The NY Times was reporting the other day that AT&T is selling the Motorola Z9 smartphone for $99 in the US with a two-year contract. This makes it a competitor of and in the same price range as the Palm Centro, also being sold for $99. The Centro has done very well for Palm, although I understand the margins are not great.
The iPhone is also potentially going to be subsidized by AT&T when the 3G version launches this summer.
Why is all this significant?
Smartphones comprise about 6% of the US market and perhaps a slightly larger share of the EU market. Price drives consumer adoption (hence the success of the Centro) and smartphones change user behavior.
Smartphone users access the mobile Internet and conduct mobile search three to four times as frequently as conventional cell phone users. This is even more pronounced at the highest frequency levels, with smartphone owners accessing the mobile Internet many more times and in higher numbers than conventional cellphone users:
Source: M:Metrics (2008)
Dan Miller and I met with Atlas (now a division of Microsoft) to get a look at the company's new "engagement ROI" model and related tools and tracking. It was very interesting and will be the subject of another post at some point somewhere . . .
But one of the several digressions we pursued was the issue of mobile handsets being used to track and extend traditional media. This is one of my favorite topics these days. And iMedia today has piece providing an overview of the area. It's primarily about 2D barcode technology.
However, SMS provides comparable functionality without the necessary downloads and/or "infrastructure." We would expect that eventually most traditional media (TV, print, outdoor, newspapers) will feature some direct response component using mobile devices -- call it "mobile response."
On the heels of its 3G rollout, the US division Deutsche Telekom of posted solid growth, reaching a 30 million subscriber milestone. According to the company's earnings release, "At the end of the quarter, T-Mobile USA had 30.8 million customers, adding 981,000 net new customers during the first quarter."
Here's a breakdown of the U.S. carrier subscriber numbers (not updated to reflect the new T-Mobile data):
Scott Jones, co-founder of ChaCha is reporting in a press release that ChaCha's new "mobile answers" service is "seeing usage rates that exceed 40 queries per month. Our most active users are tapping ChaCha multiple times per day resulting in over 150 questions per month."
Below is the paid/traditional DA call frequency data we collected in our earlier consumer DA survey.
Regarding mobile search frequency, we've observed anywhere from nine per month to nine per day in the case of one provider. Forty queries per month is consistent with average US desktop search frequency (per comScore), which is quite significant in terms of monetization potential.
The ChaCha figures also suggest what many people have been suggesting: that mobile query volume eventually has the capacity to overtake the desktop. The voice interface facilitates greater volume or frequency because it's intuitive and doesn't rely on keyboard entry.
Yesterday I wondered what was going to happen to Sprint, which had seen fortunes plummet in the past year and looked to be -- and may still be -- a takeover target. But today the WSJ is reporting that Sprint has become the majority investor in an important new joint venture to promote WiMax:
The venture includes wireless provider Sprint Nextel Corp. and Clearwire Corp., a start-up backed by cellphone pioneer Craig McCaw. Other big-name backers include cable-TV giants Comcast Corp. and Time Warner Cable Inc., Internet giant Google Inc. and chip maker Intel Corp. . . .
The new company secured $1.05 billion from Comcast, $1 billion from Intel, $500 million from Google, $550 million from Time Warner and $100 million from Bright House. Sprint will hold a majority stake in the new venture. But to appease concerns that Sprint might try to quash the new company's ability to compete with Sprint, Mr. Hesse agreed to give up day-to-day control to Clearwire's Mr. Wolff, who is slated to be CEO. Mr. McCaw is expected to be named chairman. The new company will take on Clearwire's name.
This certainly breathes impressive new life and potential momentum into Sprint and its WiMax initiative. It also strikes a blow against LTE (long-term evolution), the 4G (but much farther away) standard favored by Verizon and AT&T. Sprint's 3G network is already good and much faster and better than AT&T's 2.5G Edge Network.
There's no word yet on time frames for rolling out the network. Initially it will be about conventional Internet access but eventually would apply to mobile handsets and potentially a range of new UMPCs and other mobile devices.
Google gets a big boost here too. Here's more from the just-issued press release:
The agreements with the strategic investor group define significant new commercial relationships, including:
Here's Google's point of view on the deal:
[T]he network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.
. . . and my post from Search Engine Land.
Belgium-based yellow pages publisher Truvo has launched a downloadable mobile, local search client (for Beligians) on the mobilePeople "liquid platform." The relationship was pre-existing and a similar announcement had been made last year.
What's also interesting here, as the release points out, is that Truvo, the old World Directories, is adding third-party content to directory listings to broaden the utility and use cases for the application.
Europe is a somewhat different market than the U.S. but the mobile arena replicates the early debate and competition between directories and search engines: can they win with a destination strategy or do they need to do "mobile SEO" and syndicate content? They not mutually exclusive strategies of course.
The rich client strategy also begs the question about whether consumers will download applications onto mobile devices en masse. On so-called feature phones applications may be more viable long term because they have limited capacity to browse the "mobile Internet" compared with smartphones. However, mobilePeople can also do and does WAP sites and portals.
Recently mobilePeople agreed to be acquired by partner Local Matters.
Apple is going to start formally selling the iPhone in Italy through two carriers: Telecom Italia and Vodafone. It marks a strategy shift for Apple, which had previously pursued exclusive carrier deals with a corresponding demand for a piece of subscriber revenues. (Although European law requires Apple to sell the phone more broadly.)
This was a greedy and short-sighted strategy on Apple's part. Now the company appears to be recognizing that the task at hand is to get the device into as many hands as possible before more viable competitors emerge.
Even though demand for the iPhone has been very strong, wide availability through multiple carriers would boost sales considerably -- at least in the US. A 3G version is expected in June of this year.
I was speaking with mobile ad network AdMob yesterday and, among other things, we discussed how mobile offers an interesting bridge between the traditional media and digital worlds. Though not "mobile advertising," one of the really interesting potentially areas for mobile is as both a tracking mechanism for traditional media and also a way to make it more "dynamic."
Examples of this are NearbyNow and outdoor, RippleTV and SMS, Hearst magazines and ShopText, Google print and 2D barcodes. Mobile couponing also falls into this category to some degree. Then there are: NeoMedia, Mobot, GeoVector and SnapTell that offer "point and search" or "mobile visual search" using camera phones.
And I just became aware also of another company in this segment: Switzerland-based Kooaba.
While these technologies are in use today in Japan and to some degree in Europe they will also come to the U.S/ in a bigger way. It's inevitable. But they will be used, at least initially, not as stand-alone alternatives to keying in search queries but rather to make traditional media more "accountable" and "actionable" (e.g., learn more, buy now, etc.).
The Voice Internet has built a broad-based platform that has a range of intriguing capabilities -- so many that it may be confusing to people. Accordingly, the company is initially narrowing to focus on a single, if ambitious offering: 800-555-5555.
It aims to be a comprehensive starting point for all voice search. The first "product" rollout is "Just Say Legal," a PPCall ad network for attorneys. The idea here -- and this is a template for other content categories -- is that users call the "800 all fives" number and say the keyword "legal," which leads them into the directory.
The company can use this same approach to build out innumerable verticals. It can also connect to any third-party service, such as Goog411 or 800 Free 411. Accordingly it could become a kind of voice "meta search" or true "voice portal," but on a scale conceptually much larger than Tellme's 800-555-Tell service. The "800 all fives" brand and underlying technology offers that opportunity.
The challenge of generating revenue can't be underestimated but the first offering Just Say Legal benefits from a promotional and investor relationship with syndicated radio show host Bill Handel.
Google publicly said that Verizon was taking a position on the C-Block 700MHz spectrum's open access provisions that would effectively create a two-tiered system: one for existing customers and one for third-parties that wanted onto the system but were not Verizon subscribers.
As we've supported open standards for spectrum and wireless handsets, we're especially excited that Clearwire intends to build and maintain a network that will embrace important openness features. In particular, the network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.
Now Verizon responds to the Google accusations:
Verizon Wireless is pleased to have been a winner of spectrum in that auction, to support incredible new "4G" products and services.
Google's filing has no legal basis. It's really no surprise that despite not winning spectrum, they continue to try to change the rules and further their own business interests through the regulatory process. We expect to file at the Federal Communications Commission within the next several days on this matter.
Verizon Wireless - and all the other participants in the recent 700 MHz spectrum auction - understood the FCC's rules for using that spectrum in advance of the auction. Of course we'll abide by those rules. As we work to put the spectrum we won to good use, if Google or anybody else has evidence that we aren't playing by the rules, there are legitimate and expedited ways to address that.
AT&T specifically did not bid for the C-Block because the company didn't want to allow third parties to use the network. There's probably considerable resentment over at Verizon of Google. Verizon's post above suggests that it sees Google (as on the desktop) as a free rider benefiting from the company's infrastructure. Indeed, this is the "net neutrality" debate playing out again, in mobile.
Verizon is not a member of the Android alliance, while Sprint is, so is T-Mobile and AT&T says it may join .