Wireless handsets

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.

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.

T-Mobile takes VoIP/wireless integration step

T-Mobile has announced it will be offering a limited trial of an unlimited VoIP calling service to broadband customers of any sort for $10 per month plus the cost of the equipment ($50). The new service may be a step toward integration of home voice services and wireless voice using dual-mode handsets, something T-Mobile has also pioneered. This is likely to create a price war in VoIP and may also hasten the FMC evolution of US providers, which will bring the femtocell/WiFi debate to a head.

RIM Profits Show High-End Handsets Gaining Strength

RIM reported doubling of profit and revenue as its Blackberry sales exploded, magnifying the gulf between the handset vendors and the network equipment vendors in the mobile space. The challenge of course is that handsets are a consumer fad and mobile networks are long-lived infrastructure that can’t churn very often. The performance of RIM also suggests, when compared with that of Motorola, that higher-end handsets will likely be gaining strength. That again argues for a disconnect of handsets from mobile service provider offers, something we’ve predicted for some time. The pressure from the handset vendors will increase with the advent of OHA, and it may be that the network operators will yield and open the handset market to avoid having a truly “open” handset based on open-source take over. OHA’s fate may depend on the early discussions on a more open relationship between traditional handsets and the mobile operators.