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January 27, 2010

Ding-Dong, the Paid Ringtone’s Dead

Filed under: Telecom — Peter Arnold

Ringtones were an $881 million dollar business in 2008. Last year, the business shrunk by $130 million and according to research firm IBIS World, by 2016 paid ringtones will go the way of (take your pick) the DoDo Bird or Palm’s mobile software.

Why? According to Fortune’s Kim Thai, who writes the magazine’s Tech Talk column, the reason is pretty straightforward:

“Cellphones simply don’t ring as much as they used to…. In the past two years the average number of text messages sent by each U.S. cellphone user has more than doubled, to 584 texts per month from 218 per month. In that same period the average number of calls has decreased almost 15%.”

Here’s the larger point: Just as digital music allowed consumers to go around the record companies’ short-sighted business models, so too has the “democratization” of mobile technology allowed consumers to bypass companies peddling ringtones. It’s a lesson the FCC should heed as it considers whether to regulate “neutrality” into the public Internet, VPNs or both.

January 8, 2010

Three Cheers for the Longhorns

Filed under: Texas football — Peter Arnold

royflagWith everyone gushing ‘Bama crimson today, someone needs to stand athwart history and yell, “Stop.” At the risk of infuriating any clients partial to the SEC, Texas was still the better team last night.

First, Texas’ defense was amazing, especially when you consider that 21 of Alabama’s 37 points were either scored by the Tide’s defense or when the offense took over deep, deep inside Texas territory. No question, the Texas defense outshone Alabama’s. Second, it took Garrett Gilbert half the game to find his legs. But once he did, this freshman (!) showed how easy it was to shred Alabama’s defense.

Third, if you take away Gilbert’s most obvious mistake – the shovel pass to D.J. Monroe – then Texas would’ve been ahead by four points in the fourth quarter after Shipley’s second touchdown. At that point, the Longhorn ground game would have taken over and Gilbert never would have had the fumble-causing sack that resulted in Alabama’s penultimate touchdown.

So sorry, Nick Saban. You’re an amazing coach with a great team but you guys aren’t Number 1.

And now back to your regularly scheduled programming….

January 5, 2010

Lies, Damned Lies and…

(New York) Two articles this morning show the fun to be had with number-tossing.

First, there’s a new mobile phone survey from ChangeWave Research that touts a “250 percent increase” in mobile users’ opting for Google’s Android OS. Of those planning on buying a smartphone, 21 percent said they expected to purchase one using Android compared with 6 percent in September. It’s a solid gain but not nearly as impressive as ChangeWave hype:

“Monstrous… [The] change rivals anything that we’ve seen in the last three years of the smartphone market,” said Paul Carton, ChangeWave’s director of research, adding that the sudden surge in consumer interest in Android had “roiled” the market.

By “last three years,” Carton presumably means “since the iPhone.” Anyway, what’s so amusing – coming from a “director of research,” no less – is the way he spins a decent-but-expected growth rate. The company’s survey comes on the heels of the estimated $100 million that Verizon and Motorola spent promoting the Droid. So going from a small base of 6 percent to 21 percent hardly seems “monstrous.” Moreover, the “250 percent” figure is what happens when you begin with such a small number.

And “roiled” the market? Note to ChangeWave’s PR Department: Stop the hyperventilating. No one who understands the industry believes you.

This brings back memories of the Internet’s biggest sham from the late 1990s – that data traffic was supposedly doubling every quarter. It happened once or twice around 1996 when AOL had 1+M subscribers and was ramping up quickly. But after that, the ability to doubling off of a large base became a fantasy.

Next up is Suzanne Vranica’s article in the Wall Street Journal, “Dr Pepper Buys Its First Super Bowl Spot,” which begins, “In an effort to drum up more interest in its recently launched Dr Pepper Cherry, Dr Pepper Snapple Group Inc. has bought advertising time during Super Bowl XLIV.” The purchase marks the first time in the company’s 125-year history that Dr Pepper will advertise during the National Football League championship, which will be broadcast by CBS Corp. on Feb 7.

First time in 125 years? Nice, except that the NFL didn’t come into existence until about 1920. Anyway, here’s the commercial, which is pretty funny.

January 1, 2010

What 2010 Will Bring

As Yogi Berra once said, It’s hard to make predictions, especially about the future. A few predictions from the 2010 crystal ball:

Google’s pride goeth before its fall. Not content to be the big kahuna in technology, Google soon becomes a consumer products company with the Nexus One. Big mistake. This requires a totally different competency – oh yes, and means lower margins. Google has no experience in consumer marketing and brand loyalty is unproven at best. There’s a big difference between convincing ISPs or OEMs to default to your search engine and convincing millions of consumers to choose an unsubsidized phone.

Also, sales will lag without subsidies which further depresses margins. Remember that iPhone sales didn’t soar until AT&T’s subsidies brought the price below $200.

And speaking of Apple products….

Apple’s tablet will produce a migraine. Let’s assume that the iSlate is introduced in January and costs around $800 . The Mac Air isn’t much more expensive and probably does a lot more. Moreover, if you’re going to work on the LIRR or leaving on a business trip, you’re already carrying your laptop. So why carry another expensive gadget which becomes yet another thing to break, leave in the hotel room, or lose in the airport. Not to mention that the AppleCare will likely be another $250.

In this economy? Not gonna happen.

Clearwire’s troubles will mount. “You got real trouble comin’,” said Jackie Gleason in a memorable 1976 movie line and this will probably be Clearwire’s mantra in 2010. Even though the WiMax technology is decent, the idea that consumers on a mass market scale will opt for an unbundled service sufficient to cover capital outlays is fanciful. The company’s recent promo will not be enough to spark sufficient growth. Meanwhile, Google’s decision to turn off the investment spigot looks increasing prescient.

Verizon still doesn’t get an iPhone – unless it does. This is my Hail Mary. Conventional wisdom has it that Verizon gets a CDMA iPhone by 3Q10. I still doubt it. That’s when the company will be rolling out its 4G service. So why would Apple want to tie down its iPhone with a CDMA technology that Verizon itself will be calling outdated? Sure, Apple will sell a few million more iPhones but it’s still faced with the task of adapting 4G technology to the iPhone OS. Not a very appealing long-term strategy from a company that prides itself on always being at the cutting edge.

Odds are that I’ll be wrong on the last one. But as Eli Manning and David Tyree could tell you, sometimes it pays to throw long.