HP Thinks it "Must" Offer its own Smart Phone

HP CEO Meg Whitman offers a simple explanation for HP's belief that the company "has to" sell its own smart phone.

"We have to ultimately offer a smartphone because in many countries of the world that is your first computing device," says Whitman. "You know, there will be countries around the world where people may never own a tablet, or a PC, or a desktop."

"They will do everything on the smartphone," Whitman says. "We’re a computing company; we have to take advantage of that form factor."

The logic is sound enough, but whether HP is simply too late is the issue. It's hard to imagine how HP comes up with a differentiated offer or a big enough application store on its own.

HP seems almost forced to try to leverage an existing mobile OS and developer community, such as Android operating system ecosystem, or possibly the Windows Phone platform, though the applications community for Windows now is much smaller than that of Android.

But going with Android means taking on the likes of Samsung. Having stumbled with its Palm acquisition, HP is unlikely to want to make the same mistake by buying Research in Motion.

Whitman makes a cogent argument for why HP has to be in smart phones. What remains to be seen is how HP can pull that off.

200,000 Time Warner Cable RGUs Exposed to Google Fiber Threat

Time Warner Cable's CTO Irene Esteves says Google's Kansas City 1-Gbps Internet access and TV service bundle doesn't pose a huge threat to the cable operator's overall business. Of course not. What Google Fiber does threaten is about 200,000 revenue generating units Time Warner Cable presently sells in the Kansas City market.

Of the 300,000 homes that Google Fiber is expected to pass in the area eventually, Esteves estimates that Time Warner Cable has 100,000 Internet and 100,000 video subs at risk.

If you assume that half the broadband customers in the Time Warner Cable service area buy high speed access from Time Warner, while half buy from AT&T, and if broadband penetration is 70 percent of homes, then you might assume Time Warner Cable's risk would be about 35 percent, or roughly 105,000 customers, which just about matches the Time Warner Cable figures.

If Google Fiber takes share equally from AT&T and Time Warner Cable, and if initial take rates are about 18 percent, one would expect losses of about nine percent for both incumbent service providers. That implies a potential Time Warner Cable loss of perhaps 9,000 high speed access customers.

If half the high speed access customers also buy the video service, then Time Warner Cable also potentially faces the loss of about 4,500 video accounts as well.

Among the other competitors in the Kansas cities market are DirecTV Group, Dish Network Corp., AT&T and SureWest Communications.

Apple's iPhone 5 Won't Work on 4G in Much of Europe

Apple's iPhone 5, launched to great fanfare in the United States on Wednesday, will not work on superfast mobile broadband networks in much of Europe, potentially confusing consumers and setting back the development of 4G services in the region.

Some carriers will benefit. Only Deutsche Telekom and Everything Everywhere in the UK will initially be able to offer the fastest internet access to iPhone 5 users in their markets, because they are the carriers holding the right frequencies.

The iPhone 5 is not compatible with 4G services on the 800MHz and 2.6GHz bands deployed across much of western Europe, including Spain, Italy and France.

Mobile Carriers Might Overcount Data Usage by 5% to 7%

U.S. mobile service providers might overcount end user data usage  by five to seven percent, a new study suggests. University of California Los Angeles computer science researcher Chunyi Peng probed the systems of two large U.S. mobile networks representing 50 percent of all U.S. mobile subscribers.

The researchers used a data-logging app on Android phones to check the data use that the carriers were recording. The carriers were found to usually count data correctly, but they tended to overcount—and hence potentially overcharge—when a person used applications that stream video or audio, and particularly when coverage was weak or unreliable.

1/3 of U.S. Survey Respondents Want an Apple iPhone 5

About a third of survey respondents to a recent Toluna QuickSurveys poll say they want an Apple iPhone 5. The survey also indicated that 56 percent of BlackBerry users are looking to replace their smart phones and 32 percent of Android users are also looking to switch devices. 

Must Telcos Embrace Over the Top Partners?

Virtually every telco in the world sooner or later will have to deal with over the top competition, even if the immediate threats are seen in some "developed" markets, the simple reason being that broadband Internet access makes such competition technologically possible for the first time. 

“Operators need to be more realistic and recognize that the OTT community is a meaningful threat to revenues,” says Nicole McCormick, Ovum senior analyst 

“The erosion of messaging revenues is already a reality in markets such as China and South Korea, and this is a harbinger of similar changes elsewhere," says McCormick. "Operators need to re-evaluate their business models, and decide on the degree to which they should compete or collaborate with content providers and OTT players.”

That also means virtually every service provider sooner or later has to have a strategy about dealing with over the top competition. One common strategy is to essentially fight OTT competition by adding more value to legacy services, using a combination of packaging, pricing and features. 

The less taken path, at least so far, is to actively embrace OTT services. That might not be so rare in the future, though it might be more common for service providers to craft ways of structuring access plans, rather than sponsoring OTT apps directly. 

Some service providers might craft access plans that exempt use of some specific OTT apps from a user usage allocation, for example. Apple FaceTime usage might be one example, but others will try to do similar things with messaging or entertainment video, perhaps offering unlimited usage or generous usage in exchange for payment of a specific app fee. 

Tablets are "Transforming" Content Consumption, Study Finds

Tablets are transforming the way content is consumed and challenging the usage patterns for personal computers, according to J.D. Power and Associates, confirms. 

U.S. tablet owners spend 7.5 hours per week browsing the Internet, watching videos, listening to music, and reading books on their device, compared with spending 9.6 hours per week on a personal computer for the same activities.

Tablet owners who also have a smartphone spend 40 percent more time browsing the Internet on their tablet than on their smartphone. Similarly, they spend 56 percent more time using gaming apps on their tablet than on their smartphone.

All of that suggests the reasons why it would be reasonable to expect a decline in PC sales over the coming years. PCs will be used for work tasks and content creation. Tablets and smart phones will increasingly be used for content consumption. 

Smart Phone Sales Have Been a "Replacement" Market since Before 2010

Smart phone shipments have largely been a replacement market since at least 2010, when roughly two thirds of smart phones were shipped to users who were replacing a smart phone, rather than users who were getting a smart phone for the first time.

In facgt, NPD DisplaySearch has downgraded its 2012 forecast of new purchases from a range of 220 million to 230 million to the new estimate of 177 million. Those figures represent devices sold to new smart phone buyers. 

The volume of replacement phones sold to users who already have smart phones is expected to increase significantly, reaching 567 million in 2012, and nearly double that number by 2016, according to Hiroshi Hayase, NPD DisplaySearch VP.  

Smartphone Shipment Forecast

Source: NPD DisplaySearch Smartphones: Displays, Designs and Functionality

Google Announces Kansas City 1-Gbps Construction Schedule

The Google Fiber Blog now confirms that 180 fiberhoods throughout Kansas City will be wired with ultra high-speed Google Fiber, and also says that includes residents in 89 percent of Kansas City, Kan. and central Kansas City, Mo. fiberhoods.

The first fiberhood to receive Fiber will be Hanover Heights in Kansas City, Kan. Hanover Heights actually qualified within two hours of availability and presently has the highest percentage of homes within a neighborhood that are pre-registered to get Google Fiber. 

Google also now has a rough construction schedule. 

Google Announces Kansas City 1-Gbps Construction Schedule

The Google Fiber Blog now confirms that 180 fiberhoods throughout Kansas City will be wired with ultra high-speed Google Fiber, and also says that includes residents in 89 percent of Kansas City, Kan. and central Kansas City, Mo. fiberhoods.

The first fiberhood to receive Fiber will be Hanover Heights in Kansas City, Kan. Hanover Heights actually qualified within two hours of availability and presently has the highest percentage of homes within a neighborhood that are pre-registered to get Google Fiber. 

Google also now has a rough construction schedule. 

Isis Delays Launch, Again

Isis, the mobile payments venture owned by AT&T, Verizon and T-Mobile USA, is delaying the launch of its mobile payments service for the second time this year, an Isis executive says. No reason was given for the delay. 

Some might speculate that Apple's decision not to support near field communications in the iPhone 5 is a factor for Isis. 

But Apple's "go slow" approach to mobile payments is not unusual. Apple wasn't the first firm to make a PC, wasn't the first to make an MP3 player or the first tablet or a smart phone. It still isn't immediately clear how mobile payments creates a huge new device market for Apple, and that tends to be the way Apple approaches new markets. 

Delays aren't unusual for large proposed mobile payment services. Telcos in the Netherlands have delayed their mobile payments launch as well. There also have been delays in  Australia, the United Kingdom and Singapore. 

There are plenty of other reasons for delay. Mobile payment is a complex ecosystem with uncertain value for many key participants in the ecosystem and lots of confusion about which consortia might emerge as clear winners. That Apple iPhones don't yet support NFC is but one of the problems. 

"Closed loop" systems that might work only at Home Depot or Starbucks, and do not require use of NFC or other relatively rare features, are logistically easier to launch, precisely because the universe of merchants, terminals, apps, payment processors, devices and users is contained. 

Where are Untapped Opportunities in E-Commerce?

James Slavet, of Greylock Partners, thinks there remain a few areas of the e-commerce space that remain undeveloped, including marketplaces, online to offline commerce (meaning transactions that take place in the physical world), and services that are “mobile-first” ways to find and book things like hotels, taxis, or send gifts and cards.

Of those three general areas of interest, mobile is directly involved with two of three, which explains the growing interest in mobile commerce, as distinct from simple mobile payment. 

Perhaps because there now seem to be many viable contestants in the mobile wallet and mobile payment areas, entrepreneurs seem to be shifting more in the direction of ways such mobile-first operations can change retail operating practices, the back office and supply chain, for example, or bridge the differences between offline and online commerce.

Amazon's new warehouse strategy, for example, which sites many more warehouses in many urban areas, could shift distribution in a powerful way, allowing one-day delivery in many cases, and even same-day in some instances. That would dramatically improve Amazon's competitive position, compared to place-based local retailers. Mobile can play a part, but more as the ordering front end. 

"Payment" and "wallet" are less strategic, in that view. 

Where are Untapped Opportunities in E-Commerce?

James Slavet, of Greylock Partners, thinks there remain a few areas of the e-commerce space that remain undeveloped, including marketplaces, online to offline commerce (meaning transactions that take place in the physical world), and services that are “mobile-first” ways to find and book things like hotels, taxis, or send gifts and cards.

Of those three general areas of interest, mobile is directly involved with two of three, which explains the growing interest in mobile commerce, as distinct from simple mobile payment. 

Perhaps because there now seem to be many viable contestants in the mobile wallet and mobile payment areas, entrepreneurs seem to be shifting more in the direction of ways such mobile-first operations can change retail operating practices, the back office and supply chain, for example, or bridge the differences between offline and online commerce.

Amazon's new warehouse strategy, for example, which sites many more warehouses in many urban areas, could shift distribution in a powerful way, allowing one-day delivery in many cases, and even same-day in some instances. That would dramatically improve Amazon's competitive position, compared to place-based local retailers. Mobile can play a part, but more as the ordering front end. 

"Payment" and "wallet" are less strategic, in that view. 

44% of Surveyed U.K. iPhone users want the new Apple iPhone 5

Apple iPhone owners tend to prefer sticking with the iPhone for their next device, virtually all studies show. So it is no surprise that 44 percent of U.K. iPhone users want the new Apple iPhone 5.

About 20 percent of all smart phone users in the survey said they wanted to upgrade to the new iPhone without needing any further information about the product.


At the same time, Samsung Galaxy users are just about as loyal as iPhone afficianados are, with only five percent saying they want to switch to the iPhone 5.

According to the research, the most popular feature on the iPhone 5 is likely to be its larger screen, described as the most appealing by 19 percent of respondents. The higher speed Internet access, making use of the new 4G mobile service which is being introduced to the UK, was cited by 17 percent of respondents as most appealing feature. But 39 percent also said none of the new features appealed to them.

Perhaps not so helpful for Apple were the 27 percent of the respondents who said the iPhone 5 had been over-hyped without anything exciting or innovative.

Is "Ancillary Jurisdiction" Exercised by FCC Legal?

The Federal Communications Commission network neutrality rules were promulgated using a concept known as "ancillary jurisdiction," essentially the notion that the Commission has authority to institute such rules because it is "ancillary" to other authority it has expressly been given by Congress.

But many would argue that the FCC exceeds its authority. Congress has never explicitly given the FCC the authority to enforce network neutrality, but the FCC contends that the power to mandate Internet openness is implicit in other powers Congress has granted to the agency.

This ancillary jurisdiction argument therefore is destined to remain controversial until the lawfulness of the authority has been settled.