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Joy for Apple, Samsung and Verizon FiOS; pain for AT&T, Google, Nokia and O2 - Telco 2.0 News Review

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After last week’s bumper crop of results (Microsoft, Intel, IBM up; Google disappoints; RIM’s two CEOs go), it was another results manic Monday. Apple’s Q4 led the way, almost dripping with success.

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO.

Well, yes.

Not only did the iDevices go out very well, Macintosh sales were up 26% year on year, and all three product lines saw their biggest ever sales quarter. Margins were up. The company is sitting on $97bn in cash, and probably won’t be fool enough to do anything like buying a telco. Horace charts their evolution and points out that the company has been growing earnings over 50% annually since 2009. The only product that isn’t selling like hot cakes is the iPod, basically because it’s directly in the path of the iPhones. (He also points out that Apple pricing is remarkably stable.)

Elsewhere in Q4s, Samsung missed taking the top spot for smartphone shipments by a hair, with 36.1 million gadgets to Apple’s 37 million. However, they could still report sales up by 30% on the third quarter, and profits growth of 19% in the broader mobile sector, with average selling prices rising. Telecoms products accounted for half Samsung’s profits in Q4 on about a third of its turnover.

Nokia, meanwhile, saw its smartphone market share fall from 29% to 12%, dragging the company into a loss for Q4.

Apparently, “well over 1 million” of the Lumia Winphones were sold in the quarter - a soft number many found suspicious. Tomi Ahonen points out that Symbian S^3 shifted some 4 million phones in its launch quarter. There’s also another number lurking in the Nokia disclosure - how many N9s were sold, something the new regime is not particularly keen to emphasise. Analysts’ efforts to quantify them produced a substantial range of estimates, but they converge on “well over 1 million”. To put it another way, the N9 may have outsold the Lumias.

And the results would be worse if it wasn’t for $250 million from Microsoft. Andrew Orlowski, usually a Microkia fan, is getting a bad feeling about this.

Elsewhere, AT&T was in the red in Q4, largely due to the T-Mobile break fee, various accounting adjustments, and the cost in handset subsidy of selling 7.6 million iPhones out of 8.2 million smartphones.

HTC has decided to change from a (Nokia- or Samsung-like) product range strategy to an (Apple-like) hero product strategy.

Unsurprisingly, given that it’s much cheaper, the Kindle Fire is the best-selling Android tablet. HP is releasing WebOS into open source, while Jon Rubenstein quits HP. Meet AT&T’s product managers - you’ll be pleased to know that the reason they won’t let you eliminate all the rubbish apps they put on your phone is that they’re not on the Android Market, so you might not be able to get them back.

More results: Verizon reported that it made a net gain of 98,000 broadband subs in Q4, but the breakdown is substantially more informative. Its FiOS FTTH service gained 201,000 new subscribers, while DSL lost 103,000 - showing the public voting with its feet for fibre or cable rather than another round of copper upgrades. And the FiOS Digital Voice VoIP product is on fire - not in a Stephen Elop sense, though, with 424,000 new subscribers in Q4. All of which is summarised by this week’s Chart of the Week.


AT&T saw a similar pattern, with customers churning off DSL. Significantly, though, they aren’t simply transitioning to AT&T’s VDSL-based FTTC service - about 50,000, just under 10%, of the churners leaked from AT&T and probably moved to the cable world, where Time Warner saw 130,000 Q4 net adds.

Meanwhile, BT asked for residential buildings to volunteer for a trial of their FTTH product. Perhaps, maybe, one day…meanwhile, the Israeli electricity grid is looking at building a national dark fibre network like the Australian NBN.

Ericsson, for their part, buys a WLAN specialist, BelAir Networks - note the special dual mode radio head designed to hang off a metro cable network.

In UK mobile, T-Mobile brought back unlimited tariffs, at a price. £41 a month buys you a BlackBerry 9900 and all the Internet, texts, and calls you can contrive to use, and if you go up to £61 you get an iPhone 4S. T-Mobile UK has form for this - back in the mid-2000s they were the first British operator to provide a flat-rate open Internet tariff, and if you paid the full £59/month whack you could even run your own VoIP from your Nokia E61’s built in SIP client to that German hosted Asterisk website…

A fascinating story: so a market stallholder imported 400,000 cable set-top boxes that let you watch Virgin Media’s whole pay-TV lineup without paying a penny. Killer detail: Virgin paid the police for the costs of investigating him. Didn’t know you could do that!

Telco 2.0’s Keith McMahon notes that Sky’s Sky Anytime Internet-TV service is now available as a pure OTT service, and theorises that they’re hoping to induce churn to Sky Broadband. On the other hand, it might well work better on Virgin’s cable broadband network.

How can Amazon beat Netflix? Probably not yet by taking lessons from the studios - Dan Rayburn is scathing about Paramount’s UltraViolet-powered streaming site.

After last week’s Google results, there’s still a lot of news coming out of Mountain View. Google is very keen to talk about Chromebooks in schools, but 27,000 of them doesn’t sound like a lot in the light of the Napoleonic vision of browser-based cloud computing and hardware as a service. There’s some more here.

The head of Google Wallet resigned this week, as the initiative struggles for relevance, being only available on one phone, on Sprint.

Meanwhile, Google Fibre in Kansas City is bogged down in something about as telco-traditional as you can get - an arcane regulatory dispute about access to passive infrastructure. Google has a promise from the city government that it can run fibre on the city’s electricity poles for free, so long as it uses the section of the pole reserved for electricity. Telco and cable lines have their own sector. Not only do the cable operators object, but it turns out that installing the fibre next to the live power lines is tricky, and requires the services of electricians rather than cable installers. Who command much higher wages. So the Google would like to run the fibre in the slot for telecoms instead, but wants to keep the freebie. And with that, it’s off to the courthouse.

Benoit Felten blogs on a similar issue in India.

Elsewhere, Dan Rayburn reports that Sony has cancelled its Google TV product.

Google announced a new privacy policy this week which lets them integrate data on individuals between different services. This sort of de-anonymisation and data fusion tends to be the privacy third rail (which is exactly what you’d expect if you’d read this paper) and there’s a great big row going on. Google’s slightly hurt response is here. The main purpose of this is to support the integration of Google + into Google Search, which is a controversial issue in itself.

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