Despite the quarterly rumors of a Verizon-iPhone and considerable demand from both Verizon and AT&T customers for such a pairing it may not happen anytime soon. AP reported discouraging comments made by Verizon CEO Ivan Seidenberg at a Goldman Sachs investor conference yesterday. Seidenberg said that "he hopes Apple Inc. will come around and allow Verizon to sell the phone for a new [4G] network it is building."
There are various reports of contract talks bogging down between Apple and Verizon. It's hard to know which side is to blame. My guess, however, is that Verizon is taking a hardline, feeling cocky about its Android success. Perhaps there's also the fear that Android would see a significant decline in sales at the nation's largest carrier should the iPhone arrive. No doubt Verizon wants to see a weaker iPhone, given how its presence and direct consumer relationships weakens the position of the carrier.
Android theoretically does the same thing, but Google has capitulated to carriers allowing them to install unwanted bloat- and crap-ware on the Android handsets. Because of its greater flexibility and "openness," Android is unlikely to be mortally wounded by a Verizon iPhone. But maybe that's what Verizon's fears.
Apple should respond by immediately opening the device up to Sprint and T-Mobile. Sprint would see a significant lift from such a move and T-Mobile would also see gains. Suddenly Verizon would be the only major without the iPhone and would be isolated accordingly. As a Sprint customer unwilling to switch to AT&T I'm hopeful that Verizon's hard line (in all probability) means earlier availability of a Sprint iPhone.
I can see the campaign now: the iPhone on America's best network. Verizon claims it, but Sprint's network is actually better. Regardless of how the Verizon-Apple negotiations shake out one thing is all but certain: we're finally going to see the iPhone become more widely available in the US. An announcement should come in Q4.
One might argue that with its huge marketing investment Verizon has the strongest brand of the four major US wireless carriers. Its network is widely regarded as the best, although that's not entirely empirically accurate. So Verizon has succeed in convincing people that there's something different and better about being a Verizon subscriber.
But with yesterday's app and developer related announcements the company is trying to offer its own unique VCast apps to further differentiate its handsets from those at other carriers and keep people from just shopping plan cost. It's offering location, analytics and carrier billing, among other things, to developers to encourage them to build specific apps for Verizon (RIM and soon Android) handsets.
Verizon has said for a long time that it's going to do this; so there are really no surprises here. In fact in my brief experience with the Droid Incredible I had a chance to review (and largely ignore) the Verizon "store within a store" in the Android market. Carrier app stores are the new "carrier deck."
If Verizon developers can build strong consumer apps and people buy them -- great. That remains to be seen. One interesting question/aside is whether apps built by Verizon developers will be monetized with Microsoft ads, per their wide-ranging deal.
I'm less bothered by carrier apps stores than the "bloatware" that they are increasingly installing on Android handsets to "reclaim" them from the "open" marketplace. For example, with Sprint I "get" Nascar, Sprint TV and other Sprint-branded things that I have absolutely no interest in.
I also get Sprint trying to send me to its portal when I open a new webkit browser. This is really irritating, even more than the branded apps and bloatware, because it's slightly harder to avoid.
As a final note, the widely circulated quote attributed to Verizon VP Greg Haller, coming out of the developer event yesterday, was the following:
VCAST Apps is not out to take over your phone, it’s not about preventing other app stores, or preventing apps to be downloaded through the browser or other means, this is about choice for our customers
That may be true in some respects, but it's ultimately about Verizon's bid to reassert itself between the handset OEM or OS and the user. That may in fact be possible on Android devices, but it won't be possible on the iPhone -- if it ever gets there.
VirginMobile (a subsidiary of Sprint in the US) announced on its Facebook page that it is getting its first Android phone, the Samsung Intercept (pictured at right). BoostMobile, another discount brand of Sprint offers the "second tier" Android Motorola i1.
Virgin hasn't announced pricing for the phone but corporate parent Sprint sells it for $349 or $99 with a two-year contract. Virgin is a pre-paid carrier and so has no contracts. Users must buy their phones outright.
I'm an Android EVO user and I pay Sprint $99 per month before taxes for its Everything plan, plus a mandatory $10 data supplement. I could also buy the phone's hotspot capability for an additional $29.99.
By contrast, the same "everything" plan on the Sprint 3G network through Virgin costs $40 less. BlackBerry devices require a $10 data supplement. I would assume that will equally apply to the Samsung Intercept.
Virgin won't let me bring my EVO to Virgin for obvious reasons. Virgin's $60 plan would be highly desirable but for the poor selection of handsets. The Intercept changes that or will change that for many people. And Sprint will be walking a bit of a tightrope accordingly.
As more Android phones become available for lower-cost prepaid carriers the interesting questions are: how will consumers respond and how will the carriers prevent defections to lower-cost plans?
Consumers are highly price sensitive in this arena. So better handsets with cheaper plans should have broad appeal.
I imagine a two-tiered system will quickly emerge, involving lower-end Android devices operating on older/slower networks. The fastest and most feature-packed phones will only be available to premium, post-paid subscribers. Lesser phones on slower networks will be available to pre-paid subscribers.
However for most people looking for a smartphone the idea of a $60 all-you-can eat plan with a generally good Android handset is pretty compelling.
Who's got a mobile "operating system"? Let's see: Apple, Google, Nokia, RIM, Palm, Microsoft, Samsung (not to mention Java and Brew). Now we discover that Facebook may be building a phone with a hardware OEM and the European carriers may be working on a joint, pan-carrier OS to combat Google and Apple.
First the EU carriers: they're reportedly considering a range of options that could include a common mobile OS. This comes from an article published friday:
French newspaper Le Figaro has reported that Stephane Richard (pictured), chief executive officer of France Telecom-Orange, has invited the heads of Deutsche Telekom, Telefonica and Vodafone to discuss the possible creation of a common platform for mobile devices. The talks, which are scheduled to take place 8 October in Paris, are motivated by a view that Apple’s iOS and Google’s Android operating systems have become a “Trojan horse” for these companies to establish their own relationships with mobile customers, reducing the significance of the operators in the value chain.
Due to the early state of the talks, it has not been decided what form the alliance will take, with options mooted including the formation of a joint venture or creation of a common apps development unit....
The article speculates that the joint venture could involve one or more of the following:
The carriers will probably recognize that creation of a new OS is not likely to succeed. They're not software companies and will have difficulty competing accordingly. A custom version of Android and/or a proprietary middleware experience is more likely. Regardless they're not going to be able to "go back" to the days when they owned the customer entirely. It's pure nostalgia to think so.
The bureaucracy and cultural challenges within these large companies combine to suggest the risk of total failure for such an initiative is quite high. A case-in-point by analogy: at one point the French wanted to create a pan-EU search engine to combat Google, which completely failed.
A parallel development reported by TechCrunch is the rumor that Facebook is working with an OEM on developing a phone, similarly wary of Apple and Google's rising control of the smartphone market. However there have been many "social networking" phones that have featured Facebook to date, all largely unsuccessful. The most visible was Microsoft's ill-fated Kin.
Motorola's MotoBLUR software focuses heavily on Facebook but it hasn't really served to differentiate the phones that carry it. And INQ Mobile (owned by the Hong Kong-based Hutchison Whampoa) has put out a couple of "social mobiles," handsets that prominently feature Facebook: the INQ Mini 3G and the INQ Chat 3G. I don't have any sales data but they appear to be decent devices.
If the "Facebook phone" rumor is true it almost certainly must be directed toward younger text-heavy users and not the higher end of the market. To succeed as a smartphone there would need to be more to the software than simply Facebook. Facebook has more than 500 million users around the world, but those users don't simply "do" Facebook. (Update: the OS is potentially Android, which if true addresses some of my critiques.)
Perhaps Facebook thinks it can revive "Platform" and compete there with apps and a developer ecosystem. However, it would be much smarter to go after the middle or lower-end of the market. For these and other reasons, I'm skeptical that the Facebook phone initiatve is quite as ambitious as the rumor argues, but we'll see.
New operating systems are unlikely to change the market substantially. Notwithstanding tools that allow developers to "write once" for multiple platforms (e.g, Rhomobile, Appcelerator) there's room for only about five smartphone operating systems to survive. That's partly why I think the Europeans will build whatever they decide to build on top of existing platforms (Android, Symbian/MeeGo) rather than create something new -- and probably mediocre -- from the ground up.
See related: How Long Before FB Is a Mobile Ad Network?
Piper Jaffray recently conducted a small survey of mobile phone users (n=258) in Minneapolis, Minnesota to determine the impact of "antennagate" on iPhone 4 sales. Almost 70% of survey respondents had in fact heard about the problems with the iPhone 4's antenna and 20% of that group said that the issue had "impacted [their] purchase decision."
Given the small sample it's hard to extrapolate from this data reliably. But I know from experience that some people inclined to get the iPhone 4 did "think twice" or have yet to get the device. But far more don't consider it a "dealbreaker."
In addition: 40% of respondents had considered buying an iPhone 4, 29% considered buying an Android phone. Among those who were aware of the iPhone antenna problems cited other issues (cost, carrier) as more significant barriers.
Source: Piper Jaffray (via AppleInsider)
The antennagate issue definitely gave Apple a black eye and may have dampened sales -- though probably not by 20% -- but assuming the company addresses the antenna issues in iPhone 5 it will overcome the episode.
My nearly 11 year old daughter wants a phone. Beyond the question of whether or not that makes good parenting sense, it has opened a doorway into the new complexity of the mobile market in the US. My anecdotal case is a window into the broader challenges and potential confusion consumers face around devices, carriers and pricing. (Less of this exists in Europe because of unlocked phones, though pricing is always an issue for consumers.)
My wife and I have two unlimited "Everything" plans from Sprint. I also have an EVO that requires a mandatory $10 supplemental payment for the 4G network, which doesn't even exist in my area. And I was also paying $30 per month for the mobile hotspot option, which I mostly use in hotels. My bill last month was $272. It's just too much -- especially in the larger context of all the access charges we pay and the fact that we're now going to get my daughter a phone.
The problem is you can't "add a line" with Sprint Everything plans. That started me looking around again at competitive plans and pricing.
Boost Mobile offers the cheapest "all-in" plan in the US market at $50. The problem is you don't get a good handset selection. VirginMobile has a $60 all-in unlimited plan; same issue there. Yet both of those are at least $40 cheaper per month than my plan -- and both run on the same Sprint network.
Sprint won't let me take my EVO to either of these value carriers however; if it did the down-market exodus would begin.
I ruled out AT&T -- if I was going to do it I would have already for the iPhone -- and Verizon because of tiered pricing. T-Mobile has a better handset selection (than Boost, Virgin) and better pricing than Sprint but its network is GSM and not CDMA. That means new phones for everyone.
I'm thinking about putting all of us on a T-Mobile unlimited Talk & Text plan for $110 per month. That would be a savings of about $160 per month (including my daughter) over what we pay today for just myself and my wife (there's no mobile Web however). Then I thought: I could get mobile Internet with the VirginMobile $40 MiFi unlimited plan (on the Sprint network) and just carry that device with me and my iPad or iPod Touch or use it for WiFi access on whatever phone I wind up getting.
If I didn't care about getting value for my money I wouldn't have entered this hall of mirrors. But since I do I'm trying to figure out which combination of plans and devices will provide the services I need at the lowest cost.
With the arrival of tablets and personal hotspots you'll see more consumers engaged in this kind of crazy making exercise. Tiered pricing also makes this more complicated for everyone, as people try and guess what their costs will be.
My suspicion is that you'll see consumers increasingly doing a version of this dance: trying to mix services and devices to circumvent carrier pricing and restrictions. Some may give up landlines to offset increased mobile costs. I'm thinking about doing that at home and just using Google Voice as our "landline" and "spam-catcher." (In the US just over 40% of households either have no landline or use their mobile phones as their primary lines.)
What a mess; I wish we consumers could simply get the phones we wanted and then shop carriers (who would be forced to compete on price more directly). But that's very unlikely to happen in the US market at any time in the foreseeable future.
One of the big stories this week was the announcement/launch of VirginMobile's $40 pay-as-you-go, unlimited mobile broadband plan. Sprint owns Virgin (in the US) so it's the same 3G/4G network being powered by Clearwire.
Hands down this is the best of the mobile broadband plans, because it's the cheapest (other than tethering) and most flexible. Depending on how popular this becomes other carriers in the US will be forced to answer.
The 4G network behind the offering, however, is not that impressive to me.
I'm a Sprint customer and I've now experienced it in several markets with very mixed results. It has not been noticeably faster than 3G; in fact I haven't really noticed it at all. This past two days I was in Dallas at a Directory Assistance conference and I kept getting notifications that Sprint's 4G network was available. Yet it kept playing peek-a-boo and I never saw the benefit of increased speeds. It never "held."
I had a similar experience earlier this summer in Seattle.
Sprint has touted its 4G network as the first in the US (it is, though not technically 4G) and as a major competitive advantage (it's not). Soon Verizon will have an LTE network and AT&T will follow at some point. Sprint has not been able to translate its 4G network claims into new subscribers so far. What has helped Sprint more is a better selection of mostly Android handsets.
T-Mobile, as I'm sure you've read, is seeking to invest in Clearwire to get access to the network. (Sprint owns 54% and is divided about whether to allow a direct competitor to gain access.) Clearwire needs the money, however, to keep building out its network. According to the Wall Street Journal:
Sprint's board of directors is debating whether to let rival cellphone operator T-Mobile USA invest in Clearwire, three people familiar with the situation said . . . Sprint has the lead now with the country's only 4G network via Clearwire, which can offer speedy Web surfing and stream videos to smartphones and other devices. But it will face competition later this year from industry leader Verizon Wireless and next year fromInc.
To stay ahead, Clearwire needs billions of dollars in funding, which would enable it to expand from its current base of 49 cities to the country as a whole. The company must also decide whether to stick with its current technology, or switch to a standard that has been adopted by Verizon and AT&T
Notwithstanding the company's ambivalence, Sprint can't simply block T-Mobile because of board voting rules in this specific case apparently. Sprint should just allow T-Mobile to invest to speed the build out of the network. Sprint is not going to gain new subscribers by trumpeting it's network speed and if it delays or hesitates Verizon will quickly pass it and Sprint's network claims will be meaningless. Sprint needs to compete on handset selection, service and pricing instead.
Notwithstanding the company's ambivalence, Sprint can't simply block T-Mobile because of board voting rules in this specific case apparently. Sprint should just allow T-Mobile to invest to speed the build out of the network. Sprint is not going to gain new subscribers by trumpeting it's network speed and if it delays or hesitates Verizon will quickly pass it and Sprint's network claims will be meaningless.
Sprint needs to compete on handset selection, service and pricing instead.
If there was any question that Google Voice/GMail calling was going to be popular, let's put that to rest. Google announced earlier today that in the 24 hours since Google's new free-calls-to-phones service went live there were over a million calls.
I don't yet have access so I can't give you my personal impressions and experience. Reviews have been generally positive but mixed in terms of call quality. Here are two . . .
How was call quality? Calls were about on par with what you expect from VoIP. They were somewhat muffled and "digital" sounding. Several of the people with whom I spoke noted that I sounded "echo-y." In other words, we're not talking pin-drop quality here, but an average VoIP client. I tested several Skype-to-Skype calls for comparison, and Skype performed at about the same level.
We were pleased with the call quality, overall, which we tested with other U.S. callers using landlines and mobile phones. Calls were loud and mostly clear, however, there were a few moments of garbled voices on multiple calls. There was also sometimes a noticeably persistent high buzz, but it did not distract from the meat of the call. The experience was about on par for VoIP calls, which are known to break up due to variable conditions with the callers' hardware, strength of Internet connection, and the telecommunications channels that process the voice data.
Assuming that, as these reviews say, the call quality is comparable to other VoIP offerings it becomes a viable telephony solution that for many could replace landlines, whether business or personal. It's hard to argue with free.
We've been waiting for Google to implement its Gizmo5 acquistion and turn Google Voice into a true VoIP solution and Skype competitor. However CNET is reporting that Google may be about to offer direct calls (to phones) through GMail:
Google could be ready to turn Gmail into a communications hub by adding the ability to make phone calls from the Google Chat interface.
CNET has learned that Google is testing a Web-based service within Gmail that will allow users to place phone calls from their in-boxes. It's launched from the Google Chat window on the lower left-hand side of a Gmail page and allows users to place and receive calls from within their contacts through a user interface that strongly resembles the one used in Google Voice.
At some point (apparently pretty soon), whether through GMail or Google Voice, Google will make it possible to place and receive calls directly rather than having to rely on an underlying phone number (landline or wireless). That's the moment when Google becomes a carrier/telco. Right now Google Voice is effectively a call-connection service.
The image above suggests the system might allow free calls to landlines and mobile phones. Quality is always an issue with VoIP but I would imagine this would become an immediately popular service.
It would also allow all kinds of connected non-phone devices to become phones, in the way that Skype does too.
Update: Google announced this feature this morning:
Calls to the U.S. and Canada will be free for at least the rest of the year and calls to other countries will be billed at our very low rates. We worked hard to make these rates really cheap (see comparison table) with calls to the U.K., France, Germany, China, Japan—and many more countries—for as little as $0.02 per minute.
Dialing a phone number works just like a normal phone. Just click “Call phone” at the top of your chat list and dial a number or enter a contact’s name.
Google will also be promoting Google Voice calls via UK-style red telephone kioks at various sites around the country.
The answer is yes and no. First Android is available across major carriers and so has diverisified distribution. But there is sufficient empricial reason to believe that some number of would-be Droid buyers would opt for a Verizon iPhone instead.
As many have already reported, a July survey of 1,000 US mobile users from Morpace found that 51% of current Verizon customers would consider buying an iPhone if/when it comes to Verizon (now speculated to be January, 2011).
That's a very significant number considering Verizon has more than 80 million subscribers in the US. The survey also reports that some number of AT&T subscribers would switch to Verizon if the iPhone were available there.
Previous ChangeWave data showed a somewhat lower percentage of Verizon mobile subscribers with pent-up demand for the iPhone:
On the subject of current Android users that are interested in potentially switching to the iPhone, Nielsen previously found that about 30% of Android users were interested in an alternative handset (either iPhone or another type):
Surveys must always be read cautiously; they indicate sentiment and attitudes but do not always correctly predict behavior. Yet regardless of how many actual would-be iPhone buyers exist among current Droid or general Verizon subscribers, merely the iPhone's presence at Verizon would alter the dynamics of the market:
The value of the latter should not be underestimated either. Before Verizon there was no "Droid" and Verizon has spent millions promoting the platform as a worthy alternative to AT&T and the iPhone. We'll see if the Verizon iPhone actually happens in January. If it does I suspect it would be a "material" development for the US market. Given Android's momentum (see below), Apple should be interested in getting the iPhone to as many carriers as possible:
As a final note, one interesting question to ask of Android buyers is: what phone are you not buying because you bought an Android handset (iPhone, RIM, WinMo)? In my case it's the iPhone.
The mobile carrier's "worst fear" was that it would one day be reduced to the same "dumb pipe" status that characterizes its fixed-line kin. But the situation has passed beyond dumb pipe; the carrier is rapidly becoming an obstacle to be avoided or circumvented.
As carriers in the US (e.g., AT&T) move to usage-based pricing, introducing more complexity and uncertainty into the system, and seek in other ways to "nickle and dime" consumers that will become even more true.
Skype, Vonage, Truphone, Google Voice (though not quite yet) and other VoIP providers hint at a future where carrier voice plans are unnecessary and calls can be made with only a data connection -- the quality isn't quite "there" yet however. In addition, personal hotspots like the one just released by Clear (pictured), the iSpot, or the Clear home + mobile plans similarly promise simplified, ubiquitous connectivity for mutiple devices for less.
Hypothetically if you lived in a Clear city, such as Seattle, you could pay a single price ($55) for Internet access, as well as access for a range of mobile devices, at home and on the go. That's significantly cheaper than paying for unlimited carrier voice and data, as well as an ISP at home and potentially a dongle for $30 per month for a laptop. Those charges, not counting family plans, could easily run $200 or more on a monthly basis.
We're also seeing data indicating that argues mobile users are increasingly tapping WiFi networks for faster speeds or to avoid using carrier networks for other reasons. For example, Kineto Wireless recently published data (n=330 US smartphone users) indicating that people were looking to WiFi for better speeds and to save money:
What these and other data indicate is that smartphone and mobile device users are seeking out WiFi networks for improved performance and/or to avoid using minutes or incurring data charges. There may come a time in the next five years when people can reduce their overall costs and have broad connectivity for their devices at home and on the go -- all without a traditional mobile carrier relationship.
See also: Vonage App Calls Facebook Friends Free
There are a number of giant, global mobile advertising companies or "platforms" emerging. Beyond the big brands, Google, Yahoo, Microsoft, there are Velti, inMobi and Amobee. Of the latter three, Velti and Amobee are more similarly situated, while inMobi is an ad network doing ad sales directly.
Today Amobee announced that "it has been appointed by Gruner + Jahr Electronic Media Sales (G+J EMS) to represent 75% of premium mobile content in Germany. Amobee will become the exclusive partner in mobile advertising, serving billions of ads impressions per month."
Amobee explains that Germany is the "largest single-country mobile ad marketplace" in Europe. The company also claims that it can, through its carrier partners and publishers, "reach around 1 in 7 mobile users on the planet every day."
Previously Amobee acquired mobile ad agencey RingRing Media. The company says its ultimate goal is to create "the industry’s largest mobile advertising exchange dedicated to connecting publishers, advertising agencies and brands to premium inventory in real-time, on a global scale."
There are many other mobile ad "exchanges" and ad mediators in the market, including AdMarvel, Smaato, Nexage, Mobclix and others. Over the next year the mobile ad market is ripe for M&A as major players try and build more global scale. US-based mobile ad network Millennial Media has indicated it may try and go public.
As I indicated earlier the Nielsen Company estimates that about 25% of the US mobile phone population now consists of smartphones. The company further expects smartphones to cross the 50% threshold by Q3 next year.
Today I was having a conversation with Placecast's Blair Swedeen about the rise of smartphones and he made a simple but profound point that I had not been focused on: the "gating" effect of data plans on further smartphone growth. Even as more people contemplate buying ever-more-powerful $200 smartphones (subsidized) they may be held back by costly and ambiguous data plans.
There are two competing trends in the US mobile handset market: 1) a movement toward smartphones and their associated dataplans and 2) a simultaneous movement by the budget conscious toward lower-cost prepaid plans.
Simultaneously Verizon and AT&T are moving toward tiered, usage-based pricing to generate more revenues from heavy users and help moderate the strain on their networks by discouraging aggressive data usage. The introduction of usage based pricing adds both uncertainty and complexity to the market and is contrary to consumer interests, though the carriers argue that most people will save money under the new pricing schemes.
T-Mobile and Sprint have so far not indicated they will follow the pricing changes of the larger carriers.
According to a consumer survey (n=2,000), conducted at the end of 2009 and published in March of this year, by the New Millennium Research Council "prepaid cell phone subscribers accounted for nearly two thirds (65 percent) of the 4.2 million net subscribers added by U.S. phone carriers in the fourth quarter of 2009."
In other words, pre-paid growth (17%) is outpacing growth of contract-based customers (3%). Additional verbatim findings from the survey include the following:
The carriers are counting on data-revenue growth to help sustain them as voice revenues decline over time. However the introduction of tiered pricing and the ambivalence about data-network usage that these plans manifest may further slow or limit growth of smartphone and related dataplan adoption.
There are some smartphones available to prepaid customers and eventually more such handsets will migrate "down market." However the newest and "sexiest" handsets will always be used as an incentive to get customers to commit to contracts. Nonetheless it's very possible that more complex pricing and uncertainty over mobile data costs (from usage-based pricing) will dissuade a meaningful number of people from getting the newest sexy smartphone.
Consequently the 50% penetration figure may turn out not to be just another milestone in the inexorable march of smartphones toward market domination. It may turn out to be something of a celiing on consumer-smartphone adoption instead.
Sprint in the US is introducing its second "4G" handset, the Samsung Epic. It's an Android device, of course, with full slide-out keyboard and a built-in Swype keypad. It also has an HD camcorder.
The phone is reportedly a version of the Samsung Galaxy handset.
Simultaneously Sprint announced the expansion of its 4G network to more secondary markets, including several in California, Florida, Delaware and Michigan. There are now almost 50 metro markets covered by the Sprint/Clear network, though some of the major markets are still missing (i.e., San Francisco, New York, Boston, LA).
I've now used the Sprint 4G network several times in the Bay Area, Seattle and Chicago. In my experience on my Android EVO the speed difference from 3G is barely noticeable and the battery drain effect is, by contrast, quite dramatic.
The promise of mobile payments and Near Field Communications has been lurking and inchoate in the US for years. There's much greater deployment in Europe and Asia than in the US. However Bloomberg reports that mobile carriers AT&T and Verizon are "conspiring" with several others -- Discovery would be the payment processor -- to outflank Visa and MasterCard and rule the now-inevitable world of mobile payments:
AT&T Inc. and Verizon Wireless, the biggest U.S. mobile carriers, are planning a venture to displace credit and debit cards with smartphones, posing a new threat to Visa Inc. and MasterCard Inc., three people with direct knowledge of the plan said.
The partnership, which also includes Deutsche Telekom AG unit T-Mobile USA, may work with Discover Financial Services and Barclays Plc to test a system at stores in Atlanta and three other U.S. cities that would let a consumer pay with the contactless wave of a smartphone, the people said. The carriers have been searching for a chief executive officer.
The trial would be the carriers’ biggest effort to spur mobile payments in the U.S. and supplant more than 1 billion plastic cards in American wallets. Smartphones have encroached on tasks ranging from Web browsing to street navigation and now may help the phone companies compete with San Francisco-based Visa and MasterCard, the world’s biggest payments networks.
One of the key issues in the hypothetical adoption of such carrier-based payment systems is: whom do consumers trust more: their credit card companies or mobile phone carriers? It's a bit of a tossup. Neither are well-loved by consumers. Yet genuine mobile payments competition from mobile carriers might be a great thing and create a better environment for consumers where carriers and credit card issuers boost rewards and loyalty programs as incentives to use their systems.
It very much remains to be seen whether this still nascent carrier effort can get off the ground. While consumers are used to seeing large credit card bills it's not clear they would be happy with massive bills from their wireless carriers. However this is one area where carriers can re-insert themselves into the consumer experience, as they're increasingly marginalized otherwise by the proliferation of smartphones.
Sprint enjoyed its first subscriber gains (as opposed to expected losses) in roughly three years. The company announced Q2 revenues of $8.0 billion. According the press release, Sprint gained 111,000 net subscribers driven largely by Android and the EVO in particular. There were also improved churn and increased customer satisfaction:
Sprint gained a total of approximately 111,000 net subscribers in the quarter. Demand for smartphones like HTC EVO(TM) 4G and BlackBerry(R) Curve(TM) - combined with Sprint's best ever postpaid churn of 1.85 percent - led to positive net postpaid subscriber growth of 136,000 on the CDMA network and 285,000 for the Sprint brand, and best ever year-over-year quarterly net postpaid subscriber loss improvement of 763,000. The company achieved its best year-over-year quarterly improvement in postpaid gross subscriber additions in more than five years.
Sprint also said that its WiMax 4G network is available "in 43 markets serving approximately 51 million people."
The company now has 48.2 million customers:
This includes 33.2 million postpaid subscribers (26.2 million via the Sprint brand on CDMA, 6.4 million on iDEN, and 517,000 Power Source users who utilize both networks), 11.2 million prepaid subscribers (5.2 million on iDEN and6.0 million onCDMA) and approximately 3.8 million wholesale and affiliate subscribers, all of whom utilize our CDMA network.
Sprint's 4G network will not remain a competitive differentiator or marketing vehicle for long, as T-Mobile, Verizon and AT&T all roll out faster networks. With Sprint's position seemingly improving, however, T-Mobile appears to be the clearly weaker of the the two weaker carriers. Yet that could change quickly.
T-Mobile is rumored to be the hypothetical recipient of the iPhone in Q3 (we'll see). If that were in fact the case in fact it would be a huge boost for the number four US carrier.
The allure of the iPhone at AT&T peaked and this past quarter. Verizon signed up more subscribers than its main rival: 665K vs. 496K.
And while talk of a Verizon iPhone continues it appears somewhat less likely than it did just a short time ago. In addition the carrier's Droid campaign is all about bashing the iPhone ("Droid Does" [i.e., the iPhone doesn't]).
This past weekend I was at a mall in Los Angeles and went in to the Verizon store to observe and play with the Droid X (impressive large screen but generally felt "insubstantial"). Verizon is very aggressively associating its brand with Droid handsets and has eclipsed T-mobile USA, which once positioned itself as the Android carrier. Given that history it's ironic that T-Mobile may become the first carrier beyond AT&T to get the iPhone.
Verizon's focus on and marketing on behalf of Android is bad for RIM/BlackBerry and other handset OEMs. RIM in particular will suffer from the "second class status" it now occupies in the carrier's positioning. While RIM doesn't rely on one carrier -- it's broadly available from all the major carriers -- Verizon is the largest and most important. Bing, which struck a major "default search" deal with Verizon (except on Droids), also suffers by extension.
As an aside, as RIM rolls out BlackBerry OS 6 and more iPhone and Android-like touchscreen handsets (I assume), it risks straying from its "franchise" -- the text-friendly keypad. This is the dilemma for the Waterloo, Ontario-based company.
I also observed the lonely Palm display in the Verizon store. Unless or until HP adds more handsets or revamps the software (which they've said they're going to do) Palm remains dormant.
Making the iPhone available to Verizon is the shrewdest thing that Apple could do to blunt Android's rise and competitive challenge. But because of the investment that Verizon has made in "Droid" (and being anti-Apple) if Apple were to make the iPhone available it might be difficult for the carrier to accept the offer.
Related: BlackBerry’s Era May Be Ending
Here are the "big four" in the US:
Total: 264 million (not counting smaller carriers). CTIA says there are 285.6 million total US mobile subsribers.
The gap between the two leaders and the smaller carriers certainly argues in favor of some sort of combination, which has previously been rumored and even supported in principle by Sprint CEO Dan Hesse.
I have no doubt that years from now these will be collectors items. I never held or used one so I don't know how well they work.
But the novelty of having one -- a phone that's pretty cool-looking and no longer available -- might be enough to lure some people to buy one on the final day of availability. KIN One is only $29 with a two-year contract.
Such a deal!
The media keep focusing on the "battle" between iPhone and Android. But the mobile platform and handset market is not winner-take-all. There's room for more than two players to succeed in the US and internationally. This is a key point made by Google itself several times now.
But how many platforms and smartphone operating systems can the market support exactly?
The following charts reflect OS representation on AdMob's global network. (AdMob does not equal the mobile Internet or mobile handsets more broadly, but there's a directional correspondence between mobile Internet trends and what AdMob shows in its metrics reports.)
If you consider the chart immediately above, what you see is that the "mobile Internet" (on AdMob's network) is dominated by iOS, followed by Android in North America and Western Europe. In other regions Nokia is a major player or dominant. Despite its large, installed base RIM is barely present on this chart.
RIM of course sells more smartphones than anyone in North America. However its mobile Internet usage data and overall user experience lag competitors. BlackBerry 6 seeks to change that.
There aren't going to be five viable global smartphone platforms. There might be four, but it's more likely three. Those will vary, as the chart above suggests, on a geographic basis, with the two "constants" across regions likely to be Android and the iPhone.
Given the scathing criticque that an InfoWorld writer offered of Windows 7 (after a demo), it's quite possible that Microsoft might not be among the winners:
The bottom line is this: Windows Phone 7 is a pale imitation of the 2007-era iPhone. It's as if Microsoft decided in summer 2007 to copy the iPhone and has shut its developers in a bunker ever since, so they don't realize that several years have passed, that the iPhone has advanced, and that competitors such as Google Android and Palm WebOS have also pushed the needle forward.
We'll have to wait and see how accurate this very harsh review is later this year when the handsets hit the market. But the Kin debacle is not a good sign for Redmond.
In the US smartphone market, it's currently a three-way race between iPhone, Android and RIM. In Europe it's likely to be iPhone, Android and Nokia. Other platforms may simply not have the scale and (developer) mindshare to compete. Several developer surveys certainly suggest this as well.
Source: Appcelerator (6/10)