smartphones

Lower Apple iPhone prices could pressure AT&T upgrades

Apple may be planning to lower its iPhone pricing to reduce the risk of losing the low end (where the growth likely is) of the smartphone market to competitors. The move may also be necessary to keep AT&T and other operators that have iPhone alliances from pushing competitive models more suited to the budget of the average phone buyer.

It’s hardly unusual for companies to target premium buyers in their early models, and that’s particularly true of Apple, which relies so much on cache to sell its stuff. A cheaper iPhone could create stress for AT&T, though: Too much success would boost traffic and force the carrier to accelerate its upgrade of wireless backhaul. The question is whether Apple would make a change without considering 4G migration, which is in the cards for AT&T and most other Tier 1 mobile operators by the first half of next year.

Sprint’s WiMAX phone: A voice competitor to itself?

Sprint is expected to release its first WiMAX phone this summer, and the launch may open a bunch of issues and opportunities in the world of evolving voice services. The issue is less whether something like the Voice over LTE (VoLTE) standard is helpful in a technical sense than whether any 4G VoIP business model makes sense.

Verizon’s decision to let Skype onto smartphones shows that operators are willing to cede some calling to over-the-top (OTT) voice players because it’s inevitable they’d lose in some spaces. How many spaces, then?

Will Sprint decide to make WiMAX voice a competitor to its own 3G voice, or will it make it an adjunct to data services offered on data devices? That’s the big question this summer may answer.

Google’s Nexus One support problems spotlight opportunity for telcos

Some early reports are saying that there are issues with supporting Google’s Nexus One smartphone, resulting in some users being shuttled between Google (who offers only email support), HTC and T-Mobile. We’re not surprised, nor should Google be. Telcos understand that people want quick answers to issues with what they consider essential communications, and, for that matter, any essential technology. Even open source software has been stalled by the fact that it is hard to find support for it, and Red Hat created a billion-dollar success from selling support for software that’s free.

There’s a moral here; the telcos that already have support organizations could turn their support offerings into a profit center by making them efficient through the use of proper tools. More significantly, they could weld supportability into new services in a way that Google and other over-the-top (OTT) players can’t match. Yet despite all of this, we find that vendors of all types are still in the dark ages of OSS/BSS instead of in the modern age of composable service automation.

Do you smell opportunity as strongly as we do? Apparently, not everyone does.

AT&T’s iPhone traffic jam and the prospect of a usage cap solution

The old 80/20 rule is now the 40/3 rule, according to AT&T.

Everyone knows that smartphone users generate between five-to-seven times more traffic than other wireless users, but AT&T says that 3% of iPhone users consume 40% of its network bandwidth. This shows the situation that all-you-can-eat pricing can get you into.

AT&T doesn’t plan to go there, according to its statements to the media. The company says it’s “inevitable” that heavy users at least pay for their usage. The decision to provide no-cap iPhone data use is out of sync with the rest of the world, where it’s routine to have data plans with specific cap-and-cover-charge policies. In fact, our model says that usage-free pricing will always increase over-the-top (OTT) competition and reduce return on investment (ROI), no matter what technology is used and no matter what services the telcos try to introduce in addition to their basic broadband.

We agree that heavy users have to pay for their usage, but we also think AT&T clearly must have known what would happen here and accepted the risk in exchange for the marketing coup it scored with the iPhone. That means regulators may have to consider whether carriers initiate pricing plans for competitive reasons with full intentions of later claiming overuse of the network and using that to justify usage caps, price increases, etc. Since most wireline network operators will move to usage-price plans (likely starting with high caps for heavy users only), this whole issue may provide an entry point for usage pricing to creep into broadband. None of this can happen quickly, though, so AT&T is also planning to upgrade its wireless services in San Francisco and New York, where problems with performance have been most severe.

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.