a week in wireless

Feel the burn

People love to talk about what a high growth market China is, and the Informer thinks he may have discovered one of the key drivers behind the bumper handset shipments that the market stimulates. According to local press reports which emerged after last week’s edition went to press, the wife of a handset retailer in the Weifang area of China, seething with resentment after being dumped, gathered the shop’s entire stock of 400 phones, put them on the marital bed, doused them in kerosene and set fire to them. The cost of the bonfire was around $42,000. That’s 400 more phones shipping to China, then – every little helps, right?

Relationship endings are usually fraught, and there was similar tit-for-tat acrimony to be found in Germany this week, where the state Government of North-Rhine Westphalia wants its money back now that Nokia’s moving in with Romania. You may remember that earlier this year, Nokia announced plans to shut its plant in the German town of Bochum, which is in North-Rhine Westphalia, because the costs of operating in Germany are proving a little too high for the Finnish handset vendor.

Turns out that the: “Darling, I’m leaving you” line went down no better in Germany than it did in China and, while the Germans haven’t actually got together and set fire to a load of Nokia handsets, they ain’t best pleased. Calls from trade unions for a boycott on Nokia products were issued after the decision and now the state Government is demanding that Nokia return subsidies it was given on the promise of job creations when the plant was opened.

The amount in question is almost Eur60m. As you might expect, the Finn contests the suggestion, but says the Germans can keep the table lamp they got as a wedding present from Uncle Wolfgang, because Nokia never liked it anyway. It’s likely that Nokia is going to have to make some kind of parting gesture, though, purely for PR reasons. The 2,800 Bochumites who are set to lose their jobs in June probably won’t be buying any more N95s, though.

While we’re on the subject of departures, Motorola saw another senior exec off the premises just after the Informa’s deadline last week. It was the turn of Stu Reed, president of Motorola’s Mobile Devices business to make like a banana, in the same week as marketing chief Kenneth Keller.

While Reed has been credited with a positive reform of the firm’s supply chain which led to cost savings, it’s fair to say that the devices unit is not in great shape. Indeed, CEO Greg Brown took personal responsibility for the handset division a month or so back. And when people leave “effective immediately” it usually involves computer access being shut off and a walk to the door with a burly security guard.

Still, there was a slvr of good news for Moto this week, when it was announced that the firm has re-established its supply relationship with 3G operator 3UK. Roast Moto has been off the menu at Chez 3 for 18 months, but it’s now on the specials board, with 3 promising an “extensive store staff training programme” around the featured handset which – Voila! – is another iteration of the RAZR. This time, it’s the RAZR2 V9.

Gartner handset market analyst Carolina Milanesi told the Informer in September last year that weaknesses in Moto’s WCDMA portfolio were hitting the firm hard in Western Europe, so maybe this is evidence of some graft in that area. Even if it’s not evidence of a much needed portfolio refreshment.

In other handset news, one of the more prominent Apple iPhone hacker groups, the iPhone Dev Team, has showed off a cracked version of the beta 2.0 firmware. This not only allows users to run any application on the device, even those banned by Apple’s App Store, but it apparently means Apple has lost the ability to kill hacked iPhones remotely.

For legitimate developers however, the SDK appears to be pushing all the right buttons. An online poll of telecoms.com readers over the last week revealed that 77 per cent of respondents think the iPhone 2.0 software will give them everything they wish for in the device, with only six per cent who thinking it falls short of expectations.

A further 11 per cent absolutely love the App Store idea, which gets third party apps out to the entire iPhone user audience, and only five per cent who think the control Apple will retain over the content is too much.

Speaking of control, let’s nip over to North Korea, where one and a half months after obtaining the one and only 3G licence in The “Democratic” People’s Republic of Korea, North African operator Orascom has announced that it expects to sign up 100,000 subs as soon as it goes live with its WCDMA network.

A GSM service is still being used by authorised government officials. The Informer’s number crunching chums at Informa Telecoms & Media say that there are currently 5,000 official GSM users in North Korea, giving the country a penetration rate of 0.02 per cent. The new Orascom service will help boost penetration to a whopping 0.4 per cent.

It’s small acorns at this stage. Still, Sawiris won’t be too downhearted. The Egyptian’s firm has mightier oaks; it’s just posted a 180 per cent rise in 2007 net income to $2.021bn, and reckons subscriber numbers had exceeded 70 million by the end of the year. Ebitda rose 20 per cent to $2.043bn.

In the US, troubled carrier Sprint Nextel has unveiled the first handset that can take advantage of its cdma2000 EV-DO Revision A network. Previously users who want access to Rev A data rates of up to 1.4Mbps on the downlink and 500Kbps on the up have only had the option of data cards. The HTC Windows Mobile unit, called the Mogul (good grief), was actually launched in June last year, but a free firmware update will render it Rev. A compatible.

It was acquisition time for Qualcomm this week, which is hoping for the luck of the Irish, with the purchase of Xiam, headquartered in the Emerald Isle. Xiam’s business is personalisation and targeting, and the firm has a platform called My Personal Offers System (MPOS).

The company uses demographic, contextual and behavioural profiling to enable one to one mobile advertising, which Qualcomm will presumably work into its own content delivery ecosystem. The deal was worth $32m.

“Qualcomm’s acquisition of Xiam provides us with advanced content discovery and recommendation technology that strengthens Qualcomm’s services portfolio,” said Andrew Gilbert, executive vice president of Qualcomm and president of Qualcomm Internet Services, MediaFLO Technologies and Qualcomm Europe. “With this acquisition, we are excited to further demonstrate our ongoing commitment to operators, brands and consumers worldwide.”

Qualcomm has made no secret of its desires to invest in European businesses. Last year Qualcomm launched a Eur100m venture capital fund specifically for Europe. Shortly afterwards, Gilbert told the Informer: “That’s a good statement about our Qualcomm’s intentions in Europe. Now we have to spend it.”

Last week Sir Richard Branson was dangling of the edge of an Indian hotel to promote the latest international expansion of the Virgin Mobile brand. This week, he was watching his US operation take a bit of a kicking.

Shares in Virgin Mobile USA had a slump this week after the MVNO disclosed disappointing subscriber gains in the fourth quarter of 2007.

Virgin, which launched its IPO in September, said that it only added 209,669 net subscribers in the fourth quarter, compared to additions of 613,752 in the previous year. The company had forecast additions of around 400,000.

Analysts have attributed the poor customer numbers to the economic downturn, given that all of Virgin’s customers come from the typically cash strapped prepay demographic. Concerns that the slowdown could get worse are likely to have made investors jittery.

At the close of play Thursday, the company’s share price had fallen more than 41 per cent. Nevertheless, the company shrank its net loss, from $45m in the fourth quarter of 2006 to $17.7m in 2007, and revenues increased to $293.5m from $271m. Churn also dropped 0.4 per cent year on year to 5.1 per cent.

Not one to miss a trick in the cheeky/smutty marketing oeuvre that is Virgin’s comfort zone, the Canadian operation put out a new campaign this week featuring booty-mongering former New York Governor Eliot Spitzer, who was forced to resign on Wednesday this week when he was outed as ‘client number nine’ at a high price escort service.

The ads, featuring an image of Spitzer carry the text: “You’re more than just a number. When you call us we’ll treat you like a person, not a client. Whether you’re #9 or #900, you’ll get hooked up with somebody who’ll finally treat you just how you want to be treated.” It’s all about class, isn’t it.

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