Palm in "Death Spiral"?

"Death spiral" is not a word any company executive ever hopes to see or hear in the same sentence as the firm name. But that's what Barron writer Eric Savitz now does. "I fear Palm has begun sliding into a death spiral," he says. "Palm is simply too small, too poor and too weak to compete in a market where some of the world's most powerful companies are vying for supremacy."

Though its competitors will not lament the potential loss of one contestant in the market, the webOS software Palm developed also is described by Savitz as "brilliant." Walt Mossberg at The Wall Street Journal in a review last summer called the Pre "potentially the strongest rival to the iPhone to date."

"There's just one problem: No one is buying the phones," he says. Palm now says revenue for its fiscal year, ending in May, will be well below its previous forecast of $1.6 billion to $1.8 billion. The problem, Palm said, is "slower than expected consumer adoption of the company's products." In other words, the Pixi and the Pre aren't selling.

Whether Palm somehow can pull off a turn-around is not clear, nor is it clear whether the company will wind up being sold to another firm. But webOS is yet another illustration of the fact that in the technology business, the "best" product does not always win.

Is UC Still Relevant and Growing?

IP-based communications often has not developed as its supporters have forecast. Suppliers thought it was an "enterprise" product, but VoIP erupted in the consumer space. That actually has been the rule, of late, not the exception.

Email, the Internet, instant messaging, text messaging, search, social networking, broadband and mobility all gained traction in the consumer space and then were forced upon enterprises.

Has unified communications now been superseded by social media and mobile devices? For many enterprise executives, that is a rhetorical question, though it might not be so rhetorical for smaller organizations or individuals.

Contact centers remain the province of enterprise-class unified communications solutions and nearly all office environments, as well as for traveling workers who need access to home office communications features.

Global businesses likewise benefit from enterprise-grade unified communications more than small, local businesses and organizations.

Since supplier organizations tend to mirror the organizations they sell to, that means many large suppliers of unified communications believe in its value because they themselves are large, far-flung organizations in best position to leverage UC and other collaboration tools.

What is not so self evidently clear is that the same level of benefit is obtained by smaller, more localized user organizations and firms.

"These customers aren’t worried about presence and a unified portal," says David Burnand, a former Siemens enterprise communications executive. In fact, "many of them run their business using mobile handsets, simple PBXs, social media, Skype and Google Voice."

Many use elements of unified communications, including single number services, video-calling and instant messaging. They just don’t call it unified communications, or use those tools because they are "unified." They use point solutions because they solve real problems.

The point, says Burnand, is that "old school" definitions of unified communications do not hold.

UC is no longer about managing a desk phone, mobile, Windows PC and many other devices. The smart phone has made that view redundant for all except the power users, he argues.

Instead, it is evolving into skinny applications for low-end users and specialist applications for power users, mixed with a dose of social media, a splash of video and a few Web-based collaboration tools.

That will be an unsettling view for many unified communications or collaboration suppliers, as it suggests the "UC market" is far smaller than many would have predicted for hoped for.

Global Voice Penetration Really is a Miracle

By the end of 2009, there were an estimated 4.6 billion mobile cellular subscriptions, corresponding to 67 per 100 inhabitants globally, says a new report from the International Telecommunications Union.

Last year, mobile cellular penetration in developing countries passed the 50 per cent mark reaching an estimated 57 per 100 inhabitants at the end of 2009. Even though this remains well below the average in developed countries, where penetration exceeds 100 per cent, the rate of progress remains remarkable.

Indeed, mobile cellular penetration in developing countries has more than doubled since 2005, when it stood at only 23 per cent.

Not many will recognize this success for the great achievement it really is. Policymakers of the 1960s, 1970s and 1980s would be, and probably are, shocked at what has happened. In days past, the thinking was that getting phone service to people who had never made a phone call would be stubbornly difficult. I do not recall anybody suggesting mobile technology would do the trick.

The broadband gap, though significant, also is showing dramatic progress, and again because of mobile networks.

There is a "problem" people and organizations who "solve problems" often have: they cannot recognize victory. Many difficult problems actually get fixed. When they do get fixed, rejoice and move on.

Getting voice services and now broadband broadly adopted throughout the world is a huge, miraculous success.

Enterprise Workers Ready to Ditch Their PCs for Smartphones?

Something rather unusual seems to be happening in the enterprise mobility space. According to a recent survey taken by iPass, 63 percent of mobile employees prefer to use a smartphone, not a laptop, as their primary mobile device, for trips of any length.

For trips of up to five days, 59 percent of respondents prefer to carry a smartphone, while 41 percent prefer a laptop. For trips lasting longer than 30 days, 64 percent prefer a smartphone to a laptop.

That likely is testament to the high value traveling workers place on voice and text communications, as well as the increased capabilities smartphones now offer, including email and Web access.

But the findings also suggest that some enterprises are over-investing in laptops and software and might need to look at scenarios where mobile or traveling workers can get along just fine with smartphones.

There is another and possibly darker view here as well. Industry suppliers have been touting mobility investments as a driver of productivity. As it now appears, enterprise workers do not even want to carry laptops with them when traveling. So what is the value of all those investments in remote access?

Granted, most enterprises likely are trying to get a better handle on mobile phone expenses, so indiscriminate replacment might not be wise. But the survey also suggests the near-universal embrace of the BlackBerry has "soft" support from users.

According to the iPass survey, while 32 percent of mobile employees ranked the BlackBerry smartphone as their mobile device of choice, 54 percent of BlackBerry smartphone users would switch to an Apple iPhone if it was supported by their enterprise.

"Mobility" also once was an issue of supporting traveling workers. Today every employee
is a potential mobile employee, iPass says. While many mobile employees have some business travel, many more are logging in from home.

About 68 percent of iPass survey respondents did not travel during the last quarter of 2009, but  45.8 percent of mobile employees logged in from home at least twice a month, and 16.8 percent logged in more than ten times a month.

Excluding home and the office, mobile employees most often log in from hotels (42.6 percent), airports (27.2 percent), retail outlets and restaurants (27 percent).

According to the iPass survey, while 32 percent of mobile employees ranked the BlackBerry smartphone as their mobile device of choice, 54 percent of BlackBerry smartphone users would switch to an Apple iPhone if it was supported by their enterprise.

Telco Choice is Not "Dumb Pipe" or "Service Enabler" or "Service Provider"

There's no question that the fundamental business underpinning of the entire global telecommunications business is undergoing a fundamental change from "voice driven" to "broadband driven," and, to a certain extent, from "services" to "access."

That leads to a fear that the future is one of "dumb pipe" access services providing modest revenue and slimmer profit margins than any existing provider can tolerate, without significant downsizing of operational cost.

Many observers suggest service providers will gradually take on more "application enabler" roles, supporting third-party business partners.

At the same time, there is debate about the degree to which any existing video or voice service provider will be able to continue doing so in the future.

But those three choices are not mutually exclusive. For better or worse, "dumb pipe" access is a permanent foundation for every telco, mobile, cable, satellite or fixed wireless provider. That is precisely what "broadband access" is; a simple "access" service.

That does not mean "only" access will be provided. There likely will be some permanent role for managed video, voice, storage, backup and other services. At some combination of value and price, users simply will prefer to buy such "services" rather than use comparable applications.

At the same time, it is likely service providers will find ways to grow the percentage of their revenue earned by supplying services to business partners. That might include billing services, location and device information, hosted processing or storage services.

"Dumb pipe" access is not the only business of the future, but it is foundational, and permanent. In addition to that, though, today's service providers necessarily will have to grow the proportion of revenue they make from "enabling" services, as they manage a likely decline of "services" such as basic voice communications or multi-channel video.

And it is not necessarily that those services decline because of a shift in user demand. The simple existence of capable competitors means market shifts will occur, irrespective of any conceivable shifts of demand. In other words, one does not have to make a definitive bet on "over the top" voice or video to plan on lower revenue from existing voice or video sources. One simply must assume that capable competitors will take some amount of market share.

In other words, at the level of discrete enterprises, cable executives have to anticipate declining video customer base and revenue contribution, while telcos have to assume declining gross voice revenue. No shift of demand to online video or VoIP need be assumed.

To be sure, those forces likely will be factors. But it is not the case that a stark choice must be made between the "dumb pipe" access provider and the "service enablement" or "service provider" roles. All three will remain parts of the overall revenue stream.

Apple Plans "Big, Bold" Steps, Says Jobs

Apple Inc. CEO Steve Jobs says Apple is holding onto $25 billion in cash to take “big, bold” risks. That should be an immediate concern for any company that competes with Apple or thinks it might have to compete with Apple.

Whatever else might be said, Apple already has reinvented itself. Apple used to be thought of as a "computer manufacturer." These days, sales of Macintosh computers probably represent about 18 percent of the company's equity value. The iPod, which not so long ago was the rising company star, now represents about three percent of the company's value.

Even the new iPad, which has just launched, represents four percent of the company's value.

These days, Apple has suddenly, dramatically, become a "mobile handset" company. Sales of the iPhone now represent about 52 percent of the company's equity value.

The iTunes and iPhone App Store represent about 5.6 percent of company equity value.

So what about Apple's purchase of Quattro, a company providing mobile advertising for Apple, Android and other smartphone devices?

Apple probably is less interested in profiting from ads than in making the iPhone the most attractive device for developers to build applications. And money might have a lot to do with that. Right now, eighty to ninely percent of app store downloads are of "free" apps. That isn't such a great business model for a software developer.

Eighty percent of the three billion downloads from Apple’s App Store are free, for example. By offering a way to sell ads, Apple can help entice developers who will have another way to make money, other than selling software.

Apple executives said recently during their quarterly earnings call that the firm had no idea whether mobile advertising would develop as an actual revenue stream for Apple or whether it would simply help reinforce its App Store operations.

"I honestly don’t know," says Peter Oppenheimer Apple CFO. "We will have to see."

App Stores Very Valuable for Handset Suppliers and Users; Maybe Not Developers

App stores have been a huge boost to smartphone perceived value. What they haven't yet proven is that they are an effective way for software developers to sell applications.

About 80 percent to 90 percent of app downloads are of the "free" rather than "paid" variety, according to AdMob.