Verizon's Moto 'Droid' an iPhone Killer? iDon't Think So

Engadget surfaced a TV commercial/video that just aired and promotes the forthcoming second Motorola Android device. It has to date been called several things (Shoales, Tao) and is reportedly a "collaboration" between Google, Verizon and Motorola. The phone is officially being called "Droid." The TV commercial goes directly after the iPhone with a cleverly phrased set of statements about perceived iPhone weaknesses:

  • iDon't have a real keyboard
  • iDon't run simultaneous apps
  • iDon't have a 5 megapixel camera
  • iDon't have interchangeable batteries
  • iDon't customize
  • iDon't run widgets

The phone will also run the new Android 2.0 software. As someone who has had the Android Magic/MyTouch3G phone and used it very extensively (not running 2.0) I can say with great confidence the phone does not match the iPhone. It doesn't. It is a strong device but it is no "iPhone Killer" or "major threat" as it's being called by some. And in most respects it's not even as "crisp" as the Pre, but it has lots more apps and a virtual keyboard (two of my major objections to the Pre).

As I've said in the past the-physical-keyboard-as-competitive-advantage argument is specious.

The only way in which the "Droid" is a "threat" to the iPhone is that Verizon customers who currently may want the iPhone but are hesitant about switching to embattled carrier AT&T may deem it good enough to keep them there. Accordingly, if the iPhone wants to grow share in the US it must get out from under AT&T exclusivity within a year. If it does not it will be surrounded by "good enough" substitutes such as Droid. 

Droid will actually be competing much more directly with the BlackBerry Storm 2 and Window Mobile devices at Verizon. In fact, Android the platform is much more directly a competitor for Windows Mobile than it is the iPhone. It's positioned very much the same way in the market. 

Every major US carrier will soon have an Android phone or phones plural. Nobody will be switching carriers to get one accordingly. But as consumers upgrade they will be comparing offerings within their carriers' handset selections. At every major carrier Windows Mobile and Android will go head to head. And right now (pre Windows Mobile 7) Microsoft's smartphone OS is quite vulnerable it appears, given the mixed reviews of 6.5.

Andorid's Droid (and its many cousins) are really potentially "WinMo killers." That's the real story as I see it.


Update: The Boy Genius Report has a quick "hands on" review and says that it's the best Android handset to date, making the other Motorola Android handset (The Cliq) "look like a child's toy." Previously the HTC Hero was the best of the Android handsets in the US market. I just played with one for the first time yesterday.

As I said above the Droid will now compete with the iPhone so much as with other Verizon handsets, such as the Storm 2 and a range of HTC Windows Mobile phones. Some level of demand will depend on pricing obviously. But no Android phone (with carrier subsidy) will be more than $200. 

Would You Buy Mobile Service from Wal-Mart?

Wal-Mart is becoming an MVNO. It will offer pre-paid calling plans, supported by the Tracfone service (itself an MVNO). The plan is called "Straight Talk." There are two plans offered by the retail juggernaut:

  • $30: 1,000 minutes of calls, 1,000 texts and some Internet
  • $45: unlimited calls and texts nationwide, and unlimited Web access

The unlimited plan is $5 cheaper than Boost's unlimited plan. Tracfone, a unit of América Móvil, buys network access through other carriers. 

The US market is becoming polarized, with high-value customers migrating to smartphones and expensive data-plan commitments (although prices are declining under competitive pressure) and the price conscious gravitating toward very inexpensive pre-paid plans. Pre-paid carriers have limited handset selection but so-called "quick messaging" phones may offer a middle-grade experience to pre-paid subscribers. 

Picture 54

Group Aims to Boost WiFi Connected Devices, Networks

A consortium of companies, called the "Wi-Fi Alliance," is seeking to turn lots of consumer electronics products into micro hotspots to boost available WiFi and make it a more reliable and ubiquitous way to get online. Right now spotty availability holds WiFi back. The alliance is promoting a new spec that offers "direct Wi-Fi connections between devices." The consortium includes small and large tech companies. Here's how the group's release explains the specification:

The specification, previously code-named "Wi-Fi peer-to-peer," can be implemented in any Wi-Fi device, from mobile phones, cameras, printers, and notebook computers, to human interface devices such as keyboards and headphones. Significantly, devices that have been certified to the new specification will also be able to create connections with hundreds of millions of Wi-Fi CERTIFIED legacy devices already in use. Devices will be able to make a one-to-one connection, or a group of several devices can connect simultaneously.

Seen in tandem with the rollout of WiMax (Clearwire) and LTE (Verizon, AT&T) expanded WiFi networks offer the promise of always available connectivity, which is what consumers increasingly want. The forthcoming barrage of eBook readers and tablets will mostly be WiFi enabled (if they don't have a carrier relationship, e.g., Kindle-Sprint). In addition, more non-phone, non-computer devices will emerge and be WiFi enabled (e.g., digital cameras, video camcorders). So there's a virtuous cycle/circle here: the more connected devices that promote WiFi coverage the more people will tend to buy such devices. 

The promise of ubiquitous or nearly ubiquitous WiFi also means that consumer-users will be less dependent on mobile carriers. In such a situation someone might choose to buy an iPod Touch or a tablet rather than an iPhone with its expensive data plan for mobile Internet access. They might have a basic mobile phone instead of a smartphone in that case and rely on the other device for Internet access on the go. There are a variety of these scenarios that become possible if WiFi truly becomes an alternative, regular access paradigm in a way that it is not currently today. 

Open Mobile Summit 2009

As a reminder, Internet2Go is proud to sponsor and speak at the upcoming Open Mobile Summit, being held November 4-5 in San Francisco. I2G program director will be leading an executive roundtable on “New Dimensions in Navigation and Search.”

This second annual conference features keynote presentations from Vint Cerf of Google, John Donovan (CTO, AT&T), Cole Brodman (CTO, T-Mobile) and Michael Abbot (SVP, Palm), but also includes an impressive mix of key players addressing the convergence of mobile and the Internet. The speaker roster spans the open mobile ecosystem with representatives from carriers, device OEMs, and infrastructure to software, brands, and applications. Click here for more information.

As a sponsor, Internet2Go readers can receive a $150 discount off the full-conference price. Register here and enter the VIP code: GREGS.

Handset Mania: Too Many Smartphones?

It's almost impossible for me to keep up with the blizzard of handset announcements coming out. That makes me think that mainstream consumers will become quite confused: HTC or LG? WinMo or Android? What about proprietary OEM software (e.g., MotoBLUR) or carrier apps? Smartphones (and "quick messaging" phones) are proliferating and getting better, but paradoxically many consumers will find making choices harder. ("The paradox of choice" and all that.)

As a practical matter price will always be a big driver of consumer behavior. But all things being equal pricewise, it's getting more challenging to make choices. And the constant parade of new handsets also creates uncertainty and desire for the newest gadget. For example, I'm ready to ditch my Pre for an HTC Hero. 

In the "branded" category there's the iPhone of course, which stands out for multiple reasons. Then there's BlackBerry, which many people are wedded to because of their jobs (see the NYTimes on the "Storm 2 do-over"). There's also the Palm Pre and forthcoming Pixi from Palm. Outside the US Nokia has a very strong brand and reputation. But after that comes the "drop-off."

Android: which one should I buy, Samsung, Motorola, Dell, Acer or HTC? Windows Mobile: buy now or wait for WinMo 7? In my limited time with a 6.5 HTC handset yesterday I found it better than 6.1 but otherwise challenging to use.

Tech consulting firm Gartner has projected that Android will be the number two smarpthone OS (after Symbian) by 2012. By contrast, iSuppli has a very bullish view of Windows Mobile's prospects

Stepping back, the Yankee Group recently found (consistent with our data) that about 43% of consumers are intending to buy a smartphone as their next handset. In-Stat says that 33% plan to buy a smartphone when they next upgrade. Smartphone adoption is driven by multiple factors but falling prices of handsets and data plans also will boost adoption. Price sensitive consumers may opt for the "mid-size" quick-messaging phones as a compromise between feature phones that offer limited functionality and smartphones. 

Opus smartphones

The market is getting more competitive but all the competition will also result in substantial consumer confusion. One might predict that will benefit the iPhone and possbily RIM. But how it will precisely play out is uncertain.

T-Mobile Data and Voice Price War?

To every potential price war I say "bring it!" T-Mobile, which just suffered a massive PR snafu with the sidekick data loss disaster, is potentially going to lower the cost of unlimited data and voice plans in the US to lure subscribers (potentially from Sprint) according to reports. Unlimited plans might come down to between $50 and $80 reportedly. 

If this happens some financial analysts believe that Sprint is the most vulnerable of the big carriers to subscriber defections. However, if prices go low enough, so are the smaller pre-paid carriers. Sprint's Boost pre-paid unit has had a very successful $50 "all in" plan for some time; however the network is the inferior NexTel network and handset selection is limited. So it hasn't attracted many post-paid converts. 

T-Mobile believes that the US market can support four major competitors and suggests that it won't be seeking to do any dramatic deals such as the joint venture with France Telecom in the UK. 

In the UK, the availability of the iPhone from O2, Orange and Vodafone means a big price war with the Apple handseet dropping to free potentially, with a 24 month contract. Something similar might also happen if the iPhone were available from multiple carriers in the US, although it's unlikely that we'd ever see it go free. 

The larger point is that competition (and a certain amount of desperation) is driving prices down. Sprint recently announced a free mobile to mobile calling plan that allows any subscriber to call anyone else on a mobile phone without counting against plan minutes. Only landlines are charged. With the exception of AT&T with the iPhone all carriers have now is pricing -- and to some degree their network reputations -- to compete with. This notwithstanding the efforts of Verizon to be an apps provider or Vodafone to build a social software layer onto handsets. The era of the "dumb pipe" has arrived. 

If T-Mobile USA in fact drops unlimited voice and data plans to $50 or $80 Sprint may be forced to match. However, AT&T and Verizon will likely take a wait and see approach rather than automatically lower prices because they both feel more secure in their subscriber retention.

New AT&T Phones Reflect Movement Up Market

They're not smartphones, but they're a growing middle segment of phones that exist between the high-end devices and the mass of very low functioning (often free) feature phones. AT&T's announcement yesterday that it was bringing out a wide array of new handsets reflects that consumers are demanding more functionality from less expensive phones:

Text messaging and email are still the 'killer app' for mobile phone data use and AT&T is responding with a great new lineup of phones for the Spring season. AT&T* today announced a fresh new lineup of smartphones and quick messaging phones that make it easier for customers to message with friends and family and manage their business and personal lives on-the-go. Arriving in AT&T stores and online at in the coming weeks, these integrated devices add to AT&T's leading mobile phone portfolio.

These types of handsets don't offer the experience of an iPhone or Android, but they do offer enhanced messaging and in some cases apps that allow for things like access to social networks. This is the case with INQ's "social mobile" handsets

We have to remember that lots of people on lower-end phones are browsing the mobile Internet. And these types of phones will accelarate that, although the frequency and levels of engagement won't be as great as on an iPhone for example. 

It's also true that these phones may be "gateways" to smartphones for those who are inhibited by the higher cost of smartphone and their dataplans. However, if smartphones are aggressively subsidized and come down to $99 consumers will largely bypass the cheaper devices in favor of the full-featured handsets. 

Regardless smartphones are forcing all devices to become "smarter" and offer more features and capabilities. Microsoft's OneApp also represents an intriguing approach to bridging the gap between smartphones and lower-end devices.

Google and Verizon Announce 'Groundbreaking' Deal

Google and Verizon just made their announcement, which will bring Android handsets to Verizon, and potentially more:

Verizon Wireless and Google(TM) today announced a strategic partnership that will leverage the Verizon Wireless network and the best of the Android(TM) open platform to deliver leading-edge mobile applications, services and devices. Both companies view this agreement as an opportunity to offer consumers an array of products that combine the speed of the nation's largest and most reliable 3G network with the flexibility of the Android mobile platform.

Integral to this agreement is a commitment by the companies to devote substantial resources to accelerate delivery of leading-edge innovation that will put unique applications in the hands of consumers quickly. The two industry leaders will create, market and distribute products and services, with Verizon Wireless also contributing the breadth of its nationwide distribution channels. Consumers will be able to purchase products resulting from the collaboration in Verizon Wireless retail and online stores.

Verizon Wireless and Google plan to co-develop several Android-based devices that will be pre-loaded with innovative applications from both parties as well as third-party developers. The family of Android phones on the Verizon Wireless network will come from leading handset manufacturers.

(emphasis added)

This is about Android handsets but also about a broader array of services and potential devices that would use Verizon's network. What those are and when they might actually materialize remains to be seen.

Google lost its bid to be the default search provider on Verizon's handsets to Microsoft. But this isn't a bad concession prize. It will be interesting to see how Verizon reconciles its contractual obligations to Microsoft under their search and ads deal when it comes to Android handsets. 


I offer some additional thoughts in my post at Search Engine Land. 

Monday Morning Mobile News Roundup

There's a good deal of news this morning and not a lot of time to expand on it. I will if I can later. Right now, here are the headlines and a few comments . . .

T-Mobile in its bid to become the US carrier most closely associated with Android, said that it would carry the Samsung Behold II, the Korean OEM's first Android handset. In addition the company is trying to boost enterprise visibillity with a big WiFi push.

Google joins the Adobe Open Screen Project to put flash on mobile devices. Now Adobe has secured flash on everyone's handsets/platforms but the iPhone. We'll see if Apple eventually is forced to roll out flash by virtue of its coming availability on competitive handsets. The Android Hero already offers flash support, and so does mobile browser Skyfire. 

Tomorrow is the big WinMo 6.5 launch day but AT&T's HTC Pure and Tilt 2 are already on sale (the Pure for $149) with Window Mobile 6.5. Note the aggressive pricing: smartphone pricing is coming down and the more it does the more adoption there will be. The more adoption, the more mobile Internet engagement . . .

VoIP provider Vonage is releasing BlackBerry and iPhone apps

The NY Times reports on how more and more apps have a marketing angle and how companies are embracing them as marketing tools. It also covers the history of the tablet.  


Update: the iPhone will get flash after all: 

The next version of Flash Authoring will enable developers to create stand-alone iPhone applications using Flash technologies (including ActionScript 3). These applications are just like any other iPhone application and can be distributed via the Apple iTunes Application store. Indeed, there are already a number of applications created with Flash on the store today.

One thing I want to stress is that this is for standalone applications, and is not the Flash Player for mobile Safari (which is something we continue to work on). The end result is a native iPhone application, and not a SWF that runs in the browser.

iPhone UK Price War & 'World Domination'?

As we said before the newly competitive iPhone market in the UK will be one to watch. With Vodafone, O2 (which just sold out of 3GS inventory) and Orange selling the Apple handset in the UK, we're likely to see a price war. How will that play out as each carrier tries to be the one that lures subscribers or seeks to retain subscribers? Some have speculated that prices will rise on other handsets to offset the deep subsidizes that are anticipated for the iPhone. Will it get to free with a 24-month agreement? (My guess is yes).

This could be a precursor for the US when the iPhone comes to other carriers. There's been considerable discussion in the past couple of days, based on a Morgan Stanley analyst report, that the iPhone could more than double market share in the US once it leaves AT&T exclusivity behind. I would agree and be even more aggressive in predicting that the device might climb to nearly 50% of the US smartphone market if it were available from several carriers. 

Under a multi-carrier scenario like this -- think 2011 in the US -- we'd see aggressive pricing on the device as carriers try to lure and retain customers, as we're likely to see in the UK. I don't think we'd get free iPhones in the US but we might hit a new smartphone ceiling of $99 (currently it's $200 with operator subsidy). 

The iPhone in particular has shifted the balance of power from the carrier to the OEM and OS providers. The UK situation illustrates this very clearly. The carriers are the pipe -- notwithstanding Vodafone's new personalization/PC-crossover strategy -- and that's not likely to be changed by software layers, carrier app stores or social media strategies. 

In terms of handset competition, there are only two smartphone "brands" in the US: iPhone and BlackBerry. Windows Mobile is not a consumer brand; we'll see what happens with "Windows Phone." Android is not (perhaps yet) a consumer brand. Nokia is all but done in the US (absent an aggressive low-end strategy). Globally Nokia remains very strong and Windows will be competitive by virtue of the sheer number of handsets in the market. The Pre has lots of buzz and mindshare at the moment, so it's got a good base from which to build a strong brand. However, usability is mixed and will need to be improved for long-term competitive sustainability. 

BlackBerry's consumer future is not entirely clear and contingent upon improved mobile browsing and overall usability. Android should chug along and grow as more OEMs introduce the handsets and more carriers pick them up. Pricing should get more competitive across the board. And there will likely be consumer confusion as people try and decide between, say, the HTC Android handset and one that appears almost identical but runs Windows. Microsoft can try and leverage cloud services and its PC dominance to differentiate, but the OS needs to get better overall.  

In this climate of intense competition and potential consumer confusion, the iPhone wins. This is especially true if it's available through multiple carriers who are aggressively subsidizing it. So far it's an unbeaten device (except for the dropped calls part) and has strong brand recognition in the market. If the price comes down (to $99 in the US and free in the UK) and it's widely available through multiple operators it will fly off the shelves -- and become the iPod of phones to so many other MP3 players in the market. The other handset OEMs and OS vendors must struggle mightily to avoid that. 

Report: 21% Planning to Buy eReader This Year

Tablets and eReaders are here to stay. Exactly how popular they'll become and how they'll impact publishing and traditional media is another question. So too is the question of where they will "fit" in the computing product line up: will people use them instead of smartphones, along with smartphones, instead of netbooks or laptops? Will they be important Internet access devices?

Electronics shopping site Retrevo recently published the results of a survey (n=771) that asked about eReader buying intentions. Here's what the company found:

Planning to buy an eReader this year: 

  • 21% yes (Males vs. females: 26% vs. 17%)
  • 79% no 

I'm surprised that this many people said "yes." And 9% of respondents said they were waiting for the rumored Apple Tablet/iPad/iMedia device.

What brand are you going to buy?

  • 62% Amazon Kindle
  • 32% Sony
  • 6% Other 

There are a range of "others" in the market (Samsung, iRex, etc.), however people have only heard of the Kindle and Sony's eBook Reader. Indeed, the relative percentages above reflect the relative visibility of the devices more than any intrinsic preference or evaluation or relative quality, etc.

As Apple and other OEMs enter the market we'll see those numbers open up to reflect the competition. Price, features and connectivity will be largely determinative of winners and losers. Kindle's usability may factor into its potential ongoing success. But I don't believe that the Kindle will emerge as the "iPod of eReaders." 

In terms of potential buyers, the respondents saying yes skewed younger, although not especially young:

Picture 23

As you might expect also, more affluent respondents were more inclined to buy these devices than those with lower incomes.

Putting aside the relatively large (21%) number of people who said they wanted to buy an eReader "this year," this market and consumer feelings about these devices are in early stages of development. Connectivity is a big issue as well (at least built-in WiFi). My belief is that those devices that offer color screens and a range of capabilities -- including Internet access -- beyond simply reading text will win and have a shot at mass-market adoption. 

But they also need to be priced right as well. Apple is the lone company that may be able to defy that dictum and get people to buy a device that costs more than $500. Most of these devices will need to come in at or around $200 to be competitive, because they'll also be competing with smartphones. 

Struggling to Avoid the 'Dumb Pipe Scenario'

Now is the time for carriers to figure out how to avoid what happened to most ISPs on the Internet, which became "dump pipes" simply providing the connection to services and content that consumers obtained from other providers. In the US Comcast might be an exception to that charge.

However, in mobile, with the advent of the iPhone and movement of the industry toward a similar model -- touchscreen devices with app stores -- the carrier is faced with becoming a marginal part of the mobile user experience over time. There's probably little they can do except to build experiences and tools that are genuinely valuable to users. Most of the carriers have apps store initiatives that are unlikely to rival the handset plays. We'll see. 

In the UK Vodafone has announced "Vodafone 360," which will roll out across its territories in Europe before the end of the year. It sounds very much like Motorola's "Motoblur" service. It seeks to bring contacts and social network updates together in a single interface. It will feature a "connected address book" (Vodafone People) at its core. There will be other apps and it also crosses over to the PC. All this will reportedly work across Vodafone handsets. From the company's release:

  • Vodafone 360 is a brand new set of internet services for the mobile and PC which gathers all of a customer’s friends, communities, entertainment and personal favourites (like music, games, photos and video) in one place
  • At its heart Vodafone 360 has the most personal address book available, bringing together all of the contacts from the mobile phone, social networks and other internet accounts. It works across a range of mobile phones, including the new, exclusive Vodafone 360 phones, and synchs automatically with the PC
  • Connected address book – Vodafone People, open to everyone on any network across over 100 popular mobile phones, automatically synchs all contacts from a customer’s phone, Facebook®, Windows Live Messenger™ and Google Talk™, and will soon also include Twitter, Hyves and studiVZ
  • New suite of internet services accessible on multiple handsets as well as PC or Mac, including a wide range of apps, games, music and mapping services

Well executed it could make Vodafone more relevant to end users. Poorly executed or overly complex and it will fail. But conceptually at least it's a good strategy -- inject a software layer between the handset/content and the user. A related strategy is providing a personalized start page or comparable way to organize content and sites that are frequently used by mobile subscribers. However all of this must be simple, intuitive and work well.

That's a tall order for carriers who are mostly not good at developing Internet-like best of breed user experiences. 

AT&T Takes Stock in Vlingo

The size and shape of the mobile speech ecosystem has taken on new proportions as AT&T throws its research chops, as well as working capital into the ring with mobile speech specialist Vlingo. The two companies have forged a licensing agreement and strategic alliance whereby AT&T is acquiring a "minority stake" in Vlingo (without making the terms public). The move marks renewed interest by AT&T's in speech recognition with special attention to the mobile user experience. This is a bellwether for anticipated revenue growth and marketing activity surrounding mobile speech on a global basis. In a recent conversation Vlingo CEO Dave Grannan asserted that mobile speech adoption has hit an inflection point. Apparently AT&T agreed. In a not-so-veiled swipe at IBM and Nuance, Grannan asserts in a press release that, Vlingo has "seen significant accuracy and performance gains with Watson compared to other core speech technologies that will allow us to create a dramatically improved user experience."

In fact, Vlingo told us that it reached the 2 million user mark based on the accuracy and automation rates attainable with its current recognition engine, licensed from IBM. We do not have a "lab" here at I2Go but have been told that the today's recognition engines from Nuance, IBM, AT&T Watson, Novauris and Microsoft can all be tuned to reach accuracy rates in the 90% range in the field. This is a marked improvement from the 40% or less achieved with early services. Because accuracy can never reach 100%, the next step in marketing and service development will be to start managing user expectation so that failure to recognize that one word out of 10 is not the equivalent of a PC's "blue screen of death."

Over the years, Vlingo has made great strides in promoting a mobile voice user interface and defining distribution plans and pricing strategies. On the Blackberry, for instance, it offers a free version that supports Twitter updates, Web-based search and voice dialing and also offers a premium version ($17.99) to add text messaging and email origination. AT&T's renewed interest in mobile speech provides some market validation and portends heightened competition among a set of well-heeled leaders (Nuance/IBM, Microsoft/Tellme, Google) and a group of service-oriented innovators that includes Vlingo (now with AT&T), Novauris, Yap, Ditech Networks (with Simulscribe) and a couple dozen others.

delves into the market in great detail in this report called, "Mobile Speech: Unlocking Personal Apps, Features and Functions."

Deutsche Telekom Looking Again at Sprint

A little over a year ago, there were rumors that Deutsche Telekom (owner of T-Mobile) was considering a bid for number three US carrier Sprint. Those rumors died down but now have been revived by a report appearing yesterday in a British newspaper that suggested the German giant was again considering making a play for Sprint.

Sprint's market cap is $10.6 billion. T-Mobile is the fourth largest US carrier, after Sprint.

A combination of the two companies would result in a mobile subscriber base of 82 million, to become the second-largest US carrier with all the Sprint 3G and 4G (WiMax) assets. T-Mobile's 3G network remains not fully built out in the US. Yet the handset/network technologies of the two companies are different: GSM (T-Mobile) vs. CDMA (Sprint), but this isn't an insurmountable obstacle. However, Sprint's merger with Nextel is accused of being the source of many of the embattled carrier's current problems. 

Here are the Q2 subscriber numbers:

  • Verizon: 87.7 million
  • AT&T: 79.6 million
  • Sprint (+ Virgin Mobile): 48.8 million
  • T-Mobile: 33.5 million
  • MetroPCS: 6.3 million

In the past couple of weeks, T-Mobile and France Telecom agreed to establish a joint venture and merge their UK wireless businesses. This Sprint-T-Mobile report is just speculation at this point, but it probably has some basis in fact. We'll see if a formal bid happens. 

If the acquisition or merger were to happen it would likely trigger a wave of consolidation at the low end of the market as well. 


Related: Here's a video of a Charlie Rose interview with Sprint CEO Dan Hesse. 

Update: Reuters sources' say the merger/acquisition isn't going to happen. 

Personalization a Key to Success in Competitive Handset Market

Here's something pretty "cool," the Palm Pixi artist series. Certainly there have been skins and other personalization efforts on mobile phones before, but this is smart and fun and will help give the phone "personality" vs. all the other smartphones in an increasingly crowded market.

The MyTouch3G is making an effort to differentiate through personalization. But Android phones in particular are in danger of being seen as generic as more and more of them enter the market. The awkwardly named Motorola Cliq with Motoblur attempts to be different with a social software layer (the "Motoblur" part) on top of the Android UX.

Back to the Pixi: this kind of personalization and a low price ($99 potentially) will give the phone broad appeal with women and younger buyers -- making it the VW beetle of handsets in a way. Indeed, the Pixi is emerging as a much more appealing phone than the Pre

Picture 17


Sprint's Free M2M Plan: Shrewd or Desperate?

Yesterday Sprint did something potentially radical, although it was not well communicated in the official release and supporting email campaign. It launched what it's calling "Any Mobile Any Time." Essentially it allows any Sprint customer to call any other mobile subscriber in the US, regardless of carrier, without counting those calls against minutes. As stated in the release: 

Starting at just $69.99*, Everything Data plans offer the best value in wireless, with the new Any Mobile, Anytime voice feature on top of all the unlimited messaging and data features customers want for one low price. Everything Data plans include unlimited text, picture and video messaging, and unlimited data services, such as e-mail, Web browsing, social networking, GPS navigation, Sprint TV, streaming music, exclusive NFL Mobile Live and NASCAR Sprint Cup Mobile applications.

Wireless-centric families will find Everything Data Family plans with Any Mobile, Anytime especially beneficial. For example, at $42.50* per person, a family of four can get unlimited wireless for each family member. That means unlimited messaging and data, and now unlimited calling, to any of the more than 250 million wireless customers in the United States at any time, for each member of the family. 

Basically there are three pricing plans, each offering more data, minutes and features. Minutes only burn when calling landlines -- not mobile. 

But for the complexity of the offer and the relatively ineffective communication of it (at launch) there should be lots of people interested in this. Sprint's pre-paid subsidary Boost offers a $50 unlimited plan (voice and data), which has been hugely popular, but it operates on the inferior Nextel network. 

Sprint's move seeks to trump other US carriers who've been introducing and expanding "calling circles" that allow consumers to designate several frequently called numbers that won't count against minutes. In one stroke Sprint obliterated that with this wireless-to-wireless free calling program. 

It's very unlikely to be immediately matched by anyone else. Other carriers will bank on the fact that they're not losing customers to Sprint and only take action if this starts to gain significant traction. That could happen with a better and clearer ad campaign.

Facebook, Pandora Come to Android, Palm Debuts Inexpensive Pixi

Two "top-tier" mobile apps previously missing from the Android pantheon are now available: Facebook and Pandora. Though not as complete as its iPhone cousin, the Facebook Android app is pretty functional. Here's a video demo of how it works.

In hardware news, Palm has now launched the Pixi (formerly EOS or Pixie). It promises to be cheaper (maybe $99) than the Pre, which is coming down in price to $149 to boost sales. Here's a "hands on" video of the new Pixi from Engadget:

Picture 27

It uses the WebOS like the Pre and in some ways appears more functional than its more expensive sibling (you don't have to slide the keyboard open to enter characters or queries). It also reportedly has a better keyboard. If the price is $99 it's going to be a much bigger hit than the Pre for sure. The big differentiator is that the Pixi has no WiFi; however that's not going to be an issue for most buyers who jump at the lower price point.

The larger point here is that smartphone prices are creeping downward amid intensifying competition. The new Android Hero (from Sprint) is going to come in at $179. The Pre is now $150 and the Pixi may be $99. The iPhone 3G is $99 and Verizon was clearing out the Storm (in anticipation of Storm 2) for $50.

These kinds of prices will drive big smartphone sales, which drives mobile Internet usage.


Video: Google improves the Android Market. Right now it's a pretty mediocre experience and not very conducive to discovery of new apps.

Orange and Deutsche Telekom to Form UK Joint Venture

The speculation is over regarding what is to happen with T-Mobile's troubled UK unit. The Wall Street Journal is reporting this afternoon that France Telecom and Deutsche Telekom will form a UK joint venture:

The deal is expected to be signed Monday and announced Tuesday, before markets open, the people said.

The joint venture, described by the people familiar with the situation as a "merger of equals," will have a combined 30 million customers, excluding Virgin Mobile, which runs on T-Mobile's network, and 38% of the fiercely competitive U.K. mobile market, where it will battle with O2, Vodafone Group PLC and Hutchison Whampoa Ltd.'s 3.

Orange will thus become the largest carrier in the UK. Reportedly both Vodafone and O2-owner Telefonica were bidding for T-Mobile UK. There's considerable speculation that Orange is to get the iPhone in October, as well. O2 has been the exclusive carrier to date in the UK. Though Orange has the iPhone in France. 

Related: Bloomberg offers some additional information:

[The JV will] create the country’s largest cellular operator with revenue of 9.4 billion euros ($13.5 billion)  . . . [and] will have 28.4 million users, or 37 percent of the U.K. market, ousting Telefonica SA’s O2 service from the top spot.

The deal shrinks the number of mobile-phone operators in the U.K. to four, with the others being Vodafone Group Plc and Hutchison Whampoa Ltd., helping shore up profit in one of the most competitive markets in Europe.

Here's more detail from the Orange site

Sprint to Debut HTC Android Hero in October, Pre in Trouble

According to Dow Jones Newswires, Sprint will offer the HTC Hero (which supports Flash) in October in the US. The Hero is the most advanced Android device, featuring the "Sense" interface, currently on the market:

The device, which hit stores on Oct. 11, will sell for $179.99 after a $100 mail-in rebate and two-year service contract. The device puts it below its own Pre device, as well as the $200 iPhone 3GS.

As a Sprint user I now regret my Pre purchase. And in fact the availability of the Android device from Sprint will negatively affect Pre sales. See below for Pre sales estimates. 


Related: Analyst says Pre sales to come in below expectations: 

Town Hall Investment Research analyst David Eller asserted in a research note . . .that sales of the Pre “are continuing to slow,” and “likely will come in dramatically below” Sprint's reputed target of 1 million to 1.5 million customers for the year. Eller now sees the company selling 416,000 units in the August quarter overall, down from a previous estimate of 488,000 . . .

Meanwhile, Eller thinks Palm will start shipping the much-rumored second WebOS based phone, known as the Pixie or EOS, in November, with a price below the Pre. The analyst thinks the Pixie may be more successful at its lower price point than the Pre is in the higher end of the market.

Also: T-Mobile introduces "Pulse" (Hauwei) Android phone in Europe. 

iPhone Emerges as Mixed Blessing for AT&T

In the beginning it appeared that iPhone exclusivity was a big win for AT&T. It got PR buzz and corresponding sex appeal; it seemed to gain a lot of new subscribers too. However, there have been bottom line costs as it bears a substantial subsidy ($400 per handset) and customers see AT&T as the bad guy when problems occur.

In addition the NY Times (in a piece about iPhone users heavy data requirements) cites a PriceGrabber consumer survey that reveals barriers to further growth:

[A] recent survey by found that 34 percent of respondents pinpointed AT&T as the primary reason for not buying an iPhone.

This is certainly true for me. I would own and iPhone but for the AT&T requirement. AT&T's brand and reputation have suffered lately, probably more than they've gained from the iPhone relationship -- especially the in wake of the 3Gs launch and network problems. The Wall Street Journal elaborates on the mixed blessings of iPhone exclusivity:

While AT&T has disclosed at least 10 million activations of iPhones since it became available in mid-2007, only about 40% of those were new customers. That number dropped to 35% in the most recent quarter when the 3GS phone became available.

That means only four million new customers signed up, about 5% of AT&T's total, or 6% of "postpaid" customers on costly monthly contracts . . . More important, perhaps, is that the iPhone likely has kept some AT&T customers from defecting. AT&T's churn, the percentage of customers who leave, has dropped to 1.49% from 1.7% since the third quarter of 2007. Over the same period, Verizon Wireless's churn has risen to 1.37% from 1.27%.

Then there is the extra revenue. AT&T has consistently said iPhone customers generate much higher revenue per user than the average, close to $100 a month. AT&T's "postpaid" average revenue per user has risen 4.7%, to $60.21, since the third quarter of 2007.

Apple is increasingly looking to move beyond exclusive deals, recently breaking O2 exclusivity in the UK, which helped the phone come to market intially. There's a question about whether AT&T will be able to retain Apple exclusivity (now being probed by the FCC) beyond next year, although the company would like to retain it until 2011 according to various reports.

Indeed, non-exclusivity is the key to future iPhone growth. Android, the Pre and Windows Mobile all would be threatened further if the iPhone were equally available on Verizon, T-Mobile and Sprint.