The Benefits of a Standardized MicroUSB

We all have the same problem: At least one drawer full of obsolete and duplicate chargers for cell phones, digital cameras, music players, gaming devices and similar gadgets. Almost every time you switch or upgrade your cell phone, you need a new wall charger, a new synchronization cord for your PC, and a new car charger. The average American upgrades the cell phone once a year, and replaces it even more often because of lost/stolen/destroyed phenomena. The end result is that we end up with several obsolete chargers every year.

This massive waste and expense is about to end. Most cell phone brands agreed in September 2007 to standardize on MicroUSB for wired connectivity and chargers. Other devices such as photo cameras, video cameras and gaming devices are likely to follow. The first MicroUSB cell phones started hitting the stores approximately mid-2008. I conducted a survey in a few cell phone stores in recent days, and came to the following conclusion: Sprint (S) and Verizon Wireless (VZ) have already implemented MicroUSB in over 50% of their cell phones. AT&T (T) and T-Mobile remain under 20%. I estimate that we will be at 100% MicroUSB by the end of 2009, perhaps with the exception of the iPhone.

Apart from un-cluttering our drawers and making our lives easier, the standardization on MicroUSB will have at least two other benefits:

1. There will no longer be any point in including a charger in the box with every new phone sold. Once you have your initial MicroUSB charger, car charger and synchronization cable, there will not be any point in getting another one for a long time. Every time you upgrade your device from that point, the salesperson can ask "Do you need a charger to go along with your new cell phone?" At that point, assuming you haven't lost or destroyed your old MicroUSB charger, your answer is likely "no." This will enable cell phone box packaging to be much smaller, with all of the environmental and cost benefits that go along with those savings. Just look at what Apple (AAPL) has done with creating small packaging for their products; now turbo-charge that miniaturization approach.
2. According to Nokia (NOK), the energy wasted from inefficient cell phone chargers – drawing too much power while not actually performing the charging function – is equivalent to two medium-sized power plants, when serving three billion cell phone users. In a world where every cell phone will be using the same kind of MicroUSB charger, and where they are not included in the cell phone box, there will be a market for people striving to buy the most energy-efficient chargers. For starters, on November 19 this year, Nokia, LG (LGERF.PK), Samsung (SSDIF.PK), Motorola and SonyEricsson agreed to a common energy rating system for cell phone chargers. This will have a meaningful impact once all cell phones are MicroUSB and the chargers are not included in the box, but rather sold separately. People will deliberately shop for those chargers that will minimize their electricity bills, something which wasn't possible or practical in the pre-MicroUSB world.

What's the bottom line for cell phone and related stocks? I believe it will have a positive effect. Prices will come down, reflecting the lower cost of industry-wide standardization. People will be more prone to upgrade when they are making an investment in a standards-based technology that will require fewer accessories being purchased over time. On the other hand, one near-term risk is that consumers are now postponing purchases of pre-MicroUSB cell phones before their favorite phones include this interface. One such example is the Blackberry 9000 Bold, which was among the last pre-MicroUSB Blackberries to be launched. With the Blackberry 8900 Curve about to be launched also by AT&T, some consumers have held off on buying the 9000 Bold because they don't want to invest in one more pre-MicroUSB device. If this theory is true, the pent-up demand for the 8900 Curve is unusually strong for a new Blackberry this time.

Disclosure: I'm long RIMM.

Comments

[BJMC:]

Thanks - nice to know all of this.

My guess is that few do which makes your bottom line a rather flaky conclusion

2008 Dec 24 06:30 AM

[User 325286:]

You've got to be kidding me! Do you really believe people are delaying their purchase of a new smartphone simply because it does not use a 'standardized' charger or microUSB card? They are never going to find a phone with everything on it that they would like. Where the iPhone may excell in one area, the Storm excells in another, etc. What I, personally, am looking for is the provider that gives the best coverage, service, and monthly service plan. Just look at service plans if you want to see an area that is non-competitive; for example, look at the difference in monthly costs (for a smartphone plan) between U.S. Cellular and Sprint. It'll make you weep!

2008 Dec 24 07:14 AM

[Roger Knights:]

It's too bad power tool companies can't agree on a standard charger too.

2008 Dec 24 09:23 AM

[.crazylegs..:]

you give phone buyers way too much credit when saying they are waiting for a post-micro usb world to buy that new gadget. 99% of mobile phone buyers don't even think about the charger. They just expect it to come in the box. I certainly hope this standardization is the future as it will make things easier especially when traveling.

2008 Dec 24 11:12 AM

[Austrian Sc...:]

All this stuff is subsidized by the subscription price so the end user, these items are free. They have no problem tossing this stuff in the garbage after a year or 2 use. They should unbundle the phone from the subscription so that you can have a lower bill if you don't take the free phone or bring a phone you already own into the contract.

2008 Dec 24 11:35 AM

[breadwinna:]

SPRINT IS READY TO JUMP AT LEAST 30% BY THE END OF NEXT WEEK. Mark my words.


On Dec 24 06:30 AM bjmc wrote:

> Thanks - nice to know all of this.
>
> My guess is that few do which makes your bottom line a rather flaky
> conclusion

2008 Dec 25 01:22 PM

[Tech:]

You apparently know little on battery technology evolution!
a charger must take care of battery type (chemicals used!), size, max number of recharge, sometime history of charge and discharge, ...
+ all the optimizations (how fast, how long, temperature, ...) (this is a company know how!) needed to keep the battery alive longer !
no way to use the same charger for all phones!
but same plug whatever it is, would be an advance and contribute to a little price reduction!

2008 Dec 26 04:30 AM

[Nextel Acce...:]

agree, one design cannot replace them all

2008 Dec 26 10:59 AM

[Gerard Hall...:]

Andrew,

I've great respect for your work. It is thoughtful, creative and challenging to my own analysis. You have influenced my thinking many times. However, in this instance, as with WAVE, I will stick to my guns.

A MicroUSB standard is a good thing for consumers but does little or nothing to help final demand for RIMM, Nokia, Apple, or any individual handset company. The reason is simple. A standard power supply reduces differentiation and increases commoditization of the industry. Maybe, just maybe, the small reduction in the cost of owning and using a mobile phone may trigger a elastic response from the market. However, we are talking about $20 out of a $6,000 purchase.

About the only impact is that this is another nip out of Motorola's hide. It was one of the first to lean hard on Micro USB as a standard power interface. Unfortunately this "competitive advantage" did not prevent Motorola’s massive share loss. So who cares now? I sure don't.

With respect to RIMM, everything it brought to the market -- push email, secure email and status to the user is gone.

There are many suppliers of push email many that will even work within an enterprise's security system. Even lowly Sprint will push email to virtually any phone, not just smart ones, for $10/month. Though with Yahoo, Google and MSN improving this is not much of an advantage for Sprint.

The iPhone is the new status symbol. Forget RIMM, it has no scale and management is far to righteous for reality.

Respectfully

Gerard6656

2008 Dec 27 12:35 PM

[Sol Rosenberg:]

People will deliberately shop for those chargers that will minimize their electricity bill? You gotta be joking. Maybe they will shop for the most energy efficient ones just to feel good about being "green", but we're talking about a few kWh a year consumed by your typical charger. With the average cost of electricity in the US at 12 cents per kWh, any gains in efficiency are noise to the individual consumer. Sure, when you multiply by 3 billion you start to get interesting numbers, but that's true of pretty much anything multiplied by 3 billion.

Jan 10 02:02 AM