Archive for the ‘AT&T’ Category
In the beginning there was the PalmOS mobile platform, and then there was Symbian, then Windows Mobile and RIM’s Blackberry OS. Then came the juggernaut iPhone OS from Apple. That was followed by Android from Google. Soon Palm will launch another mobile platform called the WebOS. All these different platforms lead to a question: How many mobile platforms can your company support?
That is just the operating systems. Already the mobile industry is fragmented with dozens of smartphone manufacturers. Add in the different features of the handsets themselves, like accelerometer, GPS, camera, etc, and you have a whole matrix of feature sets that need to be accounted for.
It is amazing how often entrepreneurs and product managers at smaller companies have said to me that this is their strategy. Then I ask them how soon they will be on all these platforms and I get a vague answer of as soon as we can. Given this situation, how long can companies justify developing products for all platforms?
Companies really need to evaluate their strategy against their resources. Building and supporting products on multiple platforms is costly and labor intensive process, just ask all those who build and support PC and Mac products. The complexity increases multiple-fold in the smartphone space. As an entrepreneur or product manager, you don’t have the time to wait until the product has been tested on all the platforms. You need to be out in the market before your competition.
Considering the limited funding and resources, you have to decide on one or two “hero” platforms as Tim Westergren, founder of the popular Pandora music service calls them. He has decided that iPhone is the “hero” platform they will focus on and when WebOS from Palm is available, that will be its second “hero” platform.
There are definite benefits in this strategy: You can develop a product that leverages the various features of that platform. You are able to conserve your resources by developing on few platforms. You can become the “best-in-class” on the specific platforms.
On the flip side, though, you have to weigh how successful are your target platforms going to be. iPhone has done phenomenally well and therefore could be a no-brainer for a lot of us. However, if you were targeting say Android or even the much-anticipated WebOS from Palm, you just have to look back at all those folks who jumped on the PalmOS bandwagon and decide if the rewards outweigh the risk and what is the likelihood of the platform surviving a few years.
Once you have decided on the platforms, like all good strategists, keep evaluating them and your strategy. Tim Westergren did not embark on his strategy right from the get-go. In fact, for two years Pandora was available on AT&T and Verizon Wireless’ application stores where it languished. Only when iPhone came along and Tim decided to launch his product on that platform did he found success.
AT&T put out a press release today announcing the release of 6 new phones and there is something for everyone. Lets start with the Nokia E71x, the much delayed and much talked, slim Blackberry competitor. It will be released in coming weeks with $99.99 price tag with 2-year contract. There is a second Blackberry lookalike, the Samsung Propel Pro. This one runs Windows Mobile and will be available in April for $149.99. Next up are two touchscreen sliders from LG, the Xenon and Neon. The Xenon comes with 2.0 megapixel photos and includes AT&T Navigator, Napster Mobile, eMusic Mobile. It comes in 3 colors and will be available starting April 8th for $99.99. The LG Neon is targeted towards teens and adults who text a lot. It will be a low cost device that will be released in coming weeks. Finally, there are two more Samsung phones: the Impression and the Magnet. The Impression is a messaging phone with AMOLED screen. It will go on sale on April 14th at $199.99. The Magnet is a slim, low-cost messaging phone with quick messaging capabilities. It will be released sometime in April.
[Via Boy Genius Report]
Listen up, you Best Buy Rewards Zone and Silver Premier members, if you have a hankering for the iPhone 3G, mosey over to the nearest Best Buy store, flash your card and get $50 if you are Rewards Zone member or $100 if you a Silver Premier member. Of course there are catches to this: First, you have to be enrolled in the membership programs before Feb 21st. Second, you still have to sign up for 2-year contract with AT&T to get the iPhone for as low as $99 bucks.
[Via Boy Genius Report]
As we all know the US mobile handset market (and most markets worldwide too), is very heavily subsidized by the carriers. That is what allows us the consumer to buy a $500 phone for $199. The carriers have a vested interest in subsidizing the handset, that’s what keeps the customers (both new and old) coming in and paying higher monthly fees. The handset makers too have an interest in getting their handsets out to the consumers cheaply as it impacts their bottom line directly. But all this is at a cost. In Q3 2008, AT&T had to take nearly $1 billion hit to its bottom line due to iPhone subsidies, and that is just for one phone. Surely, the execs at the carriers would be sorely tempted to get rid of these subsidies to improve their bottom line and also reduce the huge debt they carry (nearly 50 to 70% of their assets).
However, before they do, they need to look at the Japanese mobile industry. That should certainly give them a pause. In January 2007, Softbank introduced its ‘White Plan’ which did away with subsidies for the handset in exchange for lower monthly fees. The other two carriers, DoCoMo and KDDI quickly followed suit. Since then, the handset sales in Japan have been down nearly 30%, according to Jeita, the Japanese electronics association. The average handset lifetime has also increased to 3 years.
Also, the Japanese carriers already have a healthy source of revenue other than fees, namely the charges they collect for allowing users to charge their purchases to the phone. In US, there is already a move towards building an alternate source of revenue, namely the application stores for the smartphones. However, those are primarily owned by the handset maker, not the carriers. Carriers have been slow to adopt this strategy and have had limited success with the stores they have launched.
It has to be very tempting for the US carriers to follow suit as DoCoMo is reported to announce an increase in operating profit by 20% due to reduction in subsidies for the period April-Dec 2008. However, if the US carriers followed their Japanese brethren, I believe the handset sales will be down more than 30%, more likely around 44%.
AT&T grumbling about the $900 million subsidies in its conference calls and report was not just a CEO’s vent, it was a balloon floated to test the waters. While the market and handset makers are not ready to see the subsidies go the way of dodo anytime soon, investors are chomping at the bit for that 10cents per share increase to their portfolio. There is a strong likelihood that US carriers will get rid of the subsidies, especially on the high-end phones in two to three years, if not sooner.
AT&T has been riding the iPhone craze to becoming a leader in the telecom space. However, that exclusivity will not last forever. So, they are looking ahead and trying to be pro-active about their future success. The iPhone development was unprecedented in that the phone was made without AT&T input. They were luckly in that Steve Jobs and company did a fantastic job with the phone. Can you imagine what it would have looked like for AT&T and the rest of the mobile space if iPhone had bombed. It has allowed AT&T to take a $900 million hit on profits while still growing through its voice and data plans.
However, AT&T has learnt from this experience and has decided not to rest on its laurels. Here is an interesting article from CNN Money on what AT&T is doing to keep its leadership position. One of the technologies they are working on is to transfer videos from the iPhone to TV with just a flick of a finger on the iPhone. Now, that would be cool. However, it is going to take some time for that technology to be available.
I am certainly glad that AT&T is taking some concrete steps to insulate its future. I get a feeling that AT&T is looking in its crystal ball and is not liking that it is so tied to the pipes and spectrum. It see Apple capturing a share of revenue through its app store to which AT&T has no access. It also sees that its capital-hungry investments in infrastructure which has laden it with huge debt could become millstone around its ability to grow. Finally, it sees that mobile phone carriers are fast becoming utilities which can have far-reaching consequences. It recognizes the signs of time and wants to diversify into being able to provide a complete experience to the user while at the same time reducing its dependency on the spectrum and other capital intensive investments.
AT&T is going to launch the E71 smartphone from Nokia, as the E71x, according to Boy Genius Report. The phone which is direct competitor to the Blackberry comes with a full QWERTY keyboard, like the current versions of the Blackberry. The phone is rumored to cost around $150 with 2-year contract.
Citi today announced that it has partnered with Firethorn Holding, LLC, a Qualcomm company to provide a mobile application for its Card holders to access their account information on their cell phones. This rollout is to be on the AT&T and Verizon Wireless networks. The application will allow card holders to check balances in real time, review their transaction history and rewards points on their cell phone via a secured and encrypted connection. You can read the press release from Verizon Wireless here.
AT&T has finally released the Fuze, aka, HTC Touch Pro. This touch screen phone has been anticipated for a while now. Unwired View got their hands on it and reviewed it for us. Stasys at Unwired View was very impressed by the phone though he was not sure about it being an iPhone killer. You can read his entire review here.
Yesterday, AT&T announced some stellar performance numbers for the 3rd quarter 2008 led by growth in Apple’s iPhone 3G products. AT&T activiated 2.4 million iPhones during the quarter and their wireless data revenue grew to $2.7 billion. More recently, Apple also announced a great quarter with record sales of 6.9 million iPhones during the quarter. However, the future is very uncertain.
The end of last quarter saw the beginning of the economic downturn. We have already seen the effects of the downturn on Nokia which said its Q3 revenue fell by 7% from previous quarter. Sony Ericsson has also been affected by the downturn with their sales down 10% over previous quarter and profits down 1% over last quarter. No one knows how long it is going to last. As such all three companies mentioned above have lowered their forecast for the next quarter and the new year. That was expected, that is not the big story.
The bigger story is the profit squeeze that the Mobile sector is facing. Take for example AT&T which is considered the bellweather for this sector. As I mentioned earlier, its revenue grew impressively. However, it had to subsidize the iPhones heavily, to the tune of $900 million in the quarter which amounts to a 10¢ reduction in its earnings per share. Clearly, AT&T has to subsidize the iPhones to stay competitive with RIM Blackberry, T-Mobile’s G1 and Microsoft Windows Mobile based phones with various carriers including AT&T. However, it is going to get worse going forward as consumers reduce their spending and shun expensive plans. There is a danger that consumers might shun smartphones all together. As Sanford C. Bernstein analyst Craig Moffett said to BusinessWeek:
you wonder whether the iPhone runs any risk of tilting from being the next cool gadget to suddenly being a symbol of excess.
I have a feeling that not just iPhones, but other smartphones will end up looking like “symbol of excess”. If that happens, RIM will probably be affected the most. Unfortunately for RIM, its Blackberry Storm and Blackberry Bold launches are coming in the first quarter after the major financial crisis and as US heads into a recession. Whether RIM will see the same bounce in sales as Apple did, remains to be seen.
All carriers will see further worsening of their ARPU during Q4 2008, according to the IE Market Research Corp.’s 4Q 2008 United States Mobile Operator Forecast, 2008 – 2010 report. In Q208, the ARPU declined by 1.7% across all carriers. However, Sprint and T-Mobile will be more adversely affected as it takes them longer to get a return on their their investments in WiMax and 3G respectively.
AT&T has given the Technical Acceptance for the Blackberry Bold which means that it is ready to be sold, according to Boy Genius Report. However, it appears that AT&T will slip its shipping date once again from October 27th to Election Day, November 4th. Also, BGR reports that the price will be $300. The question I have is that price with contract and after rebates? AT&T and RIM just put out a press release which states that the price will be with 2-year contract and qualified voice and data plans.
Now, just a word of caution for all the US fans of Blackberry Bold. Go Vote first, and then buy a Bold to celebrate exercising your right!