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 So why would Apple want to tie down its iPhone with a CDMA technology that Verizon itself will be calling outdated?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.

From the Sublime To…

(Washington) … the ridiculous:

“This notion that customers must now curb their Internet usage or pay up is not only unfair to consumers, it puts up a roadblock to wireless innovation,” says Craig Aaron, senior program director at Free Press, a nonprofit group that advocates for unfettered access to communications.

The year has three more weeks but it’s safe to say that the competition for the most incomprehensible, illogical statement is over.
Beyond the absurdity in Aaron’s statement, the irony is that Free Press styles itself as a consumer advocacy group. But what sort of consumer advocate could possibly support a uniform pricing system in which serial filesharers are subsidized by senior citizens who use their connection to check email twice a day?

Logic would say that Free Press and a consumer advocate like Craig Aaron should support a lower-priced option for occasional users, instead of deriding it. Wonder why they don’t…

LA Confidential

(Las Vegas) The award for the year’s most puzzling headline goes to the Los Angeles Times for this doozy on David Sarno’s story about iPhone usage: “AT&T may penalize iPhone users who hog data.”

It’s a great headline, at least to the extent that “penalize” is a shorthand way of saying, “Those who consume a lot of a product should pay more than those who only use a little.” Actually, Sarno’s article is fairly straightforward and is one more example of how the current uniform data pricing structure among wireless carriers is increasingly untenable.

According to the head of AT&T’s wireless division, three percent of iPhone users are chewing up 40+ percent of the company’s bandwidth. Credit the proliferation of mobile video options. But this imbalance should hardly come as a surprise since a similar imbalance has existed on wired broadband for years.

Japan, which led the world in wired broadband, faced a similar issue well before America did. Thanks mostly to P2P, fewer than five percent of subscribers consumed almost half the country’s bandwidth. For a good resource on this, here’s the 2007 report on net neutrality from Japan’s Ministry of Internal Affairs and Communications.

Specifically, look at the usage charts on pages 17-19 and the conclusions on pages 59-66.

Mobile Agonistes

(New York) LA Times columnist David Lazarus writes in his column today:

All [wireless] phones should work on all compatible networks — particularly in light of the fact that all wireless companies are building state-of-the-art networks to accommodate increasingly snazzy smart phones.

Figure it like this: If you buy a TV at Best Buy, it’ll work with any cable or satellite provider you pick, anywhere in the country. Mobile phones should work the exact same way.

Well now.

Lazarus is a bright guy and ought to know the obvious problems with this ridiculous comment. First, the four main U.S. carriers (AT&T, Verizon, Sprint and T-Mobile) use incompatible technologies. Second, these technologies operate on different frequencies.

In technical terms, unless your carrier’s cell tower technology and emitting frequencies match the radio in your mobile phone, your call won’t go through. That’s why European 3G handsets have difficulty with the U.S. 3G standard. Even though the technology is basically the same, Europe’s standard for 3G is 2100 MHz, while AT&T operates 3G at 850 and 1900 MHz.

That means that while Lazarus’ dream of a mobile phones that are technology- and frequency-agnostic can be achieved, it won’t be cheap. Nor does he acknowledge that there is the cost. Maybe an additional $60 per handset? Maybe $80.

That said, the market is converging, as the 4G/LTE standard should bring greater technological harmony to the mobile industry. But don’t hold your breath, as it won’t be truly mass-market until 2011.