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Apple’s SIM Patent; Vodafone, Ericsson Samsung results - Telco 2.0 News Review

[Ed. Hot on the heels of last week’s envigorating EMEA Brainstorm in London our attention is now turning to the APAC Brainstorm in Singapore, 30th Nov - 1st Dec. You can see more on the program here, including Telco 2.0 Strategy, Mobile Broadband Economics, Digital Entertainment, Mobile Payments, and more on our major new research report dealing with the disruptors - Google, Apple, Facebook, Microsoft/Skype, and Amazon which went down a storm at the EMEA event. As a taster of the analysis from the event, the chart below shows EMEA delegates’ views of the contribution of so-called ‘OTT’ players on the significant decline in voice and messaging revenues they foresee.

messaging decline EMEA event vote nov 2011.png

Join us if you can in APAC or see more on our Disruptors analysis here.]

Vodafone announced solid results this week, with operating profits up 4.4% on revenues up 2%. At last week’s Telco 2.0 event, Vodafone executives briefed on the progress of their project to consolidate the giant carrier’s numerous IT systems and on OneNet, their SMB-focused hosted unified comms product. And, of course, the arrival of the first dividends from Verizon Wireless is doing them a lot of good. In general, Telco 2.0’s Keith McMahon comments, the results reflect a renewed focus on operational excellence without the distractions of constant mergers and acquisitions.

Ericsson claimed this week to have double Huawei’s market share in infrastructure. They expect global population coverage with HSPA to go from 35% today to 80% in 2016 and LTE to go from 2% today to 35% in the same period of time. Interestingly, they reckon that 60% of global mobile traffic will be concentrated in urban areas, so you might wonder if their real competitor is actually WLAN.

After all, there are currently about 1.3 million WLAN hotspots in the world and they’re forecast to grow to 5.8 million by 2015. Informa reckons the biggest chunk of that massive roll-out will be owned by mobile operators.

Samsung also had news this week, specifically about the world’s biggest smartphone manufacturer’s investment plans. This year, their single biggest hardware investment line item will be the System LSI division, which produces the chips that go into both the Galaxy S II and frenemies Apple’s iPhone 4S. That’s getting £4.5bn, while the rest of the semiconductor operation gets as much again. OLED screens and cameras get £3.9bn, and a whole £5.6bn is going for R&D and software development. Unsurprisingly, LCD technology is being cut right back.

On the other hand, there are some far less bullish metrics out there. A few weeks ago, there were reports that Apple and other vendors had revised down their pre-orders for chips in Asia, presumably as weak demand rippled up the supply chain. This can be overstated - recall last week’s Businessweek story about how Apple doesn’t just pre-order parts, it pre-orders the machine tools needed to make them well in advance and rents them to the contract manufacturers. That doesn’t sound like they buy much in the spot market. But the economic news is grim and this data-point is telling: Cathay Pacific is struggling to fill its cargo planes outbound from Hong Kong to the US West Coast.

Horace Dediu, fresh from his data-rich presentation at the EMEA event on the evolution of OS’s and what might be next, is the sort of analyst who probably tracks air freight rates and volumes at obscure German machine-tool companies - and we mean that as a compliment. We like this chart from Horace at the Asymco blog summarising just how far off Apple’s own forecasts have been.

Forecasts are wrong

In fact, what this chart shows is part of the phenomenon described in a classic HBR piece - corporate earnings forecasts are almost always wrong. Not just that, but they are usually wrong in the same way. They tend to be far too optimistic, and they also tend to hugely underestimate volatility. Apple seem to have given a new slant to this phenomenon, being far too pessimistic in guidance and seemingly even more volatile than actual earnings. In fact, counting the bars in the chart above, Apple was more than 30% short on its guidance seventeen times in twenty quarters. As error margins go, this might be considered extraordinary for a company with such famed attention to detail in its corporate DNA.

Earlier this year, there was much excitement when Apple persuaded the GSMA to permit SIM cards that could be remotely updated rather than swapped physically. Well, now they’ve patented the idea, which ought to worry operators a lot. Especially as it means sharing the authentication secrets with the manufacturers. (NB We covered the critical and increasing importance of patents in our presentation on ‘Patent Pool Wars’ last week and will be publishing more on this in coming weeks.)

Elsewhere, and following on from one of Horace’s themes (of which more soon), Amazon has acquired a voice-command startup, Yap. Since Siri, the Apple halo-effect looks to be causing a rush into this micro-segment. Nokia Research, for example, demoed a phone that tries to guess the caller’s mood.

Wired has a detailed and critical review of the Amazon Kindle Fire, in which they report that the Silk browser with its Opera-like cloud proxy seems to be much slower than the iPad 2 which doesn’t use an accelerator proxy.

On the other hand, the same issue also has an interview with CEO Jeff Bezos which is worth reading. Notably, he says he’d happily give up the infamous 1-Click patent if it meant software patents weren’t such a pain, and describes the Kindle Fire as a media service rather than as a product. He also rather oddly contrasts how long it takes to load a Web page “over WiFi” with how long it takes on Amazon EC2 - but you need the WiFi to get to EC2 in the first place.

Meanwhile, AllThingsD reports that Amazon has quietly added more features to the Amazon Prime service.

Netflix has been spending a lot of money lately. The latest deal is an exclusive for Lionsgate content in the UK and Ireland, in preparation for their coming launch here. Elsewhere in content, Telefonica-owned social network Tuenti has got out ahead of Netflix in launching a video rental service.

Where Netflix has been frantically buying up content rights and dipping its toes into the risky business of film financing, Google has been targeting key bloggers and videographers on YouTube and signing them up on exclusive deals, which has to be cheaper. Being Google, quite a few of them are science-focused.

Dan Rayburn’s quarterly CDN report is out, putting prices falling about 20% and volumes up 60%. Interestingly, however, the pricing is driven by bulk discounts for the very biggest video pushers and most CDN customers won’t see anything like that.

China is getting ready to deploy IPTV, and the STB orders are likely to be monumental. Faultline reports that 80% of the orders from each province are being reserved to a group of five Chinese vendors led by (of course) Huawei.

Felix Salmon has some thoughts about online advertising and makes the point that it’s a much better idea to offer links that someone might deliberately click than ads that are only ever clicked by accident.

Back over with the smartphones, here’s a positive view of the Nokia Lumia 800 and some app recommendations. However, Telefonica thinks it’s too expensive and therefore won’t be carrying it in the UK.

Also, you no longer need a Nokia to use the Nokia Maps and Nokia Music apps after somebody hacked’em. This is described as a loss for Nokia, but it could as well be a win if they have any plan to monetise the services independently of hardware. After all, you can use Nokia Maps the website on any device with a half-decent browser (and it’s blindingly fast, too).

Motorola’s new RAZR Droid, reviewed. PCMag interviews Alec Saunders at RIM, who promises that full BlackBerry Enterprise Server integration will be in the first lot of QNX smartphones and that they will be fully compatible with the PlayBook. And there are even more dev kits coming, including Qt.

High Scalability points us to the ever-reliable Packet Pushers’ Podcast, which argues that the Internet is facing a menace, and the menace is tunnelling. Far too many protocols, they argue, involve some form of packet encapsulation, which adds complexity and breaks core Internet engineering principles while also causing problems with robustness, debugging, and path-MTU discovery. There’s more discussion here.

And they blame telcos - but doesn’t everyone?

On the other hand, at least one cableco is boldly standing out against the tunnel menace. Comcast this week turned on its first production IPv6 network with full dual-stack addressing and therefore, no NAT or tunnelling.

A major motivation for IPv6 deployment is to make P2P applications, auto-configuration, and auto-discovery work properly. The world’s favourite P2P application is Skype, and they suffered this week when a bug in Juniper JunOS routers caused a major outage at Level(3). It wasn’t “just” the huge backbone network operator - if you can say “just” about L(3). The bug, triggered by an unusual combination of BGP attributes, caused a major disruption of Internet routing generally with a much higher rate of updates than is normal.

GigaOm reports on a preview of Comcast’s integration of Skype into their Xfinity smart-TV solution. Skype video calls will be transferred as 720p, aka HD, video, and you can make video calls in parallel with the TV. It also comes with no fewer than four microphones in order to hoover up every scrap of conversation. Providing you want that, of course.

Interestingly, it seems that Skype for Mac OSX uses 28% more bandwidth than it does on other OSes. In other voice news, AT&T has an app for cheap international VoIP, which will work while you’re in the WiFi. Android’s Native Development Kit gets low-level access to the audio path.

Elsewhere, the last NBN construction contracts are out. Reliance wants to share its towers.

Open-source cloud with VMWare at HP. Adobe ends development of mobile Flash. Integrating Node.js and Microsoft servers. Running the cloud in RAM. Building Flickr’s push API. Public data in the cloud with Amazon. Bad security advice from Google. British tech legend Tudor Brown steps down at ARM.

Beware of the tax implications of mobile payments. Klout profiles whole Twitter/Facebook user base without asking, hilarity ensues. Online gaming platform Steam hacked, loses credit card database. US Senate defends net neutrality regs, EFF battles SOPA.

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Comments

News just came out on 10/20... and I have to say I can't believe it.. Netflix is raising its prices again on Jan 9th 2012 by another 10%. It will now cost about 109$ annually. When they raised it before I stuck with them but now this is too much. They need to learn how to do business. I'm going to just use torrents.

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