March 20, 2011 § Leave a comment
News just hit the wires that AT-T, the once largest, sometimes and recently second largest telecommunications carrier in the US agreed to acquire T-Mobile, the 4th largest carrier with 33 million subscribers in a $39 billion dollar deal. This makes AT-T the definitive largest carrier by a big margin. It is early hours to speculate and confirm if the deal will pass the scrutiny of the antitrust folks but chances are the big telecom lobby will make sure it does. And when it does happen, it will mean 3 major carriers left standing (and one of them wobbly at that) and a bunch of fringe players whose valuation just jumped up at the prospect of Verizon scooping them. Metro PCS at less than $6 billion now seems a juicy target for Verizon. While the 8 million subscribers that Metro PCS offers is much less than the 33 million from T-Mobile that AT-T just picked up, it is still a first step for Verizon. The added bonus of having a LTE network rollout in progress will help the Metro PCS-Verizon Wireless marriage, if it were to happen. The speculation will start tomorrow and Metro PCS shareholders will definitely see the stock go up.
The implication of this event is significant. As recently as last week, rumors suggested that Sprint-Nextel, the third largest carrier with about 50 million subscribers was looking to merge or get acquired by T-Mobile to give the third and fourth place carriers some heft against AT-T and Verizon. This is particularly important in the era of exclusive handset agreements that can make or break multiple quarters for a carrier. The iPhone exclusivity is a case to point that effectively killed a lot of business for Sprint-Nextel and T-Mobile. The Verizon-Google-Motorola relationship was another. It made sense from a business standpoint for T-Mobile and Sprint-Nextel to merge although there were significant technological hurdles stemming from the completely different radio technologies used by the two (CDMA by Sprint and GSM by T-Mobile).
The synergies for AT-T and T-Mobile are much more than T-Mobile and Sprint-Nextel. Given that they have significant field test and operation presence out of Seattle and that they utilize similar wireless radio technologies, it makes for a relatively smoother transition. It also gives AT-T, extra spectrum for its LTE roll-out in the future. But where does that leave the consumer?. T-Mobile has been consistently rated as the best in customer service while AT-T often finds itself at the bottom of the pile. T-Mobile has a loyal set of customers who have benefited by excellent data and messaging plans often times cheaper than AT-T and Verizon. What T-Mobile has lacked is the killer smartphones that have fueled the rise of AT-T in recent years and also a larger coverage map thanks to AT-T’s legacy. This will change now with AT-T and Verizon primarily duking it out for the best smartphones while Sprint-Nextel watches from the sidelines with the occasional exclusive HTC phone. But consumers also have only one national GSM operator to pick making AT-T a bigger behemoth than what it was with a lot more muscle. This will affect the all critical data plans moving forward. On the bright side, with the expanded network, voice calls on AT-T will be better.
Day After Update:
Metro PCS stock is up 5% (PCS). Leap Wireless, a similar CDMA operator is up 12% (LEAP). As expected, this hurts Sprint the most, not just the stock price which is down 15% (S) but also their future prospects (here).
And yes, its all about LTE spectrum.
January 13, 2011 § 1 Comment
Daggers drawn, here we go again. With the recent and totally “unexpected and surprise” announcement that the iPhone is heading the Big Red way, we now have a battle on our hands. Until recently, the battle between the two operating systems was fought as a proxy war between the two largest carriers, Verizon and AT&T. With the iPhone now soon to be available on both networks, it makes things a tad fuzzy. Added to the mix is the fact that some of the upcoming Android big hitters are also headed the AT&T way. Until the iPhone exclusivity existed, AT&T either chose or was forced to pick up second grade Androids. That has been changing the last few months and will become obvious with the upcoming Motorola Atrix, Samsung 4G Android devices, Sony Ericsson Xperia Arc and more. On a smaller note, AT&T is also courting Microsoft by being the premier launch partner for Windows Phone 7 devices and also RIM with the exclusive Torch.
The coming months will hopefully provide answer for the following questions:
1. Was Android’s rise only due to lack of iPhone on Verizon?
2. Is AT&T doomed, now that it has the “perceived” poorer network and the iPhone is no longer exclusive?
4. Will Verizon stop or significantly reduce its An”droid” ads?
5. Is the Google-Verizon honeymoon over?
6. What happens to Motorola now that the big ad dollars are probably not there from Verizon?
We are all set for an interesting 2011 on the mobile OS wars. Get ready folks. Its going to be one heck of a battle between the behemoths!
August 9, 2010 § Leave a comment
Verizon and Google today unveiled an ambitious proposal for the future governance of the internet and more specifically handling the burgeoning traffic [Google][Verizon]. The coverage on the matter has been pretty good and some recommended links are here  . There is also a lot of chatter about Google “becoming evil” and abandoning its champion of the internet moniker. I wanted to pen down a few quick thoughts on the matter and see if it all makes sense.
Google and Verizon are basically saying the following key things:
1. Treat wired and wireless differently from a governance standpoint. This is critical for both companies since the Android operating system is growing by leaps and bounds primarily due to the Big Red push and any self inflicted wounds will potentially be fatal for both parties.
2. Do not allow any private deals on public networks and levy fines on guilty parties. The language on this is open so as to allow interpretation. In addition Google said that it had no monetary interests in such a proposal. What is left out is private networks like the FiOS private infrastructure of Verizon and the potential growth areas like healthcare and gaming.
3. Transparency and consumer protection are also highlighted as key areas. Transparency from ISP with regards to their traffic policies and consumer protection against blocking any of their content as long as it is legal and from a legal device.
The rest of the document basically can be described thus, ” Guidelines to live by but with enough options to work around”. The only part in all this that left me confused is what does Google get out of it?. I can see why Verizon needs it. It is a behemoth that wants to desperately manage its investments so as to get the best return and a deal with Google would be the best step to insuring its billions. But for Google, there is no “obvious” gain. The provisions pretty much keep things the same from a wired standpoint. It could be argued that the public face of Google probably took its worst hit today. Unless the deal gives Google some kind of access to data as this author suggests or a wireless deal for its Android OS, its hard to imagine Google being a winner in this deal. Am I missing something here?
Time will tell how this all translates into practice. For now it is just a proposal but one backed by industry giants. Will the FCC bless it or stick to its neutrality stance- we shall see. But it sure is an interesting development in an issue that warrants close attention.
For those interested in reading the full text of the joint proposal, it is here.
May 12, 2010 § 1 Comment
The iPad is about to have some serious competition. In the marketplace today, the iPad is numero uno when it comes to a must have tablet computer. That might soon change if Google, HP, Lenovo and a myriad of competitors have their way. It is public knowledge that Google is working on a tablet that runs one of its Chromium/Android OS. This much was revealed a few weeks back here. There is even a cool video with a mockup of a tablet running the OS. Fast forward to today where there is tremendous anticipation for an iPhone that runs on Verizon. For everyone complaining about ATT’s network being an impediment to using the iPhone, this was going to be the Holy Grail. Engadget dug up the ATT-iPhone contract details that confirmed that the exclusivity expired not in 2010 as many had predicted but in 2012. This implied that Verizon would have to wait to get the iPhone.
In the meantime, the Verizon – Google partnership on the Droid handsets is flourishing. All the Android devices on Verizon are selling extremely well and are proving to be a cash cow to Verizon. All of a sudden, for haters of ATT network, there is a lot of smartphone love with The Big Red. So it was no surprise when WSJ and Bloomberg leaked information yesterday of a collaboration between Verizon and Google to bring the Google tablet on their network. This makes sense in a lot of ways. Google gets to continue its oneupmanship battle with Apple. Verizon gets to call a tablet its own and the consumer has choice in the tablet segment.TechCrunch breaks this equation down here.
Eventually HP will get into the tablet business with a webOS based Hurricane tablet. Microsoft is already in the tablet business to retain its competitive edge in the OS segment. So a bevy of vendors will tote out Win7 tablets in the coming months. The Lenovo U1 IdeaPad met with good initial response when unveiled at CES. It remains to be seen if it ends up as a meaningful competitor. The iPad will now have to fight it out with multiple tablets featuring different OS’s each with its pros and cons. It will also have to keep upping the ante on the e-Reader front against the Kindle, Nook and the upcoming Kobo from Borders.
For the consumer, it is a win-win. Competition as always forces innovation and price wars. It also means there is an alternative. Bring on the tablets!
May 11, 2010 § 1 Comment
In late December of last year, the Internet was abuzz with information about a new phone from Google- a superphone that had any and every feature that man had ever dreamed of. The iPhone competitor from Mountain View. Soon after, the Nexus One debuted in the hands of Google’s employees. Sneaky photos and videos of the uberphone debuted all over the Internet. Everyone was curious to know if this was the iPhone killer?. Once the hype was on overdrive, Google unveiled it officially in a very simple affair at their Mountain View HQ.
Thanks to a friend whose wife worked at Google, I had a chance to play with the device in early January after the official launch. I liked the touch and feel of it not to mention how fast it was. But that was that. I didnt see it as an iPhone killer- atleast not in the Nexus One version. The Android software, while extremely flexible and developer friendly was not yet the business minded developer’s platform of choice. Until that happened, the real cool apps would not make an appearance on the platform and hence prevent a very large uptick in sales of the device. That said, Google was attempting to change the carrier lockin system tied to handsets by offering it on its own website based on the carrier of choice. This would be a revolutionary way of selling handsets and one that had the potential to change the landscape, if it worked. If it worked.
Over the last four months, a lot has happened on the Android front. Today (May 10, 2010) NPD revealed that the Android platform was the #2 largest selling mobile platform in the US ahead of the iPhone. This has been made possible thanks to the proliferation of Android devices on all four carriers not to mention great promotions and some really cool hardware. Added to all this is the fact that the iPhone is exclusive to ATT which makes it hard to match a platform selling across 30+ devices on 4 different carriers.
But things havent really been all that great for the Nexus One. What was once viewed as a superphone and the best of the best from the Android stables is now almost an also ran. A few weeks ago, Verizon which was supposed to get the Nexus One in Spring said that it was skipping the device in favor of HTC Incredible. Two days ago, Sprint joined Verizon in politely declining the Nexus One in favor of the HTC EVO. It is hard to blame the carriers. The cost of marketing and promoting the tent-pole devices is so high that one cannot afford to have multiple such devices. One or maybe two superphones is all a marketing team can focus on. Not to mention trying to cannibalize one phone over the other in one’s own portfolio.
To be fair to Google, they went for broke and failed. But they did make an attempt to change the status quo in an industry that hasnt changed by much in a very long time. The only downside to all of this is that we wont see Google put up a big effort on the mobile handset front for a while, if not ever. They will continue to spend their resources and effort on the Android which is bearing fruit as we speak. So Android as a platform will be Google’s contribution to the cellular industry. The Nexus One will be a footnote. An uber one at that.
Disclaimer: After I finished writing up the post, I noticed in my Google Reader that Fast Company has an article very similar to this one titled “The Rise and Fall of the Nexus One”. It is a very nice article worth reading here. Soon after, I saw the Motley Fool article along the same lines here.