Google Drive is Launched: 5 Gbytes of Storage Free

Goolge has launched Google Drive, a consumer cloud storage service. 


Google Docs is built right into Google Drive, so users can work with others in real time on documents, spreadsheets and presentations. 


Once content is shared with others, users can add and reply to comments on anything (PDF, image, video) and receive notifications when other people comment on shared items.


If you have used cloud storage services before, you know the big advantage is that all the stored items are available from any device with Internet access and web browser capability.


Users can install Drive on a Mac or PC and can download the Drive app to an Android phone or tablet. Google also is working hard on a Drive app for Apple iOS devices.


All stored content can be searched by keyword and filtered by file type, owner and more.


The first 5 Gbytes of storage are free. Users can add additional storage as well. You can choose to upgrade to 25GB for $2.49/month, 100GB for $4.99/month or even 1TB for $49.99/month. When you upgrade to a paid account, your Gmail account storage will also expand to 25GB.



Drive is built to work seamlessly with your overall Google experience. You can attach photos from Drive to posts in Google+, and soon you’ll be able to attach stuff from Drive directly to emails in Gmail. Drive is also an open platform, so we’re working with many third-party developers so you can do things like send faxes, edit videos andcreate website mockups directly from Drive. To install these apps, visit the Chrome Web Store—and look out for even more useful apps in the future.

Galaxy Nexus now on sale in Google Play, Unlocked, for Use on T-Mobile USA or AT&T Networks

Google has started selling unlocked Galaxy Nexus (for HSPA networks ) from a new "Devices" section in the Google Play web store, allowing users to take advantage of Google Wallet, and the device, on either T-Mobile USA or AT&T networks, Google says. 


First available in the United States, Galaxy Nexus costs $399 and is sold without a carrier commitment or contract. You can use it on the GSM network of your choice, including T-Mobile and AT&T. It also comes pre-installed with the Google Wallet app which lets you easily make purchases and redeem offers with a tap of your phone. Best of all, we'll give you a $10 credit to get you started with your new mobile wallet.


Galaxy Nexus by Samsung runs the latest Android software, Ice Cream Sandwich, with Google mobile services, Google Play and new features like Android Beam and Google mobile hangouts. It also offers a 4.65” HD Super AMOLED display. 

Apple's "Stealth" Approach to Enterprise Adoption is Working

The " iPhone is changing the way companies across the globe use mobile devices for work," says Peter Oppenheimer, Apple Chief Financial Officer and Senior Vice President. That perhaps unremarkable comment nevertheless is interesting because Apple never has gone much out of its way to sell to enterprise and other business users, preferring to sell directly to end users, and simply relying on those users to do missionary work inside their organizations.


"In addition to accessing e-mail, calendar and contacts, many of these companies are developing and deploying mission-critical iPhone apps to help improve productivity and give employees secure and immediate access to information anywhere," said Oppenheimer. 


"Some new examples include Royal Dutch Shell, Credit Suisse, Kimberly-Clark, St. Jude Medical, Providian, Teradata, Nike, [indiscernible] and Facebook," Oppenheimer said.


The same pattern can be seen for iPad adoption by businesses of all sizes. 


"Nearly all of the top companies within major Fortune 500 markets including pharma, manufacturing, hospitality, consumer products, financial services, healthcare and retail are actively using iPad to improve workflows, business processes and customer engagements," said Oppenheimer.


"Real estate agents at Coldwell Banker and Sotheby's access sales presentations and use custom iPad apps in the field," he noted. "Retail chains such as Bed Bath & Beyond use iPads to deliver key business metrics on the sales floor."


"Wineries are using iPads in their vineyards to call up weather data and soil profiles, record quality assessments and make decisions on the spot about whether to harvest their grapes," Oppenheimer added. "And in this past quarter, Chinese airline, EVA, has also deployed iPads to pilots and crew for flight manuals, documentation and training."


The Denver Broncos have stopped using paper playbooks and now use iPads instead. 

AT&T Wireless Revenue Exceeds 50% for First Time

AT&T mobile services revenue has been building for some time, and in the first quarter of 2012 broke above the 50 percent level for the first time, reaching 51 percent of total revenue. Landline voice revenue fell to 18 percent of total. 


Looking only at fixed network revenue, 27 percent was contributed by services to business customers as well as data services. Wireless data alone accounts for 42 percent of total revenue. 

Mobile data will be the largest contributor to U.S. telecom service provider growth over the next five years, says Pyramid Research. That not-unexpected assessment is simple recognition of the fact that growth must be driven by services that have obvious demand drivers, fit network and other organizational capabilities are not already fairly saturated and highly competitive. Right now, in the U.S. market, mobile broadband to support smart phones and tablet devices is the only clear service that fits all the parameters.

Voice services are expected to dwindle, on both the fixed and mobile networks. There will be growth in the video entertainment, VoIP and high-speed access segments, but at modest rates. 

The U.S. telecom market generated $367 billion in service revenue in 2010, an increase of 3.1 percent over 2009.

"We expect the market to grow at a 3.1 percent compound annual growth rate over 2011 to 2016, reaching $443 billion in 2016, Pyramid Research forecasts. 

While it was the fourth-largest service segment in 2010 (after mobile voice, fixed voice and pay-TV), Pyramid Research projects mobile broadband will have a 12.7 percent CAGR over the 2011 to 2016 period.

That means that mobile broadband services will overtake mobile voice, fixed voice and entertainment video  to become the single largest revenue stream in the U.S. telecom industry by 2016.

As demand for fixed circuit-switched voice decreases, fixed VoIP will increase, growing at a 12.2 percent CAGR from 2011 to 2016. But VoIP still will be the smallest of all revenue streams over the forecast period. There might continue to be some small dial-up Internet access revenue, but it will be negligible. 

Apple Profits Most from "Consumerization of IT"

Though some will disagree, you can argue that Apple now leads the consumer electronics business, not only the computing business, while Microsoft has become more of an enterprise technology supplier. 


Five years ago, in 2007, Microsoft reported quarterly revenue of $14.398 billion and  profit of $6.589 billion. In 2012, Microsoft’s revenue was $17.4 billion, while profit was $6.374 billion. The company is still growing, but not fast, and is less profitable. 


The bigger story, though, is likely Apple.


Five years ago, in its first quarter of 2007, Apple revenue was $7.1 billion and profit was $1 billion,  the first quarter with a billion dollar profit in company history. In 2012, for the same quarter, Apple had $47 billion in revenue and $13 billion in profit.


The shift into different customer segments is not, in some ways, a surprise. Apple never has chased the enterprise market, preferring to sell directly to end users, and then watch enterprise sales grow as those users demanded the right to use their devices at work. You can say Apple has been the biggest beneficiary of "bring your own device" or "consumerization of IT" trends. 


Workers now report using an average of four consumer devices and multiple third-party applications, such as social networking sites, in the course of their day, according to a study sponsored by Unisys. 


Also, workers in the survey reported that they are using their own smartphones, laptops and mobile phones in the workplace at nearly twice the rate reported by employers.

In fact, 95 percent of respondents reported that they use at least one self-purchased device for work. Another big change is that where enterprise IT staffs used to assume they were responsible for training and supporting users on enterprise technology, these days many users simply will go ahead and train themselves to use tools they prefer. That also is a big change.

That 'consumerization' of technology is quite a big shift. Decades ago, the pattern of technology diffusion was fairly straightforward. The latest new technology was purchased by large enterprises and large government entities. Over time medium-sized businesses and organizations started to buy the same technology. Later, small businesses and organizations adopted the tools. Finally, some consumers 'brought the technology home' and used it as well.

All of that has changed over the last two decades. These days, many enterprise tools actually were brought into the enterprise by consumers who already had adopted the technology for home use.

U.S. Mobile Ad Spend Will Double in 2012

Mobile ad spending worldwide will grow 85 percent in 2012 from $6.3 billion to $11.6 billion, according to Strategy Analytics. 


In the United States market, ad spend for mobile advertising will grow much faster, at about a 128 percent rate, to about $4.2 billion, Strategy Analytics estimates. 


The total U.S. mobile mediamarket is expected to outperform the global growth rate as well, increasing by 22.1 percent to nearly $38 billion by the end of  2012. 

U.S. consumers are expected to spend $6.7 billion on mobile apps in 2012, a 24.6 percent increase over 2011, and accounting for 20 percent of all U.S. consumer mobile spend. 

Tablets Will Win Because Pain of Resisting is Higher than Pain of Adopting

Tablets aren’t the most powerful computing gadgets, but are convenient, "cool," and work because many of the core "computing" requirements people have today are related to content consumption and some light communications, rather than heavy content creation. 


They’re portable, easy to use and suitable for content sharing and working in groups. Screens are large enough to display content, and the disadvantages of computing power if balanced by better battery life. 


Tablets will gain wider user because much of our "computing requirements" now consist of content consumption, not content creation. 


Some of us would also argue that something else is at work. When looking at adoption of any new technology, a good rule of thumb is that the "pain of changing" has to be less than the "pain of not changing." 


But part of the "pain of not changing" has nothing to do with technology, as such. "Pain" can be social. The pain of not buying a tablet occurs when all your friends have one, and you don't. Don't  discount that sort of "pain." It happens with all important consumer technologies. There simply is a point where a person feels they must have something "most other people have," so long as the innovation is useful.

Microsoft Smart Phone Market Share Keeps Falling

Apple is the clear winner in the smart phone business so far, though Samsung has made important strides. And though nobody should count them out, Microsoft, Research in Motion and Nokia are struggling. 


But it is in the area of smart phone profits that Apple is unusual. 


Profitability, more than anything else, now is shaping the global smart phone business, one might argue after considering an estimate by Strategy Analytics of market share in the global handset business.

Globally, Apple and Samsung have, over the last 12 months or so, surged to the top of the charts in terms of smart phone sales volume. In the past, the “smart phone” category has not been significant, as all devices were feature phones or basic phones.

As the market begins to shift to a smart phone buyer pattern, differences in firm strategy and execution have lead to a rapid change in market leadership.

Global smart phone shipments grew 54 percent annually to reach a record 155 million units in the fourth quarter of  2011, according to Alex Spektor, Strategy Analytics associate director. That apparently has proven to be a decisive change.

In the past, Nokia has been the global share leader, but Nokia has not been able to translate that prior success into smart phone success, where Apple has changed the game and Samsung apparently has been able to keep pace.

Apple overtook Samsung to become the world’s largest smartphone vendor by volume with 24 percent market share. Apple’s global smartphone shipments surged 128 percent annually to 37.0 million units, as distribution of the iPhone family expanded across numerous countries, dozens of operators and multiple price points.”

Apple took the top spot for share on a quarterly basis, but Samsung became the market leader in annual terms for the first time with 20 percent global share during 2011. With global smartphone shipments nearing half a billion units in 2011, Samsung is now well positioned alongside Apple in a two-horse race at the forefront of one of the world’s largest and most valuable consumer electronics markets, Strategy Analytics says.

In contrast, Nokia’s smart phone market share was cut in half from 2011 to 2011, dropping from 33 percent in 2010 to 16 percent in 2011.

That is one reason there has been so much focus on the Nokia partnership with Microsoft, as many would argue the Windows Mobile operating system represents the best shot Nokia will have to avoid collapse.

The other observation of note would be that profitability might now be emerging as the key differentiator, even though design and consumer demand clearly are driving the market overall.

Samsung’s most-recent quarterly earnings also set records. Samsung Electronics Co declared $4.7 billion in quarterly operating profit. jumping 76 percent year over year.

Between them, Apple and Samsung earned fully 81 percent of all profits in the mobile handset business.

Work Keeps You From Being "Creative," Adobe Study Suggests

Our biggest barrier to creativity might be at work, a new study by Adobe suggests. In the survey, 75 percent of respondents said they have been experiencing more and more pressure from superiors to be productive rather than creative in the workplace, even though their jobs require at least some measure of creativity, the study suggests. 

Facebook Revenue Per User is $1.21

Facebook says it earns $1.21 per user. Keep in mind that Facebook also has 901 million monthly users. 


Worldwide mobile monthly active users increased by 69 percent from 288 million as of March 31, 2011 to 488 million as of March 31, 2012.


In all regions, an increasing number of our MAUs are accessing Facebook through mobile devices, with users in the United States, India, Indonesia, and Brazil representing key sources of mobile growth over this period. 


About 83 million mobile MAUs accessed Facebook solely through mobile apps or our mobile website during the month ended March 31, 2012.


Some 405 million mobile MAUs accessed Facebook from both personal computers and mobile devices during that month. 

Zynga Drives Content Sales (or Virtual Currency) at Facebook

Advertising still drives the overwhelming portion of Facebook revenue, but growth of digital content sales is faster, according to Facebook. Much of that activity was driven by users of Zynga games. 


In 2011 and the first quarter of 2012, Zynga directly accounted for approximately 12 percent and 11 percent, respectively, of total Facebook revenue, mostly from virtual goods payments. 


If you consider sales of digital goods to be a "content sales" operation, you'd be right. But since Facebook also requires use of its captive Facebook Credits mechanism to do so, those revenues might be considered "virtual currency" operations. You can take your pick which description is more accurate. 


Zynga also generated about five percent of Facebook ad revenue from third parties in 2011, and about eight percent of first quarter 2012 third party display ad revenue. 


 According to a 2010  In-Stat report, the worldwide revenue generated from the sale of virtual goods on social networking sites, online worlds, and casual games increased from $2 billion in 2007 to $7 billion in 2010, and is forecasted to increase to $15 billion by 2014. 


Still, the advertising opportunity is an order of magnitude bigger than that. 


Revenue from Facebook's payments division nearly doubled between the first quarter of 2011 and the first quarter of 2012, though. 

Facebook advertising of 37 percent occurred on a far-bigger base. 

Facebook brought in $186 million in revenue from its payments division in the first quarter of  2012, up from $94 million in the first quarter of  2011. But Facebook had total revenue of about $3.7 billion. 

Most U.K. Users Seem to Overestimate Their Mobile Data Consumption

New research from billmonitor.com, the Ofcom-approved mobile price comparison site based on analysis of customers' actual bills, shows that smart phone data use has more than doubled since late 2010.

The average U.K. smart phone user now uses 154 MBytes per month, compared to 71 MBytes in late 2010. Nearly 30 percent of smart phone users now use more than 250 MBytes per month.

The study by billmonitor of 215,507 bills from U.K. customers suggests the flip side of growing data consumption: many users are on plans that are more expensive than needed.

In fact, “bill shock” when users exceed their usage caps is surprisingly limited, the study suggests.

The billmonitor.com’s analysis of customer bills shows that in any given month, only around two percent of analyzed bills include out-of-bundle data charges of more than £10. Also, it appears that out-of-bundle spending on mobile data is actually decreasing, even as data usage increases overall.

The real problem facing most UK smartphone users is that they are overcompensating for the amount of data they use by having a much too large data allowance, and overpaying.

Half of all smart phone users still aer using less than 154 MBytes worth of data a month. But 88 percent of smart phone users have opted for a monthly data allowance of at least 500 MBytes, of which most goes unused.

Mobile Payments Will be "Hybrid" for Some Time

The founding of a new industry, such as mobile commerce, always will threaten the leaders of the industry that risks being replaced, at the same time it offers brand-new opportunities for attackers of all sorts. 


That perhaps especially is true when an existing way of doing things necessarily involves a collision between several large existing industries. In the case of mobile commerce that might reasonably include banks, payment processors, retail software and hardware, mobile services, retailing, marketing and advertising. 


At least early on, successes often have taken a line of least resistance. Starbucks did not focus on anything "fancy," in technology terms. But it gained huge traction, fast, by essentially linking a smart phone with bar code readers and prepaid cards. 


Google Wallet likewise essentially has taken the tack of linking a mobile phone with a prepaid instrument as well. Square, Intuit and PayPal have used dongles to turn smart phones or tablets into retailer point of sale terminals. 


The main point is that early successes have happened where innovators built something new that works with a huge installed base of supporting infrastructure and common user behaviors. 


It might not have seemed so logical, at first, to unite an established behavior and payment instrument--the prepaid card--with smart phones to create a "mobile payment" system. 


Nor might it have seemed so logical to use a simple dongle to turn a smart phone or tablet into a retailer payment terminal. But taking the line of least resistance has proven successful. Rather than attempting to change behavior, or create huge new ecosystems, some have adapted existing behaviors and ecosystems in new ways. 


Along the way, suppliers will find themselves working in fields in which they have little experience. Problems will arise.  Security will remain an issue, for example. Sometimes the obvious answer will be to marry expertise in one field with capabilities of another. 


That sometimes will take the form of "mashing up" a mature technology and set of processes, such as "prepaid cards," with a technologically-emerging set of hardware and software, such as smart phone devices and apps. 


In the history of technology disruptions, that is a common pattern. Hybrid approaches often work, early on, because they are practical, and build on what is already accepted practice. Think of steam engines on sailing ships. Initially, it was not practical to drive a ship solely using steam engines. So shipbuilders grafted steam engines onto sailing ships. 


The full replacement of an older technology might take much longer. Consider that the first mobile phones went into service in 1946, but it wasn't until the mid-1990s that "most" people used them.


The first video games were played in 1961. But video gaming did not first become a mass behavior until the early 1980s. The first personal computer was created in 1964, but significant adoption did not happen until the mid-1980s. 


That is why the "prepaid account plus mobile phone" will be a successful early approach to mobile payments. It is a hybrid of existing behaviors and processes. Only later will mobile payments emerge in a more "finished" mode. 

What's a Wallet, and How and Why Do You Use It?

There are reasons why Google Wallet, cash, debit and credit cards and checks exist, and why some consumers prefer to use one or a few of those, rather than others, as payment tools. Those habits will be hard to change. 


To design a successful mobile payment process therefore requires changing stubborn end user behaviors.


To cause change, mobile payment proponents also must understand those barriers, including the values and attitudes shoppers have when they choose to pay for purchases one way, rather than another. 

A study conducted by Ipsos for American Express broadly suggests three payment "personae," with distinct sets of values and payment preferences. They also therefore have key objections or attractions to using mobile payments.


If 69 percent worry about security, that objection has to be overcome. But that isn't a primary objection for every user. "Techies" will use any tool that is convenient, and prefer the "bleeding edge." Security isn't a big concern; coolness is. Cash isn't as "good" as using a smart phone, because it is easier to track expenses when using either online or smart phone payment methods. Credit cards are the current default payment method. 


For many shoppers, though, security probably is the biggest objection. Identity theft is a big issue, so brand preferences lean towards their established financial institutions. "Convenience" is not as strong a value for this sort of buyer. For this persona, cash and credit cards are central and preferred payment methods, though there remains some use of checks.


For others, the chief concern is an ability to manage and understand spending. Debit cards and cash currently are the preferred payment methods, because each is viewed as helping with the budgeting of spending. So convenience, security and control are key values for different parts of the user base. 


But addressing any one of those key values does not necessarily drive interest for the other two types of personae. "New" is attractive to techies. 


"Safety" is the big value for "security buffs," so "fear of compromised data" is the key objection. 


Spending control is the big driver for "budget bosses" so fees are a big objection. (click on the image to see the full chart). 


 

2.5 Billion Unbanked Consumers: Mobile Can Fix That Problem

Some 68 percent of adults surveyed by the World Bank say they have used a mobile phone for a money transaction. In Sudan, 52 percent say they have done so. In Gabon, 50 percent, in Algeria 44 percent. 


Some 2.5 billion people do not have access to financial services, often because bank branches are unavailable. That's why mobile money transfers are so useful. With just a little use of existing retail locations, people can pay education or utility bills, for example, using feature phones and simple text messaging, without needing physical bank branching locations. 

Most of the Revenue in Mobile Content Business is "Access"

2011 was the first year that global consumer spending on media content, apps and services for mobile phones broke through the $100 billion barrier, according to Strategy Analytics. 


But there is an important caveat: 60 percent of that spending was for broadband access. In other words, some $73 billion was spent by consumers for mobile data access. In 2012, mobile data will represent $82.8 billion in spending, up 9.5 percent over 2011 levels.


Apps are now the second largest category for revenues. Advertiser spending on mobile media is expected to almost double (85.4 percent growth) from $6.3 billion to $11.6 billion in 2012, Strategy Analytics says.


That implies $149.8 billion in global revenue in 2012, a 17 percent increase over 2011.

Apps are expected to account for about 19 percent of global consumer spending in 2012, amounting to $26.1 billion, up about 31 percent over 2011.


In fact, it often is the case that much of the revenue in any product category consists of "access services." Consider cloud computing. Well over 33 percent of total end user spending on "cloud computing" is "access," for example. 

Fuzzy Thinking on Wireless "Spectrum Crisis"

One apparent problem with many discussions of how much bandwidth mobile service providers will need in the future is that some observers confuse tactical buying and selling of some blocks of spectrum with the overall bandwidth trend; and today's problems with tomorrow's problems. 


"The wireless carriers say that in the next few years they may not have enough of it to meet the exploding demands for mobile data," writes Brian X. Chen in The New York Times. But some think spectrum crisis is imaginary, and point to some specific proposals, as a commitment by Verizon to sell some spectrum if it is allowed to complete its purchase of AWS spectrum from Comcast, Cox Communications, Time Warner Cable and BrightHouse Networks. 





Other say there obviously will be a spectrum shortage if demand keeps growing 60 percent to 100 percent a year. It is true that technology can help. Better signal compression, more efficient coding, Wi-Fi offload and retail financial incentives can help. 


But is is much more difficult to create usable mobile bandwidth than it is to create additional fixed network capacity. That's mostly a matter of physics. To avoid interference, discrete blocks of frequency are used by only one service provider, though those firms can re-use the same frequency across nearby cells, by using frequency planning.


For fixed network providers, each discrete provider can, in principle, use a full range of frequencies, even when other licensees have exclusive rights to use discrete frequencies in the wireless domain. U.S. wireless service providers have the use of frequencies in the 700 MHz, 800 MHz and 2 GHz bands, for example. All others generally are reserved for other users. And even if higher frequency spectrum were available above 2 GHz, it is, for reasons of physics, difficult to economically use those frequencies in a mobile communications context.


Fixed line providers can use much more spectrum. Where mobile service providers are restricted to specific frequencies in three main bands, each separate cable operator can use all frequencies between about 1.6 MHz up to about 1 GHZ, the real limitation being the cost and signal propagation characteristics, not the ability to use frequencies above about 750 MHz. 


By way of comparison, then, where a mobile service provider might use paired 10-MHz channels, representing 20 MHz of total capacity, and where one single mobile provider can use those specific frequencies nationally, each cable operator can use more than 700 MHz. In other words, every cable operator has an order of magnitude more "raw bandwidth" to work with, compared to any mobile service provider. 


To be sure, many mobile operators run two or three discrete networks, each with 10 MHz to 20 MHz of spectrum, there are clear physical limits, compared with any cable network. 


Landline telcos generally use optical fiber, and different signaling methods, that support hundreds of megabits per second to gigabits per second for every user, in principle. Consistent with the business case, landline telcos also could use multiple discrete wavelengths to reuse all their frequencies over and over again. 


That means it always will be easier for fixed networks to re-use frequencies that, in the wireless domain, must be reserved for use by only a single provider.


Also, most spectrum usable for mobile communications already is licensed to "somebody else." There is very little "fallow" spectrum.  The point is simply that there is no comparison between fixed network potential bandwidth, and mobile potential bandwidth.


Observers who argue there is no need for more spectrum sometimes argue that "new technology" can fix any mobile service provider capacity problems. New technology can help. Alternative technology can help. Creating incentives for people to use finite spectrum wisely can help. 


But there are clear indications that mobile network physical capacity will not be sufficient for future needs. Denying that strikes some of us as fuzzy thinking. 

Cloud Computing and Mobile Apps Could Shake Up IT Business

Cloud computing might be part of the next great evolution of computing, but mobile computing probably will be such an intrinsic part of the architecture that the two will be hard to separate. The ramifications could be substantial.

Amazon’s AWS Marketplace, for example, could have huge ramifications for sales forces in the communications and information technology marketplace. As AWS Marketplace and other similar marketplaces develop, the “cloud” becomes the way everyone gets access to business apps and data.

Separately, Hewlett-Packard (HP) has launched an “HP Enterprise Mobility Platform” designed to allow telcos to create “enterprises app stores.”

Service providers can populate the app stores with custom apps designed to use data from corporate back-end systems (such as CRM and ERP) and deliver it to increasingly mobile staff using tablets and smartphones. The assumption is that apps and data can be gotten directly by any device from the mobile network.

Both offers illustrate use of cloud computing and mobility to make business application installation and use a simple mobile app install to a device with web browser capability and broadband access.

What you will note about the enterprise app store concept is that it disintermediates nearly all of the premises networking infrastructure. There is no need for the enterprise local area network, except perhaps to switch to Wi-Fi access at times.

You can imagine this will have serious implications for firms that traditionally make a living selling gear and services for enterprise LANs. Just as easily, you can see the upside for traditional communications providers who now could have an expanded role in the information technology business.

What products would be “natural” parts of a communications and information technology bundle? How much easier would it be for traditional telco sales organizations to sell key business software?

In fact, non-technical sales forces of all types might find there are new opportunities to sell products that might have been “too technical” in the past. Firms outside “IT” might find they can create bundles almost on the fly, customized for vertical markets or businesses of various sizes and types.

A shift to some new computing architecture based on cloud resources and mobility could have huge implications for any number of businesses in the information technology and communications businesses.

HTC Share of Traffic Drops 60% in Five Months

From October 2011 through March 2012, Apple’s traffic share grew from 46.8 percent to 76.9 percent, an increase of 64 percent, says Chitika Insights.  HTC, on the other hand, experiencd an overall web traffic share fall from 18 percent to 7.3 percent, a decrease of 60 percent. 


Traffic is in many ways a proxy for device market share. Others who follow the device market more closely than I do can offer reasons for the precipitous decline. Aside from the competition with Apple, HTC obviously has to compete with other Android device manufacturers on price and value. 

1 Gbps: If You Build It, Will They Come?

Individual subscribers connected at gigabit speeds constitute a relatively new phenomenon.
First introduced by Hong Kong Broadband in 2010, the number of service providers offering
residential gigabit services is growing, with more than two dozen service providers providing such service, according to a study by Joe Savage, Telecom ThinkTank principal, and Michael Render RVA Market Research principal.

About seven of those providers offer service to residences as well as businesses, and have networks that pass at least 100,000 sites (not to be confused with “customers”). “Our March, 2012 estimate is that global residential gigabit subscribers number in the hundreds,” the authors say.

Historically, consumers have responded enthusiastically to higher speeds, at least up to a point. For both dial-up Internet and then broadband Internet access, consumers responded in overwhelming numbers. Both were examples of “build it and they will come” optimism on the part of service providers.

But that has not yet proven universally true. As many people buy automobiles, but not everybody buys a luxury automobile, service providers probably should maintain some circumspection about demand for “super-fast” access, defined as 50 Mbps, 100 Mbps or even 1-Gbps service.

As with the market for automobiles, user have distinct needs and spending abilities. Any auto provides “transportation.” But most people do not buy high-end luxury vehicles. In the same way, one might argue, demand for broadband speed is simply not highly elastic.

Verizon, for example, had a total of five million FiOS Internet connections in service at the end of the first quarter of 2012. That works out to FiOS Internet penetration of 36.4 percent.

That should provide evidence that fiber to the home does not sell itself. Some of us tend to believe that the advantages of fiber to the home are so obvious Verizon would only have to "build it and they will come." Not so, it turns out.

Though there is slow movement to higher access speeds, Verizon's experience suggests providers of 1-Gbps services should have realistic expectations about take rates.

Some of us immediately would wonder whether existing 1-Gbps customers, especially in markets where monthly prices are in the $200 range, actually are “business” users, though, much as Google product managers and others have 100-Mbps connections, paid for by Google, so they can work efficiently at home. Some ISPs have found scant interest for 50-Mbps services, for example.

Prices for residential gigabit service range from a low of $26 per month for Hong
Kong Broadband’ s service to a high of $560 per month at network operator Turkcell. Prices
roughly correlate to the capital investment required to pass a subscriber in the serving area, the authors say. It costs $200 per home passed in Hong Kong compared to $1,000 to $4,000 per home passed in Europe and North America. ISPs have seen price resistance whenever monthly recurring costs approach triple digits.

In North America, Sonic.net will be seen by many, and ought to be seen as notable, for offering 1-Gbps service to consumers for $70 a month, including two phone lines with no-extra-charge domestic long distance. Comcast’s 105-Mbps service in San Francisco costs about $200 a month, by way of comparison.

Gigabit subscribers report that they are online an average of eight hours per day. That compares with the “typical” U.S. Internet user average of 2.5 hours per day. By definition, 1-Gbps customers are not “mainstream.”

In addition to being “early adopters” and “technology enthusiasts,” they stream high-definition content, engage in multi-player online games and tend to be content creators.

It remains to be seen whether there will be higher adoption as the service is made available to more potential users. At least up to this point, few subscribers who pay for their own connections (as opposed to having the bills paid by an employer) seem to have become customers. Also, surveys have shown that most users are happy with speeds they now get.

That said, we will soon get a better look at receptivity to 50 Mbps and 100 Mbps services in a number of markets, such as United Kingdom. Some question whether “build it and they will come” is so reasonable an assumption, at this point.

Data Caps Serve Multiple Objectives, Exec Argues

The need to protect the fixed line business is the real reason behind the move towards data caps and tiered pricing for Long Term Evolution, says Roberto Saracco, director of Telecom Italia's Future Center. Data caps on mobile broadband usage often are justified because mobile bandwidth always is more finite than fixed network bandwidth.


On the other hand, business policies often can serve several goals, at once. Saracco argues that mobile data caps, especially as faster LTE fourth generation networks become available, also help some service providers protect their landline broadband access businesses.


With caps in place, users have less opportunity to replace a fixed network connection with a mobile alternative. One key issue is the size of the respective caps. Mobile broadband might feature caps between 2 Mbytes and 5 Mbytes, with optional plans of 10 Mbytes.


Fixed networks routinely have caps of 150 Gbytes, or two orders of magnitude higher. Aside from the fact that the cost per bit is much higher on a  mobile network, the difference in caps mean mobile substitution does not work.


Some lighter users, in single-person households, might be able to substitute mobile broadband for fixed service. Multi-person households, heavier users and people who watch significant amounts of video, will find mobile unworkable as a fixed network substitute product. 


On the other hand, there are instances where mobile substitution makes perfect sense for an ISP. Where a service provider has no landline facilities, wireless substitution allows a mobile provider to compete for some parts of the landline broadband access business, with no risk of cannibalization. 

OpenFlow Poses a Challenge to Net Neutrality, in a Good Way

In principle, some of us would argue, consumer users of Internet apps should have the ability to prioritize their own traffic, or have their ISPs optimize on their behalf, in ways that preserve user experience as deemed important by users themselves. Current network neutrality rules prevent that. OpenFlow might help. 


OpenFlow is software that could allow any end user to create priorities for their own traffic. In principle, ISPS could use OpenFlow to optimize on behalf of their customers. In practice they cannot, as it would violate network neutrality rules that only allow "best effort" for all packets. 


The advantages are relatively obvious. Business users for example, can buy services not subject to net neutrality rules, in ways that are helpful. 


Cadbury, for example, is managing its internal corporate network using application and other priorities after an audit found that 55 percent of its traffic was recreational, says Nolan Rosen, chief marketing officer at Exinda, a consultant to Cadbury, USA Today reports. 


Now, each office now gets bandwidth prioritization based on size of site or its contribution to overall business objectives. Such policies, based on type of application, time of day, day of week, type of user or site are permissible for private networks run by enterprises, but are not allowed for consumer broadband customers.


That's one reason some of us have argued that current network neutrality rules, intended to prevent unfair business practices, also have the effect of denying packet prioritization policies that actually can have high value for discrete end users, based on the priorities those users have. 


Video and voice are two applications most consumers use frequently, and both are real-time services that benefit from policies that preserve bandwidth for such applications at times of network congestion. Gaming is the other obvious application that can benefit from prioritization policies at times of network congestion. 

Verizon FiOS Lessons for 1-Gbps Access Providers

Two subjects from Verizon's first quarter 2012 earnings report jumped out at me, one being wireless data revenues, the other being FiOS penetration.

Data revenues were $6.6 billion, up $1.1 billion, or 21.1 percent, year over year, and now represent 42.9 percent of all wireless service revenues. Total revenues were $18.3 billion, up 8.2 percent year over year.

Also, retail postpaid average revenue per user grew 3.6 percent over first-quarter 2011, to $55.43. Retail postpaid data ARPU increased to $23.80, up 16.0 percent year over year. Retail service ARPU grew 3.4 percent, to $53.66.

The second subject was FiOS penetration. Verizon had a total of five million FiOS Internet and 4.4 million FiOS video connections at the end of the quarter. FiOS Internet penetration was 36.4 percent at the end of first-quarter 2012, compared with 33.1 percent at the end of first-quarter 2011, Verizon reports. 

In the same period, FiOS video penetration was 32.3 percent, compared with 29.1 percent in the same quarter a year ago. 

The conventional wisdom, and in fact the correct wisdom, is that Verizon growth is lead by mobile service revenues, and that mobile service revenues are lead by mobile broadband services. That clearly is the case at Verizon Wireless. 

Also, mobile broadband revenues seem to be kicking ARPU higher, despite the decades-long downward drift of average ARPU, industry wide. 

The other observation is that fiber to the home does not sell itself. Some of us tend to believe that the advantages of fiber to the home are so obvious Verizon would only have to "build it and they will come." Not so, it turns out. 

Some 36 percent of consumers able to buy FiOS broadband have done so. About a third of customers able to buy FiOS video services have done so. Some of us would say the former figure is less than we'd have expected, the latter about what we would have expected. 

Video competition is brutal, with Verizon facing two experienced satellite providers and a cable operator in every market. Getting a third market share is an accomplishment.

The continuing surprise is that broadband access penetration is not higher. 

Put another way, Verizon has built an extensive fiber-to-the-home network that provides one brand new service--video--and a better experience for an existing service. But that investment garners about one in three households for the new service, and only a bit more than that for the better broadband service. 

Though there is slow movement to higher access speeds, Verizon's experience suggests providers of 1-Gbps services should have realistic expectations about take rates. 

92% of Consumers Want A La Carte Video: Won't Get It

About 92 percent of consumers want some type of a la carte programming offering from their video subscription  providers, but they're not willing to pay much for it, according to RBC Capital Markets. The upshot is that they aren't going to get a la carte programming. 


About 92 percent of respondents said they would be at least "somewhat likely" to switch to a full a la carte option, the RBC Capital survey of more than 1,000 consumers found. 


Some 82 percent said they would subscribe to at least 11 channels and 40 percent indicated they would subscribe to more than 20 channels, with a weighted average of about 19 channels. 


That sounds about right: most people watch seven to 12 channels on a regular basis, a rule of thumb suggests. 


Of the respondents who would prefer a la carte service, and would pay for the services, about 51 percent said they would pay at least $1 per month per channel, with the weighted average being $1.47 per month.


That works out to about $28.50 per month, or about a third the average monthly video subscription bill. Some programmers might be able to build a business case on an a la carte basis, but most likely would not fare as well. 


Granted, programming rights costs appear low for many channels, in the cents per month range. But that is based on volume discounts and represents only licensing fees, not marketing, operations, billing and other costs of delivering content to a customer. 


Consumers seem to be using the same sort of logic they use in assessing the "right cost" for a single downloaded song. People seem to divide the retail cost of a CD by the number of songs and assign a value. Users might be doing the same thing with their video service, essentially dividing the monthly recurring cost by the number of channels in their packages. 


Service providers would rightly argue that there are sunk overhead costs that are not "channel based." All those costs would, in a full a la carte regime, need to be amortized over a smaller number of revenue units (channels). 

More Deregulation for Landline Voice

In a significant development for the landline telecommunications business, states are passing or considering laws to end the requirement that phone companies provide "universal service" to every potential customer in competitive markets. Definitions might vary, but the Indiana version of the law defines what we might call effective competition as situations  "where at least two other companies provide voice service, whether it's wired phone, Internet services such as Skype, or mobile access."


Indiana and Wisconsin are the two most recent states to end the requirement, and many others, including Alabama, Kentucky and Ohio, are considering it, USA Today reports.

In California, a State Senate bill to deregulate VOIP services has passed the Senate Energy, Utilities and Telecommunications Committee by a vote of 11-0.  

The bill,  SB 1331, would eliminate the power of the state’s Public Utilities Commission to regulate VOIP services, which historically has had regulatory authority over public utilities, including telephone companies.

In some ways, the move was inevitable. California deregulated nearly all landline service six years ago.