Apple iPhone and Android Top OS Satisfaction Ratings

When it comes to satisfaction levels, the Apple iPhone continues to lead all other major cell phone manufacturers, with 74 percent of owners reporting they're "very satisfied" with their iPhone, according to ChangeWave Research.

But 72 percent of Android users also say they are "very satisfied." There's a big gap to the number-three OS, where 41 percent of Research in Motion users say they are very satisfied with the operating system.

It is worth noting that the "very satisfied" rankings for the Palm OS primarily reflect experience with the older OS, not the new  Web OS (Pre, for example). About 58 percent of Pre users say they are very satisfied, while for smart phones using the older Palm OS it was just 29 percent.

Is Android Finally at an Inflection Point?

The Android seems to have hit a sales inflection point, and is poised to take share in the smartphone market, according to ChangeWave Research.

More buyers now are indicating they will be buying Android devices, and fewer say they will be buying an iPhone. In September 2009 about six percent of respondents to 21 percent of respondents to a recent ChangeWave Research survey.

At the same time, where 32 percent of respondents said they would be buying an iPhone in September, 28 percent said they would be doing so in the December 2009 survey.

The ChangeWave Research data suggests that Android has hit an inflection point, after roughly a year on the market, a time when some observers might have wondered whether Android would emerge as a viable alternative to the iPhone.

The ChangeWave survey also suggests that the Android is taking share from other devices as well, with the possible exception of the BlackBerry. Where 17 percent of respondents said they would be buying a BlackBerry in September, about 18 percent said they would be doing so in December.

But Windows Mobile buying intentions were about nine percent in September and had dropped to six percent by December. Likewise, about six percent of respondents suggested they would be buying a Palm OS device in September; just three percent in December.

Android Becoming a Factor in U.S. Mobile Ad Market

Android smartphones are becoming a bigger factor in the U.S. mobile advertising market, with ad requests growing 97 percent in just two months between October 2009 and December 2009, according to AdMob.

Of those one billion ad requests tracked by AdMob, 90 percent were from U.S.-based devices.AdMob tracks handset and operator data from every ad request in its advertising network of more than 15,000 mobile web sites and applications.

Much of the growth was driven by the release of the Motorola Droid. Before the Droid’s launch, HTC devices accounted for 98 percent of Android requests. In December, that fell to 56 percent, with 39 percent from Motorola (which also offers the CLIQ) and five percent from Samsung.

The Motorola Droid already is the leading Android handset in the AdMob network and generated 30 percent of requests in December.

Google Nexus One Unveiling Jan. 5, 2010?

Google seems to be gearing up for a Jan. 5, 2010 unveiling of its Nexus One smartphone. The somewhat controversial move might be seen as a misguided effort that will undercut Google's effort to support broad adoption of its Android operating system by all the major service providers.

Worse still, in the worst-case scenario, Google is aiming to become a service provider in its own right. That seems highly unlikely. That really would strain relationships with its carrier partners. Nor does Google seem to be angling to become a hardware supplier in the same way that Apple is.

True, it seems to be fostering development of handsets. But even a Google-branded device might be seen as a way of pointing out what it thinks could be done.

One suspects that the unveiling is more of a demonstration project, intended to showcase what might be done with the Android operating system when paired with mobile hardware. One reason for that belief is that unlocked smartphone devices are expensive enough that few actually are sold in the U.S. market.

More seriously, T-Mobile is rumored to be readying a contract-subsidized Nexus One deal, which would put the out-of-pocket cost of the device within typical ranges for some other leading smartphone models. The typical model is a two-year contract in exchange for a device subsidy, and that is what most observers expect to see.

That is a fairly well established business model, giving T-Mobile a period of device exclusivity before it also is made available to other service providers.

The other angle is that if Google were really serious about becoming a player in either the device or service provider business, it likely would have readied deals in multiple countries.

The key thing is whether the user experience winds up being something users clearly can perceive as offering a "delightful" experience. That would seem to be the point. Whether Google can deliver remains to be seen.

E-Book Style Revenue Models Needed for Many Mobile Devices

As Apple plans to introduce a new mobile "tablet" device, and rumors grow that Google is working on a Chrome operating system tablet of its own, it is not hard to predict that much future growth for mobile service providers will be in providing broadband data connections for such devices, whether or not the actual first-generation devices from Apple and Google actually take off.

The reasons are drop-dead simple: most people who want a mobile phone already have one. The new growth frontier is for other devices that also benefit from a broadband connection, such as notebooks, tablets and e-book readers.

Shipments of mobile broadband-enabled consumer electronics are forecast to increase 55-fold between 2008 and 2014, say researchers at ABI Research. The market includes e-book readers, mobile digital cameras and camcorders, personal media players, personal navigation devices and mobile gaming devices. Total global shipments reach 58 million in 2014, says ABI Research.

One suspects sales of mobile-connected devices will hit critical mass only when a device is linked intimately with a content service that provides the revenue model. Not many consumers likely will spend much money to Internet-enable their cameras, for example.

Instead, what we probably will need to see are content services (e-book readers provide an excellent example) where payment for content subsidizes the use of mobile broadband access, with no incremental cost to the end user.

One suspects tablet devices likewise will achieve only modest success until video and other content services provide the revenue to support no-incremental-cost use of mobile broadband connectivity.

It isn't immediately clear how this might work for devices supporting multi-player gaming, for example, but e-book style models likely will have to be created for mass adoption of mobile broadband for gaming devices.

Consumers are not going to want to buy subscription plans for many discrete mobile devices at rates anywhere close to what broadband access now costs, either for smartphones or notebooks, for example.

Is Digital Delivery Destroying Other Parts of the Movie Ecosystem?

Reality typically is more complex than any forecast about reality. Consider the movie business and downstream ecosystem. Digital entertainment was supposed to destroy the movie theater business, but evidence is contradictory on that score.

It might be more accurate to say that the digital entertainment business is hitting "physical media" sales more than anything else. In the first half of 2009, ticket sales grew 17.5 percent, according to Media by Numbers, a box-office tracking company. You might argue that is the result of higher ticket prices or a desire to momentarily escape recession woes.

As it turns out, neither of those factors seem to be driving the trend. Attendance jumped by nearly 16 percent in the first half of 2009. If those rates hold for the whole year, it would be the biggest box-office surge in at least two decades.

There likely is some truth to the adage that "people go to movies more frequently in a recession." But the evidence is mixed on that score. The last time Hollywood enjoyed a double-digit jump in attendance was 1989, when the unemployment rate was at a comfortable 5.4 percent. That year, the number of moviegoers shot up 16.4 percent, according to Box Office Mojo.

In 1982, theater attendance jumped 10.1 percent to about 1.18 billion as unemployment rose sharply past 10 percent. Then admissions fell nearly 12 percent, an unusually sharp drop, in 1985, as the economy picked up.

The economy's effect is a bit unclear, in other words. As always is the case, though, movie attendance is higher when film-makers create movies lots of people want to see, and that likely is a part of the story.

The film industry over the last year or two has released movies that are happier, scarier or just less depressing than what came before, some might argue.

Still, the point is that digital delivery has not adversely affected theater attendance of late.

DVD sales are another matter. In 2008, movie ticket sales surpassed DVD revenue, according to Adams Media Research. Where 2009 box office receipts grew 10 percent $9.87 billion, DVD sales fell 13 percent to $8.73 billion.

For whatever reason, consumers are spending less money buying DVDs than they had been for most of the past 10 years, and a reasonable guess would be that video on demand and other streaming services finally are starting to have an impact. The other angle is that Netflix has kept growing as well, despite predictions by many that growth would falter as Internet delivery and VOD became more established behaviors.

Consumers may also have realized that they will not watch most movies more than once. That will shift behavior towards rental services and VOD.

The prevailing wisdom is that the DVD business is in a permanent decline. A few years ago many analysts wrongly predicted that theater sales would drop every year, as well. One should never underestimate the impact business decisions by the movie ecosystem can have.

Making movies people want to see plays a huge role, for example. Pricing and distribution decisions made in the DVD sales and rental channel also can have a huge and unforseen impact. Netflix disrupted the retail rental store business, for example.

Also, Blu-ray HDTV appliance adoption might be playing a role as well. Though the installed base of DVD players still represent the lion's share of device usage, Blu-ray obviously is growing. That could have consumers holding back on purchases of physical media they believe will someday go the way of casette tapes.

North America is Ripe for New Broadband Backhaul Facilities

North America appears to be ripe for new high-capacity backhaul from mobile tower sites to points of presence.

The reason? Mobile broadband is not matched by backhaul broadband. Most tower links use T1 connections running at 1.544 Mbps.

That clearly is not good enough for mass adoption of mobile broadband services. Internet service providers located in rural areas have additional problems, though. Quite often, regional connections between local points of presence and the nearest Internet PoPs also use T1 connections.

If you wonder why "middle mile" projects were so prominent in the first wave of broadband stimulus awards, that's why.

Incumbent Telco VoIP Transition is Not Technology-Led

The fact that AT&T has asked the Federal Communications for a definite date to shut down the public switched telephone network is, like most regulatory filings made in Washington, D.C., more complicated than it might appear.

Virtually all telecom service provider executives believe IP voice is the future, whether in the mobile or fixed domains. But the economics of the transition are complicated, at least for an incumbent provider.

Attackers, such as cable companies or independent VoIP providers, have no installed base of customers to cannibalize. Incumbents most certainly do, and that makes all the difference in perspective.

A Verizon executive recently noted that, “at this point in time, the business case does not support a technology-led migration off of the PSTN with the combination of land line loss, the economy, competing priorities and competitive dynamics.”

The key phrase is "technology led." Cable digital voice, Skype and Vonage build on VoIP: the technology directly supports the business case.

For an incumbent telecom provider, the technology in some cases harms the business case. To the extent that VoIP services largely replace an existing service with no incremental revenue, added investment is not met by added revenue. To the extent that VoIP services are priced lower than the voice services they replace, the business case is negative.

Under such circumstances it is rational to harvest PSTN voice as long as possible, despite market share losses. At some point, the logic reverses, however. As the fixed costs of the old PSTN are shared over a smaller base of customers, it will at some point be advantageous to switch to IP voice, strictly on the basis of operating cost savings.

That point has not yet been reached, but it is inevitable. The issue right now is what regulatory regime will apply to incumbents as that transition occurs. And one might argue that is the real point of the AT&T request for the FCC to specify a firm timetable for shutting down the PSTN.

The replacement of PSTN technology with IP telephony also creates an opportunity for new rules about carrier obligations that directly affect the costs of providing such service. That is why the AT&T request also argues that legacy rules must be altered as the transition is made.

Those rules are arcane and of little visible consequence for the typical consumer user of fixed voice. But they have enormous impact on the voice business case, as viewed from an incumbent perspective. Basically, all the rules that govern how networks compensate each other for terminating traffic are the heart of the matter.

So incumbent sunsetting of the PSTN will not be "technology led." The institutional and business frameworks remain the key issue.

Broadband Stimulus Won't Change Much, Firm Says

Some observers seem to have believed the "broadband stimulus" program, as helpful as it will be for some organizations and service providers, would somehow "fix" a "broadband" adoption problem in the rural and some other "underserved" areas of the country. It appears reality is setting in.

"The bottom line is that the stimulus money is going to change any of the access issues," says Robert Rosenberg, Insight Research Corp. president. "It is far to few dollars to make any impact."

But "access" is only part of the "problem." In fact, Insight Research says, there are four different kinds of households that must be considered when looking at broadband "adoption" and "availability," which are quite different issues.

There are households "unable to buy" broadband service, at least from a terrestrial provider (most analysts seem to forget that there are two national providers of satellite broadband). There are households that can buy broadband, but choose to buy dial-up service.

There are households that do not own computers and households that own computers but do not use the Internet.

"I don't want to over-play the 'I can't buy it' issue, says Rosenberge. "Yes there is some of that, but it is also the issue of 'no computers' or 'dial up is fine for me,'" he says.

Insight says 60 million U.S. homes buy broadband access service, while 12.6 million homes buy dial-up access, for a total of 72.6 milliion Internet access buyers.

Insight Research says that if one adds up the households without any broadband service at all, plus dial-up households, perhaps 58 million households, or 49 percent of all U.S. households, potentially are candidates for broadband service and have not yet bought it.

Insight Research estimates that at least 12 million rural and non-urban market households do not have access to any broadband service (terrestrial) due to the lack of supporting terrestrial infrastructure. Given a minimum cost of $1,500 per household, it is easy to see that the price tag for expanding broadband access to 12 million new households could exceed $18 billion.

By definition, the funding available under the broadband stimulus program is just a bit over $7 billion, and that includes funding for middle-mile projects, computing centers and other projects that do not directly add new broadband access capability. In fact, only a theoretical $6.4 billion actually is available for infrastructure.

Insight Research projects that non-governmental funding will provide the majority of the
growth in broadband penetration for the next five years.

With an estimated 40 million households still lacking broadband access by year-end 2014, the $6.4
billion in government funding would allow for an investment of $164 per household to provide broadband access to these non-broadband households.

The availability of such a small investment amount per household casts serious doubt that any significant expansion of broadband access will result from this government action, Insight Research says.

At the current estimate of $1,500 per household, at least $60 billion would be needed to deploy universal broadband access across the United States for 40 million households.

The broadband stimulus will not change much, it appears.

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.