IDC Raises Its Worldwide Tablet Forecast

International Data Corporation has increased its forecast for the worldwide tablet market to 117.1 million units, up from its previous forecast of 107.4 million units for the year.

IDC also revised upward its 2013 forecast number from 142.8 million units to 165.9 million units. And by 2016 worldwide shipments should reach 261.4 million units.

"Despite ongoing economic concerns in most regions of the world, consumers continue to buy tablets in record numbers and we expect particularly strong demand in the fourth quarter," says Tom Mainelli, research director, Mobile Connected Devices at IDC. 

$35 Tablet for India

The Aakash UbiSlate 7Ci is a super-cheap tablet that will attempt to connect every student in India to the Internet. 

The latest version of India’s $35 tablet comes equipped with WiFi and has an optional upgrade ($64) of a cellular Internet package of $2/month for 2 GB of data (roughly 25 emails, 25 websites, 2 minutes of streaming video, and 15 minutes of voice chat a day). More importantly, it is expected to launch  in India in September 2012. 

 

Older Customers Like Voice "That Just Works," Millennials Prefer Bundles

Both Generation Y and Pre-Boomer (Millennial) customers are significantly more satisfied with their home telephone service than customers in other generational groups, according to J.D. Power and Associates.

J.D. Power and Associates defines “Pre-Boomers” as people born before 1946; Baby Boomers as born 1946-1964; Generation X as born 1965-1976; and Generation Y as born 1977-1994)

The study measures customer satisfaction based on performance and reliability; cost of service; billing; offerings and promotions; and customer service.

Overall satisfaction among Pre-Boomers with their residential telephone service is 709 on a 1,000-point scale, compared with 690 among Gen Y (Millennial) customers.

The average overall customer satisfaction is 682.  In addition, Pre-Boomers and Millennial customers are significantly more satisfied with their phone service than are customers in the Gen X (667) and Baby Boomer (678) generational groups. according to J.D. Power and Associates.

Pre-Boomers are satisfied with their phone service because it is reliable, while Gen Y customers are satisfied because of their ability to bundle other services such as cellular phone service and high-speed Internet.  

While the majority of Pre-Boomers are unlikely to switch providers, nearly one-fourth of Millennials are likely shop around for a different provider.

"Pre-Boomers tend to take an 'if it's working, why switch' approach to their telephone service, while Gen Y customers are not afraid to switch and will consider a provider offering a less expensive alternative," says Frank Perazzini, J.D. Power and Associates director of telecommunications.

Some 22 percent of Millennial customers indicate they "definitely will" or "probably will" switch phone service providers, compared with just 11 percent of Pre-Boomers.

Among Millennial customers who are willing to switch, 72 percent say they are willing to switch for a better price, compared with 60 percent of Pre-Boomers who say the same.

In addition, the study finds that 57 percent of Millennial customers say it would be "extremely easy" or "somewhat easy" to switch their phone service, compared with 51 percent of Pre-Boomers who say the same.

While Millennial customers have a high propensity to switch providers, they also present the greatest opportunity for growth.  Among Millennial customers, 41 percent indicate they will buy additional products from their provider, compared with 31 percent of Gen X customers, 25 percent of Baby Boomers and 21 percent of Pre-Boomers.

About 12 percent of Millennials are interested in bundling home security services with their telephone service. Some 11 percent of Gen X customers, nine percent of, Baby Boomers and seven percent of Pre-Boomers have such interest.

Some 21 percent of Millennial customers use online video chat, compared with 13 percent of Gen X consumers, nine percent of  Baby Boomers and seven percent of  Pre-Boomers.

Verizon Wireless has Enough Spectrum for 4 to 5 Years

Verizon Communications CFO Fran Shammo says that Verizon Wireless now has enough spectrum to handle its capacity needs for the next four to five years. Granted, Verizon and other carriers have a vested interest in convincing regulators that they will need more spectrum to handle increasing demand, but there also is a reason most people assume the general claim is correct.

If one assumes demand is growing perhaps 40 percent a year, and even assuming more intense coding, cell division, more efficient signaling and Wi-Fi offload are among the other tools service provider have, more bandwidth will be needed.

The issue, one might argue, is that some of those techniques could be much more expensive than simply deploying more spectrum. And those additional costs will be passed along to consumers.

At a global level, Analysys Mason predicts that mobile data will grow at a 41 percent compound annual growth rate. That would be quite a slower rate than had been the case in 2011, for example, when growth was about 90 percent, on average, in the U.S. market.

According to a 2011 Nielsen monthly analysis of mobile phone bills for 65,000 lines, smart phone owners, especially those with iPhones and Android devices, were consuming about 435 megabytes in the first quarter of 2011, up from about 230 Mbytes in the first quarter of 2010.

Data usage for the top 10 percent of smartphone users was up 109 percent, as you would expect. The top one percent of users increased their usage by 155 percent from 1.8 GBytes in the first quarter of 2010 to over 4.6 GBytes in the first quarter of 2011, Nielsen said.

EU Wants Business, Government Users to Buy €45 billion Worth of Cloud Computing by 2020

Governments and industry should buy €45 billion worth of cloud computing services by 2020 as part of an EU strategy to generate an estimated €900 billion in gross domestic product and an additional 3.8 million jobs by the end of the decade, a new report European Commission report will advocate.

The European Commission's cloud computing strategy document is set to be released in late September by Digital Agenda Commissioner Neelie Kroes, 

OTT App Providers, Telcos and Cable "Think Different" About "Out of Region" Sales

It is no secret that app providers and telecom, mobile, satellite and cable service providers "think different" about their respective "customer" bases and prospects. All access providers necessarily must work within frameworks set by regulators on a country by country, state by state or locality by locality basis. 

There are franchises, certificates, spectrum or other regulatory requirements for being in business. That necessarily leads access provider executives to instinctively and logically think about services they can sell to people and businesses within their authorized areas of lawful service. 

App providers, in contrast, do not have to "ask for permission" to be in business. In fact, an app provider wants the widest possible audience or customer base for their apps, irrespective of geography. Whether an app provider sells "packaged" software or cloud-based software, the typical goal is to sell "everywhere," as much as practical. 

Telefónica is among tier one service providers exploring an out of region strategy based on apps, though it primarily remains a geography-based business. 

But the main reason service providers do not like over the top services and applications is that they generally represent direct competition for key products service providers sell.

But that is one key to how things will change in the future. If a major reason over the top apps and services are disliked is that they pose a threat to revenue, then a major reason for adopting an over the top approach is if doing so can create new revenue opportunities. 

That is not to say the task is easy. But many service providers have been "going out of territory" for quite some time, expanding into new geographies in a variety of ways, generally using both a licensed approach. What will happen in the future is more out of territory expansion using non-licensed, over the top approaches.

In fact, partnership between operators and OTT players are the way Long Term Evolution suppliers can prosper, according to Gulzar Azad, Head of Access for Google India  Google India.

In some ways, you would expect a major app supplier to say that. Access providers need to start thinking in terms of delivering services, not data plans, Azad suggests. 

Where service providers traditionally think in terms of offering services to their own subscribers inside their own geographical market,  “what they could be doing is offering services that anyone can sign up for, because that’s where all this is going,” Azad says. 

The challenge, of course, is that this approach benefits a third party app provider more directly than an access provider. 

Still, the conceptual and practical leap will be explored, and sometimes embraced, by a wider range of service providers, eventually. Think of it as a shift of focus from “selling services to current customers, where we have network” to “selling services to non-customers who are out of territory.” The addressable market for the former is far smaller than the addressable market for the latter.

80% of U.S. Smart Phone Owners Used Device to Get Retail Content in July 2012

According to comScore, 80 percent of U.S. smart phone owners--some 85.9 million people–used their smart phones to view retail content on their devices in July 2012. 

Amazon Sites led as the top retailer with an audience of 49.6 million visitors, while multi-channel retailers including Apple (17.7 million visitors), Wal-Mart (16.3 million visitors), Target (10 million visitors) and Best Buy (7.2 million visitors) also attracted significant mobile audiences as well.

Across both smart phones and desktop computers, males and females represented nearly equal proportions of retail category visitors. However, females accounted for a higher share of time spent on retail destinations at 53.4 percent of minutes on desktop computers and an even greater share of retail minutes on smart phones at 56.1 percent, comScore says.

Smart phone shoppers were also more likely to be younger than their desktop counterparts with 70.7 percent of smart phone retail visitors under the age of 45 compared to 61.1 percent of desktop users. 

Engagement among these audiences showed even greater disparity with visitors under the age of 45 accounting for nearly 3 in every 4 minutes spent on retail content via smart phones, compared to 61.6 percent of retail minutes on desktop computers.

Smart phone retail audiences were more likely to reside in higher income households compared to desktop computer users, likely as a result of smartphone ownership skewing towards higher income segments compared to an average consumer. 

Among smart phone audiences accessing retail destinations, nearly 1 in every 3 had a household income of $100k or greater, with this income segment driving a comparable 31.2 percent of minutes spent on retail sites and apps.

Selected Retail Properties by Unique Smartphone Visitors(000) (Mobile Browser and App Audience Combined) July 2012 Total U.S. Smartphone Subscribers Age 18+ on iOS, Android and RIM Platforms Source: comScore Mobile Metrix 2.0
	All Smartphones
	Total Unique Visitors (000)	% Reach
Retail Category	85,905	80.6%
Amazon Sites	49,636	46.6%
eBay	32,583	30.6%
Apple	17,684	16.6%
Wal-Mart	16,295	15.3%
Target	10,041	9.4%
Best Buy	7,177	6.7%
Ticketmaster	5,699	5.3%
CVS	4,468	4.2%
The Home Depot	4,353	4.1%
Blockbuster	4,017	3.8%
Barnes & Noble	3,804	3.6%
Walgreen	3,707	3.5%
Limited Brands	3,261	3.1%
Lowes	3,246	3.0%
Etsy	3,160	3.0%

Why Groupon is in the Mobile Payments Business

At first blush, it is puzzling that Groupon, a mobile and online advertising company, now is in the mobile payments business. 

But there are logical reasons, both tactical and strategic, for doing so, one might argue. For starters, the particular part of the mobile advertising business Groupon is in is facing dramatic reductions in average revenue per ad, and some concern about consumer disengagement. 

That isn't to say the business has no legs. Local advertising and media research firm BIA/Kelsey projects that U.S. consumer spending on online deals will reach $3.6 billion in 2012, doubling last year's figure of $1.8 billion. By 2016, spending is forecast to hit $5.5 billion, though year-on-year growth rates will slow to single digits.

BIA/Kelsey forecasts that, going forward, online deals will become an anchor for a platform of non-advertising small-business services. These services include instant mobile deals, loyalty products, promotions, reputation management, transaction processing and e-commerce.

But neither is the business growing so fast it can support all the new competitors in the field.

So Groupon is betting that a significant share of retail transactions will be made using mobile payments. So as its original business grows, Groupon can diversify and grow its own revenue streams by becoming a transaction processor.

That helps Groupon grow its revenue much faster, right now, while its mobile and online advertising business segment grows. 

OS Strategy Changes In The Post-PC World

In the older PC business, it made good sense for operating system providers such as Microsoft to avoid competing with its customers. 

So Microsoft did not build its own branded devices. That began to change with the first non-PC computing devices, such as MP3 players and game consoles. 

Some were therefore surprised when Google built its own Nexus smart phone, and then acquired Motorola, thereby becoming a device supplier in its own right. Some were surprised when both Microsoft and Google decided to build and sell their own tablets. 

So what ever happened to the "avoid channel conflict" model? Some would argue that Microsoft and Google want to encourage innovation, and avoid the hardware commoditization process seen in the PC business, where suppliers mostly tried to compete by driving prices lower, rather than by adding value. 

So one way of looking at the changed strategy is that both Microsoft and Google want their respective ecosystem partners to focus more on innovation than price cutting. 

"The message to their device manufacturers is abundantly clear: If you’re not building devices that surpass what we can do ourselves, you’re not adding value," says Tony Costa, Gartner analyst. 

That appears to be another difference between the ways OS suppliers conducted business during the PC era, compared to what they are doing in the post-PC era. 

"Pay Music" Analogy to "Pay TV" Wrong?

The natural analogy for streaming music services, or Sirius XM, for that matter, is that streaming music or Sirius XM is to radio as cable TV is to TV. By that analogy, consumers will prefer the new programming choices the new services offer, in comparison to broadcast radio. But some question whether the analogy is apt. 

“There is a natural ceiling of adoption of the people who are willing to pay $9.99 a month for music they don’t own," says industry analyst Mark Mulligan. 

And that might be a key difference. People never experienced TV as something they owned. TV always was "streamed" or "broadcast." Radio, on the other hand, was a one way people consumed music, the other key mode being packaged prerecorded media (records, then tapes, then CDs, then MP3s). 

Though there was a period in the 1980s and 1990s when it seemed people had significant desire to "own" copies of favorite movies as they were used to owning copies of their favorite songs, that habit has not proven to be a sustained major trend, as sales of DVDs are declining, while sales of Blu-ray discs are not growing fast enough to replace lost DVD sales. 

To be sure, the DVD rental business, and the newer streaming delivery of movie or TV content, is succeeding in a way that the earlier "pay per view" business did not achieve. 

In other words, for historical reasons, people might view the logical consumption modes for TV and music in different ways. To be sure, many skeptics once believed that people would not pay for TV, either. Those skeptics were proved wrong. 

Perhaps the same consumer reluctance will be overcome, and streaming music services will indeed become the "equivalent to cable TV for the radio business." 

"It’s a niche proposition," says Mulligan. "The majority of mass-market consumers are still not interested in that pricepoint.”

Enterprise Videoconferencing Falls for 2nd Consecutive Quarter

For the second consecutive quarter, the global enterprise video conferencing and telepresence market was down, according to Infonetics Research.  Revenue fell six percent to $644 million in the second quarter of 2012, Infonetics reports.

“Economic woes in Europe, declines in public sector spending, and a shift toward lower-priced video conferencing products drove sales of video conferencing and telepresence equipment lower from the year-ago quarter” says Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research.

DirecTV Weighs Brazil Telco Buy

DirecTV is one of several companies seeking information to evaluate a bid for Vivendi SA ’s Brazilian phone unit GVT, Bloomberg reports.

DirecTV, the largest U.S. satellite-television provider, is counting on surging demand for video entertainment and Internet service in Latin America as growth subsides in its original U.S. market.

The move would be one more step by DirecTV towards more active involvement in the "triple play" business, which traditionally has favored cable and telco firms able to provide such services. Up to this point, DirecTV has been a provider of TV and broadband access, but the firm has not had an elegant way to provide voice services. 

AT&T "Welcomes" Idea of Spectrum Caps?

You wouldn’t normally expect any market leader to support possible new regulatory action that might actually limit the amount of spectrum, or the types of spectrum, any mobile service provider can own.

But the unexpected AT&T view of the Federal Communications Commission’s intention to review both spectrum holding limits and spectrum quality considerations--essentially “welcoming” such a review could point to an AT&T belief that uncertainty is a bigger problem than spectrum limits.

Also, AT&T could be betting that other competitors will suffer more than it will if new limits on spectrum ownership were to emerge.

Or, some might argue, AT&T simply has decided that confrontation with the FCC has limited utility, at least in this case, the reason being that AT&T itself has a number of important spectrum purchases lined up for FCC approval.

AT&T is attempting to buy about $2.6 billion worth of spectrum to catch up with Verizon Wireless. AT&T has proposed at least 24 deals in the past four months for the rights to spectrum.

Verizon already has won U.S. approval to buy airwave rights from Comcast Corp. and three other cable companies for $3.9 billion.
Many AT&T users might agree that AT&T needs more spectrum, just as Sprint customers using that firm’s 4G network (WiMAX) might complain that performance is slower than it used to be.

AT&T’s plans would boost its most important spectrum holdings by 62 percent in the biggest 100 U.S. markets, according to John Hodulik, a UBS AG analyst.

There’s no question bandwidth demand is growing. The issue is really “how fast?” and “what can be done” to better use existing spectrum resources.

Still, under normal circumstances, one would expect a market leader to oppose the notion that there should be caps on the amount of spectrum any single provider can own. What therefore needs “explanation” is why AT&T would essentially say it welcomes the possibility of such caps.

Many, after all, would argue that control of spectrum is essential for market control. If new competitors cannot get spectrum, they can’t be in the business. On the other hand, such limits are commonplace. U.S. cable operators work under the assumption that no single provider will ever be allowed to gain control of more than 30 percent of U.S. video entertainment customers.

So how does Comcast grow? Comcast sells many other services to a finite number of customers, and then gets into another business, namely programming.

Whether AT&T’s thinking is “merely” tactical (do nothing to impair approval of its immediate spectrum buys) or more long term (sooner or later we will face spectrum caps, but those caps also will affect its major competitors, and there are other sources of business advantage), the apparent lack of resistance to the notion of spectrum caps is unusual.

John Legere Named as CEO of T-Mobile USA

Deutsche Telekom has named John Legere, a 32-year veteran of the U.S. and global telecommunications and technology industries, Chief Executive Officer of its T-Mobile USA business unit, effective September 22, 2012, 

Some might find the T-Mobile choice a bit puzzling, given Legere's prior stewardship of Global Crossing. Some might have expected an executive with deeper experience in mobility, for example. 

Others might note that Legere has experience with enterprise and computing device aspects of the business. Some might point to experience with mergers and acquisitions, in a business rife with competition, as well. 

If you share the opinion that the top end of the U.S. mobile business simply has too many competitors, then both T-Mobile USA and Sprint must be counted as among firms that "must" merge or sell, ultimately. 

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Amazon, eBay, Google, Yahoo, Others Form Internet Association

Amazon.com, AOL, eBay, Expedia, Facebook, Google, IAC, LinkedIn, Monster Worldwide, Rackspace, salesforce.com, TripAdvisor, Yahoo and Zynga have formed The Internet Association, a trade association representing the interests of the application providers.

The organization says it is "dedicated to strengthening and protecting a free and innovative Internet," along with its decentralized architecture.