3G iPhones Cost $256 to Manufacture

You might wonder how Apple can sell 3G iPhones at a subsidized price from AT&T of $200 or so. Well, according to iSuppli analysts, the phone costs about $265 to produce.

Apple gets $300 from AT&T for each device sold. After packaging, shipping and marketing costs, Apple will have to make its money elsewhere. Applications, music and movies would appear to be the "somewhere else."

As part of the new arrangement, Apple will not be getting recurring revenues from usage plans.

The company also forecasts 4.5 million iPhones sold this year, and over 30 million by 2011.

Comcast Adds Global Calling

Comcast has struck a deal with some IP voice provider, as it is launching calling to Western Europe, Latin America and Mexico. I'd guess it is Jajah underneath the hood, given the amount of activity Jajah is pouring into relationships with telcos and cable companies, as well as the spare capacity it has built into its global backbone network. Whomever the deal is with, the move by Comcast shows that telcos and cable companies can leverage over-the-top or Web activated forms of IP voice for out-of-territory calling.

SMS Packaging Like Long Distance

Text messaging packaging is starting to look like long distance used to, in some ways. In other ways, the packaging is starting to resemble voice usage packaging.

As per-message fees rise to the 20 cents a message rate for casual use, it makes sense to buy a bucket of minutes. That's a concept similar to the "presubscribed carrier" system for long distance calling in the U.S. wired telephony market. If users didn't pick a carrier, and use long distance on a "casual" basis, those users got socked with fairly expensive charges for used minutes.

Picking a carrier of record for long distance typically meant lower per-minute prices. With the rise of VoIP unlimited calling plans and "buckets of minutes" in the mobile market, that is less an issue than it used to be.

Text messaging, though, is moving that way. Carriers want users to upgrade to buckets, so pricing casual use at a high rate is one way to encourage that behavior.

In another sense, the new packaging also is similar to the voice bucket plans now used in the mobile industry. Usage above the bucketed amount incurs hefty additional usage fees. So people have incentive to buy bigger buckets than they think they will need as insurance against payment of those usage fees.

Text message pricing now has moved that way as well. The other effect is to increase the value of any unlimited texting plans.

One thing is clear enough: the highest revenue-per-bit service in the U.S. market is text messaging.

C Titles Prefer Web

According to an online study from Forbes.com and Gartner, the Internet continues to be the most influential and important source of business information for C-Level executives around the world, at 67%.

This number has increased 37% since 2004. At the same time, C-Level executives, citing newspapers such as the Wall Street Journal as their main source of business information, has decreased 36% since 2004.

The number of C-Level executives who prefer the Internet first thing in the morning has increased 22% since 2004, while those who prefer to read the newspaper first thing in the morning has declined 11% over the same time  period, the survey suggests.

HTTP is the Long Term Issue, Not P2P

Though it is peer to peer traffic that currently has network engineers concerned, HTTP traffic rapidly is surpassing P2P in volume, driven by the amount of video being viewed in a Web context.

Open Road for Open Source

Open source now is mainstream in the enterprise environment and in the Web environment. So it is not too surprising that open source now is emerging in a big way in the mobile market.

It isn't simply Android or Linux. It also with a couple years will include Symbian.

If one is looking for innovation, the mobile market is among the best places to watch. No devices or experiences are as customizable as mobiles are. No devices get replaced quite so often. No devices are so well adapted to applications that are "always on."

A Dramatic Change in Core Functionality

What is the core value of enterprise application? What is the core value for any PC application used by consumers? In times past, one might have answered "productivity" for an enterprise. In the consumer space, entertainment probably rivals productivity.

And though those might still be the right answers going forward, there's something new afoot. How are productivity and entertainment realized?

Increasingly by use of social and communications mechanisms, ranging from email, messaging, downloads, uploads, managed and hosted services, cloud computing and social networking.

Software increasingly works because it is connected to other software and other people. In some real sense, even when productivity or entertainment is the "value," value is realized only in the form of communications and connected computing.

As Bill Gates steps from history's computing stage, that's the observation that occurs. Bill Gates deserves thanks for personifying the "PC era." Maybe we don't have a name yet for what is coming, or any single person, company or application to define it.

Who could forget Time magazine naming the "PC" the person of the year? Who thinks it will be so easy to tag what is coming?

Why People Miss 30-50% of Calls

According to studies sponsored by Nokia, people who carry their mobile in their pockets sometimes or always miss 30 percent of inbound calls.

People who carry mobiles in their handbags sometimes or always miss half of all their inbound calls. That's reason enough for mobile providers and device manufacturers to investigate other ways of distributing the inbound call function.

It's hard enough to connect with a person when busy and unavailable to speak immediately. It's even harder now that so much voice traffic has shifted to mobile methods. Now, even when a person is available, calls are missed simply because the "alert" function has failed.

Some of us try to get around this problem by putting devices into "vibrate" mode. That works well enough until the phone is out of the pocket and sitting on a desk someplace. Then we forget that there won't be an audible tone--and we miss calls that way.

Three Screen Ads: Heat More than Light

At least some tier one service providers have high hopes for advertising spend based on targeting techniques and availability on three screens (TV, PC, mobile).

You see huge numbers around online ad spending, mobile ad spending or targeted ad spending. Nobody knows what will happen, except that share will continue to shift from existing media to online and mobile.

It doesn't seem so clear to me that new ad revenues will be transforming for either cable or telco providers, though.

Cable has been at the ad game for quite some time, and the overwhelming amount of money made by ca cable operators comes from recurring services.

In fact, cable modem and voice services already surpass total ad revenues. As a new revenue stream, it's important, to be sure.

The issue is how significant targeted advertising can be, when location and other attributes are easy to assimilate as part of the placement decision. If history provides any guidance, the answer will be "far less than you think."

Cable TV Model for Some Parts of the Content Ecosystem

"An unconstrained profit-maximizing platform charges a positive fee to the other side of the market if and only if content providers value additional consumers higher than consumers value additional content providers."

In other words, platform and service providers have opportunity to earn revenue from content partners when new, emergine or highly-focused content partners want expedited carriage, placement or promotion on platform portals.

It's the same sort of thing the cable industry long has had as a business practice. Popular networks get paid, low-viewership networks often must pay to get carriage (shelf space). In a service provider context, the analogy is that promotion, targeting, location, billing and other features and services can be so useful a content partner might be willing to pay to obtain them.

If, on the other hand customers highly value a particular content provider, a rational platform simply will make sure the popular provider is well supported, and will do nothing to impede customer access.

It's still an emerging sort of thought, and the services and applications platforms can offer partners isn't so well developed. But it is coming.

IP-Based VPNs to Surpass Frame Relay, ATM in 2009

2009 should be the year the installed base of IP-based virtual private networks surpasses the installed base of frame relay and asynchronous transfer mode sites, Vertical Systems Group forecasts suggest.

The shift has been going on for years, but a crossover point would be significant, as it will be when the installed base of IP phone systems surpasses that of digital systems.

Adoption of the ascendant technology gets a boost when vendors begin to slow and end development of legacy applications and gear.

Sprint Wins with Instinct

Sprint Nextel Corp. has broken company sales records with its new Samsung Instinct, leading to temporary shortages of the touch-screen phone in some stores, the company says. Despite placing what it calls the largest-ever initial order for a 3G handset, Sprint still underestimated demand, apparently.

E-mail access, Internet browsing, GPS navigation tools, interactive maps and one-touch click-to-call access have met "extremely heavy use," the company says.

The phone costs $129.99 with a two-year contract and a $100 mail-in rebate. The obvious observation: iPhone has had a transforming impact on handset design.

Intel Sees "No Compelling Case" for Vista

New York Times staff reporter Steve Lohr says Intel has decided against upgrading the computers of its own 80,000 employees to Microsoft’s Vista operating system

“This isn’t a matter of dissing Microsoft, but Intel information technology staff just found no compelling case for adopting Vista,” an Intel source says.

To be sure, large enterprises have all sorts of applications that might have to be upgraded or modified when making a major operating system change. Consumers don't generally have those problems.

Still, it's a bit striking when a major Microsoft partner makes a decision like that. Chipmakers like it when new operating systems and apps require lots more powerful processors and lots more memory. Except when it's their money, apparently.

ICANN Changes Domain Name Scheme

The Internet Corporation for Assigned Names and Numbers has voted unanimously to relax rules "top-level" domain names, such as .com or .uk. by 2009.

The decision means that companies could turn brands into Web addresses, while individuals could use their names.

Domain names written in scripts, such as Asian and Arabic, also were approved.

At the moment, top-level domains are limited to individual countries, such as .uk (UK) or .it (Italy), as well as to commerce, .com, and to institutional organisations, such as .net, or .org.
BBC infographic showing domain name sales

Under the new plans, domain names can be based on any string of letters. Individuals will be able to register a domain based on their own name, for example, as long as they can show a "business plan and technical capacity".

Companies will be able to secure domain names based on their intellectual property, such as individual brand names.

Broadband "Over-supply" Problem

Cox Communications is doubling the download speed of its most popular residential Internet service (Preferred) in Northern Virginia and increasing the speed of its Premier service by thirty-three percent.

PowerBoost, which supplies temporary "burst" bandwidth for uploads, also has been added to the Preferred and Premier packages. PowerBoost for downloads has been available since 2007. This is the fifth consecutive year that Cox has enhanced the speed of its Internet services in northern Virginia (credit Verizon's FiOS service for that).

Verizon has boosted FiOS downstream speeds to 50 Mbps, with 20 Mbps upstream, for its top package, available everywhere FiOS is sold.

Cox customers will get the speed increases automatically in July, without need for a call or technician visit.

The PowerBoost feature means uses of the Preferred package will experience speeds up to 12.5 Mbps down/2.5 Mbps up. Premier customers can achieve 25 Mbps down/3.5 Mbps up.

Policy advocates often complain about the U.S. "broadband problem." Sometimes they mean it isn't available, isn't fast enough or costs too much. The evidence suggests availability isn't a problem. Whether a service is "fast enough" is a matter of interpretation, but I don't see evidence of anything but increasing speeds, often for the same cost. "Price" likewise is an issue.

With the exception of Japan and South Korea, though, cost per Mbps in the United States is quite comparable to nearly all other leading nations.

Complaining about broadband is a bit like similar observations we could easily have made about wireless penetration or use of text messaging, where U.S. users lagged way behind European users for quite some time. That "problem" doesn't exist anymore.

Neither will the "broadband" problem. Have there been issues with availability and speed? Yes. Are those problems in the process of resolution? Yes. Pointing to the existence of problems is fine. Ignoring clear evidence that problems rapidly are being fixed is either misinformed, intellectually dishonest or sloppy.

Some people like to say the definition of broadband is a problem, pointing to data collection that defines "broadband"--at minimum--as 200 kbps. That is wrong, also. The FCC recently changed its minimum definition to 768 kbps. A couple of points.

The only definition the global telecom industry ever has formally set was way back when ISDN was created. Broadband still formally is defined as any bit rate over "voice" rates of 64 kbps. So 128 kbps "traditionally" has been considered "broadband."

Market have moving definitions. But you can hardly fault the FCC for initially setting a minimum standard that is in fact above the recognized global nomenclature. In recent practice, industry executives might have considered broadband to be 1.544 Mbps or above, while anything between 64 kbps and 1.544 Mbps is "wideband."

All that is meaningless. It will be even more meaningless when cable operators start branding some broadband speeds as "wideband," to suggest it is more bandwidth than "broadband." Markets may like that. But it doesn't change the only formal definition the global engineering community ever has embraced.

Also, "minimum" is one thing. "Maximum" or "mean" are other things. Megabit access now is the norm. Targets will continue to shift higher over time. Call it the broadband version of grade inflation. The minimum "passing" grade might be a "D." That doesn't mean people expect that to be the norm.

The United States once had a major "broadband" availability problem. It no longer has. There are places where "access" by wire remains a problem. Most of those places have satellite alternatives, though. And many places have fixed wireless access as well.

Honestly, most potential users have one or two wired networks to choose from, two satellite providers and two or three mobile providers. Many consumers soon will be able to choose from as many as five mobile broadband providers.

Under-supply won't be an issue for most, much longer. Over-supply is the looming problem.