Dean Bubley

Mobile Phone Industry in Denial About Economy

The iPhone example is an interesting one - but coupled with other factors it's still quite a US-centric model that doesn't work quite so well elsewhere.

Bear in mind that in the rest of the world, the majority of people use prepaid cellphone plans (often with unsubsidised devices), not monthly contracts. iPhones can be $500-1000 upfront in those cases.

SImilarly, "ditching the landline" is unlikely in markets which tend to use ADSL rather than cable for broadband, especially if there is no legal imperative to sell unbundled DSL without an associated PSTN telephone account. Generally it is only the economically disadvantaged that "cut the cord" - it's not aspirational, except in a few countries like Finland.

I'd certainly agree that Apple is better-placed than the Android ecosystem at this point in time. Slightly less true of non-US markets where people generally buy high-end Nokias because of brand, or basic preference for their voice and SMS user experience.

Also, worth noting that in many parts of the world users would rather have a mobile broadband USB modem for their notebooks, than a smartphone.

Dean Bubley

2009 Will Be a Painful Year for Mobile Device Vendors

The amount of memory really isn't going to be the determinant of Apple's lower-end price point.

Bear in mind that the $200 iPhone price points only apply on long-term contracts (usually 2 years), that imply a large subsidy by the carrier.

The "real" price of the iPhone 3G is more like $350-500. Certainly, if you buy it on prepay, it's a $500+ device, and in some countries more like $800.

I certainly think that there's a reasonable opportunity for Apple to expand its market share, but of the overall global 1-billion phone market, it's probably chasing realistic addressable target of 5% or so for the foreseeable future, although 50m phones is a pretty tempting target.

A more interesting prospect is if Apple introduces a smaller "iPhone Nano", or better still a clamshell version, as there is a large part of the market that would never go near a large tablet-type device.

Nokia's New Product Blurs the Featurephone / Smartphone Divide

Ken

I tend to agree, although Internet usage isn't necessarily the only measure of the value of "smartness". Arguably the reason that Nokia sells so many is that the OS makes it easier for *Nokia itself* to spin the platform into many different handset variants. And if you look at Japan, NTT DoCoMo uses Symbian for its own purposes, to create its own handset platform.

But in terms of end users actually doing "interactive stuff",and especially browsing the web with large volumes of traffic, you're probably right, although there's quite a large number of people using downloaded Symbian apps for things like VoIP. Also there's huge differences between the US, Europe and Asia in all of this

Dean


On Nov 27 12:50 PM KenC wrote:

Nokia sells about
> half of the smart phones in the world, and yet, smart phone usage,
> as measured by internet access indicates very few people are using
> it as a smart phone. You wonder if usability plays a role in that.

Just How Late Is Nokia with HSUPA devices?

I agree that it's not immediately obvious what the applications for UPA are - most of the ones I can think of are not necessarily operator-friendly: VoIP, filesharing, using the phone as a web server etc.

On the other hand, it could be used for *operator* VoIP or other rich communications, managed P2P, decent-quality realtime video uploads & as a means to compete with home DSL/cable in some places.

Some operators have been quite aggressive deploying UPA - especially T-Mobile in Europe, Vodafone, some of the 3 subsids, AT&T etc.

Either way, it's unusual for Nokia not to have at least *some* devices supporting it before its main competitors do. It's been first to market with radio technologies like UMTS900 before.

Does a Mobile Internet Devices Market Exist?

Thanks.

A few comments -

Tiffy - yes, it sounds like we're in total agreement.

Mollytjm "absolutely no one buys an iphone because they want a phone. they do want something closer to a pocket computer". Sorry, that's wrong. There are plenty of iPhone users who just want it because it's a phone that looks cool, at least initially. Some/most will later discover it does a bunch of other stuff, but certainly outside the US I wouldn't underestimate the power of aesthetics or subsidy.

Also a sizeable % teenagers don't like the iPhone's lack of proper numeric keypad. It's impossible to send SMS without looking at the screen - you can't send messages with the phone under your school-desk / in your pocket. (And some non-teenagers would prefer a proper QWERTY if they're heavy SMS/email writers)

Various - Bluetooth headsets are only useful for a % of users, for a % of the time. If the phone rings on your bedside table, or while you're in the pub, are you going to fumble around to put the headset on? No. Nobody I know uses a headset for 100% of their calls, and unless you talk while you drive a lot, probably few people are >50%. A phone needs to be a phone.

Brewer - I don't get other "enthusiasts" berating me on SeekingAlpha or my main blog. Given I'm independent of the debate (to be honest, I prefer featurephones to smartphones for my main mobile device), it seems to me that Apple fans are particularly vociferous - and go out looking to start a fight with people who aren't being belligerent.

Others - clearly there's broad mix of people who want smaller/larger and single/multiple devices. It depends on wealth, existing behaviour, country, preferred services, preferred usage models, whether you carry a bag, how large your pockets are and a zillion other factors. Proclaiming one device or form-factor as the God Product is unreasonable.

DB

Does a Mobile Internet Devices Market Exist?

Daniel

Read the post again. As I said, you can choose whether or not to include the iPhone in the "MID" category depending on how you define the segments. You can call it a small MID or a large smartphone, or both, depending on your preference.

And as you yourself say "it's redefining the cellphone market". I'm not talking about the cellphone market, I'm talking about MIDs.

Honestly, I'm getting fed up with iPhone fanboys trying to read criticism into anything I wrote about the thing, particularly when I'm praising it. I've repeatedly said its a good device - it's just a shame about the attitudes of some of its fans, who seem to go actively looking for negative comments, where none are made or implied.

DB

Are Global Smartphone Sales Poised For Takeoff?

Thanks for the comments.

To the first poster Papita with the rant "you people are coming out of the woodwork" - you're talking gibberish. I've been a technology industry analyst for 17 years and advise clients (mostly non-investors like manufacturers and network operators) on trends in a variety of mobile sectors. The content here is syndicated from my own mobile-industry blog.

MightBuyOneNow & others - This is something on which I've done a lot of research. In my view, this notion that smartphones will be substitutes PCs for people in developing markets is wishful thinking by people in the mobile industry. It's not supported by observed facts, although obviously there are occasional specific exceptions.There are numerous reasons, not least the fact that PC prices are falling rapidly, and PCs have (typically) a 2x or 3x working life compared to a phone. They can also be shared more easily among families. Further, kids in education get access to PCs as governments wish to encourage future computer literacy for business, and develop local software industries. I'm not aware that anyone *writes* software on a phone, or runs their company's accounting system on one either.

Then there are hidden factors - for example, many people in developing countries use PCs to watch (often illegally copied) movies bought on video CDs or DVDs. And it's difficult for teenagers to have 15 separate IM chat windows open on a phone.

This doesn't mean that people won't want Internet access on mobile devices as well - that will certainly be a growing trend, and indeed is probably the main thing driving smartphone sales.

In China, according to official stats, about 73m people access the Internet on mobile phones... but virtually all of them also access it on PCs. The vision of "mobile-only" Internet users is a myth, with a specific exception for Japan, and to a lesser degree in India.

For more detail, please see:
disruptivewireless.blo...
disruptivewireless.blo...

Thanks

Dean Bubley

Is Nokia Removing VoIP Capability from N-Series Phones?

Thanks SamiJ - I know, I wrote this post almost a week ago, and various comments have subsequently emerged. Unfortunately it's taken a few days for SeekingAlpha to syndicate my original blog post

Is User Apathy About Smartphones Becoming Apparent?

Most of the discussion on my post is on my blog rather than Seeking Alpha.
disruptivewireless.blo...

Various comments here are misrepresenting my argument. In particular, I'd argue that US users are *more* likely to download apps to smartphones because they tend to "deliberately" buy smartphones in the first place & have a heritage of using PDAs. Conversely, European tend to get smartphones because they want a Nokia with a 5MP camera, and it comes with an OS by default.

Assorted comments have inferred all sorts of rubbish about my views on iPhones, none of which is supported in the text or indeed my opinion. The post isn't about Apple. For what it's worth I quite like the iPhone (it's much better than I'd expected), bought my father one as an Xmas present, and might get a 3G one myself when available. I don't think it's a fad, but neither do I see it having a huge impact in the global scheme of 3 billion mobile users. It's a bit like the original PDAs - fantastic gadgets for *people who care about that sort of thing and have the money to spend on them*

Data pricing is an issue everywhere, although cheap flatrate is becoming more common. Sub-$10 per month for a decent amount of data per month (perhaps 50-100MB) is pretty typical, although I know the US can be more expensive, and roaming is horrible.

Although many people assert that "everyone" will want access to the Internet on mobile devices, at present that is just an assertion. I think the demand, economic feasibility, and practical constraints (eg enough spectrum/cellsites) is lower than many evangelists would hope for.

As for adding extra *applications* to a mobile device, that's purely a specialist sport, and likely to stay that way. Most "Normal people" don't want to download apps to phones, even iPhones. (This is a flaw in Google's Android worldview too). Browsers and Web 2.0 and AJAX helps a bit, but still won't get close to ubiquity.

Handset OS Fragmentation is Here to Stay

Baba

Of course arbitrage is not a networking term. It's a general concept in business and commerce, whereby *users* or *customers* can play off differential pricing of what is essentially the same good or service.

It applies to handsets where there are multiple ways for the *user* to choose between to achieve a specific objective, be it making a phone call or downloading/sideloadin... an MP3 file. For a music download, realtime is (usually) not important, so the user can look at exploiting the differential pricing between an operator-mediated portal and transferring a file from a PC.

The *user* or the *user's software agent* is starting to call the shots, facilitated by ever-more powerful devices which when combined with IP networks & the Internet can decouple access from service.

Increasingly, real-time services are becoming less important than non real-time capabilities in terms of the perception of user value (and also payment). This is already true in the fixed line/Internet world, with the exception of voice. But to deliver scalable realtime voice it clearly is *not necessary* to have IMS. Existing circuit services, over-the-top VoIP, and standalone operator-managed SIP VoIP app servers work well enough already and scale.

In any case, we are already starting to see voice calls fragment between QoS-essential (999 / 911 calls, important B2B communications, medical etc) and QoS-optional calls (phoning a mate in Australia for an hour's chat). There's no point "wasting" QoS and network resources - consumers already know this, which is why they use Skype or SMS or VoIP callthrough instead of needlessly expensive cellphone calls.

Real time mobile video is near-irrelevant. There's no massmarket business model in mobile, and I haven't seen anything that even remotely demonstrates that this is likely to change. Video should be treated as an add-on, not a core design objective for mobile-centric NGNs.

Conversely, non-realtime applications - SMS, web access, email, music/content downloads, social networks, filesharing and so on - are becoming proportionately more valuable in mobile.

*Therefore* future network investments will start to become more *optimised* for non-realtime capabilities. Realtime will still be valuable, but over time it will become secondary. This in turn will drive network capex and handset architecture decisions.

Sure, we will probably always see some form of QoS-managed network for the stuff which absolutely, positively has to be realtime. But it won't drive the overall investment decisions & certainly not define the underlying architecture for the majority of traffic for which that would be over-engineered.

This is why various of the radio-access network evolutions are evolving to some form of split-access mechanism. The stuff that matters goes to the QoS-managed operator core. The stuff for which best-effort is good-enough gets piped straight out to the Internet.

And in many cases it will be the handset (& its software & above all the user) that defines any instance of communication in terms of whether or not QoS or realtime is important.

Dean

Handset OS Fragmentation is Here to Stay

Let me clarify - outside N America I don't see the iPhone being particularly important in shipment volume terms, especially compared with high-end Nokias, and especially given the lack of subsidies. The revenue-share model also means that I can't see it easily being sold to the 70% of customers who prefer prepay to monthly subscriptions. It's also too large for many people who live in countries in which it's socially unacceptable to use a hip holster for phones.

On the other hand, I agree that the iPhone has had a fair amount of impact in terms of the industry's expectations. And yes, it has certainly driven more browser usage on handsets than most earlier phones.

Let's see if v2 or v3 iPhones are more appealing to people beyond the current fashion/tech-driven group, though.

Baba - interestingly, I've had a lot of discussions recently about the possibility that in future, yes, handset capabilities will drive the network rather than vice versa. There is already more "intelligence" at the edge than in the core measured in raw compute power - 3bn devices x maybe 150MHz processors on average, moving to 500-1000MHz in high-end devices.

In this case, the tail wagging the dog is inevitable, thanks to Moore's Law, especially where the devices now have multiple ways of routing voice, data or content (cellular, WiFi, Bluetooth, USB, memory card etc) and can act as a hub for arbitrage and least-cost/best-perfor... routing.

Obviously, those markets with greater operator control over handset architecture & distribution will be able to retain more network-centric control, compared to those where the device & service provision are decoupled.

No, Web 2.0 won't "ride on top of IMS". In most cases, it is more likely to be the other way around. I'd expect to see an IMS Rich Communication client as a good FaceBook plug-in, for example.

Thanks

Dean