Amazon CEO Jeff Bezos Confirms Strategy: No Profit on Kindles, Money From Content

Amazon CEO Jeff Bezos recently confirmed Amazon's hardware strategy, namely that it sells devices at "no profit" in expectations it will create new revenue streams based on the sale of content.

"We sell the hardware at our cost, so it is break-even on the hardware," Bezos said. Apple does the reverse, selling content at minimal or low profit as a way of selling more devices, where it makes its money. 

Softbank in Advanced Talks to Acquire Sprint Nextel

Sprint Nextel Corp. hopes a majority investment by Japan's Softbank will help resolve Sprint's debt issues and provide liquidity to finance additional acquisitions in the U.S. mobile market. The deal could flounder if issues related to Clearwire are not resolved, though, as Softbank appears to want control of Clearwire as well.

And there are the regulatory clearances to sort through as well. Despite regulator concern that the U.S. mobile market already is overly concentrated, it is about to become more concentrated, albeit mostly as relates to the shares of market held by T-Mobile USA, which gobbled up MetroPCS, and possibly now a Sprint "sale" to Softbank. 

The big question is whether regulators would eventually allow Sprint and T-Mobile USA to be merged. Some think the concentration analysis used by the Department of Justice and Federal Communications Commission would prohibit even a merger between Sprint and T-Mobile USA, even though that would create a number-three supplier with nearly equivalent subscriber share. 

Many would argue that three carriers is a sustainable number of leading carriers in the U.S. market, and have argued that for years. An analysis by economists at the Phoenix Center argues that the effective use of any available amount of spectrum is more efficient, for example, when there are fewer providers.

Mobile Revenue is Slowing in Western Europe, But Why?

There are growing signs that the mobile service provider business is facing a structural slowdown in Western Europe. Researchers at Analysys Mason, for example, say Western Europe's fixed network and mobile service providers now see declining revenue.

Consumers also are allocating a smaller percentage of their incomes to communications services.

Separately, STL Partners reports that the mobile industry’s combined revenues from voice, messaging and data services in the United Kingdom, France, Germany, Spain and Italy will drop by nearly 20 billion Euros, or four percent per year, in the next five years, and by 30 billion Euros by 2020. says.

There is a reason to suspect that use of over the top applications for voice and messaging have something to do with the declines. That is at least partly true.

More than 45 percent of customers with a smart phone use some form of instant messaging  or over-the-top (OTT) messaging app in addition to (and in some cases instead of) traditional text messaging (SMS), according to Analysys Mason. The data was collected from more than 1000 smartphone users in France, Germany, Spain, the United Kingdom and the United States.

In addition, 20 percent of consumers use a VoIP app, and 20 percent of those consumers use it more than traditional voice services.

About 20 percent of the respondents ussed the “WhatsApp Messenger” at some point over the 60 days of usage that were tracked as part of the story.

But it would appear that many users make very light use of over the top voice or messaging, and very few consumers have abandoned carrier voice and messaging completely. Just 1.7 percent  of the panel used IM or OTT messaging without using carrier text messaging at all.

And Analysys Mason says that only 16 percent of all panelists in the study use VoIP apps at all. The perhaps unwelcome implication is not that carrier services are suffering from a shift of demand to rival services, but that a possibly more worrisome trend is developing, namely that people are simply choosing to use mobile services less than they have in the past.

10 Telco Myths

Telco 2.0's "10 misleading myths" in telecom. 

Western Europe Fixed and Mobile Service Revenue is Dropping

Researchers at Analysys Mason say Western Europe's fixed network and mobile service providers now see declining revenue. Consumers also are allocating a smaller percentage of their incomes to communications services. 






Retail spend per capita per month by service type, USA and Western Europe, 2010 and 2011 [Source: Analysys Mason, 2012]

Verizon Wireless to Turn of Its 2G and 3G Networks by 2021

Verizon Wireless plans to decommission its 2G and 3G networks by 2021, says Aparna Khurjekar, Verizon vice president of global strategy for M2M. 

Western Europe Mobile Revenue Will Drop 4% Per Year to 2020

The mobile industry’s combined revenues from voice, messaging and data services in the United Kingdom, France, Germany, Spain and Italy will drop by nearly 20 billion Euros, or 4% per year, in the next five years, and by 30 billion Euros by 2020, says STL Partners.

You can call that an example of the product life cycle. You can point to the impact of competition. But at that rate, those mobile service providers will lose half their current revenue within a decade. 

Forecast Mobile Telco Revenues in Euro 5 Economies

Sprint Waiting on Any Potential MetroPCS Offer

Sprint Nextel Corp. seems to be holding off on any immediate counterbid for MetroPCS Communications, at least in part because it wants to spend more time examining the particular terms for the planned sale to T-Mobile USA, Bloomberg reports. 

Also, Sprint might have some months before it would have to submit a formal offer. Sprint might be betting that MetroPCS could drop in value before a formal bid. 

Retailers Make Bid to Lead Mobile Payments

Over the past decade, the dominant payment networks (Visa, MasterCard, American Express) have accounted for most of the investment in mobile payments trials aimed at retailers. That has changed recently. 

Programs launched by Starbucks and a number of mobile point of sale suppliers such as Square, PayPal and others illustrate bids by retailers to operate their own closed loop systems, as well as new efforts by branded payment networks to reshape the payments clearing part of the business. 

But the formation of the Merchant Customer Exchange (MCX) by major retailers is a bid by retailers to maintain better control over the emerging mobile payments business.

Created by merchants with some $1 trillion in annual retail sales, the MCX wants to create a standard for smart phone-based transactions for all major platforms. Its members include Best Buy, CVS, Sears, Shell Oil, Target, and Wal-Mart Stores.

Walmart Expects $9 Billion in E-Commerce Sales in 2014

Walmart said it plans to generate $9 billion in revenue from ecommerce sales in 2014. One way Walmart expects to reach that revenue goal is by adding a "same-day delivery" capability. Amazon also has said it is looking at next day delivery, or perhaps same-day delivery, in at least some markets.

Walmart is more optimistic than is Amazon. Walmart is testing same-day delivery in four markets and a scan-and-go smart phone service, which would allow customers to scan purchases with their smart phones and pay for the purchases without getting into a check-out line.

Another Example of How Technology Diffusion Has Changed

Major General Robert Wheeler says that where once the military led development of new technologies with war-fighting implications, now the vast majority of improvements are being driven by advances made in the private sector. And that is particularly true in the mobile technology area, Wheeler says. 

So the Department of Defense and other federal agencies are looking for help from corporations and enterprise sources. 

That mirrors the paradigm change for many other technologies. Once upon a time, important new technologies were discovered or proposed at universities, then commercialized for enterprises. Technology then tended to migrate to mid-market firms, then to smaller businesses, and finally to consumers.

In the broadband and mobile businesses, that pattern has changed. These days, innovations tend to move from university directly to the consumer markets, and people then migrate their use of those tools into the work environment. 

Enterprise Workers Use "Non-Desk PCs" 1/2 the Time

A survey by Forrester Research shows that about half the time, surveyed employees use only their desk PCs. About 20 percent of the time, workers use both PCs and laptops, and 28 percent of the time use their desktop, notebook and smart phone.

Smart phones represent about 35 percent of the amount of time enterprise workers say they use at some point in a day. The desktop PC gets used at some point in the day by about 82 percent of users in a typical day.

Many employees use multiple devices during a typical day. Some 16 percent to 20 percent of workers said they use four devices at work. 

Perhaps 22 percent said they used two devices, 18 percent said three, 20 percent four or five, and 14 percent said six or more. 

In other words, workers using 2 or more devices was at 74 percent in February, and has now dropped to 66 percent. Tablet usage is about 12 percent.

PC Sales Drop in 2012 for First Time in 11 Years

PC sales will drop in 2012, for the firs time in 11 years, according to IHS iSuppli. IHS iSuppli notes that hasn't happened since 2001, the "dot com bust."

Videoconferencing "Cannibalized" by Mobile Devices

The videoconferencing market is moving away from expensive telepresence systems and toward mobile applications, says Andrew Davis, senior partner of Wainhouse Research. 

Davis says mobile applications will soon outpace other videoconferencing offerings such as tele-presence and room-based systems. 

In fact, demand for telepresence systems is expected to decline sharply in the coming years as the market for these systems becomes saturated with options.

That will not come as a surprise to observers who follow the industry. Over the last couple of years, enterprise and business interest in videoconferencing likewise has been moving to desktop approaches rather than room-based approaches. 

Revenues generated by the enterprise videoconferencing and telepresence market dropped to $644 million in the second quarter of 2012, a 6 percent decline, according to a new report by market research firm Infonetics Research.

Dwolla Partners With mFoundry for Peer to Peer Mobile Payments

Dwolla is partnering with mobile banking and payments service provider mFoundry to provide peer to peer mobile money transfers and payments to mFoundry's  800 banks and credit unions using the mFoundry cloud banking platform known as Fin.X.

The Starbucks Card Mobile is powered by mFoundry. The new agreement means Bank of America, PNC Bank, Zions Bank and more than a third of the top 50 U.S. institutions could provide P2P money transfer, if they choose to do so.