Amazon Sells More Kindle Books than Physical, On Christmas Day At Least

In a milestone of sorts, on Christmas day, Amazon sold more Kindle books than physical titles, the company says.
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But Kindle content sales have a problem akin to YouTube's similar problem. The device and application are popular, and getting more traction. But the company loses money on new releases and makes only a modest amount on older titles, thus losing an estimated $1 per Kindle book sale.

The old adage about losing money on a sale, but making it up in volume does, in this case, have a logic to it. If Amazon can make its appliance and service popular enough, if it starts to drive huge volumes, then content owners will have more incentives to cut Amazon better deals on wholesale access to titles.

Over time, that should allow Amazon to improve its margins. So the big issue, long term, is whether much-lower wholesale prices will drive incremental sales volume high enough to create a big new business. Some observers speculate that at retail prices are cut to $2.99 or $3.99 per copy, sales volume should soar.

Smaller gross sale amounts, but much-higher volume, could create a more-attractive business case for Amazon and its partners.

Small Businesses Challenged by Social Networking

As often is true in the communications business, tools that large enterprises find useful and helpful are not necesarily so helpful or useful for small businesses. Social networks likely fall into that category.

A survey of small business executives by Citibank, for example, found owners and managers giving short shrift to social networks as a help for their businesses.

The survey of 500 small business executives across the United States by Citibank / GfK Roper found 76 percent of respondents saying they have not found social networking sites such as Facebook, Twitter and LinkedIn to be helpful in generating business leads or for expanding their business during the last year, while 86 percent say they have not used social networking sites to get business advice or information.

The survey found that general search engine sites such as Google and Yahoo! trump small business-focused sites and the WSJ.com as destinations for small business owners to seek business advice or information. 61 percent of respondents say they rely on these search engine sites.

"Our survey suggests that small business owners are still feeling their way into social media, particularly when it comes to using these tools to grow their businesses," says Maria Veltre, Citibank EVP. "While social media can provide additional channels to network and help grow a business, many small businesses may not have the manpower or the time required take advantage of them."

That's a lesson even some mid-sized companies already have encountered. It isn't that social networking takes much capital or imposes much operating cost. What it does require is time. So the typical pattern is that a firm launches a social networking effort of some sort with time borrowed from executives and professionals who are very busy and scarcely have time to tackle the other issues on their agendas.

Over time the effort dwindles. That's one reason few small businesses have made sustained and vigorous social networking efforts.

One trend confirmed in other studies is that small businesses are making greater use of Web sites to support their business operations, marketing and sales.

About 42 percent of small business owners and managers reported that in the past year they have made greater use of their company's Web site to generate business leads and sales, though.

Among companies with 20 to 99 employees the percentage rises with 57 percent saying they have made greater use of their Web site.

Survey respondents are also using email marketing (28 percent) and online advertising (25 percent) to generate business leads and sales.

But the evidence on how well social networking works for lead generation is contradictory, so far.

A recent survey by Ad-ology found lead generation is the biggest benefit of social networking for U.S. small businesses, cited by one-half of respondents as being the case. Social networks were also considered a good way to keep up with the industry and monitor online chatter about the business.

Small businesses rated Facebook the most beneficial social networking site, with 33 percent of respondents reporting it was at least somewhat helpful. It was also the social network most likely to be used. Use of LinkedIn was less common, but the business-oriented site was claimed as beneficial by 21 percent of small businesses, compared with 19 percent that said the same of Twitter.

The biggest roadblock, however, was the perception that “our customers do not use social networks,” which 31 percent of respondents said they believed.

And as has been the case noted above, nearly 50 percent complained that they did not have the time or staff available to do a good job with social network marketing.

Vonage World Mobile Launches

Users of the iPhone, BlackBerry and iPod touch can subscribe to Vonage World Mobile, a new global calling feature available for "Vonage Mobile," Vonage's mobile calling application. Vonage World Mobile provides customers with unlimited mobile international calls to over 60 countries for one flat monthly rate when calling from their mobile device.

The service works on cellular or Wi-Fi (iPhone), just Wi-Fi for the touch and only using mobile spectrum for the BlackBerry.

Current Vonage World residential customers will receive a 40 percent per month discount on their home service when they buy Vonage World Mobile.

Vonage World Mobile costs $24.99/month and is available as a free download at www.vonage.com and the iTunes App Store.

Mobile Terminations Now Exceed Fixed

Mobile subscribers have become a powerful force in the international voice market. In 2008, mobile-originated international traffic grew 19 percent, and accounted for 36 percent of total international traffic, up from 32 percent in 2007, according to TeleGeography.

Mobile terminated traffic grew 18 percent in 2008 and accounted for 48 percent of international traffic terminated in 2008. TeleGeography projects that mobile terminated traffic will exceed traffic terminated on fixed lines in 2009.

If you want to know why Sprint is selling "no incremental cost" calling to any domestic U.S. mobile, that is one of the reasons.

That would be a first. Up to this point, more calls have been terminated on fixed phone lines. To be sure, more calls still are originated on fixed lines than mobiles, but even that gap is narrowing.

Mobile phone subscriptions overtook fixed lines in 2002, TeleGeography notes.  By 2008, there were four billion
active mobile accounts globally, accounting for 77 percent of global phone lines. In recent years, growth has shifted to developing countries. Mobile subscriber growth in Africa has led the world in recent years, growing 35 percent in 2008 after having increased 39 percent in 2007.

While growth rates in Africa are tremendous, the subscriber base remains very small—mobile penetration in Africa is still only 39 percent.

Still, India gained 112 million new mobile subscribers in 2008, a net increase that exceeds the total number of mobile subscribers in Germany, says TeleGeography.

China gained 89 million mobile subscribers in 2008, and Brazil, Indonesia and Vietnam all gained more than 30 million mobile subscribers. Conversely, mobile subscription growth in more mature markets has slowed.

Good News for VoIP, Bad News for Wired Telecom Providers

"VoIP" was the "industry of the decade," according to IBISWorld, which says the industry earned that accolade because of its 1,655 percent growth rate between 2000 and 2009. IBISWorld notes that VoIP, as a new industry, only began to earn any revenue in 2002, so it is starting from a "zero" base.

Wireless telecommunications ranked eighth for industries of the 2000 to 2009 period, posting revenue growth of 183 percent.

IBISWorld also predicts VoIP will show the most revenue growth in the coming decade as well, growing 150 percent between 2010 and 2019.

The bad news for the 2010 to 2019 period is that wired telecommunicatons carriers will show negative 52 percent revenue growth. Telecommunications resellers likewise will show negative 26 percent revenue growth over that same period.

Public Wi-Fi: Smartphones Driving Usage

Originally envisioned as a for-fee service used by users who wanted Internet access for their notebooks, public Wi-Fi hotspots increasingly are used by smartphone users.

As a percentage of total sessions, handheld access increased from 20 percent in 2008 to 35 percent in 2009, according to In-Stat.. By 2011 handhelds are anticipated to account for half of hotspot connections.

There are lots of reasons for the trend. The number of devices equipped with Wi-Fi capability is growing fast. In-Stat estimates that, from 2007 to 2008, Wi-Fi-equipped device sales inreased more than 50 percent. Service providers also are encouring users by offering Wi-Fi hotspot access as an amenity to their fixed broadband, smartphone or PC card customers.

More devices able to use Wi-Fi, plus a "no incremental cost" charging model are boosting activity. The other development is use of devices other than PCs and phones that can use Wi-Fi. The Apple iPod "touch" is perhaps the best example, but In-Stat points out that shipments of Wi-Fi-enabled entertainment devices, such as cameras, gaming devices, and personal media players, will increase from 108.8 million in 2009 to 177.3 million in 2013.

Will Mobile App Revenue Decline in 2013?

Mobile application downloads, mostly driven by mobile app stores, will reach about five billion in 2014, ABI Research predicts, up from 2.9 billion in 2009.

Despite the proliferation of apps, the firm expects sales to start declining in 2013 as free or ad-supported versions of "must-have" apps undercut the paid ones.

That is perhaps the single most intriguing prediction, as it tests, to a certain extent, both developer ability to create compelling for-fee apps as well as the much-discussed "freemium" business model, where some applications or functionality are given away for free and additional functionality is added "for fee."

In part, ABI Research expects revenue from mobile app sales to decline by 2013 due to competition, which will lead to downward pressure on application prices.

But ABI Research also believes “must-have” applications now sold in app stores will face competition from free or advertising-supported substitutes. This has already started to happen, with the launch of Google’s free turn-by-turn navigation service, says Bhavya Khanna, ABI Research research associate.

As with all such predictions, it might turn out to be partly right, partly wrong. Music, games and other entertainment apps likely will be able to charge fees. The same likely will be true of business, utility, content and productivity apps.

The analogy probably is today's software business. Widgets are free. But lots of other utility, productivity and content apps are sold.

To be sure,  GPS-maker TomTom recently cut the $100 price of its iPhone app in half as a result of Google launching its own free Android counterpart. The ways people acquire GPS capability likely will change over time, it is true. Some people will want stand-alone devices, others will buy such capability as a built-in part of their smartphone purchase. Some will pay for fully-featured apps while others might be willing to use free or low-cost apps.

Some for-fee apps will face pressure when they are confronted by companies such as Google that have some other revenue model that allows them to subsidize functionality other providers rely on as their core revenue stream.

Users who regularly download paid apps spend approximately $9 on an average of five paid downloads per month, AdMob noted in July 2009. People do not seem to mind applets that cost less than $2 each. That suggests, at least so far, an emphasis on micro apps as the revenue driver for mobile app stores. That is a different market than most "shrink wrapped" apps sold today using other channels.

Still, there is a chance of disruption. Ask any telco what happened when Skype, Google Voice and other IP-based firms were able to provide voice calling functionality because it was not their legacy business.

Some for-fee providers likewise will face pressure from competitors that have lower cost structures. But that's a generic business problem. Ask any executive from an established grocery chain what they had to do when Wal-Mart showed up in their local market.

But not every conceivable application will face those problems. Consumers will pay for valuable products, and app stores likely will prove an important way for innovators to sell valuable functionality, at relatively low prices, much of the time.

We likely will see lots of new revenue and business models develop, and app stores will allow creators to sell their products at lower prices than possible before. So some of us might not agree that app store sales revenue will decline, ever.

Among other findings, ABI Research predicts that Android's share of the market will grow from 11 percent to 23 percent over that same period. "This rapid growth is driven by the mass adoption of the Android OS by both vendors and consumers from 2009 onwards," says Bhavya Khanna, ABI Research research associate.

There are now more than 14 phones that run the Android OS, and many more will launch in 2010. This, coupled with the rollout of application stores from both smartphone vendors and network operators, will see the iPhone’s share of the total market shrink between 2010 and 2014,” says Khanna.

64% of U.S. Broadband Connections Now are Mobile

There are more mobile broadband subscriptions in service in the U.S. market than fixed line.

The CTIA notes that there are now 103 million mobile broadband customers in the United States, according to Informa Telecom and Media. There are more than 58 million fixed line subscribers, according to Insight Research Corp.

By that measure, there are 161 million U.S. broadband subscriptions. So mobile connections represent 64 percent of broadband connections now in use. And mobile broadband has exploded over the last 18 months.

In June 2008, mobile broadband accounted for more than 59 million high speed subscribers, about 45 percent of all broadband connection in the United States, according to the Federal Communications Commission.

Clearly, any effort to create a national U.S. broadband policy would have to recognize the leading role wireless now plays.

Google, QR Codes and Mobile Tagging

You might wonder why Google is interested in "QR codes," two-dimensional bar codes that can contain any alphanumeric text and often feature URLs that direct users to sites where they can learn about an object or place.

Camera-equipped mobile devices provide the "reading device." Mobile always are with a user, so the QR reader software allows people to get information about anything with a QR code, wherever they are. Combine that feature with Google's advertising revenue model, location-based services and one ends up with the mobile equivalent of "tagging."

Beyond the ability to create richer information about places and things, widespread QR creates a richer platform for mobile advertising. That is all the incentive Google needs to push the technology.

The codes are increasingly found on product labels, billboards, and buildings, inviting passers-by to pull out their mobile phones and uncover the encoded information. QR codes can be used in newspapers, magazines or clothing.

Tracking information for products in industry, routing data on a mailing label, or contact information on a business card are other potential applications.

QR codes also are part of the move to "augmented reality," providing richer information and context about the physical world around any mobile user, where they are. Again, the marketing possibilities are obvious.

What Business is Google In?

Looking back from where we are, and recalling the vigorous debates analysts and observers once had about "whether Google wants to be a phone company," it now appears the original question has no simple, unambiguous answer.

Does Google want to be a regulated common carrier providing communication services to consumers and businesses? No. Does Google want to be a provider of Web-enabled IP telephony services? Yes. That's what Google Voice does.

Does Google want to be a "Skype-like" provider of international calling services? Perhaps it was not originally thinking it wanted to do so, but Google Voice now supports for-fee global calling from whatever handsets Google Voice users wish to employ.

Does Google want to be a facilities-based wireless services provider? No, but it has an investment stake in Clearwire. Does Google want to be a mobile phone manufacturer? No, but it is increasingly partnering with others, including hardware and service provider partners, to create new applications and business practices within the mobile industry, planning to introduce the "Nexus One," a Google-branded open and unlocked GSM phone, in 2010.

The point is that there is no unambiguous answer to any of these questions. Google slowly has been adding new roles in the communication ecosystem, but primarily to increase its core business model of indexing information and creating advertising revenue streams around the ways people use information.

To "answer" the decades-old question about whether an "ad-supported" telephony model can be created, again we are left with an ambiguous answer. The consumer voice apps Google provides are partially supported by end user fees, while the business-focused "Google Apps" productivity suite primarily is supported by user fees.

It remains unclear whether any sustainable "telephony services" business model can be 100-percent ad supported. But it seems likely such an effort can be partially ad supported, just as cable TV service provider evenues are partially ad supported.

So here's the next question: Will Google Voice, still in private beta, be configured as a small business service, much as Google Apps comes in both a consumer version and an enhanced business version? Michael Arrington at TechCrunch thinks that will happen.

"From what we've heard, Google is very seriously planning to add a version of the Google Voice product to its Apps suite of applications for businesses," says Arrington.

So far it sounds as though the service will be most applicable to the very-small business setting, as the likely deployment will feature a single inbound line and then mapped extensions that will redirect calls to a home business line, mobile or VoIP device.

The key here is management of the single trunk line. To keep the single trunk line available, Google Voice would have to connect an inbound call to the virtual extension, creating a direct connection between the caller number and the virtual extension, and then release the trunk line.

The same thing would have to be done for outbound calls, allowing the Gooble Voice virtual number to do the outbound dialing, setting up the connection between two physical phone devices, and then releasing the Google Voice trunk.

If that isn't done, there will be danger of high "line is busy" blocking.

Still, one would guess that the inevitable question--does Google want to be a provider of communications services to small business--likewise will wind up being only ambiguously answerable. The only unambiguous observation is that Google now is well entrenched in the mobile, communications, application, advertising, IP communications spaces.

It is part of the ecosystem, but uncomfortably (for other ecosystem partners) unconfined to one role in the full ecosystem. Perhaps a better way of phrasing the question is: "Does Google want to make itself the center of a new ecosystem?". There's likely a single answer to that question.


Google started out as a search engine, and have since expanded, through product development and acquisitions, to include services in every link of the information chain, says Jay Neeley, a Web strategy consultant. So one way of looking at how Google might see itself is that it operates in core parts of the information ecosystem.

As part of its activities in the "Internal Information Creation" segment, Google hosts or enables the creation of content.
But Google also is heavily involved in the "External Information Creation" segment, indexing information it has not created.

In the "Information Usage" segment, Google facilitates ways to share, edit, talk about, use, remix, and do all kinds of other things with information. In the "Information Reception" segment, Google offers a variety of ways for users to access and keep track of information.

"Information Aggregation" is another part of what Google does, culling information by popularity or usefulness and
making that information available in other ways, such as in Google Maps. "Information Analysis" is part of the analytics portion of the information business.

It just so happens that to extend its information business, Google might want to do lots of other things that impinge on other existing businesses in the communications, entertainment, applications, software, media and hardware spaces.

AT&T to Add an Android?

Earlier in 2009, Motorola indicated that it plans to release as many as 20 handsets in 2010 running Google's Android platform.

It appears AT&T will be launching at least one Android device in 2010, said by some observers to be called the "Backflip" or "Enzo,"

The device is rumored to run "MOTO BLUR," software that syncs Facebook, MySpace and Twitter updates with no log-ins and no apps to open.

Perhaps you would expect this, but at least some rumors suggest the AT&T Android device will not come preloaded with any Google apps except for Maps. Some people won't like that, but the point is that users can buy Androids that do feature Google apps, either on other Android devices sold by AT&T, or Android devices sold by other carriers. And there will be the Nexus One as well.

The whole idea of "open" neworks and devices is that diversity will happen. Some people might not like AT&T "dictating" what software load is on the device when purchased. Others might simply say that it is an option. If any user doesn't like it, don't buy it. That's the whole idea of the benefits openness brings. Users get choice.

The "Opus One" is said to be Motorola's first iDEN-based Android phone. That means it will work on Sprint Nextel's iDEN network and offer features such as walkie-talkie calling. According to the Boy Genius, it will run Android 1.5 with iDEN service enhancement.

Twitter Appears to be Profitable

Twitter appears to be profitable, on the strength of new deals with Google and Microsoft to allow indexing of Tweets, as well as lower telecom expenses, Bloomberg BusinessWeek says. As important as that is for Twitter and its investors, it also is good news for Twitter users, who now can have less concern that Twitter will vaporize for lack of a sustainable business model.

To be sure, the long-term model still must be created. But Twitter now has more breathing room to do so.

In exchange for making tweets, searchable on Google, Twitter will receive about $15 million, while the Microsoft partnership is worth about $10 million.

Twitter also achieved profitability by reducing expenses, particularly the money it used to pay mobile providers to disribute tweets as text messages.

Apparently Twitter has managed to renegotiate so many deals with carriers that the company pays far less for the services.

By some estimates, Twitter now requires about $20 to $25 million in operational costs. That means the two search deals basically cover Twitter's operational expenses, at least for the moment. That will allow Twitter to spend time creating an ad revenue stream and commercial services that would allow enteprises to analyze traffic, for example.

Is Broadband "Satisfaction" Directly Related to "Bundle" Savings?

The conventional wisdom is that high-speed broadband access is becoming a commodity bought by consumers primarily on the basis of speed and price.

A recent survey by Parks Associates also showed that there is not all that much difference between consumer satisfaction with any of the broadband network types.

With cable modem service and digital subscriber line as the baseline, consumers said they were a bit more happy with fiber to the home, and a bit less happy with either satellite broadband or fixed wireless broadband.

So the differences are a matter of performance, or speed or price, right? Well, maybe, and maybe not.

The Parks Associates survey also found that consumers were more satisfied with any broadband service purchased as part of a bundle, less happy when broadband was purchased a la carte. Since the primary end user benefit from buying any bundle is the cost savings, one might conclude that consumer satisfaction has less to do with the technical parameters (speed and reliability) and mostly to do with "saving money."

Since satellite broadband and fixed wireless services rarely are purchased as part of a multi-service bundle, that fact alone would explain lower satisfaction with either satellite or fixed wireless services.

A Look at Consumer Satisfaction with Broadband

One can get a good argument about whether consumer satisfaction with any communications or entertainment video service is strongly related to customer loyalty.

The conventional wisdom is that "happy" customers are "loyal" customers, but that always has been tough to demonstrate in the consumer communications market.

Churn rates for "satisfied" customers often do not seem all that different from the behavior of demonstrably "unhappy" customers, though few would argue there is no relationship between "satisfaction" and "loyalty."

Some new analysis by Parks Associates illustrates the issue. As it turns out, "satisfaction" with various broadband access services is relatively comparable across platforms and networks. Fiber to the home fares better, satellite broadband and fixed broadband a bit worse than either cable modem service or digital subscriber line.

But the differences are not quite as pronounced as one might think. With cable modem and DSL service as the benchmark, FTTH does a bit better and wireless a bit worse. But FTTH, while "above average," and wireless "a bit below average," are fairly close to the baseline.

At the margin, FTTH customers are a bit more happy, wireless customers a bit less happy. But the link between satisfaction and churn is not precise, nor linear. Other surveys tend to show that overall consumer satisfaction with most entertainment video, mobile and fixed line services is reasonable, but not typically among the products consumers routinely say they are most happy with.

Grumbling and grousing just comes with the territory, it seems.

Permanent Changes in Consumer Behavior and Mobility Business?

The economic crisis "permanently" changed how consumers, enterprises and network builders approach everything, says Christopher Collins, Yankee Group analyst. The changes might not be helpful to communications service providers, if consumers do as they have told Yankee Group they will.

About 66 percent of consumers claim they will spend less in 2010 than in 2009, while 25 percent expect to cancel or spend less for core connectivity services.

About 20 percent of business executives also said they had undertaken “severe reductions” in their technology investments.

But one has to be especially careful at times of transition, which by definition lead to changes of sentiment and behavior. And sentiment seems to be improving.

But some of Yankee Group's 2010 predictions are grounded in a continuation of underlying trends.

The number of mobile-only households in the United States doubled in 2009, to 30 percent of homes, says Collins.

And cord-cutting is rapidly expanding to mobile broadband at a rate faster than anticipated, he notes. In fact, Collins estimates that 33 percent of U.K. homes will be "mobile only" for their broadband connections by Deember 2010. That could happen elsewhere, he suggests.

Prepaid payment plans, lower prices and higher speeds might encourage mobile broadband substitution, he says. "These factors will combine to make mobile broadband a more realistic alternative to land-line broadband for the most price-conscious and quality-insensitive consumers," he says.

Another trend just might have the effect of slowing smartphone adoption, though. Yankee believes mobile service providers cannot afford the increased customer acquisition costs subsidized phones represent.

But should that happen, and users start to pay the full costs of their devices, upgrades will slow and churn will lessen. To forestall the slowing of smartphone uptake, which is key to increasing data revenues, service providers could resort to payment plans for phone purchases.

Also, the Yankee Group believes the netbook will face disappointing sales in 2010, something of a reversal of 2009 trends. NPD DisplaySearch reports that year over year netbook sales grew by almost 270 percent through the second quarter of 2009.

Collins notes that netbook return rates are high, running 30 percent. Collins suggests that is a result of user unhappiness with performance, form factor or other issues. The other issue is that prices of notebooks have dropped. The Yankee Group assumes notebooks will take on similar netbook form factors but with more utility than netbooks offer.

Consumers also drive more than 50 percent of enterprise smartphone purchases, Yankee Group predicts. The largest beneficiary of this trend will be Apple, as the iPhone continues to cross over into the business world. The biggest loser will be Microsoft, as Windows Mobile loses mindshare among both business decision-makers and employees.

Analysts also believe the Chrome OS also will start to power a new class of devices and that cloud computing will drive demand for new enterprise management tools.

Huawei will continue to nab LTE deals from Ericsson, Alcatel-Lucent and Nokia Siemens Networks on their home turf, and Yankee Group predicts that Huawei will expand on its success by winning a major LTE deal in North America in 2010.

Telcos also will start to leverage reliability concerns about cloud computing to win business. As owners of network assets, they can provide enterprises with secure VPN links between private and public cloud environments, plus sophisticated management portals to monitor service performance, Yankee Group believes.

That’s why telcos including BT, Deutsche Telekom, NTT, Orange Business Services and SingTel are leading candidates to become trusted cloud intermediaries.

The coming year also will raise awareness that innovation increasingly requires partnerships, as venture capital investment in hardware and networking start-ups is declining. Venture capital funding for networking and equipment start-ups has declined every year since 2000, according to the National Venture Capital Association (NVCA).

In 2000, the venture capital community invested $11.2 billion in networking and equipment sector companies, but in the first three quarters of 2009, that sector saw just $545 million in investment. If they are to remain competitive, suppliers  must revitalize internal research and development.

In 2010, infrastructure sharing (of both active and passive network assets) will become the de facto business model for efficient telcos in both developed and emerging markets. This is not just a matter of economics; regulators are also forcing the practice. And it’s a critical shift for telcos: Competitive differentiation will focus on services, not network reach. Europe is currently a center of activity, but it’s a global trend (e.g., we see this in India, where regulators are eager to improve the economics of connecting rural areas).

Trailblazers in 2009 included Vodafone and Telefónica, which agreed to share network sites in the U.K., Spain, Germany and Ireland, with more countries under discussion for 2010. Meanwhile, Orange and T-Mobile U.K. agreed to merge in 2010 without changing T-Mobile’s existing 3G network-sharing deal with 3 or Orange’s deal with 3 to provide 2G coverage services.

If telcos don’t embrace infrastructure sharing on their own, regulators may force their hand. The European Parliament (EP) recently approved reforms aimed at helping all telecom operators in the EU 27 share incumbents’ access networks on equal terms. If incumbents fail to comply, regulators can force the functional separation of network operations from service divisions (as the EP did in the U.K., and now plans to do in Italy and Poland). Such approaches are in play across the world: New Zealand with Chorus and Singapore with Nucleus Connect are notable examples; Australia is likely to be next.

Also, U.S. network neutrality rules will have a domino effect worldwide. As a result, service providers everywhere will be forced to become more transparent, both in terms of their internal traffic management practices and the ultimate effects those practices have on end-users.

How Will "No Contract" Smartphone Sales Affect Adoption?

What happens to smartphone sales, data plan sales, consumer behavior and mobile service provider marketing if phones cannot be provided at subsidized prices? If sales of smartphones fall, then use of mobile broadband services likely will grow more slowly. So smartphone prices do matter.

Up to this point, mobile phone subsidies have been seen as a “necessary evil” for the development of mobile phone services and have helped kick start the mass market for mobile phone services in many markets around the world. And it would be hard to underestimate the role subsidized handet pricing has had.

Handset subsidies are viewed as a loss leader strategy, a means for bringing new subscribers onboard, or encouraging existing subscribers to churn away from their existing network and onto a competitor’s.

But investors do not like the practice, as it puts pressure on service provider cash flow. Regulators do not seem to like the practice because subsidies mean contracts, and contracts lessen consumer ability to change carriers.

Global smartphone volumes will represent 14 per cent of total mobile devices sales in 2009, growing by 23.6 per cent from 2008 and to 38 per cent by 2013, say analysts at Gartner.

Smartphone prices are falling as shipment volumes increase, and a new study from ABI Research finds that while in 2007 only 18 percent of smartphones on offer cost under $200 retail, that percentage has already grown to 27 percent in 2009. By 2014, say the firm’s forecasts, 45 percent of the smartphones shipped that year will be priced below $200.

“Manufacturers see consumers increasingly demanding smartphones, because of their better understanding of the value that a smartphone delivers,” says mobile devices practice director Kevin Burden.

The result: more and more smartphones and conventional phones are priced in similar ranges. According to ABI Research, by far the greatest increase in smartphone shipment volumes over the next five years will be found in the $100-200 price range.

But what happens if new government regulations bar the practice of phone subsidies, and consumers must pay full retail price for new high-end models? Less buying.

On the other hand, there will be more buying of cheaper models. That doesn't necessarily mean smartphone sales overall will plunge, but it will be far more difficult to sell massive quantities of new high-end devices, as few consumers have shown any willingness to spend $600 for unlocked devices.

Of course, there are other possibilities. Perhaps some providers will be able to create new payment models, such as offering installment plans for purchase of new high-end devices. A few might consider other subsidy programs that serve up ads and default applications in exchange for lower-cost devices.

Advantage also will be gained by manufacturers that can wring out costs, offering high-performance devices that just cost less to begin with.

What seems clear, though, is that mandated sales of full price devices, sold without contracts, will have massive impact on the take rate for high-end devices.

Video Represents 99% of Consumer Information Consumption

Reduced to bytes, U.S. consumers in 2008 imposed an information transfer "load" of about 34 gigabytes a day, say Roger E. Bohn, director, and James E. Short, research direction of the Global Information Industry Center at the University of California, San Diego. That works out to about seven DVDs worth of data a day.

And that isn't even the most-significant potential implication. We are used to hearing about consumption of media or information in terms of "time," such as hours consumed each day. But Bohn and Short also look at information flows in terms of "bandwidth."

If one looks at consumption based on the "hours of use," video accounts for possibly half of total daily consumption.

If one looks at the flows in terms of compressed bytes, or actual bandwidth required to deliver the information, then video represents 99 percent of the flow volume.

That has huge implications for the design of any nation's communications and "broadcasting" networks. To the extent that virtually all information now is coded in digital form, a shift of consumption modes (from watching linear satellite, cable or telco TV to Internet delivery) can have huge effects.

Recall that video bits now represent 99 percent of bandwidth load. But also note that most of that load is delivered in the most-efficient way possible, by multicasting a single copy of any piece of information to every potential consumer all at once. It requires no more bandwidth to serve up an event watched by 500 million people than one person.

That is why video and audio networks historically have been designed as "mutlicast" networks. They are the most effiecient way of delivering high-bandwidth information.

If more video starts to move to Internet delivery, the bandwidth requirements literally explode. To deliver one identical piece of content to 500 million Internet users requires 500 million times as much bandwidth as the "old" multicast method, in at least the access link. If network architects are ruthlessly efficient and can cache such content at the edge of the network, wide area bandwidth consumption is reduced and the new load is seen primarily on the access networks.

All of this suggests a rational reason for maintaining "multicast" video entertainment networks, and not shifting all consumption to unicast Internet delivery. It is extremely inefficient and wasteful of network resources. To the extent that much "on demand" viewing of popular professional content can be satisifed by local storage (digital video recorders), this should be done.

On-demand viewing of YouTube content is harder to rationalize in that manner. For the same reason, local storage of computer games, where possible, makes sense. Interactive, "live" gaming does not allow such offloading, and will contribute hugely to Internet bandwidth demand, just as viewing of YouTube videos is doing.

“Information," representing flows of data delivered to people from 20 sources, is likely to be much higher the next time the researchers replicate the study, because television, which accounts for nearly half of total consumption, now has shifted from analog NTSC to high-definition, which imposes a greater information load.

Television consumption represents about 41 percent of the daily consumption, but computer and video games represent 55 percent of the flow. Add ratio and TV and those two sources represent 61 percent of the flow.

But there is another important implication: the researchers counted "compressed" information, or "bandwidth," in addition to more-familiar metrics such as hours of consumption.

Looked at in this way, the researchers say, "led to a big surprise." In fact, only three activities--television, computer games and movies account for 99 percent of the flow. All other sources, including books, mobile or fixed voice, newspapers, radio or music, contribute only one percent of total load.

The researches also point out that they count bytes as part of the  "information flow" only when users actually consume the information. Data stored on hard drives or TV or radio signals not being watched or listened to does not count in the research methodology.

The researchers also point out that if “personal conversation” is considered a source of information, then high-quality "tele-presence" applications that actually mimic talking to a person in the same room would require about 100 Mbps worth of communications load.

Three hours of personal conversation a day at this bandwidth would be 135 gigabytes of information, about 400 percent more than today's average consumption.

Will Firefox Mobile Displace App Stores?

Right now mobile apps are hard to develop if what one wants is access to the widest range of browser-equipped smartphones and application stores. Basically, each application has to be re-coded for each mobile operating system.

Mozilla.org thinks it has a better solution: write apps directly for the Firefox mobile browser, using HTML5, CSS and JavaScript, and be done with it.

Firefox Mobile (known informally as "Fennec") will launch for Nokia's N900 handset "soon," with versions for Windows Mobile and Android planned for 2010. In developing its new mobile browser, Mozilla.org is trying to replicate and preserve as much of the current user experience as possible, a sore point with some users.

Firefox for mmobile phones will include "The Awesome Bar" that searches a user's history, bookmarks and tags, allowing users to go to their favorite sites instantly by auto-completing entries.

Firefox preferences, history, and bookmarks can be shared between a desktop and mobile, providing a convenient way to sync important elements of the Web experience. The mobile browser will be continually synchronised with the PC.

If a user starts typing a specific address, and the user has visited that site before, the site will pop up, Mozilla.org says.

Tabs will allow users to browse multiple sites at once and one-touch bookmarking will allow users to quickly organize and add new sites. If a user is working on a PC with multiple tabs open, and then wants to resume on a mobile, the tabs will be available on Firefox Mobile when the user opens it up.

Also, users will be able to "add on" new widgets for the browser itself, something difficult-to-impossible to do at the moment.

For developers, the ability to create apps directly for the Firefox browser will simplify the development process, if not the business model. Developers who simply want people to use an applicatons will find the browser model quite attractive.

Developers who want to create a "for fee" business model might have to stick with the application stores, though, as the billing process will be an issue.

Writing for Firefox should make easier the task of integrating geolocation, camera and calling features of the phone.

Firefox Mobile will offer the fastest Javascript engine of any mobile browser, Mozilla.org says.

"Anyone who knows JavaScript and HTML can develop a great app without having to learn a specific mobile platform," says Jay Sullivan, Mozilla.org VP.

Browser Versus App: Which is Best for Mobile Developers?

Developers can just about flip a coin when trying to decide whether to write an app that runs directly in a browser compared to an application a user has to download from an application store.

According to a survey by Compete.com,. about half the time, Apple iPhone users are running apps rather than using their browsers.

So far, Android users are spending more time on their browsers than using apps, but that likely will change as more apps are made available.

Users of other smartphones tend to use their browsers more than downloaded apps.

40% Will Increase Email, Text Message Marketing Campaigns, Survey Finds

About 40 percent of email marketers surveyed in November 2009 by Silverpop say they will increase their email marketing budgets in 2010, while 47 percent said their budgets would stay the same.

In the coming year, more than half of survey respondents (52 percent) said increasing customer loyalty was a top email marketing goal.

But incremental revenue clearly is the top driver. Overall, 51 percent of respondents want to drive incremental revenue with their email program, while 65 percent of those with larger email budgets say that's their top goal in 2010.

"Inbox clutter" remains an issue for 37percent of respondents. That's an issue, but nothing like the opt in issues faced by users of text messaging campaigns, whose users often must pay "by the message" to receive them. Cluttering up an inbox is one thing, charging someone to receive your marketing message is far worse.

And social media is growing in important. About 84 percent or marketers plan to include social media into their email programs in the coming year, while 38 percent will add text messaging.

Marketers enjoying budget increases are even more likely to add these to their programs; About 89 percent of marketers will growing budgets say they will incorporate social media,  while 44 percent of respondents with growing budgets say they will add text message campaigns.

Email linked to popular social networks will work fine for PC-based users, but text messaging will be needed to reach mobile users on the go.

Who Will Lead Mobile Internet Industry?

If there is one enduring theme in the information and communications technology businesses, it is that the industry's leaders in one era are displaced by new leaders in the subsequent era.

That suggests we will see a new list of industry leaders in the "mobile Internet" era that is coming.

The main thing right now is not to worry too much about where we set the boundaries of the various computing waves.

The point is that a new wave is coming. As shocking as the notion might seem, the names that lead the Internet computing wave might not be on the list of "mobile Internet computing." Nothing is foreordained, though. Just because no leader has made a transition from one era to the next does not mean contestants will not try their best and hardest to make history by managing the transition.

Android Gaining Ground on iPhone as App Platform

Android seems to be emerging rather quickly as a "number two" choice for mobile device application development, a new analysis by comScore suggests.

“With handsets on multiple carriers, from multiple manufacturers, and numerous Android device models expected to be in the U.S. market by January, the Android platform is rapidly shaking up the smartphone market,” says Mark Donovan, comScore SVP. “While iPhone continues to set the bar with its App Store and passionate user base, and RIM remains the leader among the business set, Android is clearly gaining momentum among developers and consumers.”

Of those American consumers in the market for a smartphone, 17 percent are considering the purchase of an Android-supported device in next three months, compared to 20 percent indicating they plan to purchase an iPhone.

Although Android’s share of the smartphone market is relatively small, it has quickly doubled in the past year to 3.5 percent in October 2009.

An analysis of mobile media consumption on smartphones suggests that users of both Apple and Android-supported devices are more likely to engage with mobile media than an average smartphone user.

Users of the Apple iPhone were most likely to consume mobile media, with 94 percent of users doing so in September 2009, while 92 percent of Android device users, predominantly T-Mobile G1 users, engaged in mobile media activities, 12 percentage points higher than an average smartphone user and far higher than the 26 percent use of mobile media by feature phone users.

Apple and Android users were equally likely to engage with news using their browser and are nearly identical in their mobile application engagement. About 80 percent of both iPhone and Android users say they access news using their device browsers. About 83 percent of Apple users and 82 percent of Android users say they use downloaded apps.

Some 58 percent of iPhone users say they use mobile social networking, compared to 52 percent of Android users. About 43 percent of iPhone users use instant messaging while 46 percent of Android users say they use mobile IM.

Email is an area where Android and iPhone behavior is distinct. Apple iPhone users (87 percent) are far more likely to use email on their devices than Android users (63 percent).

Google’s Android platform has continued to gain awareness among U.S. consumers. In August 2009, just 22 percent of mobile users had heard of the Android, while in November 2009 this figure had reached 37 percent, largely prompted by the Verizon Droid advertising campaign launched in the fall.

The comScore study found that not only is general awareness increasing about Android, but intent to purchase an Android-supported device is also increasing among mobile phone users.

When mobile users were asked in November 2009 which phone they planned to buy in the next three months, 17 percent of respondents in the market for a new smartphone said they planned to purchase an Android-supported device, with 8 percent of those planning to purchase a Verizon Droid, compared to 20 percent of respondents who said they planned to purchase an iPhone during that same time period.

In comparison, when survey respondents answered this same question in August 2009, only seven percent indicated an intent to purchase either the T-Mobile G1 or the T-Mobile MyTouch -- which were the only Android-supported phones available at the time -- while 21 percent of respondents planned to purchase an iPhone in the next three months.

U.S. Mobile Handset Sales to Double in 2010?

Although 2009 was not the best year for mobile device sales most places in the world, the United States was a rather salient exception. But 2010 will be an even-better year for U.S. mobile device sales, says TNS. In fact, moble phone sales could double in 2010.

About 53 percent of American respondents and 55 percent of Canadian respondents say they plan to buy a mobile phone in the next six months, up from just 24 percent of U.S. respondents a year ago and 19 percent of Canadian respondents.

Touchscreen phones are set to be the big winners, with 29 percent of U.S. consumers and 28 percent of Canadian respondents saying they will buy one as their next phone.

Mobiles with Qwerty keyboards are also rising in popularity, with 23 percent of U.S. respondents indicating they will buy such a device, and 19 percent of  Canadians.

But there are some issues.  TNS’ research shows that consumers find it hard to distinguish one device from another. Also, 27 percent of Amercian consumers and 29 percent of Canadians consumers say "ease of use" problems as preventing them from using some of the new mobile services offered.

Another mobile device that stands to do well in 2010 is the netbook. About 19 percent of American consumers say they are likely to buy one in the next six months, compared to 19 percent for larger notebooks and only five percent for desktop PC’s.

In Canada, about 20 percent of consumers say they are likely to buy a netbook, 22 percent a notebook and five percent a desktop machine.

TNS studied 24,000 consumers in 35 markets to develop its findings.

Have Smartphones Surpassed TV as a News/Information Channel?

The mobile phone has become an increasingly prevalent channel for Americans to receive news and information, in fact surpassing television in terms of importance, says Synovate.

About 35 percent of U.S. survey respondents say they cannot live without their mobile phones. Compare that to the 34 percent of U.S. respondents who said they couldn't live without TV.

There's your shocker: mobile phones now have become more important than television.

But the Internet clearly is the number-one source for news and information. Fully 58 percent of Americans say they can't live without the Internet, the highest response across all 11 national markets surveyed by Synovate.

One way of evaluating importance is to compare the monthly recurring cost of using a multi-channel video subscription compared to a smartphone subscription. Most smartphone fees, for a single user, now run in the $75 to $100 a month range. The typical video subscription likewise runs in the $75 to $100 range.

To be sure, a single video subscription can be shared among members of a household, so the value per person is different. But many households also use mobile family plans, which likewise changes the cost-per-user.

The comparisons are most direct for a single-user household, where it might be argued the value of a mobile and TV are about equal. In a four-person household, one might argue the mobile is more important as per-person spending is something like $50 a person, whereas mobility is about $80 per person.

Mobile Internet Wave Coming: Who Wins?

If a "fifth wave" of computing is about to break, as analysts at Morgan Stanley clearly believe, the issue is who the wave's new winners and leaders will be.

The history of computing suggests that the companies that lead the prior wave do not lead the new wave.

Morgan Stanley seems to think that as social networking and mobility combine, a company such as Facebook could wind up in the "Mobile Internet Computing" leaders category.

Morgan Stanley also is high on Apple making the cut, as well. Should Apple pull that off, it would make history.

Verizon Gives Fixed, Mobile High-Speed Internet Access Customers Free Public Wi-Fi

Though it has not extended the offer to its smartphone users, Verizon Wireless has given some of its fixed broadband access customers (those on plans supporting a minimum of 3 Mbps in the downstream direction) and mobile broadband customers "no incremental cost" access to about 10,000 public Wi-Fi hotspots in the United States.

Verizon Wi-Fi is available in locations across the United States, including airports, bookstores, coffee shops, hotels and other public locations. The service is also available at locations in Canada and Mexico.

The new feature is available to mobile broadband customers using Verizon Wi-Fi supported devices, including the Mobile Broadband USB modem, PC Card, "ExpressCard," Verizon Wireless MiFi 2200 Intelligent Mobile Hotspot, or a notebook or netbook with "Mobile Broadband Built-In" running Windows 7, 2000, XP or Vista.

When within range of a Verizon Wi-Fi hotspot, customers can use "VZAccess Manager" to connect with a Wi-Fi-enabled notebook or netbook computer. When they are ready to move, but want to remain connected, or if they want the added security of the Verizon Wireless network, customers can simply switch back to Verizon Wireless’ 3G wireless network, which is the largest and most reliable in the country.

To use Verizon Wi-Fi, customers must also have VZAccess Manager version 7.2 or higher installed on their PCs.

Will 2010 be a Turning Point for the Telecommunications Industry?

Will 2010 be a turning point in the telecommunications industry? Maybe, says Mike Cansfield, Forrester Research analyst.

Cansfield argues that the recession has brought a new realism to the sector, forcing telcos to cut costs and adopt better operating practices. Might might argue this trend has been underway for several years, though.

Uncertain economic growth also will weigh on the industry.

But new converged services might explode, as the boundaries between Internet, telecom, voice, data video and applications continues to blur.

Cansfield argues that a major telco will disappear in a merger or go bankrupt in 2010. The merger of T-Mobile and Orange in the United Kingdom, the unsuccessful merger of Bharti Airtel and MTN Group in Africa, and the purchase of HanseNet in Germany by Telefonica are examples.

"Green" initiatives will be back on the telco agenda in a big way, Cansfield believes.

Mobile device wars will renew with extra intensity and the battle for the mobile apps market will begin in earnest. Just as iTunes in conjunction with the iPod changed the music industry and the MP3 device market, so the Apple App Store in conjunction with the iPhone transformed the mobile data and applications market for both consumers and, now, businesses.

The boundaries between "work" technology and "home" technology will continue to blur. Traditionally customers have bought different communications services depending on whether they were at work or at home.

But these distinctions are blurring, Cansfield says. Many of us today work part of our week at home and connect with the office through our own terminals and fall into the trap of dealing with business emails at home in our supposed down time. But this is not a one-way-street — hence the high number of personal SMS and Twitter messages sent from the workplace.

Net neutrality will be a major issue in 2010, because the evolution of stable and sustainable revenue models for the entire ecosystem is at stake, though most for network service providers.

Also, 2010 will be the year that many governments will recognize that broadband connectivity is essential for economic competitiveness, the delivery of public services, and an inclusive society, and they will step up to the plate to close the digital divide, Cansfield argues.

All of us likely have opinions about the importance of 2010. I suspect some of us really believe 2010 will not be especially noteworthy in terms of marking a turning point in the telecommunications business, but only because the underlying changes are irresistible forces not dependent on economic conditions, government regulations or industry consolidation.

The business is changing in profound ways because end user needs and interests, provider business models and powerful technology trends are profoundly aligned. Nothing is going to stop those changes.

Surprise, Surprise: Mobile Ops Now See Google as a Partner

Mobile service providers seem to have reached new conclusions about their role in the future mobile ecosystem, Nokia Siemens Networks says.

The single greatest change of business environment is that “the boundary between mobile telecoms and the Internet has all but disappeared,” says Frederic Astier, Nokia Siemens Networks head of customer operations marketing.

So what does that imply about the relationship between network service providers, application providers and end users?

“This study tells us that telecoms operators increasingly see their value, and competitive differentiation, in increasing customer satisfaction through improving network quality, while acting as a content broker for social networks, mobile app stores, TV and voice over IP services," Astier says.

Where the old business model was tight integration of network capability and applications, the new world features an more-open environment where network services and features are sold to third parties who create and deliver services, applications and features to end users.

While voice calls remain at the core of their business, about 78 percent said they plan to open their network as an intelligent bit pipe for new solutions, by while 69 percent said they intend to bundle voice with other content.

Moving away from the walled garden approach of the traditional telecom model, they are embracing two-sided business models by acting as conduits between third-party applications and content developers and the end users.

In that regard, there seems to have been a bit of a shift in attitudes towards application providers such as Google, which now is seen less as a disruptive threat and more as a partner.

The study involved one-to-one interviews with the business leaders of 70 communications service providers from 42 countries, says Nokia Siemens Networks. Its aim was to provide a comprehensive overview of these telecoms operators’ business needs through 2012.

ADTRAN Unveils "NetVanta Unified Communications Solution Suite"

The issue with many unified communications solutions is that they explicitly or implicitly require people to change the ways they do things. ADTRAN thinks that doesn't work. The other problem is that people sometimes have trouble envisioning how IP communications can help them, in concrete ways.

For that reason, the new "NetVanta Unified Communications Solution Suite" provides voice mail, unified messaging, fax server, and auto attendant features that are compatible with legacy and IP-based business phone systems, with a big focus on the ability to create business process apps.

NetVanta UC solutions are designed to accommodate from five to greater than 2,000 users per server,  and are designed to allow rapid creation of vertical market applications for the  banking, hospitality, education, health care, retail and real estate industries, for example.

The "NetVanta UC Solutions Suite" includes the "NetVanta UC Server," a software-based UC application designed for customers with an existing PBX.  Microsoft Windows platforms and scales up to 2,000 or more users per server. It is capable of supporting unified communications on one or more different types of PBXs from a variety of leading manufacturers.

It provides unified messaging, fax server, auto-attendants, personal assistants, graphical drag-and drop service creation, IVR for inbound and outbound calling services, integration with ODBC databases, text to speech, one number services and call redirection services and notifications.

The "NetVanta Business Communications System" combines the NetVanta 7000 Series IP-PBXs with the NetVanta UC Server, enhanced with click-to-dial capabilities and an integrated conference server.

The "NetVanta Enterprise Communications Server" is a complete IP-based voice system for larger enterprises. Designed for use with Microsoft Windows and "Active Directory," it offers a full soft IP-PBX that is complemented with all the UC features of NetVanta UC Server, plus click-to-dial, an integrated conference server, a paging server for overhead paging.

The "NetVanta Business Application Server," scalable to more than 200 concurrent calls, allows businesses to create cost-effective new apps using a graphical drag-and-drop service
creation environment.

It allows channel partners, service providers and IT and telecom professionals to quickly and easily create tailored communications services. The app server integrates with existing application databases.

It is useful as a standalone solution or can integrate with Microsoft OCS or IBM Lotus Sametime, for example. It also works with IMAP email servers and Google Gmail.

The new NetVanta products are all software applications using the Microsoft platform. The key decision for a buyer is whether it wants to "buy a new PBX" or "keep" what it already has.

If a firm has 10 to 100 users, it will tend to buy a new PBX. If it has 75 to 2,000 users per location, it also will tend to want the enterprise communications server.

The complete line includes a standards-based PBX, switch, router, firewall, voicemail, voice gateways, auto attendant, integrated messaging. The base package now supports as many as100 users. Larger organizations will use the enteprise communications server, using ADTRAN or Polycom handsets.

One advantage of the system is that it works with analog or IP business phone systems. More significantly, though, it allows rapid creation of vertical market apps.

In the real estate business, the "Talking House" application can be used to create automated logs of who is calling in to inquire about a property, or allow prospects to get information on any property an agent is showing, with the materials created directly by the agent.

Agents can have people contact them right away, listen to an IVR message or create marketing materials that can be faxed or emailed to people who want more information.

The same thing can be used by auto dealers to automate the process of car warranty notifications and doctor's offices can automate the reminder process.

"In a business office environment, customers can use unified messaging to provide more value, using our PBX or anybody else's," says Jeff Wissing, ADTRAN senior product manager.

"You can deliver a fax to a smartphhone, forward messages, read emails over the phone or harvest telephone numbers from existing directories and then place calls," says Wissing.

"If you listen to customers, you can create apps for them," Wissig says. In some cases it might take only minutes, it other cases a few hours to create an app. Once a reseller learns the environment, the reseller can use the tools to create all sorts of templates for their end users.

The whole idea is to "make it very personal and customized," he says.

"Customized services are a big draw and makes end users very sticky," Wissig notes. "It very often is faster to spend an hour to build a prototype service, and then have the customer use it, than to explain what a user might do."

"We had a B2B call center and built a prototype in 15 minutes to show how the solution would work," Wissig says. The customer got a payback on the system within 30 days, he says.

"In every organization there are ROI opportunities with UC that are lurking, just waiting to be discovered," says Wissing. "You just have to know how to find them."

A manufacturer of personalized items such as rubber stamps, signs and business cards might create an IVR application that provides 7/24 order status to customers with small orders, allowing their call attendants to concentrate on providing personal service to larger customers.

A wallpaper manufacturer might use an IVR application to provide product availability and pricing to their resellers based on their membership level in their reseller program, providing reliable 7/24 service without the need for call takers.

A large multi-national company might use an application that reliably redirects after-hours calls for support to the cell phones or even home numbers of on-duty support staff, eliminating the need for physical staffing of an after-hours call center.

A video store might allow callers to place orders 7/24 without the need for an after-hours service team.

Is the Unified Communications Business Growing or Shrinking?

One of the "problems" observers have when evaluating the size of the unified communications market is that UC includes so many different legacy products and services, ranging from business phone services to software applications and hosted services.

The other issue is that UC applications overlap with and complement other applications such as mobility and social networking, which can make an accurate estimate of product sales difficult. Analysts at Forrester Research, for example, suggest that sales of legacy products of all sorts are not growing much at all, while sales of business phone systems might drop precipitously in coming years. This forecast represents annual sales volume in billions of dollars, for example.

Whether UC is important or not is not the issue. Lots of other useful, even essential services and applications, such as email and voice, represent indirect revenue streams, or even declining revenue, despite their inherent usefulness.

Something of that sort seems to be underway in many segments of the UC business. This forecast does not cover other product segments that likely will represent parts of the future UC revenue stream, such as telepresence, a direct UC application, or even access services such as SIP trunking that will be used to support unified communications.

How Significant Will Google "Nexus One" Be?

It's increasingly clear that a new Google-branded "Nexus One" unlocked smartphone will be sold in 2010. What remains unclear is how much impact the device will have, for a number of prosaic reasons. Unless Google has designed a dual-mode, multi-band device capable of operating on both GSM and CDMA air interfaces, roughly half the market will be inaccessible. Even if the device is GSM certified, it has to be built using a radio operating across all U.S. GSM bands, and that isn't entirely clear, yet.

It might be the case that the Nexus One simply has not yet been certified for AT&T's 3G spectrum bands, or for Sprint and Verizon networks using CDMA. For an unlocked device to work across all four of the major U.S. networks, that would be required.

So far, it appears the device is certified only on some of the U.S. GSM bands. What that means is that T-Mobile USA absolutely will be able to support the Nexus One. It might work on AT&T's spectrum as well, but it isn't completely clear that is the case, at the moment. So far, AT&T has declined to offer an Android-based device in its device line up.

That issue should be clarified soon enough. The other issue is the retail price of the phone. Unlocked phones can be bought now in the U.S. market, but few consumers do so, because of the price. Perhaps Google plans to subsidize the device, but if not, Nexus One will not be a mass market device at the start. Few consumers buy devices at $600 when a subsidized device costs $200 to $300.

Perhaps Google plans to offer an installment plan, which will help. If the Nexus One really provides a better user experience, it will be helpful. But if it is sold at full retail price, and works on just one U.S. GSM network, its impact will be limited, to begin with.

Google "Nexus One" Available in January 2010

A new Google-braned phone called the "Nexus One" will be available in January 2010, it now appears. The Android device apparently resembles the unlocked HTC Touch, runs Android 2.1 on a Snapdragon chip and has two microphones, according to a report by eWeek, supporting voice-to-text features.

The move represents a new tack for Google, which to this point has relied solely on handset and carrier partners to propagate Android-powered device in the retail market, with T-Mobile, Verizon Wireless and Sprint all selling Android devices.

Some observers say Google is bothered by a problem frequently encountered with open source software: incompatibilities that frustrate users and provide a less-than-optimal end user experience. Others might suggest Google simply wants to showcase what is possible by more-tightly integating hardware and software, as Apple's iPhone is able to do, providing a more-enjoyable and useful experience.

Why the Google "Mobile Lab" Test?

Whatever else Google may want to demonstrate with its "mobile lab" test, which apparently has Google employees globally testing an Android smartphone, the company likely wants to explore and highlight the use of the mobile device as an intelligent sensor able to use voice input, location and camera features to enrich the "what's around here" features of Google's search experience.

Google first launched "search by voice" about a year ago, and "looking ahead, we dream of combining voice recognition with our language translation infrastructure to provide in-conversation translation," says Google VP Vic Gundotra.

Google recently also introduced "What's Nearby" for Google Maps on Android 1.6+ devices, available as an update from Android Market. The application returns a list of the 10 closest places, including restaurants, shops and other points of interest near a user's location. Local product inventory will be added in 2010.

Visual search also is developing, Gundotra says. A picture taken by a Google-equipped device will return relevant search results based on that visual information, including information on landmarks, works of art, and products.

"Today you frame and snap a photo to get results, but one day visual search will be as natural as pointing a finger," says Gundotra.

Google Phone Appears to be an Unlocked GSM Device

Google's rumored phone appears to be an unlocked GSM device, to be sold under its own brand name, and built by HTC, TechCrunch reports.


What seems clear enough is that Google employees are testing something. Google says it is testing something it calls a "mobile lab," said to be "a device that combines innovative hardware from a partner with software that runs on Android to experiment with new mobile features and capabilities, and we shared this device with Google employees across the globe."

"Unfortunately, because dogfooding is a process exclusively for Google employees, we cannot share specific product details. We hope to share more after our dogfood diet," Google says.

Google-Branded Phone Coming in January?

Rumors about a Google-designed and Google-branded smartphone have circulated over the past several years, though the company consistently had denied the reports. But the rumors are building again. TechCrunch seems to think the umors are more credible this time.

To be sure, Google repeatedly has said it is not in  the phone-making business.  “We're not making hardware,” Andy Rubin, who heads up Google Android development. “We're enabling other people to build hardware.”

Of course, some might parse the words and say that Google doesn't have to build its own phone: it simply has to commission a company that does build phones, to build one, with tightly-integrated Google control over the software load. There are many nuances to such an approach.

The device could be tightly integrated, but not Google branded. It could be Google branded but not exclusive. It could operate as an unlocked data-only device on a single air interface or several.

A Google-branded and controlled device might fly in the face of the open source nature of the operating system, which so far has featured a loosely-coupled approach.

It also might open a new and unwanted level of channel conflict with the firms that are counting on Android to power their own devices and create a robust applications business. On the other hand, such a move could be viewed as an effort to demonstrate what is possible using Android, more than anything else.

The current rumors say the device is built by HTC, is quite thin, does not have a keyboard, and uses voice recognition for virtually all apps.

Cynics might argue "leaking" rumors of a game-changing device are a time-tested way of "freezing" sales of competitive devices. And there is at least some anecdotal evidence that some potential Android sales are on hold until the rumors convincing are disproved or confirmed.

To be sure, any Google move to build a tightly-integrated device, Google branded and supported, would be a fundamental shift in approach that would imperil its effort to foster widespread use of the Android operating system by a wide range of manufacturers and service providers.

Apple is the only company in the mobility business that delivers both the hardware and software on a tightly-controlled basis.

Google Adds "Place Pages"

One simple step any business can take to become more involved with mobile-based marketing is to take advantage of "Place Pages," a new feature Google is introducing.

Basically, a Place Page is a free one-page listing any business can sign up for, and which is available to mobile and PC-based searches using Google Maps.


Retailers can create a "Place Page" by going to the Google "Local Business Center" at
http://www.google.com/local/add/analyticsSplashPage?service=lbc&gl=us&utm_source=/lbc&utm_medium=van&utm_campaign=en&hl=en-US.

Listings are free to create. Think of it as a sort of enhanced phone book whose entries pop up on a Google Map search when a user is looking for something near a physical location.

There's more. The Place Page also allows retailers to create coupons, for example. Also, an analytics feature also allows retailers to track where customers are coming from and what they search for to find a particular retail location.

Android Now 14% of Mobile Web Sessions

If you are considering creating a mobile app, the Apple iPhone and Touch still represent the single largest target.

But Android is growing fast. According to an analysis by Flurry, Android users now represent 14 percent of mobile Web sessions.

The iPhone represents 50 percent and the iPod Touch generates 35 percent of mobile Web sessions.

Android seems to be taking share from the iPhone, but not from the Touch.

Americans are Happy with their Products and Services, Sort Of

A new study by the Government Accountability Office suggests 84 percent of U.S. wireless users are "very" or somewhat" satisfied with their wireless phone service. That isn't to say there are no issues: there are.

The GAO says 10 percent of users are "dissatisfied" with their service. About 12 percent say they are dissatisfied with billing, 14 percent are dissatisfied with terms of service, 11 percent unhappy with call quality and 12 percent dissatisfied with customer service.

But 76 percent of respondents are satisfied with billing; 72 percent satisfied with terms of service, 85 percent satisfied with call quality and 70 percent satisfied with customer service.

In terms of complaints received by the Federal Communications Commission from end users, 55,000 were unhappy with billing and rates. About 14,000 were unhappy with call quality, 13,000 complained about contract early termination issues and 12,000 were unhappy with customer service, GAO says.

In terms of complaints, billing issues were more than 400 percent more common that complaints about call quality, contract termination or customer service.

In some ways, in fact, the GAO study suggests a higher degree of satisfaction with wireless service than other surveys might suggest. The American Consumer Satisfaction Index, which ranks consumer satisfaction on a scale running from zero to 100, with 100 being the top score, might suggest less happiness, not only with wireless, but also with cable TV and satellite service, with declining scores for wired voice service.

Did U.S. Consumer Communications Spending Hold Up in 2009?

We will have to wait a while for 2009 figures to be compiled, but history suggests that, when the figures are available, U.S. consumer spending on communications will come in about where it always does, at about 2.3 percent of disposable income.

The reason is that, year in and year out, during booms or recessions, that is what U.S. consumers have spent on communications. The composition of spending changes: more for mobile, more for broadband, less for other services. But as a percentage of disposable income, behavior is remarkably consistent.

By 2012, "Closed" Mobile Business Will be Over

Today, the wireless sector is on the edge of a seismic shift, says Deloitte. A survey of wireless industry executives found that 53 percent of surveyed network service provider executives believe their current closed business models will no longer exist by 2012.

That is a shocking finding, for several reasons. Many in the policy community seem convinced the only way to "change" the mobile industry is to legislate more "openness." Mobile industry executives, on the other hand, already believe openness will be the normal way they compete, within a shockingly short period of time.

One way of putting matters is that before the major legal challenges to any new set of wireless "neutrality" rules can be clarified, the industry already might have moved to an open business model, and arguably would have done so without any government action.

If some readers believe this is highly unlikely, one need look no further than the last major revision of U.S. telecommunications policy, the Telecommunications Act of 1996. Despite the fact that many observers argue the Act "failed," you would be hard pressed to find any user of communications who argues their services, prices and features are "worse" or even "the same" as prior to 1996.

Despite the current mistrust of markets, the recent record suggests that "regulatory failure" did not impede market success, defined as better and richer services for end users.

It appears the same thing is happening in the mobile business, and that mobile industry executives widely believe a shift to open models, precisely the state of affairs many policy advocates desire, already is happening at rapid speed.

In just three short years, economic power in the mobile business will be held by third party application providers, not service providers, mobile executives themselves believe.

More than half of the executives surveyed believe by 2010 the future of mobile will be driven by open mobile content, with 67 percent of the respondents believing it will be a “game changing” force within wireless in the short-term, Deloitte reports.

"When asked which mobile operating system has the greatest potential to be the U.S. de facto standard in five years, Google’s open source Android operating system was the runaway favorite with 43 percent of all votes, more than double the score of the next highest finisher," Deloitte says.

"In fact, 27 percent of those surveyed say that Internet companies, rather than network
carriers and handset makers, will dominate the U.S. wireless sector in five years," says Deloitte.

Nearly 60 percent of industry executives surveyed agreed that the future of mobile will be driven by open content and mobile software application providers.

"While almost two thirds of the survey respondents believe that open access regulations will accelerate the commoditization of U.S. wireless network carriers, companies that focus too narrowly on regulatory issues as the key catalyst for change may in fact miss the real market opportunities being driven by open platforms and technologies," Deloitte says.

The regulatory debate over "openness" obscures what will happen, irrespective of any new regulatory intervention. "In fact, when respondents were asked on the best course of action for network carriers to sustain their competitive advantage, keeping network access, devices and services tightly controlled and retaining as much as possible current proprietary business models was the least popular response."

In fact, 74 percent of the executives said that the key to their businesses in the future was to embrace open application and content models. One can argue that regulatory protections to open up networks are important because they will help this "natural" state of affairs to develop on its own.

It might not be politically popular at the moment to argue that a regulatory "light touch" still is the best course of action. But industry executives themselves seem committed to a view that open mobile networks are in fact the fast-coming and basic industry realty.

Whether one agrees that the Telecom Act was a success or failure does not seem to matter. The market seems to have lead to success, in spite of regulatory failure. Maybe we should not be in such a hurry to tinker with the process too much. It looks like openness is the future, no matter what interventions happen, or do not happen.