mobile phones

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.

As the Palm Pre goes, so goes Sprint?

How closely tied are Sprint’s fortunes to the success of the Palm Pre? Look around and it would seem the two are indistinguishable. The device has been appearing (unnamed but unmistakable) at the end of all Sprint’s Now Network commercials, in a full page ad Sprint bought in the Wall Street Journal, and in almost all blog chatter about Sprint’s future. SeekingAlpha.com has a post entitled Why Sprint Needs the Palm Pre to Succeed which outlines the case succinctly:

During the quarter, Sprint lost another 1.3 million subscribers with the vast majority being the highly sought after “postpaid” variety. This brings the total number of subscribers down to 49.3 million an 8.4% decline over fiscal 2007’s year end. With Sprint’s main competitor’s AT&T (T) and Verizon (VZ) gaining subscribers through the downturn, the gap between the “have’s” and the “have not’s” continues to expand. The wireline (mostly internet) business was not much better as revenues in that area dropped 6%.

It is clear that Sprint needs something to make customers stick around, and they believe that they have that silver bullet with their exclusive deal with Palm (PALM) to provide the new Pre handset. Continued »