Apple Won't Block VoIP Apps Using Wi-Fi

CEO Steve Jobs says Apple will not block third-party development of VOIP applications for the iPhone and iPod Touch, as long as the applications run over Wi-Fi. That's an obviously politically astute move given Apple's relationship with mobile providers who aren't keen on the idea.

Nevertheless, the idea might allow everybody to get a bit more experience with "dual mode" service, using a widely-deployed handset, without a lot of expensive bets on particular devices, interfaces or marketing.

Mobile Content Habit Grows

Mobile phones for lots more than just talking, especially by Millenials, according to a recent study by the Deloitte Development-Harrison Group.

Nearly 90 percent of 13-to-24-year-old Internet users surveyed said they sent text messages frequently or occasionally.

Slightly more respondents overall said they used their handsets as cameras than said they used them for texting.

The intensity of usage of just about any data-oriented application drops in older demographics, as you might expect.

Ubiquitous Wireless Broadband: New Possibilities

As new WiMAX and 700-MHz broadband networks are built, two different sorts of new user behaviors will emerge. The abiliy users have to access Web-based data and applications anywhere, at any time, over wired and wireless networks, is going to allow business users to rely on network-based applications in a way unthinkable at present.

“Cloud computing” or "network computing" will move applications and data storage away from the desktop or laptop to remote servers accessed using high-speed networks. That's going to change enterprise data center strategies in profound ways.

It will make possible lighter, more portable access devices on the PC side, and might also drive the emergence of even-more-powerful portable devices on the handheld side, as business users start to rely on network-based resources where they now rely on their own hard disc drives.

The other potential development is that the range of consumer behaviors related to wireless broadband data might emerge.

"Our recent research shows that 62 percent of American adults have either accessed the Internet wirelessly or used non-voice data applications, such as texting, emailing, taking a picture, or recording video, with a handheld," says John B. Horrigan, Pew Internet & American Life Project associate director.

On the average day, 42 percent of those with cell phones or other wireless-enabled handhelds use the devices for at least one non-voice data application.

Users in this emerging environment will fall ino at least two different use profiles, Horrigan argues. Mobile business use might start to resemble desktop use. But consumer users might embrace digital content to play games. Today, some think mobile blogging or social networking might emerge as widespread new behaviors.

Apple, RM Battle Shapes Up

Apple took 28 percent share of the fast growing U.S. converged device (smart phone) market in the fourth quarter of 2007, behind Research in Motion’s 41percent, but a long way ahead of third placed Palm at nine percent, say Canalys researchers.

Apple also finished ahead of all Windows Mobile device vendors combined, whose share was 21 percent in the quarter.

Globally, converged device shipments rose 60 percent to hit 115 million in 2007. U.S. sales doubled.

Nokia remained the global market leader, shipping 60.5 million smart phones, while RIM shipments grew 112 percent to 12.2 million.
Globally, Symbian operating system devices had 67 percent share, followed by Microsoft on 13 percent and RIM with 10 percent.

Apple claims that nearly 70 percent of all mobile Internet traffic is generated by iPhone users. Executives at Google, meanwhile, have confirmed the basis thesis: iPhone users surf the Web way beyond anything seen up to this point.

On the other hand, RIM points out that nearly two thirds of its 12 million BlackBerry subscribers in December 2007 were government or corporate customers.

The observation is that as the smart phone market continues to grow rapidly, the dynamics of the U.S. market--as distinct from the global markets--are shaping up, in part, as Apple going "up market" to enterprises and RIM going "down market" to consumers. That's not to dismiss Microsoft-powered or Nokia devices, but simply to illustrate a dynamic.

We have a market likely to take new shape as devices and users expand beyond the original base of "mobile email" addicts. The iPhone has shown there is a new class of user who uses mobile email but also surfs the Web and uses the mobile Internet in ways we haven't seen before. That's going to get designers moving in different directions as the various segments start to emerge. For some users the current iPhone or BlackBerry interfaces still will work. For others, something else might emerge.

Personally, I like the ability to swap SIMs between devices, which iPhone doesn't want me to do. I like to be able to change my own batteries, which iPhone doesn't want me to do. Small things, of course, but real barriers to me getting rid of my BlackBerry. Other choices will have to be made by music or video afficianados.

DirecTV Awaits Satellite Launch

Satellite launches always are dangerous things. But, should the DirecTV 11 broadcast satellite be launched successfully on March 12, DirecTV will be able to provide 150 national high-definition channels and will be capable of supporting spot beams carrying 1,500 local high-definition channels, typically useful for beaming retransmitted local broadcast station signals back into the local markets.

In February 2007 a Zenit-3SL rocket on the Sea Launch platform, the same one DirecTV is using, exploded on the platform. It happens from time to time.

The odds of a Sea Launch satellite launch will fail are about one in 8.5. Of roughly 25 attempts to date, the company has experienced a failure rate of 12 percent. That's no particular slam on Sea Launch. Launch failures have been part of the industry's reality since the beginning.

Enterprise Users Get their iPhone

Starting in June, Apple iPhones will be able to receive push email, calendar and contact information from Microsoft Corp.'s Exchange server. Apple has licensed Exchange ActiveSync from Microsoft and is building it right into the iPhone, so that iPhone will connect out-of-the-box to Microsoft Exchange Servers 2003 and 2007 for secure over-the-air push email, contacts, calendars and global address lists.

The iPhone 2.0 software provides a configuration utility that allows IT administrators to easily and quickly set up many iPhones, including password policies, VPN setting, installing certificates, email server settings and more.

Once the configuration is defined it can be easily and securely delivered via web link or email to the user. To install, all the user has to do is authenticate with a user ID or password, download the configuration and tap install. Once installed, the user will have access to all their corporate IT services.

Built-in Exchange ActiveSync support also enables security features such as remote wipe, password policies and auto-discovery.

The iPhone 2.0 software supports Cisco IPsec VPN to ensure the highest level of IP-based encryption, as well as the ability to authenticate using digital certificates or password-based, multi-factor authentication.

The addition of WPA2 Enterprise with 802.1x authentication enables enterprise customers to deploy iPhone and iPod touch with the latest standards for protection of Wi-Fi networks.

Those are features most enterprise information technology managers require before a device is approved for widespread use, and represent a huge potential opportunity for Apple to penetrate enterprise accounts.

Some even think the iPhone is about to become an envied thing: a "platform."

“Think about it," says venture capitalist John Doerr, who has launched a $100 million fund to back iPhone-related application companies. "In your pocket, you have something that's broadband and connected all the time. It's personal. It knows who you are and where you are. That's a big deal. A really big deal. It's bigger than the personal computer."

Why the Line Loss Pattern?

The top four incumbent telcos in the U.S. market, AT&T, Verizon, Qwest and Embarq, will lose around 2.3 to 2.6 million local access lines per quarter, according to IP Democracy.

These four service providers lost a combined 2.53 million local access lines during the fourth quarter of 2007, compared to 2.55 million in the third quarter, 2.64 million in the second quarter, 2.28 million in the first quarter. So the question is, why the steady pattern?

The consistent rate of loss might suggest a couple of things. Some share is shifting to cable voice providers, but the losses tend now to follow a pattern. When a new area is opened to marketing, the biggest losses occur in the first couple of quarters, and then some sort of "normalcy" occurs. That will tend to produce a linear rate of change, rather than a disruptive rate, over time.

And since the largest operators are now well into their deployment patterns, we probably are past the stage where a large amount of share shifts rapidly.

The other major sources of loss are fairly steady as well. There's some intentional churn caused by telcos shifting dial-up customers to broadband, which often means an access line is lost. But again, we are past the peak surge in broadband net additions. Every year, another couple of million dial-up accounts switch to broadband. But again, the rate of change is relatively stable.

Wireless substitution also continues, but that sort of line loss has never shown any "spikey" pattern. Some percentage of users simply decide, every quarter, to go wireless only, but with no noticeable change in attrition rate.

The other issue is that consumer customers once served by competitive providers are slowly churning back to the incumbents. So as competitive inroads are made on one hand, lines are being won back on the other.

On the other hand, telcos themselves increasingly are venturing out of region, and typically are competing for business lines. Rates of change are bounded by the size of sales forces, the rate at which existing contracts come up for renewal, the aging of phone equipment and other "change" factors that are fairly predictable.

In any given year, only a percentage of contracts are up for renewal; only a percentage of phone systems; only a percentage of new businesses or locations launched or closed.

Also, consumer VoIP adoption rates are flattening as well, again showing a sort of linear pattern, and contributing to the linear loss rate for legacy access lines.

The other thing is that incumbents, as a matter of policy, are not yet at the point where they are willing to make massive changes in pricing, technology or packaging to match VoIP competitors. What that means is that, as a matter of deliberate policy, executives will let the losses continue, at a controllable rate, until the point where it makes more business sense to respond with competitive efforts.

Nor have the largest carriers, for the most part, gone out of their way to emphasize wireless substitution. Quite to the contrary, bundling has provided incentives to keep a landline at very small incremental cost.

This might now begin to change a bit, with the advent of unlimited calling plans. Sprint or T-Mobile, who have no access lines to lose, might be expected to emphasize wireless substitution a bit more.

For some users, such plans create a new buying context. Assume a user with a landline and a wireless plan, plus a text messaging plan that collectively costs about $100 a month, living alone or in housing with unrelated people. That user now can spend about the same amount of money as at present, and shift all traffic to one device, with unlimited texting in some cases. If a Sprint plan is bought, the user will get unlimited Web browsing, music and video services as well.

The other thing is that consumer access lines, as opposed to business lines, are a lesser percentage of overall revenue than used to be the case. Major telcos fairly rapidly are getting to the point where consumer voice revenue is less important every year.

And since the foundation service for the future is a broadband access line, that is where telcos can be expected to fight hard for every point of share.

Maybe there are other explanations as well. But the gradual, steady erosion is not different from the pattern we saw with long distance revenue, which declined at a fairly steady rate for years.