Microsoft, Apple, Google, Huawei, Qualcomm, SKT: Telco 2.0 News Review
- Microsoft: Microsoft writes off Nokia, phones stay for now; pivoting to a comms-based business; Gigjam
- Devices: Apple=60% of PC margins; tool-up rumours; Apple, AT&T, Sammy in for eSIM; Intel Q2s; altOS news
- Content & Commerce: Google Q2: margins soar, YouTube ads surge; "Buy it" ads; say no to 10x; OpenStack
- 5G & Broadband: Huawei H1; 400k small cells; Ericsson Q2, 5G use cases; Sprint 2.5GHz finally flows?
- Carriers: Sprin-T rumours back; T-Mo Q2 surges into 3rd place; wireless gigabackhaul; Comcast 2Gbps pricing
- Regulation: EU vs Qualcomm; OFCOM edges towards BT breakup; duplex gap; French, Russian auctions
- Security & Privacy: Hacking Team's hacking revealed by hack; worst data leaks yet; Mozilla vs. Flash; DRIPA
- Internet of Things: SKT joins LoRA, plus HP, Foxconn, Schneider. VF: EU is top in M2M. Verizon home IoT fades
New STL Research: Ten forces shape the European telecoms market. Which ones will win?
Microsoft writes off Nokia but phones stay for now; pivoting to a comms-based business; Gigjam; Windows 10 updates
Microsoft bites the bullet and writes off the whole acquisition of Nokia Devices & Services. That'll be $7.6bn, plus $800m in restructuring costs to pay off the 7,800 people who lose their jobs, so Microsoft has essentially lost every penny it put into the phones business back in 2011. Unsurprisingly, Stephen Elop has left the building. Satya Nadella, meanwhile, says:
I am committed to our first-party devices including phones. However, we need to focus our phone efforts in the near term while driving reinvention. We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family.
Whatever that means (and Lucy Kellaway addresses this question at the FT). It sounds like the phones are staying, but emphasis is moving elsewhere - surely not to Windows Phone licensing, so more likely towards cross-platform apps and services.
As Steve Ranger at ZDNet says:
Microsoft's strategy will focus on three areas: "management, security, and productivity" for business customers, "communications services" for value phone buyers, and "flagship devices" for Windows fans. It's worth pointing out that two of those three elements don't necessarily involve Microsoft actually building Windows Phone devices anymore.
Oddly enough, Nokia was talking vaguely about getting back into phones in some way the other week, so perhaps here's an opportunity. Anyway, an example of the new cross-platform strategy is the leaked Cortana for Android app, described as...Cortana. For Android.
Meanwhile, Benedict Evans ruminates about a platform that would replace Office, to which STL Partners retorts that it exists, it's successful, and it's Office 365 with Skype for Business.
Trailer: Watch this blog for new Telco 2.0 research on Microsoft as a communications-focused business.
If that isn't enough, Project GigJam sounds a lot like it too.
Speaking of Office 365 and cross-platform Microsoft, O365 users are getting Office 2016 for Mac first.
It's going to be very, very difficult to skip updates to Windows 10 for home users. Hopefully this means the end of the unpatched Windows box, but we better hope they don't ship an update that breaks networking. Also, Win10 will indeed be supported out to 2025, a point about which there was some doubt.
Apple=60% of PC margins; tool-up rumours; Hooks; Apple, AT&T, Sammy in for eSIM; Intel Q2s; alt OS news
If Microsoft is going cross-platform, it's no wonder really. The enormous success of the iOS line has dragged Apple's Macintosh line with it - or was it the other way around? Horace quantifies this, pointing out that 60% of operating margin in the PC market is now inside Apple.
A lot more, less quantified value exists in the software and content ecosystem - MS presumably has some ideas about how to, ahem, quantify it by selling software there. Horace also points out that the last few Apple quarters have been significantly above either market expectations or Apple's guidance.
There are some reasons to think so. This German company manufactures machine tools for making lithium-ion batteries, and Apple (or rather its suppliers at one remove) are a major customer. The total order book for that line of business was €25m in 2014, but it's €40m YTD, and the production run for Christmas is being guesstimated at 85-90 megagadgets.
You couldn't say that for Apple Watch, but perhaps there's an app for that. Hooks is an app that provides an enormous range of composable notifications on the Watch for pretty much anything you can get on an iOS device, comparable to Tasker in the early days of Android.
Motorola flagships drop on the 28th of July.
Intel Q2s are out and they're strong, specifically in data centre, IoT, and memory, making up for flat PC and terrible mobile sales. 70% of profits are now coming from data centre (i.e. server), IoT, and Flash NAND chips.
Mozilla has announced new plans for Firefox OS. Starting now, they intend to keep up a cycle of 6-monthly major versions, developed in weekly sprints, port the extensions API from Firefox itself, implement more of the new W3C Mobile Web APIs, and bring back the "view source for mobile" option that existed in early versions.
Jolla's Sailfish OS survives, just, the last legacy of pre-Elop Nokia. It's likely to kick past whatever market share Firefox OS has: Indian OEM Intex has agreed to licence the OS.
And here's the Marshall smartphone, as in Marshall amplifiers, not surprisingly a music-focused device.
Google Q2: margins are back as YouTube ads surge; "Buy it" ads; say no to 10x; OpenStack; AWS API Gateway
Google announced a startlingly great Q2, with net income up 17% year on year while revenues were up 11%. To put it another way, the company's margins, which suffered in 2013-2014 (see this Telco 2.0 Executive Briefing), have improved significantly. A key factor in this was the surge in ad revenue from YouTube, where the count of advertisers has increased 40% since last year and the average spend among the top 100 60%.
Usage on mobile has grown significantly (it's now 50% of the total), but the really interesting point is how Google has changed its ad sales practices. For a start, they have set up a measurement system with Nielsen and Comscore so that the data is comparable with TV ratings. Also, a new product, Google Preferred, offers ad placement only on the top 5% of channels in a given category. Facebook, of course, did very well by rationing the inventory, so it looks like the new thing in online advertising is serving less of it. Google also sees to have had a breakthrough in getting advertisers to take YouTube microcelebrities seriously.
Here's a new feature in Google Ads: Purchases with Google, a "Buy it" button that appears in the ad itself, providing a (dare we say it) Amazon-like one-click route to conversion. They are also integrating this with OK Google and providing some buyer-side features like price comparison, sort by reviews, and price alerts.
Google's "10x philosophy" considered harmful? Googlers are expected to believe that projects should always improve things by 10x. But this led to a succession of ultra-shiny pet projects while Google Ads went years without anything substantially new. Do click through to the prototype remote control for Google TV.
Anyway, if the Q2s are anything to go by, Ads is now benefiting from a sensible dose of incremental improvement, the very antithesis of 10x.
Huawei H1; 400k small cells; EU 5G groups; Ericsson Q2, 5G use cases; Sprint 2.5GHz finally flows?
Huawei announced half-year revenues up 30% year on year, with margins stable just over 18%. The company said that there was "stable growth in all three segments" of the business, but gave no details. We wonder if that's going to be something of a pattern in Chinese companies post-stock market crash. Apparently, some more detail about the smartphone business is coming later in the week, and heavy carrier CAPEX in China is bound to do them some good.
Huawei's president of small cells says they expect to ship 400,000 of them this year, mostly in Asia.
Ericsson, meanwhile, reported Q2 results. In reported terms they were up 11%, but in real money - i.e. after adjusting for exchange rate movements - they were down 6%. The problem is that Ericsson never did get enough North American LTE when it was rolling out and now doesn't have enough Chinese to fill in, and its strongest markets haven't invested heavily in 4G yet. On the good side, its strongest markets are usually also big spenders with their services division.
In case you were wondering, here are 5 use cases for 5G Ericsson thinks are important. Those would be "broadband everywhere", "smart vehicles, transportation, and infrastructure", "media everywhere", "critical control of remote devices", and "human/IoT interaction". Interestingly, Ericsson seems to be interested in publish-subscribe multicast messaging.
Intel and SK Telecom are trialling interworking between LTE and WiGig, in what sounds more like LWA than LAA, especially in the light of SKT and KT's existing WiFi/LTE multistream projects. Note that Intel's Mobile Edge Computing tech is also being used.
And Sprint has started rolling out LTE carrier aggregation, incorporating 20MHz channels of its 2.5GHz spectrum, in 39 major US cities.
New STL Research: How can carriers be more agile and disruptive?
Sprin-T rumours are back; T-Mo Q2 surges into third place; wireless gigabackhaul; Comcast 2Gbps pricing
Sprint's shares, meanwhile, have dived, triggering another round of Sprin-T speculation. The story this time is apparently that Sprint might soon be in "severe financial distress" without a deal, and in such an emergency, the government might reverse itself and accept a deal rather than seeing Sprint go bust. The obvious problem would be how a company in "severe financial distress" would finance a monster acquisition and why T-Mobile shareholders would sell when they could instead go in for the kill.
Speaking of T-Mobile, Q2 results are in. T-Mo net-added 760k postpaid phone, 248k postpaid dongles, 178k prepaid, and 919k wholesale customers, for a final score of 2.1m net adds in the quarter. One imagines they won't weep salt tears over the 33k net loss in M2M. This beat estimates handily and left them on 58.9m subscribers total. And with that, it's finally happened: T-Mobile is No.3, about 1.8m subs ahead of Sprint, unless Sprint pulls out a truly massive Q2.
Revenue targets have been revised up and margins down, working on the principle that a lot of shiny has been given away to get them in the door. However, interestingly, the latest (Jump On Demand) version of their quick-upgrade plan leases gadgets and requires a trade-in, rather than selling them on instalments, in a similar way to AT&T and VZW's competing offerings. This means there might be a significant recovery rate and therefore rather less of a hit to margins.
Sprint, meanwhile, is preparing a new business-focused product, "Mobility as a Service". This offers quick provisioning and dedicated support with reasonable pricing; a while ago there was talk of reviving the Nextel brand, but that seems a stretch.
Here's someone suggesting Sprint could solve all its network problems by using Airspan's LTE multipoint backhaul product. Perhaps. Wireless backhaul competing with fibre backhaul came off much the worse in Europe, and Sprint's now been bitten by quite a few magic technical fixes.
That said, Windstream is offering Gigabit Ethernet pseudowire and MPLS over fixed wireless in Boston and some other cities where it doesn't have access fibre. Be interesting to see how that turns out, although it may be regulatory arbitrage, as we'll see later in this post.
As negotiations between Verizon and the CWA and IBEW trade unions continue, a strike is threatened. Meanwhile, a court has ruled that AT&T is within its rights to discipline technicians who wore "Prisoner of AT&T" T-shirts on the job during a dispute in 2009.
Teliasonera saw H1 revenue up 8.5% but it disappears after allowing for currency shifts, the acquisition of Tele2 in Norway, and the Nepalese earthquake. The end of its near monopoly in Kazakhstan meant a 23% hit to profits at Kcell.
Comcast's 2Gbps service will be dear: $299/mo with a $1,000 one-off fee. However, for the first three years, there will be a "promotional" rate of $159/mo - surely if it's three years it's hardly promotional? It's also quietly upped its 50Mbps tier to 75 and added a new 150Mbps tier.
Suddenlink has begun turning up a 1Gbps service.
EU vs Qualcomm; OFCOM edges towards BT breakup; duplex gap; DISH; French, Russian 4G auctions
The EU has launched a pair of anti-trust investigations against Qualcomm. One of them originates from a complaint by Icera, now part of NVIDIA, as long ago as 2010, which alleges that Qualcomm offered substantial discounts to buyers who used their basebands exclusively. The other was self-initiated by the EU Commission, and alleges dumping. The Commissioner, Margrethe Vestager, sets out a policy on competition here but it's frankly not very illuminating.
Cesar Alierta thinks OTTs should be regulated in some fashion because of "algorithms".
OFCOM has completed the first phase of its review of the BT-EE deal, and says that it's seriously considering breaking up BT by forcing it to sell Openreach. It would like comments on the proposal before the 8th of October. This launches the full-dress Digital Communications Review phase.
The FCC has put off a vote on the planned 600MHz incentive auction until the 8th of August, over the issue of the "duplex gap" and whether it could be used to relocate broadcasters' wireless microphones (remember the huge OFCOM row about those?). Harold Feld endeavours to explain.
The auction rules, meanwhile, have been changed to rule out a repeat of the DISH caper. Charlie Ergen is going to sue.
AT&T doesn't want to give Windstream special access for its Ethernet products, and is protesting to the FCC. That's probably why Windstream is so keen on trying to squeeze Gigabit Ethernet into a fixed-wireless product - as a bargaining chip on the regulatory issue.
T-Mobile gets fined $17.5m for a 911 outage.
French 700MHz and Russian 1800MHz auctions are go.
Hacking Team's hacking revealed by hack; most embarrassing data leaks yet; Mozilla vs. Flash; DRIPA still illegal
Fallout from the hack of Hacking Team continues. It turns out that they organised a BGP hijack to regain control of some servers they used as bot command and control nodes after the hosting company became suspicious, shamelessly breaking the Internet.
Despite being the security company where the password was "password", they also tried to sell drones with a WiFi attack payload. What could go wrong?
Lots of things, but most of them pale into comparison next to the great Ashley Madison data heist. The site famous for its slogan "life is short, have an affair" has been hacked with the loss of 34 million user records. The attackers have demanded that the site go off the air, or else they will start releasing data onto the Internet and keep doing so until they get what they want. They seem especially angry that the site's infamous $19 charge for a "full delete" of your account didn't actually delete anything.
As if that wasn't enough, UCLA's medical centre may have lost 4.5 million unencrypted medical records. "Was it encrypted?" is the new "Do you have backups?"
Not only are an unknown number of US federal government personnel files out there, but the attackers may have been able to write to the database.
Verizon is offering a new managed security appliance, but firewalls really aren't the problem here.
It's probably no surprise, then, that about 30% of consumers give entirely false details to call centres in order to protect their privacy. It's only surprising it's that low.
After two major Adobe Flash exploits were discovered in the Hacking Team leak, Mozilla has deactivated all versions of the plugin by default and seems determined to force Adobe to retire it. That would of course be great news for WebRTC.
Something is wrong with Skype.
The UK's DRIPA, the surveillance law designed to replace RIPA after a court found it to be illegal, turns out to be illegal.
The fibre slasher of Northern California strikes again.
Don't destroy the Internet, Dave! That's the guy from California's job.
SKT joins LoRA, plus HP, Foxconn, Schneider. Vodafone: EU is top in M2M. Verizon home IoT quietly fades out.
SK Telecom has signed up with LoRa, the French-led LPWAN alliance. This is the first time LoRa has got a foothold outside the North Atlantic. Meanwhile, they've also signed up Schneider Electric, Foxconn, and HP.
Vodafone reckons Europe is leading the world in M2M, or IoT, adoption. 31% of the businesses they asked have live devices, up from 21% last year, although you wonder how representative the sample is. Interestingly, German manufacturers are the fastest into the game.
No mention of the R-word, though: revenue.
Here's an interview about Telefonica's Thinking Things IoT developer kit.
Weightless is deploying its low-power radio tech in Copenhagen and Esbjerg.
Qualcomm has joined Thread, a standards group for IP-based consumer IoT.
Verizon seems to be winding up its home automation product.