iPod Rules, iPhone Might,

A new survey of 500 teenagers' buying patterns and brand preferences suggests that Apple's iPod market share grew to 82 percent from 79 percent last fall, and that 84 percent of students surveyed had heard of the iPhone. The study conducted by research firm Piper Jaffray also found 25 percent of participants indicating they would pay $500 for an iPhone. The survey also found that 89 percent of those students who legally purchase music online use iTunes, down slightly from 91 percent last fall.

"Apple's dominance in the portable media and online music markets is going largely unchecked," says Piper Jaffray senior analyst Gene Munster. "Also, iPhone awareness among students is high, and 25 percent show interest at the $500 price-point. We believe that the teen demographic is a critical component of long-term growth in both markets, and Apple is clearly leading the category."

"Among high school students, it is clear that Apple is successfully carrying itbrand from the media player market into the mobile phone space," the analyst said.

The percentage of students downloading music is still rising, but 64 percent of those surveyed are using free P2P music sharing networks, rather than paying for music legally. That number is down eight percent from 72 percent last fall, and iTunes share remains very high in the online music store category at 89 percent.

Some 82 percent of students polled say they own an iPod. Some four percent said they own a Sony player, while Dell, iRiver, and SanDisk players each accounted for two percent of players owned. About three percent of students said they own a Creative player.

When asked whether they planned to purchase an MP3 player within the next year, 73 percent said they would purchase some form of iPod. Just 11 percent of students surveyed said they would purchase a Sony player. The majority of students said they would pay between $200 to $300 for an MP3 player, more than the 22 percent who would pay less

than $100. 323 percent would pay between $100-$300, and just 10 percent were willing to pay higher than $300 for a portable player.

"Overall, Apple's dominance in the portable music player market remains largely unchecked, and Apple has captured the 'cool factor' among high school students," the analyst says. "We believe that Apple is poised to carry over its portable music player dominance into the mobile space with the iPhone."

"We expected to see high awareness of the iPhone among teens, given the incredible amount of buzz surrounding its launch," says Munster. Fully 84 percent of the students surveyed had heard of the iPhone, says Munster. "But we have also expected the iPhone's high price point ($499 for 4GB and $599 for 8GB) to result in less price-sensitive early adopters setting a 'gotta-have-it' trend for the iPhone," Munster says.

"Our survey indicated that 25 percent of high school students said they would buy an iPhone for $500," Munster says. "Even if 20 percent of those students (five percent) actually enter the market at $500, our estimate may prove to be conservative," Munster says.

Teens said they acquire 83 percent of their music via online download, but the percentage of music downloaded legally from online music stores -- 36 percent -- is at its highest point since the research firm began studying those numbers in the spring of 2005.

"While Apple is dominating the online music space the category as a whole remains under penetrated, as 37 percent of music purchased by teens is still purchased in a physical format," the analyst noted.

Just Another Example...

...of how voice and communications are becoming parts of other experiences. Microsoft will be integrating Live Messenger into the Xbox platform on May 7, linking 260 million Live Messenger users with six million Xbox Live users. Xbox Live users will be able to chat with up to six contacts simultaneously by plugging a USB keyboard into the Xbox.

How Many Retail VoIP Providers Sell $214 million?

Not many. Probably not Skype, which might wind up the year in the $200 million range. Cbeyond does. Which might lead you to conclude a few things about the current state of customer demand for VoIP services. What's the leading approach in the consumer market? POTS replacement. Same phones. Same features.

What's Cebyond's approach? Phone service and Internet access, same phones, plus some additional features such as BlackBerry integration, so an inbound call can be taken at the desk or away from it. As it operates in the small business market (generally no more than 250 users at any single site), Cbeyond can be expected to offer more features than a mass market customer might expect.

But the fundamental approach, which is to use VoIP in the core of the network and retain the analog edge and customer premises equipment, is pretty much the same.

That isn't to say the enterprise market is showing precisely the same adoption pattern. In fact, VoIP "past the edge," all the way to the end user device, increasingly is a familiar pattern. Enterprise IT managers still have concerns, of course, as a recent Network Instruments survey shows. But IP features arguably are more visibly a presence in enterprise markets.

Nor can one infer that "VoIP in the core, POTS at the edge" is the pattern that always will hold. It won't. It just works today, and effectively.

People Aren't Paying Attention

They can't pay as much attention to any single form of media as the total amount of media explodes. Of course, users are going to reduce consumption of less relevant media forms as well. The absolute hard limit is that there are only so many available hours in a day. So as consumers become flooded with more media, they are finding ways to make room for it rather than letting some of it go.

Multitasking, in other words, has become a necessity. Though teens are more likely to do so than adults, it is estimated that 25 to 30 percent of total media time is spent multitasking.

In 2006, 103 million of the 147 million US adult Internet users watched TV while they went online. Nearly 90 million listened to the radio while online, and more than 50 million read magazines while online. Among teen Internet users, 7.3 million of the total 9.4 million watched TV while online, and 6.9 million listened to the radio.

Mobile is Where Innovation Will Happen

...for very simple reasons...VoIP doesn't change the user experience very much on a landline phone. Some people think that is an advantage. On a mobile handset, VoIP is but one element of many many things that can be tweaked and customized in ways the enrich the communications experience. That's in large part because, to an ever-greater degree, mobile handsets are general purpose computing devices, with all that implies for differentiated services and features.

Mobility itself arguably is the single biggest change in voice communications over the last 30 years. But smartphones will provide the platform for the next waves of development, simply because the smart phone is the most-used intelligent edge device, and is deeply embedded into a typical user's life.

In fact, 75 percent of people questioned in a survey by Yahoo! HotJobs said they used their wireless devices equally for work and personal reasons. Nearly 30 percent were so attached to them they only switched them off while sleeping. The online survey of 900 professionals revealed that 81 percent stay connected with a mobile phone, 65 percent use a laptop to keep in touch and 19 percent have adopted smart phones, cell phones with computer-like functions.

Like a network upgrade from mechanical to eletronic switches, or analog to digital, or digital to soft switch, VoIP mostly changes what happens in the core of the network. Analog terminal adapters and network interface units change what happens at the network edge.

Mobile handsets change what happens at the user interface level. And most of the advantages fixed mobile convergence represents will occur as mobile features become usable on the wireless tail of a wireline transport mechanism.

"VoIP isn’t a business category anymore"

...says Alec Saunders in his latest post on http://saunderslog.com/2007/04/05/voip-isnt-a-business-category-anymore/.

"VoIP isn't the reinvention of the telephone which we all foresaw five years ago. At least, not the VoIP peddled by the likes of Vonage. It's ordinary telephone service… delivered on IP. While popular, it has failed to deliver the revolution industry types envisioned. "Innovations" like web-based dashboards are long in the tooth, and the truly revolutionary applications which could have been delivered have never seen the light of day.

It's time to stop talking about VoIP as a business category, or an industry. Companies using VoIP to deliver service to customers are really just one more instance of a competitive service provider, albeit with different tarrifing and competition rules. Viewed from that vantage point, it's no wonder that this "industry" is struggling."

One might add that IP also is simply the way application and service providers--including incumbents of all stripes--are going to deliver features and make money in the future. All of which is simply the latest evidence of a trend underway for a couple years now: VoIP is voice; voice is communications; no more, no less.

Unfortunately, FTTX Doesn't Tell You Much

At some point, there will be a pretty compelling business difference between a fiber to neighborhood, fiber to a node of 16 to 32 homes and fiber directly to the customer. Standard definition TV may persist for awhile in closed environments. Cable operators might even see some business advantage there, as customers can continue to use their analog TVs without any new decoders to receive at least some programming. Of course, the counterweight is that bandwidth taken up by analog prevents efficient use of potential digital bandwidth to provide new services.

But when all terrestrial broadcasting instantly converts to HDTV in a couple years, and cable programmers match the move to avoid being seen as inferior in quality, most linear programming will be in HDTV format (the issue is what cablers will want to do about "standard definition" NTSC signals).

The assumption that just one concurrent HDTV stream will be required by any single home has to be suspect. To some extent, the access network has to be built to the level required by the most demanding user. And while it still makes sense to retain the ability to "spot upgrade" on an incremental capital basis as more demanding customers are signed up, the access network has to support such incremental and spot upgrades. Whether or not all the theoretical bandwidth is presently required, the ability to provide it on demand is something the access network must be built to support.

The option to deploy a "thin fiber" network saves capital investment for the moment, to be sure. Planned properly, fiber then can be incrementally extended deeper into the network. Such rework remains a non-trivial exercise, though.

Also, keep in mind that all discussions about what video might do the backbone of a network is a separate matter from what might be required in the access network. The reason is satellite delivery, regional server farms and other ways of substituting storage for bandwidth, processing for bandwidth, non-real-time delivery (store and forward) and alternate networks. All of these forms of substitution allow for easing the stress on backbone networks. The amount of stress on access networks typically is the real pinch point.