AT&T

Trouble in paradise: Amazon dumps Sprint for Kindle, falls into the arms of AT&T

Ah, young love. When Amazon launched the Kindle almost two years ago, the company proposed to Sprint Nextel Corporation: Support us! The wireless carrier accepted. They took the solemn vow to be partners in sickness and in health, in good times and in bad.

Although the Kindle was earning Sprint only $2 ARPU, the carrier was still reaping huge profit margins as Amazon picked up most of the operational costs.

But they say one in two marriages end in divorce, right? This couple is no exception. Amazon Kindle Director Russell Baker confirmed Amazon is dumping Sprint for AT&T so that it can support international users, according to FierceWireless.

“Sprint’s network uses CDMA technology, while AT&T’s uses the much more widespread GSM technology … Amazon’s decision to drop the CDMA Kindle is a blow to Sprint, which in the first quarter of the year touted its sales of the Amazon Kindle e-reader device as driving the majority of its 394,000 wholesale additions.”

No word from Sprint yet on this. We hope they’re not drowning their sorrows in a gallon of Edy’s, as we’re prone to do after a bad breakup.

UPDATE: Sprint spokeswoman Stephanie Greenwood responds.

The Kindle DX operates on the Sprint mobile broadband network, so Kindles currently in use or already in the sales pipeline will still be powered by Sprint. Sprint has enjoyed a long and successful relationship with Amazon—since the Kindle first launched. We understand their international strategy and look forward to working with them on future projects.

Apple’s record-setting quarter and what it means for telecom

Telecom is a hard-knock life sometimes, like this week when Apple announced its most profitable quarter EVER. No small part of that smashing success is the 7.4 million iPhones sold in the quarter. Of course, in the U.S., AT&T benefits from those new iPhone users since they use AT&T’s 3G wireless network.

And then there’s Google. Last week the Android-backing company also crowed about increasing its net profit for the third quarter, declaring the recession almost over.

Meanwhile back at the network, while things are looking up, those in traditional telecom circles are talking about how to stem plummeting cost per bit and wondering if they can make a buck deploying 4G LTE networks.

So what does all of this iPhone success mean for wireless operators? For starters, Verizon hasn’t negotiated to also sell the iPhone, apparently, because its new ads are promoting the “Droid,” an Android 2.0 phone that may be supplied by Motorola (one of the Android mobile operating system’s original backers). And so we may be in for a new season of handset wars, which can be dangerous business, according to our telecom guru Tom Nolle. The weakness with the iPhone is the stress it’s putting on AT&T’s 3G network, Nolle reminded us. When Verizon moves to 4G LTE and introduces the Droid, both Apple and AT&T could face more heat.

Apple’s slice of the app store pie

I’ve reported that wireless service providers aren’t seeing much direct app store revenue, so when I came across an article in yesterday’s Wall Street Journal on Apple’s cut of the app store, I read with great interest.

According to Sanford Bernstein analyst Toni Sacconaghi, Apple’s 30% commission could net them $150 million this year, the Journal reported. Not bad, but small potatoes compared to the $2.8 billion the iPhone’s hardware revenue earned in the 6 months to March. The Journal suggests that much of that latter revenue is indirectly derived from the app store, however, because the 50,000 apps iPhone offers provide a compelling advantage for many users over the 2,000 apps RIM’s BlackBerry App World offers, for example.

The figure that struck me the most, however, was R&D spending: RIM spent 6.2% of its 2008 revenue on R&D, with Microsoft, Palm, and Motorola each spending 12%-15% on R&D. Apple? Just 3.4%, yet they’re still hailed as the innovation leaders.

Looks like in Apple’s case you can have pie and eat it, too. Even better, it’s the third-party developers doing the baking.

Related Reading:

• AT&T aggressively pursues app store agenda
• Dear gadget hounds: Wireless networks more than their phones
• Mobile app stores deliver little direct revenue but are critical for ARPU

Dear gadget hounds: Wireless networks more than their phones

I know, I know, it’s just the natural tides of media coverage chasing after the latest buzz, but really: AT&T, Verizon and Sprint are more than their headline-grabbing devices.

As I blogged previously, the Palm Pre and Sprint aren’t fated together. Now we’re being told that AT&T’s iPhone fumbles are killing the carrier. Please.

The Apple iPhone and Palm Pre are amazing devices, even “game changing,” as long as we’re delving into marketing buzzwords. But they aren’t going to single-handedly decide the fate of a $155 billion dollar industry.

Just look at Verizon: The BlackBerry Storm has received the worst reviews of the three headlining devices (even T-Mobile’s G1 has gotten much more favorable coverage!) yet the company’s still in great shape. Point made.

More LTE vendors join the 4G party (but no cake for Nortel!)

Lately, 4G is starting to seem like (relatively) easy money for everyone … or rather, everyone but poor, beleaguered Nortel, which is starting to remind me of Milton from Office Space, never getting a piece of the cake even as they watch it distributed all around them:

Nina: Now Milton, don’t be greedy, let’s pass it along and make sure everyone gets a piece.
Milton Waddams: Yeah, but last time I didn’t receive a piece. And I was told…
Nina: Just pass.
[while the cake passes Milton mutters - eventually everybody but Milton gets a piece]
Milton Waddams: [muttering] I could set the building on fire.

Today, Verizon announced that Giesecke & Devrient will be the supplier of the telco’s LTE smart cards, one step closer in bringing its planned 4G juggernaut to the masses. It will be a long, long time until we see LTE phones, of course, but already G&D and other suppliers are starting to see the 4G stimulus roll in.

Verizon also announced today Gemalto would offer the company’s OTA platform for LTE.

Meanwhile, FierceWireless notes a UBS report that claims AT&T has shortlisted Continued »

Wireless wizard: AT&T partners in search of valid revenue stream

AT&T has taken on a partner in Sunnyvale-based Jasper Wireless, a company that will provide the technical infrastructure so AT&T can support a new generation of wireless devices like navigation systems, e-readers, mobile Internet devices, netbooks, healthcare and tracking systems, to name a few. The target markets? Consumer and business.

In the old days, AT&T probably would have developed the inner-workings itself. But this partnership is about speed to market, and Jasper Wireless’s whole reason for existence is to “provide the platform, applications and design services needed to profitably connect and manage devices worldwide.”

By using the billing capabilities in Jasper’s software and AT&T’s wireless network, AT&T hopes to create a billing “relationship” with customers more quickly. In this multi-year agreement, Jasper brings its service platform to the table with the applications that help customers build, deploy and manage connected devices. AT&T is Jasper’s exclusive U.S. carrier for its wireless platform.

In a recent New York Times interview, Glenn Lurie, president, Emerging Devices and Resale, AT&T Mobility and Consumer Markets, acknowledged that while there’s a flurry of market activity around wireless access for gadgets, the market is in its infancy. I was relieved that Lurie sounded very clear that no one is clear what the business model looks like yet. Specifically he said: “You’re going to see a lot of people throw a lot of things out there and see what sticks.”

Maybe it will be a little bit like Apple’s iPhone apps. It seems every time I turn on the TV, I’m told that no matter what I might need, Apple’s iPhone has an app for that. Maybe wireless operators will want me to have all sorts of convenient wireless services.

Think Amazon Kindle. The AT&T partnership was announced the day after Amazon said it would release yet another Kindle in June. The Kindle DX is a large-screen (9.7 inch) version optimized for newspapers and magazines for $498. Now I am a recent Kindle 2 owner, and every time I download a book to my device in a matter of seconds, I think about the Amazon model of offering customers “free” wireless access. Since the Kindle’s launch in 2007, Amazon’s whisper-quiet partner has been Sprint, which runs the Whispernet (EVDO) network. Wispernet delivers e-books to me quickly and quietly. Someone pays for it of course, but for once, it’s not me.

The Amazon Kindle/Sprint Whispernet deal no doubt gets other operators’ attention. Sprint may provide the access, and other operators may want to go farther and get a more direct cut of the content. AT&T’s Lurie believes Jasper Wireless can help AT&T get into the wireless device market faster.

According to AT&T:

For some AT&T powered devices, Jasper Wireless’s applications will provide automated operational management capabilities, including custom device provisioning, instant activation, real-time diagnostic tools and detailed billing and usage reports – managed through a Jasper Wireless core software-as-a-service platform designed exclusively for M2M and consumer electronics communications.

By all means, companies should experiment, and wireless operators need to find a comfortable revenue stream, maybe even one that doesn’t make them mere transport providers. Lurie says AT&T wants to experiment with different models that could include charging customers for short-term or prepaid wireless access – both of which sound interesting.

Being a service-provider supporter, somewhere in all of the experimentation, I hope something lucrative sticks.

Wi-Fi: You can take it with you

Being neither 3G nor 4G, Wi-Fi, with its “no G” status, is much in the news these days, which goes to show that beyond the next-gen hype, there’s life (and competition) in Wi-Fi yet.

First let’s look at Qwest, which is offering its high-speed Internet customers a good deal — free Qwest Wi-Fi access at 17,000 hot spots nationwide. Qwest Wi-Fi is actually rebranded AT&T Wi-Fi, so there’s no doubt a wholesale deal in place. Some years ago, this deal would have been unthinkably anti-competitive, but both of the former Baby Bells operate in completely separate wireline territories, and Qwest doesn’t own any wireless assets. So why not?

Continued »

Telecom Timeout: Video investments

Telecom Timeout: Video Investments covers the latest on Nortel’s application delivery business sale to Radware, Cisco’s lay offs, a continued evaluation of Alcatel-Lucent’s future plans, as well as AT&T’s self-investment and the beginning of the process to distribute the broadband stimulus grants. Futher coverage also highlights the future plans involving IPTV by service providers, as unified communications, development of the 802.11v standard and new legislation for an updated Internet Safety Act.

Keeping you up-to-date on the latest in telecommunications industry news, views and strategy, Telecom Timeout and its weekly video blog track the highs and lows of the industry. Join us daily on Telecom Timeout for conversations on developing telecom trends and in-depth analysis of service providers, VoIP, wireless, IPTV, telecom regulation, and more.

Telecom Timeout: Trials and Tribulations

Juniper Q4 2008 results, Alcatel-Lucent’s end of year 2008 results, U.S. digital television conversion and AT&T out-sourcing suspension are a few topics covered on this week’s Telecom Timeout video update.

Keeping you up-to-date on the latest in telecommunications industry news, views and strategy, Telecom Timeout and its weekly video blog track the highs and lows of the industry. Join us daily on Telecom Timeout for conversations on developing telecom trends and in-depth analysis of service providers, VoIP, wireless, IPTV, telecom regulation, and more.

Telecom Timeout: Episode 2 — Quarterly Reports