iPhone Tops at&t Phone Sales

The iPhone has become at&t's top selling device, commanding some 13 percent of overall sales, according to Strategy Analytics. At least 1.325 million units have been sold in the U.S. market since the iPhone was launched. It also is conceivable that the iPhone will be the top selling U.S. dvice over the next couple of quarters.

Currently, the top selling U.S. handset is Motorola's RAZR V3. Generally, the top 10 handset models account for approximately 25 percent of total handset sales in a typical quarter.

"The typical iPhone buyer is college educated with a six-figure household income," Strategy Analytics says.

The largest percentage of iPhone buyers is between 20-30 years old, but nearly 25 percent are between 50 to 60 years old. Which makes sense, given the demographics of buyers, which are high end.

Skype Phone Coming

One mobile device trend is the creation of "cross over" devices that meld feature phones big on media with "work" phones optimized for email. But there's another trend: creation of new devices that are optimized for one particular application or use mode. Add the new Skype phone to that bucket.

Skype plans to introduce the phone in the countries where mobile carrier "3" operates. 3 is the mobile venture of Hong Kong's Hutchison Whampoa Ltd. and operates in Australia, Hong Kong, Indonesia, Austria, Denmark, Italy, Ireland, Sweden and United Kingdom.

The whole point here is to optimize the phone for Skype, making it as easy as possible to use on a mobile device. If BlackBerry is "email in your pocket," and iPhone is "Web and music in your pocket," then the new device is "Skype in your pocket."

iPhone Dings Treo and Sidekick

iPhone buyers were 10 times more likely than other new phone buyers to have previously owned a Treo and three times more likely to have owned a T-Mobile branded phone, such as the popular Sidekick model, say researchers at NPD Group.

In contrast, iPhone buyers were no more likely than the average buyer to have previously owned a Blackberry. NPD theorizes that lack of support for corporate BlackBerry servers is the reason.

Alltel and T-Mobile took the biggest churn hit. Consumers who switched carriers to buy an iPhone were three times more likely to switch from Alltel or T-Mobile than from other carriers.

Sprint and Verizon also lost customers to at&t, but not nearly to the same degree.

If early buyer trends hold up, the iPhone might be bridging the gap between content-focused feature phones and productivity-focused smart phones, NPD argues.

Personally, I still think it will be tough to develop a single device that is equally adept at melding feature and productivity device functions. Well-designed user interfaces will help, but the fact remains that such devices must embrace too much complexity and consume too much power. That means the devices will be harder to use.

Mobile phones still are consumer devices. And in the consumer device space it is a truism that a single-purpose device will outperform a multi-purpose device. Unfortunately, lots of us will continue to use two devices as a result.

Symbian Gets Touch

The Nokia-backed Symbian mobile phone operating system is adding a "touch" user interface. The S60 operating system will support a variety of input methods, including touch screens with a traditional keypad, touch screens with a "qwerty" keyboard or touch screen alone, supporting both finger or stylus optimized input.

The new interface supports tactile feedback when the user taps on the screen. The new
OS also expands the use of sensor technology to detect device motion and orientation, a feature expected to be used in gaming applications, for example.

The new OS also is said to be the first mobile software platform to deliver the complete Web video experience, including Flash Video. This allows people to view on the go Flash-enabled Web sites and Flash Video, such as YouTube, as they would do on their desktops.

How Much More Can Vonage Take?

And what is the exposure for other independent providers of VoIP services? Not to mention software and hardware providers, though the dominant carriers are unlikely to sue their suppliers.

AT&T filed a lawsuit against VoIP provider Vonage Oct. 19 seeking damages for alleged patent infringement.

The lawsuit comes on the heels of a Vonage settlement with Sprint Nextel over patent infringement as well, and against an as-yet-unresolved patent infraction case filed by Verizon. Vonage also appears to have settled another legal dispute with Klausner Technologies, a small company with patents on voice mail technology, for an undisclosed sum.

In a filing with the U.S. District Court for the Western District of Wisconsin, at&t says Vonage willfully infringed an at&t patent related to telephone systems that allow people to make VoIP calls using standard telephone devices.

So far, Vonage's patent-related payments are north of $80 million, as Vonage announced on Oct. 8 that it settled its suit with Sprint Nextel for $80 million. As part of that agreement, Vonage agreed to license VoIP patents from Sprint, including more than 100 patents covering technology for connecting calls from a traditional phone network to an IP network. And then there is the Klausner settlement.

Vonage is also in the process of resolving a patent infringement dispute with Verizon. Unfortunately, of course, the Sprint Nextel settlement and the ultimate Verizon settlement will set a precedent likely requiring Vonage to settle with at&t as well. That will likely bump Vonage's patent payments well above $100 million in total.

And if Vonage is infringing patents held by all three giants, what are the odds other VoIP providers are immune? As for the giants, they'll simply cross-license. For everybody else, the warning is pretty clear: get too much success and you will be sued. So one wonders when the assault against cable companies will come. After all, if one wishes to slow down competitors, messing around with Vonage is okay if it creates the foundation for the bigger assault against cable. But Vonage isn't a telco incumbent's big problem in any case.

It is a sobering thought: all the other independent VoIP providers other than cable are much smaller than Vonage. What chance do they have if any conceivable profit goes to pay lawyers and settlement fees?

WiMAX Future? 3G! Sort of

Although WiMax and third generation cellular have been positioned as rival and alternative wireless standards, that might change in some cases as the International Telecommunication Union has decided to include WiMAX in the IMT-2000 set of standards. WiMAX is to be considered, after all, as just another 3G solution such as W-CDMA, CDMA-2000 and TD-SCDMA, all of which are part of the IMT-2000 set of standards.

The decision to approve the WiMAX Forum's version of IEEE Standard 802.16 as an IMT-2000 standard boosts WiMAX chances for wider deployment, especially within the 2.5-2.69 GHz frequency bands. How much of a boost is hard to predict.

WiMAX still will compete with the HSPA "Super 3G" or "long term evolution" (LTE) path most cellular operators have been saying they will take, in large part to preserve the value of expensive infrastructure they already have in place. WiMAX represents a sharp departure from that strategy.

Therein lies the challenge. Few 3G providers will want to risk being marginalized if the great bulk of 3G providers opt to stay on course. Roaming issues, handset cost, availability and price are the price to pay for bolting from the generally accepted path.

On the other hand, an upstart might choose WiMAX in order to differentiate itself from the pack, despite those issues. It's risky, but a challenger might be willing to take some risk, in a bid to grab a seat at the table. After nearly bankrupting themselves chasing 3G spectrum rights, most European mobile carriers will understandably be cautious about risking too much again.

att&t, Verizon Change Contract Policies

Verizon Wireless and at&t say they are changing their contract policies, and will allow customers to make changes to their calling plans without automatically extending their contracts. at&t also announced it would reduce the fees consumers pay for breaking their long-term contracts. The moves come as Congress is debating legislation that require wireless companies to prorate the fees they charge customers to cancel their cellphone contracts.

The bill would also force companies to allow customers to make changes to their calling plans without automatically extending their contracts. at&t says it will replace its $175 cancellation fee with a prorated system allowing customers to pay less if they are near the end of their contract. at&t also says that it will allow customers to make changes to their calling plans without having to extend their two-year contracts with the company.

Verizon Wireless has prorated cancellation fees for nearly a year, but last week it also began to let customers change their calling plans without extending their contracts by a year or two.

Contracts obviously makes sense for carriers as they smooth out revenue, lock in customers and allow discounts on phones. But a move away from that model seems to be likely, at least in part. The iPhone pioneered a new model where consumers pay for their phones without subsidy. In Europe consumers already can buy phones without being locked into service with any particular carrier at all. So it seems likely that consumer pressure will create demand for no-contract service, if not for bigger changes such as unlocked phones.