Will Verizon Get Handsets Right?

So the rumor is that Verizon doesn't want to support the Google Phone. It also didn't want to support the iPhone. It isn't going to get future N series Nokia devices. So maybe Samsung or BlackBerry are working on a Verizon exclusive. That at least would explain Verizon's reluctance. Granted, Verizon would be loathe to share revenue in the way the new handset partners prefer. But there is a danger here.

It isn't so clear customers are, or can be made, loyal to a network. No network is an expression of a user's identity or personality. Handsets are. Users just want networks to work. Beyond there, why is there any reason for loyalty?

Some networks work better than others, for all sorts of reasons. I happen to be using at&t, Verizon, Sprint and T-Mobile for various applications and devices. All have some shadow areas. In-building coverage is a problem for all of them. Customer service is radically better from all of them, compared to a few years ago.

T-Mobile's biggest negative is the lack of a 3G network. But Verizon's 3G network rarely delivers the throughput it claims. And everybody has coverage issues. In fact, one of the absolute Verizon dead spots is around our Virginia home.

The point is that loyalty to a network isn't likely going to happen, for me or most anybody else. Handsets are another matter, and that's where Verizon could be making dubious decisions at the moment. Unless there is some killer device waiting in the wings, "the network" isn't going to help them.

Is Voice the Killer App for IMS?

You have seen this story before: a new service rolls out and providers look for the "killer app." Then it turns out the killer app is something people already do, but the innovation allows them to do it in a new way, or maybe a better way.

To some extent, voice is a bit of that sort of thing for broadband Internet access, as email was something approaching a killer app for dial-up Internet access. Though the initial "killer app" for broadband was fast Internet access, voice becomes a very important incremental value.

"We are seeing a pattern in Europe of VoIP being delivered by companies that control the broadband infrastructure," notes Stephan Beckert, TeleGeography analyst. "It's an add-on feature to broadband."

So what is the killer app for fixed-mobile services? It's voice again, allowing legacy providers to hang on to more of their fixed-line business than otherwise; allowing mobile providers to displace landline traffic with mobile; or new providers to displace business phone systems.

So what is the killer app for IP Multimedia Subsystems? Wouldn't it be surprising if it turned out to be voice?

So what's the logic? Assume wireline carriers might lose as much as $13 billion in annual revenues by 2011, in part because 34 percent of U.S. households might elect to go "mobile only." So enter IMS, allowing mobile users to take advantage of cheaper Wi-Fi-based calling over their broadband lines.

Assume the landline carriers then lose just $8 billion in revenue to cord cutters. That's a $5 billion annual revenue stream. So put that in perspective. All U.S. multichannel video providers put together earn about $4 billion a year from pay-per-view and video-on-demand services.

So if wireline carriers just prevent landline erosion, they make more money than the whole U.s. VOD and PPV providers put together.

Voice Mashups Disruptive or Not?

Iotum recently shifted gears and decided to take advantage of Facebook APIs to create a conference call app inside Facebook. Many of you know what Skype has been doing in the area of encouraging third party development around its client. And of course Microsoft has made clear its intention to place communications within the context of every expression of its desktop productivity suite.

Some people would argue this move to voice as an attribute of every application spells the death of traditional "communications as a service." So far, of course, there is no evidence of this, though there is plenty of movement within the service industry. Neither is there any evidence that people communicate less when they have the new tools; the reverse typically being the case.

So far, at any rate, one would have to say that the advent of voice as an application, as an inherent attribute of other experiences and activities, simply is creating incremental revenue opportunities and end user utility. To the extent that it negatively affects the "service" business, providers of services already are transitioning away from reliance on "voice" revenues in any case.

Enterprise phone system providers hope to do the same, and speak only of "unified communications" these days. It isn't the calling, they seem to say; it's the integration. Not an unwise choice given the fact that Microsoft Office Communication Server provides a complete alternative.

But maybe this time around we shouldn't worry so much about disruption. Choice will do nicely. Human beings are starting to have lots more choices, and that's a good thing. Companies will do well providing those choices. It will be enough.

Voice and communications increasingly are available to users as discrete services and integrated applications. This trend isn't going away. But the explosion of choices and richness do not inevitably spell doom, or automatic success, for any contestant. Calling entities "dinosaurs" doesn't hobble them. Nor does "disruption" always succeed. Quite the opposite seems to be true at this point.

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.