iPhone Sales Hit One Million

So there's no question Apple will hit its target of one million sold by the end of September. Apple sold its millionth iPhone last Sunday, just 74 days after the combination cell phone-iPod went on sale and less than a week after its price was cut by a third. Some observers speculate that iPhone sales have sagged of late. We shall see.

Dylan is out of boot camp...

  Headed for South Carolina to do a year's intensive training in nuclear engineering, then up to Annapolis to finish up his aeronautical engineering degree. Then aviation training. Then he has to land his jet on a carrier deck and get it right the first time (one chance only). Anybody who doesn't washes out of the pilot corp immediately. About 40 percent fail to get the tailhook down on one of the three guy wires and it's all over.

Disruption? Maybe Not.

Lots of companies and lots of people have been at the "telecom disruption" game for quite some time, beginning way back with the Carterfone decision and MCI's assault on the long distance calling market. We have had Internet service providers, competitive local exchange carriers, hosted service providers, application providers, instant messaging providers, portals, VoIP providers, cable companies, satellite providers and others attacking one part or another of the global telecom value chain.

Through it all, global communications service revenue has kept climbing. In fact, you'd be hard pressed to find any year when that didn't happen. Perhaps the issue is not disruption at all, but rather transformation. There will be new spaces created, and a rearrangement of older spaces. But nothing has stopped global revenue from climbing, year after year.

Of course, all the analysts could be wrong. Some cataclysm could yet await. But it sure doesn't appear to be something you would build your company on.

Another Outage for BlackBerry

U.S. Internet-based users of the Research in Motion BlackBerry service might have noticed, and might still be noticing odd behavior from their handhelds. Like, no mail parts of Friday, and then huge dumps of what you thought was archived mail thereafter. If so, it might be because RIM had another outage of some significance last Friday, Sept. 7. That's two significant outages this year.

All of us may someday lament the fact that no service we now enjoy and rely upon has the ruggedness and uptime of the old public switched network.

Apple iPhone Price Cut is, Oddly, About the Buzz

Equity analysts and presumably some investors are said to be quite unhappy about the $200 price reduction on the eight gigabyte vesion of the iPhone, which now sell for $399, $200 less than the price consumers paid just three months ago when the iPhone launched on June 29. "Leaving margin on the table" is the problem.

Apple announced a credit of $100 for early buyers after the price reduction. The credit is a bit unusual. The timing of the price cut is quite unusual. Apple has in the past waited as much as a year to drop prices on a device.

Some say the move is a significant strategic and tactical misstep. Maybe. But Apple once again gets huge buzz, refocusing attention a couple months after the splashy launch. Lower than anticipated sales is unlikely to be a drive, as the company stands by its initial projection of one million sales by the end of the quarter.

It might sell twice as many. Nobody knows yet. Undoubtedly some thought was given beforehand to the customer irritation factor. The credit could have been part of the plan, not an afterthought when a hue and cry arose about the unfairness of the price cut for early buyers.

Yes, there is some margin hit. But Apple now stands ready to move past the "gotta have it" early adopter crowd and occupy other niches in the market. Just what niches is the issue. Everybody intuitively understands that a BlackBerry is "email in your pocket."

I'm still having trouble coming up with a simple description of what precise niche the iPhone occupies. It might be the "heavy iPod user who doesn't want to carry a mobile phone." The iPhone might simply be a communicating iPod. It doesn't seem quite right to say it occupies the "whole Internet in your pocket" position.

It might more plausibly be something like an "easy to use mobile phone" positioning, analogous to the way the early Apple PCs held that niche in a world of command line interfaces. Graphical user interface is then the idea; "mouse"-based instead of "C: prompt"; finger rather than scroll wheel or button.

With the price cuts, Apple gets a chance to establish something more like its ultimate market position, as enough users are aggregated to figure out how end users view the device. Right now it still seems to be a device whose niche is evolving.

Microsoft Vista Service Pack Near Beta

As a follow-up to his email sent to Microsoft execs about Vista issues, Alec Saunders says: "Coincident with my note to Microsoft about Windows Vista quality yesterday, Microsoft let it be known that Vista SP1 would be going into beta in a couple of weeks, and surprise surprise, a substantial focus is on quality."

"Following the email I sent, two Microsoft senior execs responded yesterday — Steven Sinofsky who runs with the Windows platform organization, and Jeff Raikes, President of the Business Division. Among the many things in Raikes' mails was a question about how well I liked Office 2007, a product that I absolutely love. When I told him that, he observed that Sinofsky was the VP in charge of shipping Office 2007, and that he was applying many of the same methodologies to Windows Vista."

"Sinofsky gently chided me for having rose colored glasses, observing that PnP in Windows 95 routinely fried his network cards. Perhaps, he was saying, Windows Vista isn't as bad as I've described it. Nonetheless, he acknowledged that two key areas of focus for his team right now are application compatibility, and the video subsystem. Many of the Windows updates that go out are focused on these two areas, and that seems to be a good chunk of the focus in SP1 as well."

"Time will tell. As John McKinley pointed out, this is a franchise issue for them. They have to get it right."

Mitel Inter-Tel Merger: Dan York is Available

Maybe LinkedIn or Plaxo is useful for such things, though I prefer Facebook. So if you can help Dan, contact him at Facebook. His last day at Mitel is September 21. Here's what he's thinking:

"What's next? I'm not sure, to be honest, as there are several pathways. I'd love to run back up to the crow's nest and perform that kind of analysis, investigation, exploration/communication or evangelism for a company in the IP telephony and unified communications space, especially with a focus on social networking and social media.

I think its a great fit with my technical, strategic, marketing and communication skills - and I think sites like Facebook will have a profound effect on our communication. I'd love to help explore and guide people through that space. Having said that, I definitely recognize that those roles are few and far between. I may look into something focused in the VOIP security space, where I've obviously got some great depth and experience, or something related to IETF standards, another strong interest of mine. I've considered some form of strategic consulting, or joining the analyst ranks. There are a couple of books I'd like to write. There's a startup idea I'm pondering. As is obvious, I completely enjoy blogging, podcasting, etc. and may pursue a role focused in those areas - or in community development, another strength. And then there's always returning to my open source roots in the Linux space...

Whatever the case, my aim is to be with of an organization that is part of the disruption in this space (or at the very least chronicling the disruption).

Right now I'd love to hear from folks who have openings in any of those various areas (or know of such openings). Please do email me - or contact me via Facebook or Skype. For folks in the IT telephony/unified communication's space, I'll be out at the Internet Telephony Conference & Expo next week in Los Angeles and would be delighted to speak with folks there. (As I mentioned previously, I'll be speaking there.) Information about my background can be obtained at LinkedIn (http://www.linkedin.com/in/danyork )

In my ideal world, I'd love to find a role that lets me continue to live in Burlington, VT, (with some amount of travel) since we're nicely settled in here and love the area."

Microsoft iPhone Competitor?

Since every other manufacturer of handhelds has been scrambling to create new devices that can compete with Apple's iPhone, it is only logical that Microsoft will do so as well. SoMindy Mount, corporate vice president and CFO for Microsoft's Entertainment and Devices Division, says it's not "unreasonable" to think that Microsoft will integrate photo, music, and touchscreen features into a Windows Mobile product in the future.

Microsoft's idea with Windows Mobile has been to move everyday business capabilities, such as accessing e-mail, from the PC to the mobile device. However, "Being able to do pictures and music is something that consumers are going to want, so it's a natural thing for us to want in our product road map," she says.

Has Muni Wi-Fi Missed the Window?

Municipal Wi-Fi arguably had a market window within which it had to get traction or lose out to cable companies and especially telcos. With EarthLink now backing out of the remaining deals it originally negotiated, that window could slam shut. That isn't to say there might not be some niches it could fill, but they will be smaller niches.

The higher end part of the fully mobile market will be able to buy fourth generation mobile services, broadband based on 700 MHz spectrum, WiMAX and 3G broadband services. The tethered part of the market will simply find cable modem, Digital Subscriber Line and fiber to home services too attractive to ignore as well. The out of office portion of the market increasingly can use T-Mobile hotspots, hotel Wi-Fi and airport Wi-Fi.

Clearwire and satellite broadband are going to make more sense in most rural markets, though independent ISPs continue to offer basic tethered access using Wi-Fi technologies adapted for more focused line of sight deployment.

Wi-Fi had to get into place before WiMAX arrived, and it looks like it simply is too late to be a sizable mass market access opportunity. That isn't to say hotspots are not a business at all; simply that it is a niche.

That said, sizable niches do exist for providers of satellite broadband in some segments of the market. WildBlue, ViaSat, Gilat and HughesNet prove that the niche exists. And Spaceway might someday create additional niches in the smaller enterprise market as well. Wi-Fi, though perhaps not of the muni variety, might continue to provide such a niche.

Who Will Create the "Conference in a Pocket" Phone?

The rumored Google Phone will have to carve out a niche beyond "smart phone" or "feature phone" to get any serious traction. Perhaps it can create a new dual-mode position, since nobody really has that one nailed down yet. It might be a stretch to create a position based on "location based services," since it is doubtful most people will understand that.

But some new developments elsewhere suggest it might ultimately be possible for somebody to capture a new "conference in my pocket" position. Webex now has created an iPhone compatible PCNow capability, opening a bit of a wedge for conferencing. And iotum says it will develop a conference app running on BlackBerry and Facebook.

The point is not simply the size of the niche, but the ability to create a buyer reason to use one service or terminal instead of others. There are lots of devices that handle email. But BlackBerry created and "owns" the "email in your pocket" mental niche. That doesn't mean only the BlackBerry can do this, but that the mental position creates a compelling reason to buy and use a BlackBerry even though other smart phones can do so. The iPhone's position still is developing, though the initial positioning is as a fashionista device.

The point is that the creation of a compelling mental positioning allows a device or service to stand out in a crowd of alternatives that arguably can provide the same basic functionality. A "conference in your pocket" device can provide the same sorts of marketing value.

Voice From Inside Facebook

Pat Phelan points out that there are perhaps nine voice applications users can launch from inside Facebook, including GrandCentral, RebMe by Rebtel, Phonebook by Jangl, MyPhone by Jaxtr, SkypeMe, One Minute Friend, Yakpack, Sitofono and the new conferencing application for Facebook released by iotum.

Corning FTTH Advance

Corning is introducing a new line of extremely bendable optical fiber cable based on its nanoStructures technology platform. The change in physical media might not seem so significant, as the new design allows cabled fiber to be bent around very tight corners with virtually no signal loss. So think about the way signals now are zipped around offices and homes. Coaxial cable (augmented by category 5 wiring for some fiber to customer installs) for homes and category 5 for offices. Up to this point, one reason for those choices is that optical media wouldn't bend enough to be useful as a drop media.

That doesn't alleviate the need for optical-to-electrical conversion, but could allow the conversion right at the end user device instead of some other demarcation point. In most cases it still will make sense to convert optical to electrical at a side of home network interface, for cost reasons alone. But designers will have lots more latitude in high-rise living units, where O/E conversion can be done at some point much closer to a cluster of users.

The advantage there is the network operator's ability to retain the benefits of optical bandwidth far deeper into the customer network, as all copper media carry less bandwidth than optical media does. So driving fiber deeper into a building has the same salutory effect as driving fiber deeper into a neighborhood: there is less bandwidth sharing, and therefore more effective bandwidth available to users.

The net effect is the ability to drive more fiber into customer networks at less cost than before, and to terminate optical networks closer to end users than ever before, at least in high-density settings. That, in turn, provides a boost for fiber to customer deployments in markets with high density housing. Verizon should like that.

GooglePhone: Big Issues

Speculation about a new Google Phone continues to mount. Add the Boston Globe to the Wall Street Journal as entities that have "uncovered" the prototype. Google executive Rich Miner, a co-founder of mobile software company Android (which was bought by Google two years ago), has not confirmed that he is working on a phone, but he is reported to have shown the alleged prototype to "a handful of Boston entrepreneurs and venture capitalists."

Dan Roth, president of VoiceSignal, and Mike Phillips, founder of speech-recognition firm Vlingo Inc., both are suggested as also working with Google on the device. Google's phone supposedly allows horizontal scrolling and has three-dimensional, animated buttons on the screen as well as a small QWERTY keyboard.

This will be interesting. Most tier one service providers will say Google is the competitor they worry about most, and wireless is the service now keeping the global industry moving forward.

We can safely dismiss the notion that Google will build handsets. We cannot discount Google becoming a service provider, though, as it just might bid for 700 MHz spectrum. In the meantime, it continues to work to seed existing networks with its software, so one cannot discount an "iPhone" deal with at least one wireless carrier.

But that's where matters get sticky. T-Mobile has the most to gain, but the worst network for browsing. Verizon has the network, but probably not the willingness. at&t is busy with iPhone and might not want the distraction. Sprint has the network and a long history of working with partners. The network access platform (CDMA) probably isn't the most important issue, but is a potential negative.

Then there's the issue of how coherent the value proposition is. BlackBerry is mobile email. iPhone is a fashion statement right now. It isn't clear what it will become as adoption broadens, though if it winds up being mobile Internet then Google has to take it on. Mobile search doesn't quite have the ring of something lots of end users will understand. The "Internet in your pocket" probably does, but iPhone is already there.

More important initially is the choice of network partner. "The Internet in your pocket when near a Wi-Fi access point" doesn't cut it, at least for me. That would have as little appeal as a mobile phone that only worked within range of a Wi-Fi access point. A small number of people might put up with the convenience, but it is hard to see lots of people doing so.

T-Mobile has lots of reasons for considering such a partnership. But that's the worst possible network for mobile browsing. As much as people complain about the bandwidth used to support the iPhone, they should have to use the T-Mobile data network before complaining. Negative user experience is about the only way to describe it.

Of course, Google could be angling for applications requiring low bandwidth, such as location-based and contextual information, not mobile search, or transaction capabilities based on such location-based capabilities. That wouldn't take much bandwidth. But that also wouldn't be the "Internet in your pocket."

Assuming the bandwidth issue can be finessed, the task of creating a new category remains. People understand the "email in your pocket" and "music in your pocket" positions. Mobile browsing, mobile payments, mobile advertising and location-aware services do not provide similar positions in the end user mind.

I suppose Google could attack the iPhone segment (similar features, much less price) but even there the message does not immediately seem clear.

Apple also had an advantage: it is well known for user interface innovation industrial design and ease of use. Apple also has a fanatical user base and was able to build off the wild success of the iPod. Google will not have those advantages.

And this is said by someone whose day begins and ends with Google, and for whom search is something that happens throughout the day. But the way I use Google (research) would not translate to the mobile environment. Mobile search would be a different use case and some new behaviors Google would have to stimulate and help create. Of course, BlackBerry and iPhone had to do so as well. I just can't tell you off hand what a Google Phone does for me, the way I can describe the BlackBerry and iPhone.

Separately, Google has filed a patent application covering an electronic on-line payment system it refers to as GPay. Using GPay, a server receives a text message from a payer containing a payment request for a specific amount. The server parses the text message to find out what value the payer account should be debited for, and
credits the payee account.

Of course, one way or the other, Google is going to be a presence in wireless. If Google wants a share of the mobile advertising market, and it clearly does, it needs control over more elements of the value chain.

Also, with wireless increasingly ubiquitous, and fourth generation wireless coming, Google has to get into position to extend beyond the PC experience. So Google seems to be working on an operating system and at least one handset.

It had made wireless enabling technology acquisitions, including Reqwireless (mobile apps: browser, email), Skia (graphics software), Android (OS)and Dodgeball (mobile social networking).

Google is developing mobile versions of existing apps such as its Calendar and AdSense apps. it is developing text message services such as real-time flight information, local search and payments.

Google might bid in the upcoming 700 MHz auction. it also is sealing deals with hardware makers to pre-install Google services on Samsung, Apple iPhone and LG devices and working with China Mobile and at&t--through the iPhone--to optimize the services for handset use.

Google also is supporting the Windows Mobile operating system. Google also is talking about a mobile virtual network in the U.K. market. And of course it has been experimenting with Wi-Fi networks, and is working with Sprint on that firm's WiMAX handsets.

FCC Ends RBOC Long Distance Restriction

The Federal Communications Commission has eliminated the old requirement that dominant local exchange carriers conduct long distance operations separately from their local access operations. The old regulations obviously don't make much sense in an environment where long distance has ceased to be a separate business, for the most part, and where all access providers routinely bundle access and long distance calling.

As a phase-in mesure, a&t, Verizon and Qwest agree to offer special rate plans tailored to consumers who use little long distance, for a period of three years. As most post-paid mobile calling plans all include bundles of calling including "local" and "long distance," the move allows the former regional Bell operating companies to reduce their overhead.

The change does not materially affect the way wireless and wireline calling is offered to the retail market. The issue isn't really long distance at all. Instead, the bigger issue is which servics, and how many servics, to buy as part of a single bundle, in the consumer market.

To encourage such behavior, Verizon recently increased the price of stand-alone FiOS broadband in some markets if isn't part of a voice or television bundle.

What does WiMAX Displace?

To the extent that mobile phone penetration is nearing saturation, while broadband access to businesses and homes also is close to saturaturated, at least as a technology supporting personal computers, one has to ask what customer demand WiMAX will cannibalize. Well, I suppose some people might argue WiMAX creates a new market, but the issue still is to envision what that new market is.

So far, it appears most observers other than Intel Corp. think WiMAX will supplant some other form of access.

Intel clearly sees WiMAX as a technology that changes demand for lap-top PCs. As Internet access has changed requirements for desktop machines, so Intel believes WiMAX will create new demand for mobile machines that are always connected.

But most service providers seem to view WiMAX as a technology that extends or replaces some other existing end user value or network. Sprint sees WiMAX as a technology that changes the mobile phone market by extending beyond third generation platforms, first augmenting and then replacing earlier generations of technology.

T-Mobile might view WiMAX as a technology that potentially displaces Wi-Fi hotspots. Cable and telephone companies see it as a threat to cable modem, fiber-to-home and Digital Subscriber Line services.

I wouldn't be so sure WiMAX ultimately will have most impact as a PC-affecting technology.

It seems to me more likely it will have much more significance as a mobile phone and mobile handheld device platform. There are all sorts of reasons why users aren't going to take advantage of mobile WiMAX from their PCs, including ambient light and furniture. Everybody can reach for and use a mobile in a pocket or purse.