a week in wireless


Ice, ice baby

It seems that the UK is about as well equipped to deal with a moderate dumping of snow as it would be to manage a surprise visit from a flying saucer full of angry, tentacled, mucus-dripping extra-terrestrials. Things didn’t so much grind to a halt here on Monday as stop in their tracks; frozen – literally – to the spot. From the streets of London it looked as if an apocalyptic ice age had struck. Cars were left in the middle of the road, or half mounting the pavement where people had abandoned them. Shops were shut. All was still and eerily quiet. Until you came to one of the city’s parks, that is, most of which were full of joyous citizens, of all ages, frolicking in the white stuff. Wonderful scenes.

While we’re on the topic of icy wastelands, Alcatel-Lucent put out some results this week, proving that you don’t need a sledge to take a slide. The firm’s profits sank from EUR2.56bn in the black for Q407 to a loss of EUR3.87bn for the same period last year. Losses for the full year were at EUR5.2bn. Revenues sank 5.4 per cent year on year to EUR4.95bn, although the wireless access and convergence divisions were hit harder, dropping 15 and 22 per cent respectively.

The Franco-American vendor can no longer afford to hedge its bets and so is looking to streamline its portfolio. Not worth a gamble, it seems, is mobile WiMAX. The firm is ditching this string from its research bow, preferring to focus on what it calls “the enhanced wireless DSL market opportunity” and LTE.

This is a big kick in the snowballs for the mobile WiMAX community. Judged by number of contracts, Alcatel-Lucent was one of the leading vendors in the space. If the market’s top dogs don’t think there’s enough business to warrant staying in the game, it doesn’t say much for the technology’s prospects.

And the news was no better for Israeli WiMAX kit vendor Alvarion, the company most painfully exposed to Canadian player Nortel’s recent Chapter 11 filing. The firm this week posted a net loss of $4.8m for Q408, following a restructuring charge of $3.4m related to the collapse of its partnership with Nortel.

Alvarion’s top line has also suffered as a result of the Nortel deal collapse. Q4 sales fell by $4.2m, compared with Q3 2008, to $70.1m. The company attributed the sequential quarterly decline in revenues to its inability to recognise $2.4m of revenue from the sale of products to Nortel during Q4.

But over the full year, things didn’t look so bad. 2008 Revenues were a record $281.3m, up 19 per cent over 2007, with WiMAX accounting for $171m. WiMAX shipments in 2008 increased 37 per cent over the previous year to a record $189.3m. The firm forecast revenue of $65-$73m for Q1 2009.

Back to bleak prospects, though, and US carrier Motorola published its Q408 numbers this week too, hot on AL’s heels with a net loss of $3.6bn – down from a profit of $100m for the same period in 2007. Moto’s wibbly wobbly handset unit was the focus of the kind of attention nobody wants once again, with full year operating losses of $2.2bn for 2008 and $595m for the final quarter.

Motorola estimated its own market share for the quarter at 6.5 per cent, from sales of 19.2 million units. It also bid farewell to chief bean counter Paul Liska, perhaps because there aren’t enough beans to count any more.

CEO Greg Brown talked up the firm’s aggressive cost management strategy but analysts were less than taken with Moto’s plans to hold onto its place in the handset game. Richard Windsor, technology specialist at Nomura Securities, said the results: “Set the scene on what must be Motorola’s last attempt at being a manufacturer of mobile phones.”

With the handset division now burning close to $2bn a year, Windsor noted that, if it were a standalone company, it would probably have filed for bankruptcy by now. Moto settled for the suspension of its quarterly dividend.

A central plank of Motorola’s (possibly) final bid for handset glory is to stop looking at low cost phones and concentrate on the higher end. The firm probably wishes it had made this decision before embarking on the GSMA-led Emerging Market Handset project that saw it gamble on big wins in high growth markets by developing a handset that wasn’t economically sustainable. Now the firm will focus on terminals built on Google’s Android platform, itself based on Linux.

International carrier Vodafone shares Moto’s enthusiasm for Linux, it revealed this week, but not exclusively for Android. On Thursday, Vodafone announced that it has tapped open mobile OS company Azingo to develop applications for handsets based on the LiMo platform. LiMo has one of the biggest presences in the mobile Linux space, since its absorption last summer of Linux splinter group the Linux Phone Standards (LiPS) Forum.

Azingo will develop applications for Vodafone handsets based on the LiMo platform, but that’s all the company is giving away at present. A couple of years ago, Vodafone adopted a three pronged approach to handset software, selecting Linux alongside Windows Mobile and Symbian.

Meanwhile, the World’slargestcarrierintermsofrevenues revealed this week that those revenues are not growing in the way that it would like. In mature markets, in fact, income is wilting. Q4 turnover at Vodafone declined one per cent year on year on an organic basis, the firm said, to £10.5bn. Europe was hit to the tune of a 2.8 per cent drop to £7.5bn, while Africa & Central Europe yielded a 3.5 per cent increase to £1.4bn and Asia Pacific & Middle East was up 9.2 per cent to £1.5bn.

Despite the drop-off in Vodafone’s historical core markets, the weakness of Sterling helped the firm achieve a 14.3 per cent increase in quarterly revenues on a non-organic basis and prompted CEO Vittorio Colao to increase annual sales forecasts.

Stumbling blindly through the news blizzard this week, the Informer tripped over the following piece of Google related information. The firm has introduced a new location aware dimension to its mapping application, which allows people to keep track of one another through their mobile phones.

Google Latitiude, which for the first time sees Google tapping into the recession-proof suspicious spouse market, allows users to share their (rough) location with their contacts. Because location aware tools such as Latitude naturally raise privacy concerns, Google has been careful to make everything about the service opt-in. Users can define who gets to see their location, as well as set a manual location to make them appear to be elsewhere, or just a broadcast a city-level location.

At launch, Latitude is being made available in 27 countries, and on the PC, BlackBerry, Symbian S60, Windows Mobile and Android platforms. It is expected to come to the iPhone soon.

Here’s a bit of handset-related nonsense for you: A US market research outfit called Strategic Name Development reckons it’s hit on the reason that Nokia has struggled historically in the US market. It’s all about names! Nokia persists in identifying its handsets with letter/number combinations – the N95, for example. Other vendors, Motorola, Samsung and LG, use words that are deemed engaging and cool.

The Razr, the Chocolate, the Voyager, the Vu – these are the kind of monikers, apparently, that appeal to the Americans. Never mind that ‘Vu’ sounds like pre-lingual baby-talk. Strategic Name Development backs this up with statistics, pointing out that, in Q305, Samsung, LG and Nokia each held a 16 per cent share of the US market. By Q208, having introduced word based names, the Korean firms had moved up to 20 per cent apiece while Nokia, sticking with the numbers, had dropped to nine per cent.

Industry analysts have missed a trick with this one, haven’t they? Or perhaps not. The Informer doubts that Nokia’s marketing director will be running through the halls at Espoo, tearing his hair out, screaming that he wants ‘cool’ names for his phones. He’ll probably settle for global market share that hovers around 40 per cent and half heartedly dubbing the 5800 the Tube.

If this is true, then how come Motorola’s handset business is dying on its keister? Moto led the way in the silly name stakes. And if it really is all about what you’re called, why hasn’t Strategic Name Development got a better name? Eh? Who knows.

Take care

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(The Informer)


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