Weekly Wrap: Turning the Tables
By Carlo Longino, Fri Jul 16 09:15:00 GMT 2004
Quarterly earnings start to trickle in, showing how much the handset market has changed, DoCoMo makes some moves, and more...
Sony Ericsson and Nokia both reported second-quarter earnings, and their differing fortunes reflect how the tables have turned for device vendors. Sony Ericsson's focus on imaging and multimedia capabilities has been to its benefit, as sales and profits continue to grow, while Nokia's still suffering the effects of a product lineup out of touch with consumer desires. Nokia is trying to protect its market share with price cuts, but those, too, are hurting the bottom line. The dynamics of the market and the momentum have clearly shifted to the company's competitors.
US carrier AT&T Wireless was expected to launch a WCDMA network, the country's first, sometime this year, but rumors emerged this week that it would happen next week. AT&T has an obligation to NTT DoCoMo to launch in four cities by the end of the year, with a $6 billion penalty if they don't comply. Evidently the deal stands regardless of the impending Cingular buyout, but the timing of the launch is certainly curious, as the US Department of Justice is asking some hefty questions of the carriers. Should the deal not go through, AT&T is covered, and has a 3G jump on Cingular. If the deal goes through as expected, the two carriers have eliminated what was a significant DoCoMo bargaining chip as it looks to sell off its stake in AT&T.
One place where 3G has already taken hold in a big way is South Korea -- numbers came out this week saying 90% of users there are on 3G nets, though those figures do count CDMA2000 1xRTT as a third-generation technology. Strip out 1xRTT, and 23% of Korean users are on "true" 3G networks, far higher than Japan, which tends to make a lot more noise in the media. But the two countries taken together represent more than a third of the world's 1xRTT subscribers and 95% of EV-DO subs, along with Japan having three-fourths of the world's WCDMA users. The "lessons of i-mode" is a common industry catchphrase, but how long will it be before people be talking about what they've learned from Korea?
Speaking of Japan, NTT DoCoMo hit the headlines this week when it unveiled its VoWLAN/3G handset. The device is quite different than other Wi-Fi-enabled handsets that have been announced, as it uses the connection only for voice, and relies on the mobile network for data, opposite of most similarly equipped devices. DoCoMo, though, like other carriers, is concerned about VoWLAN eating into its voice revenues, and the handset is only compatible with a particular NEC wireless PBX system, and can't be used a public hotspots.
The carrier also said this week it was investing in chip powerhouse Texas Instruments and another chipmaker to develop single-chip processors that bridge the its 3G FOMA network and the world's 2G and 2.5G nets. DoCoMo is seeding investment because its not-exactly-standard network doesn't generate enough business to create economies of scale, in turn increasing the subsidies it must pay to make its handsets attractive to end users, driving up its costs.
Hong-Kong based carrier 3 is constantly in and out of the media, with every story questioning the company's efficacy and success quickly followed up by a much more positive spin from the company. The latest retort came from the managing director of 3 parent Hutchison Whampoa himself, Canning Fok, in a rare interview. He refused to acknowledge any of the widely held doubts about the carrier's success, saying that everything has gone and is going to plan. It was a rather bizarre interview that started with Fok blasting the reporters' old GSM phone as "embarassing", and went from there as Fok attempted to blow off and deny most every question put to him.
3 is also evendently in talks with Australian carrier Telstra over a network-sharing deal that would see the two operators share a WCDMA network. But Telstra might not even need 3G, since it appears to be testing nearly every possible wireless technology. It has both CDMA and GSM, is implementing EV-DO, has big plans for Wi-Fi and is now testing Flarion's Flash-OFDM technology.
Japanese operator KDDI's success is unquestionable, as the company's made great gains on number-one DoCoMo in the last few years, and is looking to keep the momentum. KDDI said this week that some of its new handsets have an interface that uses Macromedia's Flash Lite, but more interestingly, committed to bringing fuel-cell powered handset prototypes out by the end of the 2005 fiscal year.
A report came out this week saying that location-based services are (again) about to explode, but unfortunately only consider location-based ads. The analysts that wrote the report say previous LBS efforts failed because networks and technology were immature, but maybe it's because the applications they're so enamored with -- little more than location-triggered spam -- aren't very compelling to end users, while a number of social applications heavy on utility and light on technological demands are already successful today.
Elsewhere on the site this week, Douglas Rushkoff goes in search of the ultimate power, Steve Wallage talks to another mobile researcher and David Pescovitz takes a closer look at mobile-phone viruses.