Helio Flaming Out, Virgin Lowers Unlimited Rates

Helio, which had been in talks to merge with Virgin Mobile is reportedly closing its retail stores. It's not clear whether struggling Virgin (an MVNO) will wind up buying Helio but the carrier is apparently the latest MVNO to fail (or almost fail at this point). MVNOs have not fared well in the US.

Helio's motto "don't call it a phone" promised industry leading handsets and capabilities that focused on mobile data rather than voice, for a youth demographic. However, the iPhone and others have largely made Helio and its once innovative capabilities irrelevant.

Now the company faces either a fire sale or flaming out entirely.

Meanwhile, in a bid to get attention and boost its fortunes, Virgin just introduced a $79.99 "all you can eat" voice/data. It's not yet clear whether this will in fact put pressure on other US carriers, which offer unlimited plans for $99 and above. Cheaper and predictable consumer pricing is a key to increased adoption of mobile data and Internet.

The number $79.99 gets very close to being a "mainstream" figure that would drive widespread adoption of these unlimited plans.

Android Gets Pushed Back


The Wall Street Journal has a general discussion of delays and problems afflicting Google's open mobile platform Android. There are no revelations; everything is just taking longer:

T-Mobile USA expects to deliver an Android-powered phone in the fourth period. But that launch is taking up so much of Google's attention and resources that Sprint Nextel Corp., which had hoped to launch an Android phone this year, won't be able to, a person familiar with the matter said.

China Mobile, the largest wireless carrier in the world with nearly 400 million subscriber accounts, had planned to launch an Android phone in the third quarter but it has run into issues that will likely delay the launch until late this year or early 2009, a person familiar with the matter says.

Meanwhile, the Android software has yet to win broad support from large mobile-software developers. Some say it is difficult to develop programs while Google is making changes as it finishes its own software.

The challenge, pardon the pun, is apparently too many moving parts. Hardware makers seem more ready and able to deliver the phones to carriers than carriers are to the broader market. Meanwhile, Apple's 3G iPhone is poised to capture iPod-like status in the mobile market. (Things like Mercedes integration contribute to that.)

Google unveiled some early Android applications at a developer conference earlier this month.

Exploring Barriers to iPhone Adoption

Comparison Shopping engine PriceGrabber (now owned by Experian) has released some interesting data about iPhone interest and intent to purchase, gathered from an online survey and user-behavior on its site (U.S.). The survey was conducted from May 20 to June 3, 2008 (prior to the iPhone 3G announcement) and had a total of 3,066 respondents.

Interest in the iPhone has been consistently high, according to click thoughs on PriceGrabber:

CTRs to phones

The two principal barriers to iPhone adoption, as we've discussed many times here, are cost and AT&T carrier exclusivity in the U.S.:

Intent to purchase iPhone

According to PriceGrabber, among the 54% who "do not intend" to purchase an iPhone:

  • 41% said the primary reason was that the iPhone is too expensive
  • 22% said hat they didn’t want to switch to AT&T as their carrier

Again, this survey was done before the $199 3G iPhone was announced, so the "primary" objection has now presumably been removed. AT&T's exclusivity (or contract with an existing carrier) remains a barrier for many however. But AT&T's favorable ratings are at parity with Verizon among PriceGrabber users:

Carrier preferences

Among the major U.S. carriers, all added subscribers in Q1 except Sprint, which lost a million to others (Verizon, AT&T, which together added 2.8 million). The data in the table above indicate Sprint faces potential further losses as more subscribers move to the top two carriers. Sprint's "iPhone Killer" Instinct is unlikely to compete successfully against the iPhone, although it may help retain some subscribers.

Specifically regarding the 3G iPhone, here's what the PriceGrabber survey showed:

3G intention

Those same figures broken down somewhat:

Intent to purchase next gen iPhone

Among those considering a 3G iPhone, 34% said they wanted to wait and see. Again, this survey was before the formal announcement. Some number of those people may have been swayed. Perhaps more interesting is the 36% who say that they're inhibited by their contractual commitment to their existing carrier. That suggests this group is part of the "addressable market" for the iPhone in the future.

Considered in this context, a total of 74% of survey respondents indicated interest in the device, which is a striking figure.

Sprint: Right Now LBS = DMA

With all the promotion of LBS and related mobile targeting technologies there's a notion of the "right ad at the right time and the right place." Alternatively, there's the long-held LBS pitch about the beaming of the coupon "as you're walking by the store." While a viable opt-in version of that (e.g., Dizgo) may come into being, forget about it for now.

Let's focus on the precision targeting capabilities of the mobile handset with its potential demographic, contextual and location awareness. What's become clear to me in the last 6 months is that advertisers and agencies are much less sophisticated than the emerging targeting capabilities on the Internet. Mobile takes that to the next level and is thus even farther away from the current capacities of most agencies and advertisers.

That's why Sprint executive Lisa-Anne Uhrmacher told us this morning that she just wants to work with advertisers on DMA level targeting and get them used to thinking in those terms.

However, she did discuss a successful Sprint campaign with Mercedes dealers in Houston. She said that Sprint used its billing and other available demographic information to target selected customers with Mercedes ads. Subscribers had the option to watch a video, click to call or find a local dealer. The GPS and other location awareness capabilities kicked in to direct users to the nearest dealer after they had "opted-in" to learn more.

This sort of case is powerful as an example of what's possible in mobile. But advertisers have to see, understand and build campaigns that take advantage of all these capabilities -- and that will take some time.

They don't currently "get" local on the desktop, so it's a bit of stretch to expect them to be able to embrace it in mobile.

WiMax (or LTE) Done Right Could Replace Conventional ISPs

While the standards/platform debate continues in the U.S. (WiMax vs. LTE), The Netherlands is deploying a WiMax system in Amsterdam with a plan to roll it out over the entire country. (Sprint/Clearwire is slated to roll out WiMax to selected markets in the Northeast U.S. this fall.)

The cost of developing/deploying the technology can be borne by consumers who will pay a monthly fee to receive access. It doesn't need to be ad-supported; or it could be ad-supported as a partial subsidy (think Google as ISP). Mobile WiMax or LTE (at some future point) is superior to existing ISPs because it can work at home or on the go for a single subscription fee, assuming providers don't make it cost prohibitive.

That would make devices like the iPod Touch a viable mobile device for people who don't want to use AT&T. It would also enable a new generation of Kindle-like devices that could take advantage of the connectivity. Traditional ISPs like cable companies might suffer in such a situation; however Comcast and TimeWarner cable are Clearwire investors. So, presumably, they would try and piggyback in some fashion on WiMax to prevent subscriber churn.

T-Mobile Invests $6 Million in DeCarta for LBS Insurance

T-Mobile's venture arm has invested in geo-software provider DeCarta:

Location-based services are experiencing rapid adoption as consumers are using new applications that take advantage of location-enabled handsets. Location and mapping services have become a central ingredient in most mobile Internet platforms. deCarta's geospatial software platform gives mobile LBS application developers and mobile operators the ability to quickly build and deploy applications that integrate a wide variety of map and data sources to provide complex local search, navigation, mapping, social networking and spatial search functions.

deCarta's technology is ideal for the full continuum of mobile LBS solutions including off-board, server-based applications offered by mobile operators through to "connected navigation" -- the ability to integrate personal navigation devices and smartphones through real-time two-way mobile connectivity to a variety of dynamic data sources and local search services.

DeCarta clients have included, AT&T, Google,,, Qualcomm, Sprint Nextel, Sage-Quest, Verizon, Yahoo!, T-Mobile also recently invested in Whrrl.

Previously, personal navigation device maker Tom Tom acquired TeleAtlas, while Nokia acquired Navteq.

Carriers see mapping and related data services as strategic in the segment, so I would imagine there will be other such investments, leading ultimately to acquisitions.

iPhone 3G: Game Changer Part Deux

The first iPhone changed the mobile Internet and mobile hardware forever; the new 3G GPS $199 iPhone will cause more consumer gain, competitor pain. The combination of ingredients here makes this device all but unbeatable, especially given the third party applications that nobody else currently has -- although Blackberry and Android are working on it.

In the end, it may be the apps that really make the iPhone desirable to users even more than the device itself.

But for the AT&T exclusivity, the iPhone would be the iPod of phones (meaning a brand that overshadows others). Let's see what the response is from other carriers and handset makers. Suddenly the HTC and Samsung devices (Touch Diamond, Instinct) look relatively pale by comparison.

Here's the AT&T press release just out a few minutes ago.


UK carrier O2 makes the new iPhone "free" for "selected tariffs," meaning those in particular higher-cost plan categories.

Consolidation in the U.S. Carrier Market

Verizon Wireless is reportedly trying to buy Alltel for $27 billion. If it were to succeed in acquiring the debt-ridden company Verizon would become the U.S.'s largest carrier with more than 80 million subscribers, beating AT&T Wireless, currently the largest with about 71 million.

T-Mobile has explored a Sprint takeover and Virgin Mobile and Helio have discussed a merger. Anti-trust issues aside, which are not insignificant, there will only be room for about five major players in the U.S. market, which means more consolidation.

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How does that impact the mobile Internet, data plans and pricing and consumers? T-Mobile recently lowered the cost of adding family members to unlimited plans to $49. We'll see if the others do so.

Competition might increase but there's also a danger is that you'll have an airline-like cartel that will exacerbate the challenges and problems that the carriers present to the market currently. However, the iPhone, Android and other competitive pressures on carriers (i.e., the potential for free or low-cost nationwide WiFi) could mitigate the impact of consolidation.

We'll see.

Verizon Buys Alltel for $28 Billion

According to the release that just came out:

Verizon Wireless has entered into an agreement with Alltel Corporation and Atlantis Holdings LLC, an affiliate of private investment firm TPG Capital and GS Capital Partners, to acquire Alltel Corporation in a cash merger. Verizon Wireless is a joint venture of Verizon Communications and Vodafone.

Under the terms of the agreement, Verizon Wireless will acquire the equity of Alltel for approximately $5.9 billion. Based on Alltel’s projected net debt at closing of $22.2 billion, the aggregate value of the transaction is $28.1 billion.

The parties are targeting completion of the merger by the end of the year, subject to obtaining regulatory approvals.

Here's our earlier post on the acquisition.


Will Verizon, if the acquisition passes regulatory muster, maintain innovative programs like MyCircle and the Alltel Celltop? The widget-based Celltop is Verizon's potential doorway into longer term relevance to consumers by providing a customized experience and a true "platform" for mobile developers.

Alltel Celltop

iPhone Frenzy Redux

We'll start seeing the first iPhone applications early next week. If they are sufficiently diverse, useful and just plain old "cool" they could accelerate the device's momentum and the "must have" factor.

Over at Barrons, some iPhone sales forecasts and speculation:

Pacific Crest’s Andy Hargreaves today asserts that the numbers have gotten out of hand. He points out in a research report this morning that the carriers that have announced deals with Apple have total subscribers of 669 million people, an increase of 520 million in the last month. That’s impressive: global handset sales are expected to 1.27 billion this year, growing to 1.37 billion next year. But to state the obvious, not everyone wants a smartphone. “A substantial majority of these subscribers should not be considered potential iPhone purchasers,” he cautions. Hargreaves forecasts global smartphone sales at 61 million units this year, and 81.3 million next year; of that he sees Apple taking 17.2% share this year, and 18.8% next year. That comes to 10.5 million units in 2008, and 15.3 million in 2009.

Apps, as I suggested, could boost sales. Price will also be a factor. If the rumored subsidy shows up then sales will be further accelerated. AT&T exclusivity remains a problem and sales barrier in the US, though less so around the world.

The iPhone needs to remain strong to continue to pressure others in the market to improve usability. If it can then the rest of the market will follow (as it is with touch-screen devices) and all consumers will benefit.

Starbucks Tries Free Wi-Fi to Lure Customers

Starbucks is slumping and trying to use the lure of "free" Wi-Fi to get people in the door. You have to get a Starbucks coffee card online (i.e., sign up for the company's loyalty program) and use it once a month. Then you get two hours of free Wi-Fi:

When you register your Starbucks Card and use it at least once a month, you'll receive two consecutive hours a day of complimentary Wi-Fi, courtesy of AT&T.

This is probably a smart move for Starbucks and will gain the company some incremental card sign ups. Once they get people in the door, they'll probably buy some coffee, etc. However it won't cure what ails the company more generally, which is the decline of quality in the product and services.


As an aside: All the separate for-pay Wi-Fi systems out there in the U.S. are maddening and incoherent. Hopefully Sprint's WiMax will provide affordable, high-speed national coverage in the near term or someone will roll up the various independent Wi-Fi systems and create a national network with reliable coverage.

3G iPhone Frenzy Builds

Amid data showing a market share decline for the iPhone, the frenzy over next week's anticipated 3G iPhone announcement is building. The Cult of Mac blog is reporting a subsidized, thinner phone will be released. The subsidy rumor has been around for some time. But it's looking like the new phone will be cheaper -- especially if Apple is to reach its sales targets, which are now being questioned by financial analysts.

According to IDC Q1 estimates, cited by CNET:

RIM's market share went from 35.1 percent in the fourth quarter to 44.5 percent in the first, while Apple's dropped from 26.7 percent in the fourth quarter to 19.2 percent in the first. Palm's Centro lifted that company's market share to 13.4 percent in the first quarter, up from 7.9 percent in the fourth. Samsung and HTC ranked fourth and fifth in the U.S. market with 8.6 percent and 4.1 percent of the market, respectively.

The success of the Palm Centro is all about aggressive pricing. Yet even with the $200 potential subsidy, AT&T exclusivity in the U.S. is a substantial barrier to adoption for a majority of users -- especially as iPhone clones are offered by AT&T competitors.


Wired speculates about some of the potential new (social) features of the coming iPhone.

Go2 Adds T-Mobile Relationship

Go2 is one of the original local mobile search providers. The company has been going at it for more than a decade. Recently it merged with 80108 to form Go2 Media. The company has now signed T-Mobile and is planning some changes in the way it organizes and presents content in an effort to broaden its appeal. It's also representing itself as a mobile ad network to marketers.

The company has relationships, now, with all the major U.S. carriers and lots of valuable content. It, however, doesn't have the brand strength, despite its longevity in the segment, of some of the big Internet companies now moving into mobile in earnest.

Go2 is positioning itself as something of an "on deck" weapon for carriers seeking to counter the dumb pipe scenario.

Can Whrrl Fly on the iPhone?

Whrrl was in the news recently because of a $15 million round announced by corporate parent Pelago. Carrier T-Mobile was an investor. Recently Vodafone bought mobile social network and contacts manager Zyb. (This will be the outcome for a lucky few of these companies.)

Whrrl is coming out with an iPhone application (article) that may represent a big, early opportunity to gain traction among users. On the desktop there's really no compelling reason to use Whrrl (vs. Yelp or Facebook, etc.). However, in mobile the company says it has a highly differentiated product.

Whrrl tracks user location passively via GPS (there are privacy controls) and can make all sorts of content and entertainment recommendations based on simply following users and where they go. In this regard it's not unlike Grayboxx, which inferred recommendations from a range of data. This is more direct. It also allows users to locate one another, which is an alternative but related use case.

We spoke with CEO Jeff Holden last week. Holden used to be with Amazon and there's a direct analogy between Whrrl's strategy and technology and Amazon's recommendations (Medio CEO Brian Lent was also at Amazon).

This "recommendations engine" approach is not unique certainly -- Zync, among others, was developing something similar on the desktop before being acquired by uLocate. But Whrrl's strategy and data collection methodology is "game changing" according to Holden.

The challenge will be to gain users and show them that "game changing" capability. The mobile-social networking segment is already very "noisy" before there's been virtually any adoption. That's why the iPhone application is very important to Whrrl. The company also has plans to expand into Europe so there's a very large market the company is targeting. But as with any user-generated content system or social network there's a chicken and egg problem to overcome.

However the company is in the "mobile sweet spot" with "entertainment" and location-based services. And beyond the big desktop social networking brands' early leads in mobile, there's something of a "green field" out there.


Related: Whrrl launches on Blackberry.

Sprint States Losses, Hoping Bottom Has Been Reached

U.S. carrier Sprint reported that it lost just over 1 million wireless subscribers in Q1, most likely to rivals Verizon and AT&T, which earlier stated gains:

  • AT&T: 70 million
  • Verizon: 66 million
  • Sprint: 52.8 million
  • T-Mobile: 30 million

Sprint Q1 2008 numbers

Source: Sprint Nextel

Sprint has reportedly been eyed as a merger/takeover target by T-Mobile parent Deutsche Telekom. Sprint has also reportedly contemplated selling its Nextel unit.

Most recently Sprint announced that it was merging its WiMax business into Clearwire, with investments from Google and cable Cos, TimeWarner and Comcast. This is a big strategic bet that it can beat rivals AT&T and Verizon to the 4G punch in the U.S.

Sprint States Losses, Hoping Bottom Has Been Reached

U.S. carrier Sprint reported that it lost just over 1 million wireless subscribers in Q1, most likely to rivals Verizon and AT&T, which earlier stated gains:

  • AT&T: 70 million
  • Verizon: 66 million
  • Sprint: 52.8 million
  • T-Mobile: 30 million

Sprint Q1 2008 numbers

Source: Sprint Nextel

Sprint has reportedly been eyed as a merger/takeover target by T-Mobile parent Deutsche Telekom. Sprint has also reportedly contemplated selling its Nextel unit.

Most recently Sprint announced that it was merging its WiMax business into Clearwire, with investments from Google and cable Cos, TimeWarner and Comcast. This is a big strategic bet that it can beat rivals AT&T and Verizon to the 4G punch in the U.S.

T-Mobile Reports U.S. Revenues, Subscriber Growth

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):

There were no comments apparently by T-Mobile on the rumored interest in acquiring Sprint, which has some renewed vigor in the wake of yesterday's WiMax joint venture announcement.

iPhone Previews Future Sales Strategy

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.

Verizon Responds to Google Accusations

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.

To some degree Google's celebration of the new joint venture Clearwire (announced today) is also an indirect slap at Verizon and its allegedly non-neutral stance on open access:

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 .

Vodafone to Sell iPhone in 10 Global Markets

Vodafone is going to carry the iPhone into 10 of its markets worldwide: Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey.

This is good for Apple and ironic for Vodafone given that Vodafone Deutschland sued T-Mobile challenging its right to be the exclusive seller of the iPhone in Germany. Simultaneously Vodafone CEO Arun Sarin criticized the iPhone as a “pretty poor experience.”

The Vodafone CEO must have been feeling grumpy when he lost out to Telefonica’s 02 to be the exclusive UK distributor of the device and to T-Mobile in Germany. I would imagine he is probably happy now and has accordingly changed his mind about the device and its usability, with this new deal.


The 3G iPhone looks to be coming on June 15 or thereabouts.