smartphones

Verizon’s smartphone direction still chasing AT&T?

Verizon is apparently planning a total smartphone blitzfor the holidays, including the already-discussed Droid from Motorola, but also according to rumor, a new HTC Android smartphone and perhaps a third model as well.

The Verizon moves are, we think, are calculated to make things complicated for AT&T and Apple with the iPhone for the holidays. A multiplicity of models at various sizes and price points makes sense at this stage in the market, but there is no question Apple still has the cachet that other smartphones have so far been unable to match.

We think all of these smartphone wars are a signal that whatever the FCC might do with wireless net neutrality, operators are committed to the mobile web.

Google Voice, Apple, AT&T and the FCC: The flap continues

Google has released some information that suggests that Apple’s statements to the FCC in July about blocking Google Voice were not correct, and the rumor is that even more damning information is available at Google for release should Apple not reconsider its position.

Apple claimed that its “rejection” of the Google Voice application was for look-and-feel reasons, but the Google release suggests it was explicitly because Google Voice competed with basic Apple/AT&T functionality, something the FCC would likely rule on.

This issue could bite both Apple and AT&T because an actual false statement to the FCC would be bad politics, at the minimum. We say this because it’s not clear whether the FCC really has authority over Apple and handsets. The FCC would have to contend that Apple was simply a stalking horse for AT&T interests in this case, and AT&T is within the FCC’s jurisdictional web.

Motorola’s Android phone: good but compelling enough?

Motorola has launched the Cliq smartphone, its first Android operating system model and one that offers users a kind of “mashup” launch page called Blur (not much marketing zip) that consolidates social network, email, and IM into a single page.

Motorola has been a major laggard in the smartphone space, and it’s now teaming with T-Mobile for the Cliq launch, since T-Mobile has the longest history with Android phones. There are also some international prospects for Cliq, but the problem is that the gadget doesn’t have any really compelling benefit and thus may not be enough to pull through a lot of additional sales for Motorola.

We think the Android choice is smart. Nobody but Apple, Blackberry and Palm can hope to sustain a developer program on their own these days. The problem is that Motorola has waited so long that it’s going to be incredibly hard to differentiate its announcements from the pack.

Smartphones drive wireless, Android updates in pipeline

Whether smartphones clog cellular networks or not, they’re in demand as flagship elements of engagement with the consumer. They also help reduce a provider’s churn and let the provider churn opponents instead.

No wonder, therefore, that Sprint will be launching the HTC Hero smartphone in October. Sprint already has an exclusive on the Palm Pre, but the HTC Hero is the first Android device Sprint has deployed and only the third deployed in the U.S. (the other two are offered by T-Mobile).

Google is also rushing upgrades to Android. There are three in the pipe, and we hear the first is imminent. We’re told by two providers that discussions are underway to do away with voice-only pricing and standard handsets for new customers and instead move to an integrated plan.

Both Verizon and AT&T already require data plans for smartphones, and smartphone pricing is likely to sink to the point where making them the only customer option becomes practical. When? It won’t happen till 2011 in our view.

Sony Ericsson pins handset hopes on new president

Sony Ericsson named a new president, the former head of Ericsson’s U.S. operation, in the hope that management changes can reverse the course of the company’s continued handset market share losses.

The venture was established with the hope of galvanizing the Ericsson handset business, but so far it hasn’t worked at all, largely because it missed the smartphone revolution. That simple truth embodies the problem that Bert Nordberg will face. You can’t rewind history simply because you change CEOs, and the smartphone space is very crowded today.

We’re of the view that it will take a major effort and a lot of missteps by competitors for Sony Ericsson to pull things out at this point.

Comcast launches multi-modal WiMax service in Oregon

Comcast has launched a WiMax multi-modal service in Portland, Ore., that lets customers use either Clearwire WiMAX or Comcast cable for Internet access at one fixed charge. An additional plan offers access to Sprint’s national 3G network.

The plan is aimed at the RBOCs’ success with smartphones in promoting their own data plans for wireless, creating a useful bundle for consumers. RBOCs are also expected to launch femtocell-based services that would directly integrate wireless and wireline. Comcast says it will follow up with similar services in other Clearwire WiMax cities.

New BlackBerry targets consumers as open handset policy brews

RIM’s new BlackBerry Tour may be a critical product for the company because it’s aimed at a consumer market that’s a shift from RIM’s usual enterprise targeting. The Tour is an upgrade, though in some ways a minor one, to the Storm but has the familiar BlackBerry keyboard.

The reason we think RIM is so hot on the new consumer opportunity is that it doesn’t want to be locked into a defensive war against the Palm Pre and the new iPhone 3GS for enterprise customers without at least threatening rivals’ broader base.

The summer is going to be a major face-off in the smartphone market, complicated by the fact that there is growing pressure (created in large part by the AT&T/iPhone deal) for Congress to create an open handset policy. While such a policy doesn’t kill smartphones, it may reduce provider incentives to push them, thus putting promotion of the devices in the hands of handset vendors alone.

Voice over LTE models challenge vendors/operators

The impending LTE rollout is creating questions about how voice will be handled, and the answer may have a big impact on the fortunes of vendors. There are three basic approaches being proposed by some operators: IMS/VoIP, using the 2/3G network for voice and 4G for data only (multimodal handsets), and a circuit-over-IP architecture called Voice over LTE via Generic Access(VoLGA).

Obviously the IMS approach would favor the big telecom equipment vendors while the others might admit a broader range of bidders. We’ve heard many operators voting for the fallback-to-3G approach because it would make handset transition easier since current smartphones could continue to operate on the current network, but there are potentially spectrum and cell issues to be resolved.

4G LTE adoption may depend on smartphone model

The LTE transformation appears to be gaining momentum, even though it still looks like no significant investment will be made until 2010. We believe that a major factor in this is the decision by service providers to adopt a smartphone-pull model for data revenue, a model that relies on the Internet and handsets to drive data growth and shift revenue to data-centric plans.

Unlike some previous walled-garden service plans, the smartphone model needs a lot of users and capacity to create additional revenue, and thus may be best approached with LTE. Too much near-term push on data, one operator tells us, would confront operators with the choice of either staying with 3G and risking an explosion in the number of cells, or forcing the buyers of 3G smartphones to upgrade en masse to 4G.

Femtocell plans are likely a good barometer here; operators have been talking up 4G femtocells and Motorola has now announced it’s focusing its femtocell work there. Our model says that 2011 will be the big year for 4G, which means that it will be important for equipment vendors to both prepare for that and address how to keep infrastructure spending up in the meantime.

Wireless Internet: Should “net neutrality” apply?

The FCC is being asked for a ruling on whether its net neutrality principles apply to wireless Internet. This step comes after AT&T limited the use of Skype on smartphones.

There will be a lot of interest in the FCC’s response. On the surface, the issue seems clear to us. The FCC has said before that the service matters, not the technology. On that basis, it would appear that the four net neutrality principles articulated by the FCC would apply to the Internet, period.

On the other hand, is wireless broadband the same “service,” and the question is, do the rules (promulgated in the context of a wireline access order) really apply here? The risk for operators is that OTT players can use Internet access to bypass core services like voice, yet the market is moving to a one-price-for-all mode anyway. We think AT&T will lose this one and probably should not have fought in the first place.