Moon time and Falco

By The Informer

Was it coincidence that Apple decided to launch its iPad just three days before the full moon? Certainly the name of the device has given rise to what might be described as a flow of unsavoury jokes, but the Informer was struck by something else altogether. Watching footage of Apple CEO Steve Jobs unveiling the new device on YouTube this week, the Informer found himself thinking: “The man’s a billionaire. Can he not afford a belt?” Shirt tucked into jeans with no belt is a fashion no-no even the Informer can understand.

Anyway, the iPad is here and it looks just like a great big iPhone, although it lacks the killer app that is voice functionality. In his introduction, Jobs kept repeating how brilliant the new device is, as if simply by saying it over and over the sentiment would be absorbed as fact by anyone watching. He promised that it would deliver “the best browsing experience you’ve ever had; way better than a laptop, way better than a smartphone.” That’s the Steve Jobs reality distortion field effect.

He talked up the product’s excellence as a photo display tool, movie viewer and music player and, while there is a large virtual keyboard that makes email and input possible, it looked to the Informer as if it might be difficult to use. Apple has also launched a dock-keyboard peripheral for the iPad to solve this problem but if you were to buy that then what you’d have, essentially, would be a laptop without the hinges. No doubt the iHinge is in the works.

Nope, the iPad seems to be primarily about access and display; particularly when you consider that Apple is going after the e-reader market with its new slate. There will be two connectivity options available, one version with wifi and 3G cellular and one with just the wifi.

This latter version will start shipping in late March, costing a hefty $499 for the 16GB model, $599 for the 32GB model, and $699 for the 64GB model. The Informer’s not sure he sees the benefit in a 16GB tablet, but it’s probably a trade-off to ensure there’s a model that can compete on price with Amazon’s Kindle.

The wifi and 3G models will be available in April for $629 for the 16GB model, $729for the 32GB model and $829 for the 64GB model, although users will then need to buy a data plan from AT&T in the US or whichever carriers Apple has elected to partner with internationally.

Given the strain under which the iPhone has placed AT&T’s network in certain key metropolitan markets – Manhattan and San Francisco have been the hardest hit – you’ve got to wonder whether the US carrier is at all daunted by the responsibility of showcasing the device.

Apparently not. The US carrier had a decent final quarter of 2009, racking up a net gain of 2.7 million wireless subs, the second best three-month period in the firm’s history. The quarter was also the second best performance for iPhone adds, with 3.1 million. On the Q4 earnings conference call, AT&T execs pledged to up the spend on the wireless network by $2bn over the previous year, adding cell sites and beefing up backhaul with fibre connections.

Plus Apple’s new product fits with AT&T’s strategy to champion the emerging device segment. The firm said its Q4 sub gains reflected strong growth in wireless connectivity for emerging devices, name-checking the Kindle, the Sony Reader Daily Edition and the Barnes & Noble nook. There were more than one million activations in this sector. You’ve got to wonder what the ongoing revenue opportunities are for a carrier hosting these devices, though. Just how many tomes does the average e-bookworm download in a year?

AT&T has said it plans to start LTE trials this year, and it’s not alone. Regional US carrier Commnet Wireless is to establish a trial with ZTE in Arizona, New Mexico and Utah, the Chinese vendor announced this week. Before either party starts making claims for potential performance, they might want to have a look at the speeds that TeliaSonera’s getting with its network in Stockholm.

Swedish consultancy Northstream was making some noise about the service this week, clearly feeling that comments it made last week had been taken out of context. On trialling the service for the first time last week, concentrating on outdoor performance, Northstream wrote on its blog:

“Our immediate reaction is that the browsing experience was rather good, probably thanks to the low latency compared to 3G networks. But the throughput measurements were sort of a disappointment as after countless tests, of which many were performed outdoors to eliminate any problems related to indoor coverage, we never exceeded 12Mbps in downlink. More impressive in that case was the 5Mbps uplink. But what really reminded us of the early days we’re still in were the rather frequent drops in service, even at locations where the signal strength indicators were maxed out just a second earlier. But considering that Rome wasn’t built in a day, our first LTE experience is a very positive one.”

Reports of the post focused on the disappointment rather than the positivity, leading Northstream this week to slightly over-egg the cake in response, almost as if TeliaSonera had called up to complain about Northstream abusing the privilege afforded it as one of the first to receive the hand built Samsung modem.

In the follow-up post Northstream revelled in, “being one of the lucky first to try the commericalised version of this technology in real life,” described its experience as “a positive capture of the ground-breaking steps of the next big thing in our industry and stressed that “overall our impression was very positive and promising for the future.” So now they get to keep that modem!

The TeliaSonera network buildout was interesting also because of the minor spat that it caused between Huawei and Ericsson, which each had responsibility for different cities. While Ericsson won out in the end, it was offering up a slice of gloom with its results this week, not least because of its exposure to struggling JVs.

Net income for Q409 was down 82 per cent year on year to SEK700m (€69m), from SEK4.1bn in the same period last year. Profit was also down 65 per cent year on year for the full year 2009 to SEK4.1bn from SEL11.7bn in 2008. Sales were also hit, down 13 per cent year on year for the fourth quarter to SEK58.3bn in 2009, and flat year on year for the full year 2009 at SEK206.5bn.

In the fourth quarter, restructuring charges, excluding joint ventures, amounted to SEK4.3bn. The company also took on operating expenses from the acquired Nortel GSM business, which it snapped up for $70m. Commenting on the results, newly installed CEO Hans Vestberg said the shift from voice telephony to mobile broadband investments continues, following an anticipated decline in GSM sales, which is not yet offset by the growth in mobile broadband and investments in next-generation IP networks.

In other results, leading handset vendor Nokia had a bumper quarter at the end of 2009, with profits climbing to €882m in the fourth quarter from €551 in the same period in 2008. Revenues for the three month period were down however, falling to €11.9bn from €12.6bn in the fourth quarter of 2008.

The firm’s Infrastructure JV Nokia Siemens Networks saw fourth quarter revenues drop 16.4 per cent year on year to €3.6bn, while sales at Navigation and mapping unit Navteq jumped 9.8 per cent year on year to €225m. Mapping is small fry by comparison but its performance reinforces Nokia’s decision to make Ovi Maps the heart of its mobile services portfolio.

Revenues at the devices unit were almost flat year on year at €8.2bn for the fourth quarter, with the company shipping 126.9 million units, an increase of 12 per cent year on year and 17 cent sequentially. Overall industry mobile device volumes for the same period were 329 million units based on Nokia’s estimate, representing an increase of eight per cent year on year.

Nokia said shipments of smartphones and other high end devices – the area in which the firm desperately needs to demonstrate an improvement were 20.8 million units in the fourth quarter, compared with 15.1 million units in the fourth quarter 2008, giving the Finnish firm an estimated 40 per cent market share in the fourth quarter 2009, up from an estimated 35 per cent in the third quarter of 2009. Nokia shipped approximately 4.6 million N-series and approximately 6.1 million E-series devices during the quarter.

Mobile device average selling price (ASP) in the fourth quarter 2009 was €63, down from €71 in the fourth quarter of 2008 and up from €62 in the third quarter of 2009.

Tagging along behind in second place, Korean vendor Samsung said it shipped 68.8 million devices in the fourth quarter, up 14 per cent sequentially and 31 per cent year on year. Samsung got considerably more money for its devices though, with an ASP of $115 (€82) for the fourth quarter.

Sales for Samsung’s telecoms division were up to KRW11.57tn (€7bn) in the fourth quarter from KRW10.7tn in the previous quarter.

Meanwhile Motorola, which once held the second spot and now sits in fourth, behind LG, also posted a positive quarter. Net earnings hit $142m, up from a loss of $3.6bn in the same period in 2008. But revenues for the same period dipped from $7bn to $5.7bn in the fourth quarter of 2009.

Motorola’s Mobile Devices segment sales were $1.8bn, down 22 per cent year on year, while operating loss climbed to $132m from $595m in the year ago quarter. During the quarter, the Company shipped 12 million handsets and estimates its share of the global handset market was 3.7 per cent. It also emerged this week that the US vendor is working on a Google-branded handset to follow the internet heavyweight’s Nexus One launch earlier this month.

And now for some music: Cloud-based music provider Omnifone, which made waves in the mobile market in 2007 after striking a deal with Vodafone, expanded its offering on Monday this week through a partnership with HP.

The service provider launched a PC-based music offering, MusicStation Desktop, offering unlimited music in the UK, France, Germany, Italy, Spain, Austria, Belgium, the Netherlands, Sweden and Switzerland. The service will be pre-installed on 16 HP PC models and will provide subscribers with access to millions of tracks from Universal Music, Sony Music, EMI and Warner Music International.

Music seems to be working out ok for Vodafone at the moment, with the carrier announcing this week that it has won almost 450,000 subscribers to its music services in the wake of DRM-free deals it signed with the four major record labels last year. This, says Vodafone, gives it, “stewardship over the largest number of paying music subscribers in Europe.”

Flushed with success, Lee Epting, director of content at Vodafone Internet Services said “Vodafone is starting to prove the significance of its place in the music industry.”

Of course, Falco, creator of the unforgettable ‘Rock me Amadeus’ said that too.

Take care

The Informer