Android Bumps BlackBerry Traffic in December, TechWeb Says

In just two months, Android has emerged as the second most popular platform used to access InformationWeek’s mobile web site, pushing aside BlackBerry and taking a meaningful bite out of Apple’s iPhone share of traffic, says Tom Smith, TechWeb VP.

In November 2009, Android accounted for eight percent of mobile page views at TechWeb, compared to 59 percent for Apple and 17 percent for Blackberry, says Smith.

In December, though, Android did far better. Apple had 51 percent share; Android 24 percent; Blackberry eight percent, he says.

"To varying degrees, the trends are holding up across other sites in our network as well, but those sites don’t have the same level of visitor activity as mobile.informationweek.com so the numbers above are the strongest indicator we have of Droid’s impact," says Smith.

Smith thinks it was the Verizon launch of the Droid that caused the surge in mobile activity. "We saw a spike in usage of our mobile sites in December, when Droid activity truly took off," he says.

Android appears to be making what had been a two-horse race in smartphones into a three-horse contest, with the previous number two, Research in Motion, being pushed back to third place.

Though impressionistic, the data is in line with what other recent studies suggest, namely that the Android operating system hit some sort of inflection point in December 2009.

Mobile Browsing Still Just 1.3% of All Browsing, But Growing Fast

Mobile browsing now accounts for 1.3 percent of all Internet browsing, according to Net Applications. That measurement was taken in December 2009, which saw double-digit increases for virtually all mobile operating systems, with an unusually high increase for Android.

The Net Applications statistics confirm that most users continue to do most of their Web browsing on PCs, but also that mobile's share has steadily increased during 2009.

Both Windows and Mac devices lost a small amount of share in December, as Android began to make its presence felt, but all major mobile operating systems posted large percentage gains. Android grew  54.8 percent, while BlackBerry grew 22.2 percent. The Apple iPhone posted a 19-percent gain while Java ME grew 15.4 percent.

While the iPhone continues to account for the largest share of mobile Web browsing, Google's Android mobile operating system was by far the largest percentage gainer in December 2009,  accounting for 0.05 percent of all Web browsing, up from 0.01 percent in February.

It does appear an inflection point has been reached, however: the adoption curve appears to be steepening.

Sprint and Skiff to Sell E-Reader

Though firm pricing and availability are not yet announced, Sprint will be providing the connectivity services for the new Skiff e-reader, to be sold sometime this year.

The Skiff Reader e-reader uses a metal foil display service, not glass.

Sprint and Skiff will also launch a Skiff Store, where users will be able to find more digital content.

Touted as the “first e-reader optimized for newspaper and magazine content”, as well as the first to use LG Display’s “metal foil” e-paper technology, the Skiff Reader will use Sprint’s 3G network and also can use a Wi-Fi connection.

The Skiff Reader also features Wi-Fi, a 11.5 inch, 1200 x 1600 pixels touchscreen display, built-in speaker, 3.5mm headset jack, and USB 2.0.

Books, magazines, newspapers, personal and work documents, and other types of digital content can be stored on the Skiff Reader thanks to its 4GB internal memory (expandable with a MicroSD card).

The Skiff Reader, the initial dedicated device to integrate the upcoming Skiff e-reading service, is about  a quarter-inch in overall height and clearly is the thinnest e-reader yet produced by any supplier.

The device uses a full touch-screen and weighs just over one pound.

The Skiff Reader's flexibility is based on its construction from a thin, flexible sheet of stainless-steel foil, not glass.

More Regulation Needed to Spur Broadband Competition? Really?

The U.S. Federal Communications Commission should consider regulations for broadband providers in an effort to increase competition, says Lawrence Strickling, National Telecommunications and Information Administrationassistant secretary, as reported by IDG News Service.

"We urge the Commission to examine what in many areas of the country is at best a duopoly market and to consider what, if any, level of regulation may be appropriate to govern the behavior of duopolists," Strickling says.

With all due respect for Strickling, who is a smart, experienced regulatory type who knows the terrain, and without disagreeing in full with the full content of his filing on behalf of NTIA, the notion that competition somehow is so stunted that new regulatiions are required likely would lead to greater harm, despite its good intentions.

Here's the argument. Consider, if you will, any large industry with critical implications for the entire U.S. economy. Now consider the following mandate: "you will be forced to replace 50 percent of your entire revenue in 10 years."

"During that time, for a variety of reasons, incumbents will be forced to surrender significant market share to competitors, so that in addition to replacing half of the industry's revenue, it also will have to do so with dramatically fewer customers."

"After that, in another decade, the industry will be required to replace, again, another 50 percent of its revenue. All together, the industry will required to relinquish at least 30 percent of its market share, in some cases as much as half, and also will be required to replace nearly 100 percent of its revenue, including the main drivers of its profitability."

Does that sound like the sort of industry that desperately needs additional competition? Really?

Nor is the argument theoretical. Over a 10-year period between 1997 and 2007, the U.S. telephone industry was so beset with new technology and competition that almost precisly half of its revenue (long distance), the revenue driver that provided nearly all its actual profit, was lost.

The good news is that the revenue was replaced by wireless voice. Then, because of the Internet, cable company entry into voice and the Telecommunications Act of 1996, market share began to wither. That, after all, is the point of deregulation: incumbents are supposed to lose market share to competitors.

Now we have the second decade's project, when mobile voice revenues similarly will have to be replaced, in turn, as IP-based voice undermines the high-margin voice services that have been the mainstay of the mobile business.

If you follow the telecom industry as a financial matter, you know that service providers have maintained their profitability only partly by growing topline revenues. They also have been downsizing workforces and slashing operating costs.

If you talk to ex-employees of the telecom industry, they will tell you the industry seems no longer to be a "growth" industry. That's why millions of people who used to work in telecom no longer do so.

So what about the other big incumbent industry, cable TV operators. As you clearly can see, and can read about nearly every day, there are huge questions about the future business model for what used to be known as "cable TV." Many observers already predict that such services will move to Internet delivery, weakening or destroying the profitability of the U.S. cable industry.

Industry executives, no dummies they, already have moved into consumer voice and data communications, and now are ramping up their assault on business communications. Why? They are going in reverse for the core video business.

Imposing regulatory burdens on incumbents--either telco or cable--that are losing their core revenue drivers on such a scale might not be wise. Few industries would survive back-to-back decades where the core revenue drivers must be replaced by "something else."

Imagine the U.S. Treasury being asked to replace virtually 100 percent of its revenue with "something else" in about 20 years. Imagine virtually any other industry being asked to do the same.

The point is that industries asked to confront such challenges and surmount them are not typically the sort of industries that need to have additional serious obstacles placed in their way.

Granted, they are niche suppliers, but Strickling also is well aware there are two satellite broadband providers battling for customers, plus five mobile broadband providers, and then hundreds of independent providers providing terrestrial fixed wireless access or packaging wholesale capacity to provide retail services.

Granted, only cable, satellite, telcos and several mobile providers have anything like ubiquitous footprints, but that is a function of the capital intensity of the business. Most markets will not support more than several suppliers in either fixed or wireless segments of the business.

One can argue there is not more facilities-based competition because regulation is inadequate, or one can argue investment capital no longer can be raised to build a third ubiquitous wired network.

The point is that wired network scarcity might be a functional of rational assessments of likely payback. Cable TV franchises are not a monopoly in any U.S. community. But only rarely have third providers other than the cable TV or incumbent phone companies attempted to build city-wide third networks. Regulatory barriers are not the issue: capital and business potential are the problems.

Also I would grant that mobile broadband is not a full product substitute for fixed broadband. But where we might be in five to 10 years cannot yet be ascertained. And we certainly do not want to make the same mistake we made last time.

The Telecommunications Act of 1996, the first major revamping of U.S. telecom regulation since 1934, was supposed to shake up the sleepy phone business. But the Telecom Act of 1996 occurred just as landline voice was fading, and the Internet was rising.

If you wonder why virtually every human being with a long enough memory would say their access to applications, services, features and reasonable prices is much better now than before the Telecom Act of 1996, even assuming it has completely failed, the answer is that the technology and the market moved too fast for regulators to keep up.

The Telecom Act tried to remedy a problem that fast is becoming irrelevant: namely competition for voice services. In fact, voice services rapidly are becoming largely irrelevant, or marginal, as the key revenue drivers for most providers in the business.

Yes, there are only a few ubiquitous wired or wireless networks able to provider broadband. But that might be a function of the capital required to build such networks, the nature of payback in a fiercely-competitive market and a shift of potential revenue away from "network access" suppliers and towards application providers.

It always sounds good to call for more competition. Sometimes it even is the right thing to do. But there are other times when markets actually cannot support much more competition than already exists. Two to three fixed broadband networks in a market, plus two satellite broadband providers, plus four to five mobile providers, plus many smaller fixed wireless or reseller providers does not sound much like a "market" that needs to stimulate more competition.

There's another line of reasoning one might take, but would make for a very-long post. That argument would be that, judged simply on its own merits, the availability and quality of broadband services, in a continent-sized country such as the United States, with its varigated population density, is about what one would expect.

Even proponents of better broadband service in the United States are beginning to recognize that "availability" is not the problem: "demand" for the product is the key issue.

Google Nexus One: Buy the Rumor, Sell the News

"Buy the rumor, sell the news," traders sometimes say. That seems to apply to Google's announcement of the HTC-built "Nexus One" smartphone.

There was so much leaking of news about the device, its distribution model and retail pricing that some of us likely were underwhelmed by the actual launch.

That is no slam on the device, just a comment about expectations.

As sometimes happens with financial assets, sometimes the big run-up occurs only at the "rumor" stage, with the actual confirmed event then provoking a bit of a sell-off. Some of us might note that it has taken a year for Android devices as a whole to reach what appears to be an inflection point in terms of mass buyer interest.

One probably has to credit Verizon Wireless for almost single-handedly creating "buzz" around its Droid, with spillover effects on the rest of the Android market, in all likelihood. But as many have noted, though the Nexus One appears to be a fine device, the business "wrap around" is largely conventional.

In fact, in some ways, Google is being "carrier friendly" in a way Apple has not been. That likely comes as quite a shock to many who thought Google was angling for a bit more disruption. The phone can be bought at full retail and unlocked. That's fine, but few Americans buy their devices that way.

An unlocked device can in principle be used on any GSM network in the United States, but the frequency range specified for the Nexus One means that, if used on the AT&T network, 3G won't work. In practice, that means the Nexus One is a "T-Mobile USA only" device.

If bought with a two-year contract from T-Mobile, the device costs $179. Some people will note that the Nexus One is "first" device that actually can go "head to head" with the iPhone. Others might almost say, "so what?" If all any other competing device can do is replicate the iPhone, many users might simply buy the iPhone.

Progress in the Android handset space continues to be quite rapid, so we'll have to wait and see what happens next. But it would not be surprising if it takes a little time for the Nexus One to have an impact. If the massive Verizon advertising campaign for the Droid means anything, it means promotion and marketing can make all the difference, even for a highly-capable device such as the Nexus One.

As the launch hype fades, we likely will settle in for a year or more of what appears only to be incremental growth for the Nexus One. So far, some of us cannot yet see why the Nexus One is such an advance over the Droid, as some expected. Then again, that's what this next year or so is about: allowing consumers to become familiar with the device and figure out where it fits in the smartphone market.

One might simply argue that the Nexus One is not the iPhone, and neither is the Verizon Droid, meant in a market positioning sense. The Apple iPhone seems to have created a large and sustainable niche of its own. Other devices might emulate the iPhone, but cannot create their own sustainable niches unless they somehow create differentiated audiences, as we might say in the media business.

In other words, Nexus One has to create a fan base that uses and perceives the device to be different from an iPhone, not the same. So will the Droid and all other devices in the high-end smartphone segment of the market. There's only one "iPhone." All other high-end devices must essentially create their own sustainable niches.

Matters are different at the lower end of the device market, where price and functionality make more devices functional substitutes for each other. I don't think that is the case at the high end. We'll see.

66% of U.S. Mobile Devices Will Be Replaced Over the Next 2 Years

About 66 percent of U.S. mobile devices will be replaced within the next two years, says ICR/International Communications Research, a prediction that should not surprise anybody. Mobiles break, get lost and typically have two-year contracts.

As might be expected, the younger generation is more likely to make a change sooner: 77 percent of those 18 to 34 plan to replace their mobile devices within the next two years, compared to  46 percent of those 65 or older.

About 78 percent of respondents believe they will need to replace their devices within the next two years because the items will break or be lost, while only 19 percent think they will want to upgrade to the latest version.

Upgraders also vary by age with 26 percent of 18 to 34 year-olds saying they do so, compared to 14 percent of respondents 55 or older.

Over the Next 6 Months, 3 Million More U.S. Households Will go "Wireless Only"

At current rates, over the next six months about three million more U.S. homes will go "wireless only" for phone service, a new study by the Centers for Disease Control suggests.

About 22.7 percent of U.S. homes apparently had wireless-only phone service in June 2009, according to a preliminary analysis of the most-recent survey by the Centers for Disease Control, up from about 20 percent in December of 2008.

In addition, nearly 15 percent of surveyed homes had a landline yet received all or almost all calls on wireless telephones.

A "family" can be an individual or a group of two or more related persons living together in the same housing unit (a "household"). Thus, a family can consist of only one person, and more than one family can live in a household (including, for example, a household where there are multiple single-person families, as when unrelated roommates are living together).

Approximately 21 percent of all adults--approximately 48 million people--live in households with only wireless telephones.

The percentage of households that are wireless-only has been steadily increasing, and the 2.5-percentage-point increase from 2008 through the first six months of 2009 is about equal to the 2.7-percentage-point increase observed from the first six months of 2008 through the last six months of 2008.

The percentage of households that are wireless-only increased by about five percentage points in just 12 months, from 17.5 percent in the first six months of 2008 to 22.7 percent in the first six months of 2009.

There are about 113 million U.S. homes with fixed telephone lines, and about 118 million U.S. dwellings, according to the Federal Communications Commission. A five-percent increase in homes using wireless only would amount to about six million homes.

Should that rate of shift continue, one would expect a further attrition of about three million homes to the wireless-only category over the next six months.

A large majority of households using wireless-only communications (68.5 percent) were in households lived in by unrelated adult roommates. Think college students and younger workers early in their careers and you get the picture.

Likewise, 41 percent of adults renting their homes had only wireless telephones. About 13 percent of adults owning their home are wireless only, the CDC says.

Nearly half of adults aged 25 years to 29 years (45.8 percent) lived in households with only wireless telephones, the study suggests.

More than a third of adults aged 18 to 24 (37.6 percent) and approximately a third of adults aged 30 to 34 (33.5 percent) lived in wireless-only households.

Some 21.5 percent of adults aged 35 to 44 were wireless only; 12.8 percent of adults 45 to 64; and 5.4 percent of those 65 and over. However, the percentage of wireless-only adults within each age group has increased over time, the CDC says.

Among all wireless-only adults, the proportion of adults aged 30 years and over has steadily increased. In the first 6 months of 2009, the majority of wireless-only adults (57.2 percent) were aged 30 and over, up from 48.4 percent three years earlier.

Adults working at a job or business (19.5 percent) and adults going to school (21.1 percent) were more likely to be living in wireless-mostly households than were adults keeping house (12.7 percent) or with another employment status such as retired or unemployed (nine percent).

Adults with college degrees (19.7 percent) were more likely to be living in wireless-mostly households than were high school graduates (13.7 percent) or adults with less education (12.1 percent).

You might suspect that households with children are less likely to be wireless only, but that seems not to be the case. In the CDC survey, adults living with children (20.5 percent) were more likely than adults living alone (10 percent) or with only adult relatives (14.7 percent) to be living in wireless-mostly households.

You might suspect that more users are wireless only in urban area, and that seems to be the case. Adults living in metropolitan areas (16.9 percent) were more likely to be living in wireless-mostly households than were adults living in more rural areas (13.5 percent).