Mobile

Apple MobileMe as major competitor?

Apple’s MobileMe may be more than an “Exchange Killer” (or at least a competitor); it may be the beginning of Apple’s challenge to Microsoft’s Connected Services Framework (CSF) and also a challenge to network operators. Finally, it may be a boon to Cisco. The reason is that MobileMe is an example of an over-the-top application of advanced service features, and thus a step in further disintermediating operators that might want to offer similar services themselves.

That’s what Microsoft has been doing, but more in partnership with operators than as a competitor.  But it’s pretty much what Cisco had hoped to do (and presumably still hopes to do) with WebEx Connect. In all, we think MobileMe may be the most important thing about the latest iPhone announcement because it may be setting off a new industry trend. We also think that MobileMe is the revenue kicker that Steve Jobs sees in his new iPhone deals with providers, which eliminate the Apple cut of future service revenues in favor of a one-time subsidy.

WiMAX consortium getting serious

WiMAX companies are proposing a patent pool to create a stable and reasonable royalty picture for the technology, hopefully stemming any loss of interest due to perceived risk in patent payments to third parties. Intel, Cisco, Sprint, Clearwire and Alcatel-Lucent are all involved. WiMAX, a new service framework likely dependent on wide acceptance by portable device vendors, poses greater risk than something like 3G, whose market is already established. The move is seen as a way to encourage participation by equipment vendors. This shows that the Clearwire WiMAX consortium formed here earlier is likely serious about trying to make WiMAX work.

Telecom consolidation continues in U.S. and Europe

Verizon is in advanced talks with Alltel, aimed at acquiring the mobile player. The move would make Verizon the largest mobile operator in the U.S. and a more effective competitor to AT&T. It also signals yet again the shift in the mobile market.  Consolidation is not a move that is undertaken in a dynamic and growing market, but rather in one that is already facing commoditization. France Telecom has also announced negotiations to acquire Swedish phone company TeliaSonera, a move that would create the EU’s largest operator. All consolidation moves are aimed at creating economies of scale, and in FT’s case, these are targeted initially at operations costs and core network costs, since access networks are not generally overlapping and don’t generate any real consolidation economies. In the case of Alltel, we believe there will be a net reduction in mobile spending.

Verizon backs LiMo

Verizon’s backing of LiMo is being perceived increasingly as a shot across Google’s bow, and also something that may be linked with an operator shift toward FMC and a more software-driven mobile strategy that moves away from IMS. The latter issue is, we believe, an important one for the industry, since any open platform strategy like LiMo or Android will devalue the network if no features are hosted there; everything becomes “over the top” by necessity.

Sprint/ClearWire WiMAX move to shake industry

ClearWire and Sprint have finally married, apparently, brokered by Comcast, Google and Intel. The move is said to be preparing to shake up wireless carriers, but the most significant impact will be to expand the notion of a hot spot into something with metro or even national scope. As we have said continually, WiMAX is portable user technology not mobile technology, and thus will have its greatest impact where 3G is used for laptop connect. We expect to see pricing for wireless laptop plans fall, but all wireless including WiMAX has a significant limit in total bandwidth per cell, and this will result in sub-par performance relative to wireline broadband connections.

Intel’s non-voice mobile devices to jumpstart WiMAX?

In what may well be a key announcement for the industry, Intel revealed that it had 25 partners working with it on portable Internet devices, or “mobile Internet devices” (MIDs) in the new-speak. These boxes will be designed for use while away from home or work but not mobile as the driver of a vehicle, and are larger than a cellphone but smaller than even the smallest laptops. Intel and others believe that the future of wireless non-voice services will lie in these devices, whose screens are large enough to deliver a credible viewing experience. Intel hopes these will jumpstart the WiMAX market, a key market sector for Intel and also one that has seen recent rumors of partnerships involving Intel, Sprint, Clearwire and Comcast.

Verizon open handset policy could promote loyalty

Verizon Wireless is launching its “open handset” strategy, a move that may have more impact on cellular voice pricing than its cap plan did a short time ago. Under the new program, handset makers can certify against what Verizon says will be minimal requirements and then sell directly to consumers, who will have to sign up for Verizon service but would not be required to sign service contracts. We hear that the non-contract services will be pricier than contracts offered, but that contract prices sans phone will likely be better. This will create additional slide in wireless cost and, we believe, further reduce infrastructure investment by wireless operators until an alternative revenue model is validated. We also believe it will promote FMC as a means of securing loyalty that was previously cemented through handset deals.

Mobile providers join to launch targeted ad service

Five unnamed mobile service providers have joined with ValueClick to launch a service that targets better demographic targeting of mobile ads. The mechanism used for ad selection is heavily linked to behavioral targeting, and it seems clear that the move is the long-awaited move by some mobile operators to gain some traction for themselves in the mobile advertising space. However, the ValueClick partnership doesn’t necessarily provide them the means of truly controlling their destiny, and we believe the mechanisms used in the trial (at least from what has been described) to be primitive. This comes as an analyst firm predicts that mobile search ad revenue will reach nearly $5 billion by 2013.

ECI enters Carrier Ethernet fray

ECI is entering the Carrier Ethernet market, leveraging in part the MPLS tools that the company obtained from Laurel Networks when it acquired that company. This space is a critical one because it is the focus of some fundamental debates—is Ethernet a service framework or a metro architecture, and can it displace some or all of MPLS. We believe that Carrier Ethernet can be a service and metro architecture and can displace an important chunk of the MPLS opportunity, but only if providers understand how to build metro infrastructure from Ethernet and not just offer Ethernet services. ECI seems to be moving in the correct direction, but the details of its products are still too sparse to be sure.

New mobile data pricing targets travelers

The mainstream tech publications are picking up the theme of “mobile voice is a commodity” and citing the new data plans such as Verizon’s plan for 5GB per month for $60 as proof. We think the conclusion on voice is correct (we’ve stated it ourselves, so that’s no surprise) but we believe the new data plans are independently targeting a market sector the mobile carriers believe to be a key one—the “hotspot user”. A business traveler might well stay four or five nights in hotels and also visit airport lounges three to four times in a month, according to research, and if the traveler used hotel and hotspot Internet access would likely pay around $70 per month in service costs. The new plans are attempting to pirate these travelers through slightly lower pricing.