Mobile and Cable Companies Try to Profit from Over the Top Apps

Mobile operator 3 Hong Kong will offer its subscribers a WhatsApp Roaming Pass for $8 ($1 USD) a month that gives them unlimited access to WhatsApp services without counting it against their data caps, or a $48 ($6.19 USD) daily pass offering unlimited WhatsApp use and 5MB of service in 78 destinations around the world.

You might wonder why a mobile service provider would promote a service that competes directly with its own messaging service. The answer is that so many people are doing so that 3 might as well try and extract some revenue from the service in an indirect way, namely by allowing usage of WhatsApp without counting the usage against a customer's data cap.

Time Warner Cable, for its part, is currently sending a mailer to internet-only customers, suggesting that they should upgrade their broadband speeds for a better Netflix experience and offering to throw in a whole year of free TV as a bonus.

That's one example of a service provider trying to generate revenue indirectly from an over the top application. 

PreCash Thinks Instant Check Deposit, Instant Bill Payment More Significant for Unbanked than "Mobile Wallet"

What's more important to a consumer without a bank account: a mobile wallet that stores loyalty credentials, or check deposit? Answer: check deposit.

"Current mobile check solutions can take up to six days before somebody gets their money," says Steve Taylor, PreCash CEO. "That does not work for someone living from paycheck to paycheck. They need their money immediately."

FlipMoney will offer instant mobile check deposit and instant bill payment, features that Taylor says matter a lot more to the underbanked than to the banked. 

With FlipMoney, for the first time, people without a bank account or credit card can do instant remote check deposits and perform free expedited bill payments with their smart phone. 

FlipMoney combines instant remote check deposit and free expedited bill payments in a single mobile wallet that works with a prepaid card.

Flip is currently being field tested. Large scale deployment will begin this fall, the company says. 

For instant check deposits, PreCash plans to charge $1 plus one percent of the deposit amount for a payroll or government check and $1 plus three percent of the amount for personal checks. 

There is also a standard-speed option for a flat $3 fee per item. PreCash does not plan to charge for expedited bill-payment.  

Apple iPods No Longer Drive Revenue for Apple, But Get Updated, Anyway

The iPod no longer drives key business results for Apple; that role is currently reserved for the iPhone. But Apple has updated the iPod Nano and iPod touch, anyway.

Apple iPods No Longer Drive Revenue for Apple, But Get Updated, Anyway

The iPod no longer drives key business results for Apple; that role is currently reserved for the iPhone. But Apple has updated the iPod Nano and iPod touch, anyway.

Apple has 435 Million iTunes Accounts

Apple says it now has 435 million accounts for iTunes. That also implies that Apple has active credit card information for all or most of those accounts. Think e-commerce.

Apple launches iPhone 5

The new Apple Phone 5 features a 4-inch 1136 x 640 display in a 16:9 aspect ratio, LTE support and a design that’s thinner and lighter than prior models. Apple was able to improve the battery life however; key for LTE devices. No surprise. Full video here.

3 Hong Kong Offers WhatsApp without Impact on User Data Cap

Mobile operator 3 Hong Kong will offer its subscribers a WhatsApp Roaming Pass for $8 ($1 USD) a month that gives them unlimited access to WhatsApp services without counting it against their data caps, or a $48 ($6.19 USD) daily pass offering unlimited WhatsApp use and 5MB of service in 78 destinations around the world.

You might wonder why a mobile service provider would promote a service that competes directly with its own messaging service. The answer is that so many people are doing so that 3 might as well try and extract some revenue from the service in an indirect way, namely by allowing usage of WhatsApp without counting the usage against a customer's data cap.

When "Unlimited" Makes Sense

From a consumer standpoint, there often is little to no actual difference between an"unlimited" and a "big enough" service plan for voice, messaging or Internet access. The reason is simply that most people don't actually use enough of any of those apps to "need" unlimited usage.

On the other hand, there frequently are good reasons for a service provider to offer "unlimited" access to voice, messaging or Internet access. That especially is the case when the carrier's own usage statistics indicate that most people will not use unusual amounts of capacity, whether that is voice, messaging or Internet access.

Under such conditions, provider safely can offer "unlimited" service with no danger of unusual stresses on the network.

In other words, "unlimited" is an excellent marketing platform when a service provider knows it can safely make the offer. And, in most cases, it is a good bet.

The overwhelming majority of customers on AT and T, Sprint, T-Mobile and Verizon networks studied by  NPD Connected Intelligence  don't even use 2 GBytes worth of mobile data per month, which suggests most consumers do not need “unlimited” service plans.

NPD Connected Intelligence tracked users on 1,000 Android smart phones as part of the study.

T-Mobile USA has users who consume more, though. Some 11 percent of T-Mobile USA customers use more than 3 GBytes per month, compared to four percent of AT&T and Sprint customers who consume more than 3 Gbytes a month. About three percent of Verizon customers use more than 3 Gbytes a month

NPD Connected Intelligence analyst Eddie Hold says Apple iPhone usage is pretty similar to that of Android users.

And even when customers had unlimited data plans, most didn't take advantage of it, the study suggests.  "In general, Sprint's usage is the same as the other networks and less than T-Mobile USA," Hold said.

Wi-Fi might now be a major part of the usage pattern, as it is possible users now know how to use offloading techniques to protect their mobile data usage buckets.

On average, smart phones are making eight Wi-Fi connections per day and offloading as much as 35 percent of total data consumption to a Wi-Fi network, while heavy users offload as much as 70 percent , according to Devicescape.

Devicescape surveyed one million smart phone devices as part of its study.

A couple of conclusions might be drawn. At the moment, most users don’t consume all that much data, so the value of an “unlimited” plan is questionable. On the other hand, “unlimited” is a useful marketing platform.

The other potential conclusion is that people might be using more data than is fully captured by their mobile usage in a typical month.

20% of U.S. Mobile Phone Owners Pay More Per Month for Their Phone Service Than Groceries

Some 21 percent of U.S. adults using mobile phones say they pay more for their mobile phone service plan in a typical month than they do for groceries.

When asked which other typical expenses they spend less on their mobile phone service, 33 percent of respondents said water, gas and electric bills, 57 percent said their mobile bill was bigger than their cable TV bill, and 71 percent said their mobile service cost more than their Internet access service.


Nearly half (46 percent) of mobile phone owners surveyed pay $100 or more per month for their mobile phone service. Some13 percent pay $200 or more per month.

The survey was conducted online within the United States by Harris Interactive on behalf of CouponCabin.com from September 4th to 6th, 2012 among 2,310 U.S. adults ages 18 and older.

Can Amazon Do Next-Day Delivery? Same Day? To How Many Customers?

The distinction between online commerce and physical retailing has been shrinking for some time. Mobile commerce apps and services provide one example of how that is playing out. But so is a warehouse strategy Amazon is undertaking.

Amazon expects that by building many more warehouses, in major metropolitan areas, it can cut delivery times from two days to one day. In some cases, some day, "same day delivery" might even be possible, though that seems largely out of reach for the moment. 

The new warehouses will allow Amazon to cut as much as a day off its two-day shipping times, said Jeff Bezos, Amazon CEO.  In at least some cases, Amazon might be able to offer same-day delivery, which would be a serious matter for other place-based retailers. 

“We want fast delivery,” Jeff Bezos, Amazon CEO says. At a minimum, “we can work on making it the next day.”

Economics Don't Work for Over-the-Top HBO

HBO has about 29 million consumers paying $7 to $8 a month, on average, to watch the channel on their cable, telco or satellite TV service. Full retail prices are higher, but there is heavy promotional activity, so average revenue per customer is lower than posted retail. 

That often leads potential over the top customers to ask why HBO couldn't just offer a streaming, over the top service for perhaps $8 to $10 a month. 

HBO Senior Vice President of Digital Platforms Alison Moore says the numbers don't work. 

“Here’s the thing: it’s math,” Moore said about the possibility of splitting HBO into a standalone, over the top service. 

HBO currently has about 29 million subscribers, and reportedly receives around $7 or $8 per subscriber per month. So could a separate, over the top service be sold for about the same price? That's the rub. 

That figure doesn’t include all the other operating cost needed to support delivery of all those streams, including all the content delivery network and other costs, including sales, marketing, and support. 

Going direct to online customers by pitching HBO GO over-the-top would mean losing the support of its cable, satellite, and IPTV distributors. So the bottom line really is that HBO would lose more from its main distributors than it can make from over the top, in all likelihood. 

Economic Growth So Sluggish that the Apple iPhone 5 Could Boost GDP

Sales of the new Apple iPhone could add between a quarter and a half of a percentage point to the annualized rate of economic growth in the fourth quarter, J.P. Morgan Chase & Co.'s chief U.S. economist Michael Feroli estimates. 

The forecasting firm Macroeconomic Advisers reduced its forecasts for economic growth to a 1.5 percent annual rate in the third-quarter and 1.4 percent in the fourth quarter. 

So it is that a single smart phone going on sale for the first time can move the needle. 

Europe Communications Gear Markets are Global Weak Spot

If you have been following 2012 communications service provider sales and revenue, you know it has not been a good year. That also is true of overall information technology sales.

Measured in local currencies to eliminate currency fluctuations, 2012 IT product growth will be  3.6 percent,  lower than Forrester Research's January 2012 prediction of 5.3 percent. 

Slower economic growth in the United States, Europe, China, and India, is the reason for the slower growth, says  Forrester Research

But Forrester Research also points out that the slowdown is concentrated in Europe, and notably,  and one technology product category: communications equipment. 

In local currency terms, the tech markets of the United States and Asia Pacific will grow by four percent to five percent, while emerging markets in Latin America and Eastern Europe, Middle East, and Africa will expand by over eight percent.

The weak spot will be Western and Central Europe, where the tech market will shrink by 2.5 percent. Software, IT consulting and systems integration services, and IT outsourcing will grow by four percent to five percent or more, and computer equipment by almost three percent.

But communications equipment purchases will decline by almost one percent. 

JP Morgan Raises Tablet Forecast, Lowers PC Forecast

JP Morgan has raised its forecast of tablet sales and revenue, while lowering sales and revenue forecasts for PCs. 

The revised 2012 tablet revenue estimate is $57.7 billion, where it was $52.8 billion previously. The revised tablet unit estimate is 118.5 million, compared to 106.8 million previously. 

The implied 2012 growth rates of revenue and unit estimates are 50.4 percent and 67.5 percent, versus 40.5 percent and 53.5 percent previously. 

JP Morgan also expects increasing pressures on pricing as tablet vendors test price elasticity. So JP Morgan also has revised its 2012 tablet average selling price to $487, down from the $495 previously expected. And JP Morgan admits the ASP reduction "may not be conservative enough," implying a belief that ASPs could drop more than that. 

None of those revisions will come as much of a surprise. Tablets are the new "hot" device in the consumer electronics business. Moreover, tablets are well suited to the growing "main" function of a digital appliance, namely content consumption. 

In past years, the demand for content consumption was clearest in the case of MP3 players. These days, the primacy of other forms of content consumption, which had been only latent when most people consumed such content on PCs, now increasingly is visible. 

As it turns out, for many people, the lead applications for an Internet-connected device revolve around content consumption, not content creation, as was the case for PCs. 

So do tablets "replace" PCs? Yes and no. Tablets are not substitutes for PCs where it comes to many forms of content creation. But tablets are useful and viable substitutes for the consumption related functions of a computing device connected to the Internet. 

89% of Mobile App Store Downloads are "Free"

Once upon a time, many thought mobile app stores would create a huge app sales business. It hasn't turned out that way. 

Free apps will account for 89 percent of total downloads in 2012, according to Gartner. Worldwide mobile app store downloads will surpass 45.6 billion in 2012, with free downloads accounting for 40.1 billion, and paid-for downloads totaling five billion.

In-app purchases, on the other hand, will drive 41 percent of app revenue in 2016. Gartner expects the number of downloads featuring in-app purchase will increase from 5 percent of total downloads in 2011 to 30 percent in 2016, and its contribution to the store revenue will increase from 10 to 41 percent in the same period. 

"In terms of the apps that consumers are buying, 90 percent of the paid-for downloads cost less than $3 each," said Sandy Shen, Gartner research director. "Apps between 99 cents and $2.99 will account for 87.5 percent of paid-for downloads in 2012, and 96 percent by 2016."

Gartner expects Apple's App Store to have more than 21 billion downloads in 2012, which is an increase of 74 percent over 2011. 

Global Mobile App Store Downloads, 2010-2016 (Millions)

	2011	2012	2013	2014	2015	2016
Free Downloads	22,044	40,599	73,280	119,842	188,946	287,933
Paid-for Downloads	2,893	5,018	8,142	11,853	16,430	21,672
Total Downloads	24,936	45,617	81,422	131,695	205,376	309,606
Free Downloads %	88.4%	89.0%	90.0%	91.0%	92.0%	93.0%

Source: Gartner (September 2012)