority of their usage was in text messages." Card concludes:
Don't worry. American teens still talk to their friends face to face. While more (loser?) boys (14%) than girls (8%) text for flirting, my soon-to-be-published report on cool girls -- popular teens who are fashion tastemakers -- shows that they spend more time talking on their cellies (5 hours/week) than the average teen girl (2 hours/week).

Mobile Internet Domain Goes Online

TechNewsWorld writes that "the new Internet top level domain ".mobi" went online this week, promising mobile device users a better, more reliable Internet experience with sites ending with the domain designed specifically for the smaller screens and other restraints of handsets.:

Roger Entner at Ovum said, "Technical innovation is running away from .mobi. It's a great thing, it's just five years too late."

According to the article, ".mobi registration was opened this week, with a sunrise registration period wherein mobile industry association members and legitimate trademark holders can get a .mobi version of their Internet addresses. The domain name, which drew marquis registrants such as Google (GOOG), Yahoo (YHOO), and Microsoft (MSFT) this week, was created by dotMobi, a company formed by tech and wireless giants including Ericsson (ERICY), Microsoft, Samsung, T-Mobile Latest News about T-Mobile and Vodafone (VOD)."

Ovum's Entner thought the "new TLD may be useful for organizations that must tailor their sites to limited bandwidth and device capabilities. However, the trend is toward more bandwidth and more powerful mobile devices, which can deliver better mobile Internet browsing without a special TLD."

He added, "On an EV-DO or HSDPA (wireless) network and a powerful handset, that handset can render [Internet pages] independently."

Entner also believed that "the increasing amount of multimedia capabilities and content for handsets makes the wireless Web somewhat less appealing." He said, "Music and video certainly are more appealing than the static Web. With more powerful devices, you can do that."

Ira Brodsky at DataComm pointed out that "Mobile handset users who browse or otherwise use the Internet are only a fraction of all mobile device users, but their numbers are growing very rapidly."

He remarked that "web sites specially made for mobile users, particularly a large site containing lots of information, might be useful, but he added he did not see why another Internet domain would be required." He added, "I would think this is a situation where both sides are right."

Brodsky said "In the future, anybody ought to be able to jump on a Web site with a mobile phone," and highlighted "the challenge of making mobile content relevant to users, who when mobile, are typically busy with something else."

"People don't browse from a mobile phone, they're usually doing other things," he said.

Dell'Oro Group: Mobility Infrastructure Sales Drop to Lowest Level in Six Quarters

Tekrati Research News posts about a new report from Dell'Oro Group that finds the "total mobility infrastructure equipment market contracted 15 percent on a sequential basis in the first quarter of 2006, due mostly to seasonal weakness plus sluggish CDMA sales." The research indicated that "CDMA users have stalled purchases in anticipation of the new CDMA 1X-EV-DO Revision A upgrades."

Greg Collins at Dell'Oro Group said, "As service providers upgrade their GSM networks to WCDMA, Ericsson (ERICY) is clearly gaining ground in almost every region of the world. Ericsson's share in WCDMA equipment sales outside of Japan was greater in the first quarter than its share in GSM, which indicates that it is more than simply converting existing accounts."

Informa Telecoms & Media: World Cup to drive content boom

According to Informa Telecoms & Media, "next month's World Cup in Germany will generate around $300m in mobile TV & video revenues. The firm also said that "mobile games, music, TV & video will be worth a total of $25.9bn by 2011. Mobile TV & video will contribute $1.2bn to total global mobile entertainment revenues by year end."

Informa found that "music will drive the growth in mobile content services, which will be worth $7.4bn rising to $13.6bn by 2011. Mobile games will continue their growth despite fears the market was stagnating and Informa reckons the games market will generate $2.4bn this year, rising to $7.2bn in 2011."

Nick Lane at Informa Telecoms & Media said, "The release of today's forecasts reveals sustained growth of mobile music and mobile games and that the mobile entertainment market is in good health and expanding. Mobile music is driving the uptake of content revenues in 2006, and will continue to do so for several years."

Lane added, "And there is no better place on earth at the present for the mobile industry to showcase its progress and continued development than this summer when the world will turn its attention to the World Cup. With 3G handsets penetrating the mass market, and operators and content providers alike jumping on the football bandwagon, we forecast Mobile TV to generate $300m in revenue in the build up and duration of the World Cup."

Wednesday, May 24, 2006

NPD Group: Consumer Electronics Devices and Video Game Systems Are Becoming More Entrenched in Kids Lives

According to a new report from NPD Group, "on average, kids ages 4 to 14 are using consumer electronics (CE) devices six months earlier than they were in the 2005 study." The report found that "both CE devices and video game systems are becoming more entrenched in the lives of kids today, with nine of the 11 CE devices measured in the study being used more today than in the past."

NPD noted that "purchase intent for kids is highest for “hot ticket” items such as digital cameras, cell phones and portable video game systems, which are all leaders and/or big gainers in terms of kids’ personal ownership & usage." The study also found that "in terms of personal ownership, more than twice the amount of kids personally own portable digital music players and digital cameras this year versus 2005, while cell phone ownership is up by 50 percent."

Anita Frazier at NPD Group said, “Any business that markets or sells products to kids needs to be aware of the role of these CE devices in their lives. Today’s kids are digital natives whose activities are fundamentally different than previous generations, making the information within this report critical for more effective product development and marketing strategies.”

I wonder how much of an influence gadget geek dads, moms and older siblings play in all of this. In my household, if technology was left to my lovely wife then my kids would probably be playing with traditional toys and games with little gadget goodness in sight...

Qualcomm sues Nokia over patents in Britain

Reuters.com reports that Qualcomm (QCOM) has filed a suit against Nokia (NOK) "alleging the company had infringed on two Qualcomm patents in Britain." The new suit "extends a U.S. patent suit Qualcomm, a supplier of wireless chips and technology licenses, filed in November against Nokia, the world's biggest maker of cell phones." In addition, "Nokia is one of a group of companies that complained to European regulators about Qualcomm's competitive practices."

Albert Lin at American Technology Research believed "Qualcomm would likely use the latest lawsuit as a bargaining tool in its negotiations with Nokia." He said, "I think they're using something they didn't care so much in the past to increase pressure on Nokia to continue business relationships on similar terms to what they've enjoyed until now. Nokia has made these kind of moves too ... this is a normal back and forth that takes place."

According to the article, Qualcomm "was seeking an injunction against Nokia in Britain as well as damages over phones that have already been sold that use the patented technology. The dispute relates to GSM, GPRS and EDGE products."

Forrester: Apple-Nike -- A Lesson In Network Externalities

Ted Schadler at Forrester Research posts at the Devices, Media, And The Future Of Everything blog about the Nike+iPod news.

I already posted my thoughts on what this means from a runner's perspective, although I do stand corrected that the foot pod is part of the $29 Nike+iPod Sport Kit. If there is a way to use this with non-Nike running shoes then this is a great deal, barring that it actually works. Might be my next review project.

Schadler points out the following three things are cool about the announcement:

  1. The iPod is now an application platform for personal information. Okay, it could always store contacts and photos. But now it can log your miles, calories, and exercise time. This is just the latest in a long line of iPod as application platform," following in the footsteps of Duke University syllabus, radiologist medical image viewing, and museum tours.
  2. Apple (AAPL) locks up another huge brand. It began with BMW putting iPods in cars. Now Nike (NKE), the biggest brand in sports apparel is in Apple's marketing team. Talk about getting leverage out of your marketing dollar!
  3. More companies will now "get it" -- Apple's a good partner for commercial ventures. What's perfect about this deal is that any CMO can take the concept to their CEO and they'll get the benefit: Apple+BrandX = Good Stuff. The result will be more CMOs knocking on Apple's door.
Schadler then points out that:
All of these things showcase the power of network externalities -- unreasonable returns accruing to the company with the biggest reach and most partners. It's the rich get richer and the poor get poorer all over again. Now here's the punchline. Nextwork externalities in application and developer support used to be Microsoft's biggest asset -- but now Google and Apple have taken on the mantle of most connected or biggest center of the universe.

Berg Insight: Mobile Personal Navigation Systems Hit Stride in Late 2005

Courtesy of Tekrati Research News comes research from Berg Insight that predicts "shipments of handset based personal navigation solutions in Europe and the U.S. will reach 12 million units by 2009." The firm said, "2005 marked the first successful marriage of cellular and navigation technologies. The result: shipments of around 1 million on-board and off-board systems, mainly in the fourth quarter of 2005."

Berg Inisght predicts sales of handset based personal navigation solutions to grow by 86 percent year-on-year. Johan Fagerberg at Berg Insight said, "We are very optimistic about the market potential for mobile personal navigation services. There is already a wide range of navigation solutions available for both smartphones and Java-enabled handsets. Technologies like A-GPS, Indoor-GPS and Galileo will soon enable handset manufacturers to include satellite positioning in mass-market models for the European market. This will radically improve the market conditions for navigation and all other location-based services."

According to the firm, "the top three providers of handset based personal navigation solutions during 2005 were Jentro, Route66 and TomTom. Thanks to a successful final quarter on the German market, Jentro was able to snatch the top spot with its off-board solution for Java-handsets. Meanwhile Route66 and TomTom reinforced their market positions with on-board solutions for Symbian OS smartphones."

Analysys: Mobile market in Central and Eastern Europe to reach EUR58.4 billion in 2011

According to a new reprot from Analysys "the Central and Eastern European mobile market is forecast to grow by more than 10% per year to reach EUR58.4 billion in 2011. Rising mobile phone penetration and the increasing adoption of mobile broadband access services across the region will drive this growth."

Alex Zadvorny at Analsys said, "Low fixed line penetration in the region means that mobile networks provide a viable alternative to ADSL for many subscribers – in some cases a wireless solution is the only broadband access option. A number of operators in the Czech Republic, Poland, Slovakia and elsewhere have introduced broadband access services based on EDGE, W-CDMA, CDMA450 EV-DO and other technologies, and are increasingly taking market share away from ADSL providers."

Zadvorny added, "Mobile-only operators need to promote further fixed–mobile substitution, which will result in a stabilisation and growth of voice ARPU." Key findings from the report include:

  • Total mobile services revenue is forecast to grow at a compound average growth rate (CAGR) of 11.4% from EUR30.6 billion in 2005 to EUR58.4 billion in 2011 – chart available to journalists on request. This compares to CAGR of 5.0% over the same period for Western Europe.
  • Active mobile penetration in CEE was 66.0% at the end of 2005 (compared to 96.0% in Western Europe) and is forecast to grow to 96.2% by 2011
  • ARPU is expected to bottom out and recover, reaching EUR12.7 by 2011 (up from EUR11.3 in 2005). ARPU growth will be fuelled by spend on non-messaging data services (which will contribute EUR0.6 and EUR2.1 to the total ARPU in 2005 and 2011 respectively). Voice ARPU will stabilise and gradually recover.

Ovum: Digital Hollywood Spring: the rules are changing

Josette Bonte at Ovum writes about the recent Digital Hollywood Spring in Los Angeles, a major event for the North American content industry. Bonte states that "the explosion of interest in short-form filmed entertainment delivered over mobile phones will also have repercussions on the traditional entertainment industry modus operandi." She notes that:

There are positive signs that mobile TV is starting to take off in the US. Sprint, for example, bundles TV offerings with any basic voice and data package selected by its customers, and MobiTV currently boasts over one million subscribers to its service through its affiliated carriers, including Sprint PCS, Cingular and Orange.

However, one of the big issues facing the mobile TV industry is actually licensing the rights to existing content, and indeed mobile rights may have been granted inadvertently to cable or broadcast networks as part of muddled rights definitions. In addition, the revenue splits accruing to actors have not been specified by the guilds, so there is the risk of antagonising stars that are currently appearing in other movies produced by the same studio by depriving them of those revenues.
Bonte identifies the another key theme that emerged was "in the nascent industry of filmed entertainment over mobile." She said that "brand rules and is the chief incentive for operators to do business with the content aggregators. Sony, for example, has just introduced a service in Italy that allows mobile phone subscribers to view feature-length movies with full DVR controls (fast forward, pause and rewind) on their mobile screens." Bonte concludes that:
Mobile operators have some learning to do, and in fact look set to follow the more traditional footsteps of the CATV operators in terms of packaging. MobiTV's content line-up for example, is similar to basic cable TV. The company offers a bouquet of mobile'channels' featuring 15 or 30 second commercial 'spots' that users have to watch in order to access the content. It is possible that mobile operators will follow the CATV example by starting with acquired licensed content and moving eventually to original programming. However, it remains to be seen whether this traditional approach will be a successful formula in the new media environment.