What Impact on AT&T Revenue from Verizon iPhone?

Verizon Wireless is getting the right to sell the Apple iPhone, it seems clear enough. All of that has financial analysts modeling the potential impact on AT&T.

Estimates from industry analysts of the resulting number of defections to Verizon from AT&T range from one million to six million. John Hodulik, an analyst at UBS Securities comes in somewhere in the middle. He predicts that AT&T will sell 8.8 million iPhones in 2011, down from 15.6 million in 2010.

Of the 13.3 million Hodulik expects Verizon to sell in 2011, about 2.3 million will be to AT&T refugees, he predicts. An additional 10 million will be current Verizon subscribers who upgrade from other devices, and the rest will come from other carriers.

 If six million of its customers defect, the $6 billion in lost annual revenue would amount to about 10 percent of AT&T's wireless sales in 2011 and 4.8 percent of total revenues of $126 billion in 2011, according to UBS projections.

On the other hand, while AT&T has reason to worry about losing the lucrative iPhone arrangement it has enjoyed since Apple introduced the device in 2007, the damage may not be as severe as many anticipate, for a number of reasons, mostly related to financial barriers to switching.

Despite the well-reported call dropping and other service issues in some cities and neighborhoods, many iPhone users do not report unusual levels of call dropping beyond what might be expected from any carrier, at some times, and therefore presumably do not have overwhelming incentives to change carriers. Churn possibly will be highest in New York and San Francisco, for example.

There are financial barriers as well. Contract termination fees, though pro-rated, could run up to $325 for a consumer at the start of a new contract. About 15 million of 23 million iPhone customers appear to be on such contracts.

Devices used on Verizon's network will not multitask, supporting both a phone conversation and Web usage, for example. For many customers, the cost of service on the Verizon network might be more than they have been used to, on the AT&T network.

AT&T says its 3G network is faster than Verizon's 3G network, and one does not hear Verizon disputing that in public.

Perhaps most significantly, many iPhone users are on family plans. Switching every user on a plan because one or two iPhone users want to migrate could pose barriers as well. Also, many users might want to switch, but then discover that Verizon Wireless prices are higher than AT&T's, in many cases. Whether that makes a difference is tough to determine at the moment.

Rethinking the iPhone Threat to AT&T - BusinessWeek

VoIP | Telecom | Mobility | Blog

About 50 percent of respondents recently surveyed by Frost & Sullivan expect their communications and collaboration budgets to increase over the next 12 months, while 47 percent say their budgets are likely to remain the same.

Frost & Sullivan surveyed 200 North American C-level executives as part of the study.

VoIP | Telecom | Mobility | Blog

Will Some 4G Suppliers Aim for Substitution?

Though for the most part mobile voice services have been viewed as complementary to fixed voice, at least some providers have taken a direct "replacement" tack with their marketing.

The classic example is Cricket Wireless, which marketed itself as a local calling substitute for landline voice service. Since many observers have noted that a 4G wireless service might be a substitute for a fixed broadband connection, one wonders when, and if, one or more providers will try and carve out a niche for 4G as a "wireline replacement" service.

Clearwire has been the best example of that, up to this point. Wireless likely will not be so workable a replacement for multi-person households and households that watch lots of online video. But 4G wireless might be a perfectly workable, or at least workable solution for single-person households, or households with unrelated persons, typically younger, who use about an average amount of data each month.

Some estimates peg "average" household consumption per month at about 12 gigabytes. But that is misleading. The "mean" or "average" includes consumption by very-heavy users who are a minority of all users. The "median" gives a better sense for "typical" usage.

According to Sandvine, for example, the median North American user consumed about 4 Gbytes on a fixed connection, monthly. If that remains roughly the case, then wireless is going to be workable for quite a number of users.

See the report here: http://www.sandvine.com/downloads/documents/2010%20Global%20Internet%20Phenomena%20Report.pdf

For further discussion about typical household consumption, see http://gorumors.com/crunchies/average-household-broadband-data-consumption/ and http://gigaom.com/2009/10/20/cisco-data-shows-heavy-broadband-users-are-early-adopters-not-hogs/ for more detail.

4G Wireless Evolution - 4G Pricing, All You Can Eat vs. Bundled Bytes

Amazon Says Many Use Kindles for Reading, Tablets for Games, Movies, Browsing

One wonders how many more mobile gadgets people are willing to carry around with them, and how many of the newer devices might be something less than fully mobile products, in terms of usage, if not design.

According to Amazon.com, in fact, "We're seeing that many of the people who are buying Kindles also own an LCD tablet. Customers report using their LCD tablets for games, movies, and web browsing and their Kindles for reading sessions," says Jeff Bezos, Amazon.com CEO.

At least for the moment, that raises an interesting question. Until the time that prices for tablets drop much further than current levels, discretionary income is going to be a barrier for many, perhaps most, consumers weighing the value a tablet can provide. Up to this point, early and well-heeled individuals and people who are not paying for their devices have driven iPad sales, for example.

But at current prices, an iPad can be an expensive way to watch movies, do some casual browsing or play games, when all those things can be done on PCs and other devices, especially if the reading function is largely offloaded to a Kindle or other e-reader.

Bezos says the low price of a Kindle makes choices unnecessary. "Kindle's $139 price point is a key factor," says Bezos. "It's low enough that people don't have to choose" between a tablet and an e-reader.

That people will buy and use multiple devices isn't so much a surprise. The bigger issue is that there probably are limits to the use cases. Most people take their phones everywhere. Traveling business people sometimes carry PCs or tablets. Lots of people carry iPods. But there are practical limits to how many devices people will carry with them everywhere.

That suggests some newer categories of mobile devices won't actually be used in mobile fashion, but rather simply "untethered," as with PCs and gaming devices that are Internet-connected in the home. There are implications.

Internet-connected devices can function perfectly well using Wi-Fi. Mobile devices work lots better, one might argue, with a full-time mobile broadband connection. That, in turn, drives purchases of mobile broadband services.

Amazon Media Room

Apple iPad Owners Seem to Prefer 3G over Wi-Fi Models

Among the questions posed by devices such as the Apple iPad is whether users would buy the Wi-Fi-only models, which do not create mobile broadband revenue for service providers, or the 3G models, which do. Apparently, 60 percent to 65 percent of units sold are of the 3G variety, according to DigiTimes.

Apple also is expected to release three versions of iPad 2, supporting either or a combination of Wi-Fi, UMTS (for GSM networks such as AT&T and T-Mobile USA) and CDMA (for Sprint and Verizon Wireless), for 2011 with mass production to start as early as the later half of January.

Apple will ship about 500,000-530,000 units to channels in January with shipment ratio of Wi-Fi, UMTS and CDMA models at 3:4:3, according to industry sources, citing upstream component makers.

Apple prepares three versions of iPad 2 for 2011

The Mobile Future is Now

By Brianna Swales and Lynda Starr, Vantage Communications

We’re at that time of the year again—when everyone dusts off their crystal balls and starts thinking about the upcoming New Year and what it will bring personally and professionally.  At Vantage, we follow trends and breaking news to help our clients prioritize marketing and sales goals for the coming year. Can you believe how quickly the year has gone by?

Here are the trends in no particular order that we think will characterize the mobile landscape.

The circle continues:  Faster data rates and additional bandwidth to spur new applications which will further push bandwidth.

While 3G networks have made strides in download speeds reaching 600 Kbps to 1.4 Mbps, the next-gen network, 4G, offers additional bandwidth of 1 Gbps for stationary reception and 100 Mbps for mobile reception that supports new applications.  This in turn is pushing carriers to further upgrade bandwidth. T-Mobile, Sprint, AT&T, MetroPCS and Verizon Wireless are each upgrading networks to increase capacity and data rates to enable subscribers to take advantage of robust applications and services.

Smile! Mobile video and smart phone adoption to surge upward

The growth of 3G and 4G networks has increased the use of mobile video, running the gamut from mobile TV, video on demand (VOD), and video messaging to mobile advertising, video conferencing and more. By the end of 2010, over 23.9 million people will have viewed mobile video, according to eMarketer, with those numbers expected to double by 2013. For service providers, mobile video opens new revenue streams. Much of this growth is propelled by smartphone adoption, which has reached about 23 percent of U.S. adults. Moreover, new tablet devices are improving video quality and are being seen more and more as replacements for laptops.

Location-based services know where you are and might just reward you for it

Compelling applications and availability of enabling technologies have led to the rise in location-based services, which take advantage of the geographical position of the mobile device to provide consumers with everything from personalized weather to coupon offers. Location-based services (LBS) offers advantages to both consumers and businesses.  For example, with location-based marketing, businesses can provide information to consumers in proximity. Moreover, consumers can check in with Foursquare and Facebook Places and become word-of-mouth marketers for their favorite proprietors. Location-based services increase customer loyalty and create a new class of influencers, which is changing the marketing model.

The Mobile Wallet is coming

Mobile commerce is beginning to change the way we shop and make purchases by allowing consumers to make point-of-sale purchases via mobile devices. Gartner estimates that by the end of 2010, 1.2 billion people will carry handsets capable of rich, mobile commerce. Likewise, mobile commerce is tied to the availability of bandwidth able to handle an onslaught of activity such as recent experiments by Macy’s and Best Buy.

Verizon Wireless, AT&T and T-Mobile USA are jointly launching a mobile commerce initiative dubbed Isis. The Isis network will use Near Field Communications (NFC), through which consumers can make purchases by waving a radio microchip-equipped smartphone at a corresponding retailer reader unit. Google, Apple and Research in Motion have also announced plans to integrate NFC technology into their products.

Anyone who watched The Jetsons is most likely waiting for “the future” to get here.  But as these mobile trends and others come to fruition, it might just seem like the future is now.

Amazon Cloud Computing Had Nothing to Do With Selling Excess Capacity

There's an urban myth that Amazon.com started Amazon Web Services, the cloud computing business, because it had already built the platform to support its own internal needs, and had extra capacity that it decided to sell.

But Amazon.com CTO Werner Vogels says the story is untrue.

"The excess capacity story is a myth," he says. "It was never a matter of selling excess capacity, actually within two months after launch AWS would have already burned through the excess Amazon.com capacity."

Rather, Amazon Web Services always was seen as a business with excellent growth prospects.

How and why did Amazon get into the cloud computing business? - Quora

Voice Apps Beyond Dial Tone: A Discussion

A discussion of custom apps beyond dial tone.

Facebook is 3rd Largest Web Site, by Traffic

Facebook is now the third largest website in the world, taking the number-three spot from Yahoo, according to comScore. Facebook drew an estimated 648 million unique visitors from across the globe in November, 2010, compared to 630 million for Yahoo.

In October the two sites were dead even with 633 million worldwide unique visitors each. The only two Web properties left which are bigger than Facebook are Microsoft (869 million worldwide visitors) and Google (970 million) when you look at all of their sites collectively.

Facebook Overthrows Yahoo To Become The World’s Third Largest Website

Marketers Spending More on Social Media for the Wrong Reasons - The eMarketer Blog

Businesses are adopting social media, but they also are discovering it is no more "free" or "inexpensive." In fact, many seem to be finding that it costs as much money to use social media as any other advertising or marketing channel.

A few years ago, companies could run a few tests and gain some valuable learning without spending much.

But times have changed. Social media sites have matured, and you can’t do much for free anymore, eMarketer argues. A "promoted trend" ad on Twitter can cost $100,000 per day.

Top social media agencies are in demand, and they charge premiums for their work. "Earned" media hasn't been "costless,"either, but as social media "grows up," the costs are climbing as well. Along the way, the historic distinction between earned media and paid media also is blurring.

Marketers Spending More on Social Media for the Wrong Reasons - The eMarketer Blog

Major Smartphone Push in 2011?

In 2010, the cheapest mainstream smartphone cost just below $200, unsubsidized by a carrier contract. But prices could drop by as much as 50 percent in 2011, making a smartphone a viable purchase for many consumers that would have bought a feature phone in the past.

Broadcom's "BCM2157 3G HSDPA 'Android' Baseband" chipset, for example, provides everything a modern smartphone builder needs: a dual core ARM processor, Bluetooth, GPS, support for up to a 5-megapixel camera, support for capacitive HVGA (320x480 like iPhone 3GS) or or WQVGA (~240x400) displays.

The chipset will work on AT&T (T) and T-Mobile's 3G networks in the US and on global GSM providers.

An unsubsidized $100 smartphone will enable more purchases of service plans without contract, and arguably increase competition between mobile service providers. So it is possible that data plan prices could drop as well.

At the very least, m,ore consumers might start using Wi-Fi-only data connections. In one sense that is not a direct driver of data plan sales. On the other hand, use of Wi-Fi connections will create a new habit that indirectly drives more data plan sales.

2011 will be the year Android explodes - Google 24/7 - Fortune Tech

Email, Social Media to Get More Spending by Enterprises

According to a November 2010 survey of business executives around the globe by StrongMail, nearly two-thirds of companies will increase spending on email marketing, and 57% will put more dollars toward social media marketing. Search took a distant third place with 41% of respondents indicating they would spend more.

Email and social will continue to get closer as more marketers integrate the two channels with each other. More than a quarter of respondents said they had already formulated and implemented a strategy for making email and social work together, and another 43% plan to make efforts toward integration in 2011, though some are more prepared than others.

Email, Social Media to See More Marketing Dollars in 2011 - eMarketer

Apple Expects to Ship as Many as 21 Million iPhones, as Early as Q2 2011

Apple is telling component suppliers it wants 20 million gto 21 million iPhones for the first quarter of 2011, DigiTimes reports.

Shipments don't equal sales, so it's not a perfect comparison, but for some context, Apple sold 14.1 million in the third quarter of 2010.

Piper Jaffray has a pretty conservative estimate of 12 million iPhones sold for the first quarter of 2011.

Of the 20-21 million phones Apple is ordering, five million to six million will use CDMA, which means they could run on Verizon's network. That gives you some idea of how many Apple believes Verizon Wireless will sell, possibly as early as the second quarter of 2011.

Apple Puts In Order For 20-21 Million iPhones For Q1 2011

Blu-ray Movie Sales up 75%

Sales of Blu-ray movies were up 75 percent year-to-year at the start of the holiday shopping season, according to Nash Information Services, and are expected to nearly double for the full year. That will come as welcome news for consumer electronics firms selling hardware, as well as for Hollywood studios anxious to sustain physical media sales.

Blu-ray is on track to be a $2 billion business this year, while the DVD business, down 13 percent through the first three quarters of the year, is expected to shrink to $8 billion.

NPD Group said that 13 percent of U.S. households had a Blu-ray player at the beginning of the holiday season, and that number could rise to 20 percent early next year, driven by a proliferation of Blu-ray players available for under $100 in this holiday season.

Blu-ray Growth Soothes Hollywood - WSJ.com (subscription required)

On the Fly Video Translation

I haven't tried this app yet, but am going to.