Apple Opportunity #2 - The iPhone OS

As we discussed in “Apple Opportunity #1 - An OS Inflection Point”?, there have been some highly publicized numbers coming out of Apple lately:

* Apple is expected to sell over 4 million 3G iPhones by the end of the September quarter.  Roughly 4x the totals from a similar post-launch period for the first iPhone.

* The iPhone App Store saw over 60 million downloads in its first month of existence.

These numbers are all very impressive but the naysayer will hold true and naysay.  Yes, Apple sold 4 million iPhones, but the number in insignificant when taken against the 1.15 billion mobile phones sold in 2007. 

Apple Opportunity #1- An OS Inflection Point?

OSX market share approaches 8% in July 2008.  Up 2% from a year earlier.

Apple is expected to sell over 4 million 3G iPhones by the end of the September quarter.  Roughly 4x the totals from a similar post-launch period for the first iPhone.

The iPhone App Store saw over 60 million downloads in its first month of existence.

These numbers are all very impressive but the naysayer will hold true and naysay. The numbers are still vary small in the grand scheme of things.  Yes, OSX market share is approaching 8% but don’t forget that Windows is still at 90%.  Yes, Apple sold 4 million iPhones, but the number in insignificant when taken against the 1.15 billion mobile phones sold in 2007.

Blackberry Bold Released

The much anticipated Blackberry Bold has been released in Chile with Movistar.  It appears that it will miss the expected August 6th date with Rogers but it should be available soon in Canada.

 

I suspect that these interative delays for the Bold in Canada are based on carrier testing iterations with RIM.  It’s common for carriers to exhaustively test devices before releasing them for sale.  Every carrier has a slightly different network configuration and different issues may be found by different carriers.  The handset manufacturers iterate resolution of these issues with the carriers until the handset is deemed to be green lighted for release.  At this late stage, the issues are usually very minor but at the same time, carriers want to avoid expensive customer service calls and will push to resolve as many issues as possible before releasing a device.

GSM in Canada: Bell, Telus & The New AWS Carriers

Canada is soon to be flush with GSM technology based carriers.  This, along with the upcoming significant increase in new carriers born out of the AWS auction, is great news for Canadian mobile consumers. 

The mobile industry, like many technology driven industries, is a global industry.  Global demand and market share dictate priorities for research and development expenditures.  GSM has taken a significant lead in global market share over CDMA technology.  This lead has grown from 55% global market share for GSM in the year 2000 to over 85% of global market share in the year 2006.  A good amount of this growth has come as fast growing mobile markets such as China and India have chosen the GSM standard over CDMA.  The last remanants of CDMA carriers, primarily those in North America and South Korea have begun to indicate that they will be moving over to GSM technology standards in their next set of network evolution investment.  In fact, evolution of the CDMA technology has been effectively halted after the release of EVDO Rev.B.  The outstanding question for most CDMA carriers is whether they wait and suffer competitively relative to GSM carriers for two or three years until GSM 4G LTE technology is commercially available in 2010/2011 or whether they undertake a significantly capital intensive two step approach and move to UMTS, 3G GSM, now and then step to LTE in 2011/2012/2013.

In the USA, Verizon has publicly stated that it will be shifting to the GSM technology camp by overbuilding its network with LTE as soon as it is commercially available.  In Canada, it is well known in the industry that Telus and Bell have issued a joint RFP for UMTS and are currently field trialing the technology from the four short listed vendors.  They will certainly move to GSM technology though whether they do it in two steps, UMTS first then LTE, or in one step, wait for LTE, is not known. 

The new AWS auction based cellular carrier entrants; Shaw, Videotron, Bragg, DAVE, and Globalive, will all certainly come to market with UMTS based services, starting sometime in late 2009.  Initially, as they build out their networks, they will offer services delivered via resale of the Rogers UMTS network.

What does this mean for consumers? 

For one thing, this means that Rogers will no longer have technology based exclusives on the best phones.  Hot new devices such as the iPhone, Blackberry Bold, etc. will be available on all networks at once - whether through the locked phone market or the unlocked phone market.  This loss of GSM phone exclusivity will force better handset and plan offers from Rogers otherwise they will risk losing customers to the other carriers.  As we discussed in 10 Tips For Saving on Your Cell Phone Bill, it is best to avoid 3-year contracts that lock you into high prices in advance of the upcoming increased competition. 

Additionally consumers will be able to change phones by simply moving their SIM to a new phone.  As in Europe and Asia, there will be a competitive aftermarket for unlocked GSM phones on the North American spectrum blocks. 

A similar benefit in reverse is the ability to keep your physical phone but purchase a temporary in-country SIM when travelling to avoid roaming costs.  We discuss tips for saving on roaming in 10 Tips for Saving on Your Cell Phone Bill as well.

At Cell Canada, we are very excited about finally getting competitive access to some of the best phones in the world at dramatically better phone and plan pricing.  Bring on the Nokia N96, the Blackberry Bold, the Apple iPhone, Sony Ericsson Xperia1, and the other upcoming great phones with plans on any of six carriers in our local market.

Great Cheap Phone Services

Alligato Mobile - Simple and low cost long distance calling from cell phones (alligatomobile.com)

GrandCentral - Free and feature rich single number service (grandcentral.com)

Lypp - Cost effective audio conference calls (lyyp.com)

Maxroam - Cheap multi-country roaming service (maxroam.com)

These are a few of the services that we will be discussing in more detail in future posts.  We are big fans of innovative services that combine the power of the web with traditional telecom to create consumer centric solutions.  We are also big fans of cheap and free.  We have a long history with the economics of the industry and know that cell phone long distance shouldn’t cost 30 cents/minute within Canada, and conferencing shouldn’t cost 60 cents per minute, and roaming certainly shouldn’t cost over $1/minute. 

We are always on the lookout for entrepreneurial businesses that have developed solutions to offer consumers true value in the niches where the carriers are hoarding margin.  We will talk about these services and others on this blog and welcome any suggestions on services that we should try.

Update - Rogers Blackberry Bold Release Date

Quick update to our previous story (Rogers Blackberry Bold Canadian Release Date) about the Canadian release date for the Blackberry Bold. 

We’ve learned from another Rogers contact that they expect promotional material for the Blackberry Bold this week - the week of July 28th - and plan to have the Bold on sale next week.  Fits well with our previous story indicating a release date of August 6th.

Calling Card Scams, Tricks, and Hidden Fees

The extremely high cost of long distance calling from our family’s cell phones has been the main reason that, until recently, we’ve held off on canceling our home phone line.  Like many others, we’ve come to realize that our cell phones have become our primary phones and our home phone has been relegated to occasional long distance calling.  The regular monthly bill for our home phone reminded us again last month that we should conduct some research to find a good option for long distance calling from our cell phone and do away with our home phone altogether. 

We’ve never been fans of calling cards, finding them to be just too much hassle.  Given the renewed motivation to toss the home phone, they seemed to be the obvious solution for occasional long distance calling from a cell phone.  Cheap too - we saw advertised rates, on card faces, of under one cent per minute to North America.  Almost too good to be true compared to the 30 cents per minute our cellular carriers charge for the same long distance calling destinations.

Anything too good to be true typically is just that, too good to be true.  If you flip calling cards over to view their back, and if you strain to read the fine print at the very bottom, and then persist to read it to about the two-thirds point, the published hidden fees begin to show up.

Published hidden fees such as:

• Connection Charge.  A fee on the first minute of the call that is 6 to 10 times higher than the advertised per minute rate.
• Minimum Call Charge.  A minimum charge per call.  On the cards that we reviewed, this equated to a minimum 4 to 6 minute call.
• Two minute rounding.  We were completely surprised by this minute increment.  The card balance decrements in two minute increments!
• Aging.  This is where the remaining card balance automatically decreases every day after it is first registered, whether you use it or not.

How does anyone ever know what they are really paying per minute with all of these additional varying charges?  We applied the rate structure, to the best that we could understand it, from one of these cards to a small sample of our recent long distance calls and discovered that instead of paying the 0.9 cents per minute on the face of the card, we were averaging over 8 cents per minute.  Just ridiculous.  Why do people keep buying these cards? 

On top of these published tricks, we learned that there are also many unpublished tricks.  Cards can be set to count a minute every 45 seconds.  Others have hidden time of day premiums, cell phone premiums, payphone premiums, and who know what else.

We are surprised that this industry exists in the way it does and with its apparent size.  There must be a study on human nature in here somewhere.  The gullibility of humans and how the species prefers a nice simple number while comfortably ignoring the pickpocket on its back.

To cut a long story short, we obviously passed on calling cards, we continued looking for alternative solutions and we found one in a cell phone long distance service from a company called Alligato Mobile.  The service seemed very straight forward on their web site, the rates were very good, and it was easy to sign up.  We’ve been using it for almost a month now and so far so good.   It is easy to use and the call quality is good.  We haven’t received our first bill yet and that will probably be the real test of whether we get what we think we bought.  We will keep you posted.

UPDATE AUG 3, 2008: We received our first bill from Alligato a few days ago and it looks very straightforward.  Each long distance call we made, minutes per call times the per minute rate.  Plus GST and PST.  No other charges or hidden fees.

Rogers Blackberry Bold Canadian Release Date

We just received an update on the Rogers release date for the Blackberry Bold in Canada.  As we discussed in our earlier post on the Bold, Apple Iphone Vs. Blackberry Bold, the Bold is expected to be a strong competitor in the smartphone space, especially for customers with a need for heavy email and BES integration. 

For all of you waiting for the Bold, our moles inside Rogers have told us that it will launch in Canada on August 6th.  I’m sure we will see marketing and promotion in advance of the 6th. 

For you Blackberry fans, rest your thumbs…

Blackberry Thunder - RIM Takes A Risk

Yes this is a bit premature.  The Thunder is not out yet and at best we have rumours on design and specs and photoshopped images.  However I thought I’d touch on it given that, with all the buzz around competitive responses to the iPhone from the major mobile handset manufacturers, this is the one that I believe has the most potential. 

No doubt the Samsung Instinct, the HTC Touch Diamond, the Sony Ericsson Xperia, and the Nokia Tube will have their strengths and given carrier marketing dollars, will take some market share.  Some, especially Nokia with it’s huge Forum Nokia developer community, will have the backing of developers, and most of them will have superior hardware specs to the iPhone - better cameras, video, etc.  However I don’t expect that any will capture the mass market consumer’s aspirational interest the way the iPhone has captured it.  They will not have the Apple brand image, the incredibly simple and elegant UI, and most of all, the fully integrated and well developed App Store.  Download portals - yes probably - but a simple, easy to use, fully capable application download function with discovery, one touch download and install, and a simple integrated payment mechanism - probably not.  And that is why they will remain also rans.  Many will promote how packed they are with superior hardware functions but the Internet scale innovation that a fully integrated App Store brings will be missing and with it, the weekly and monthly buzz about the latest and greatest must have application.  “Have you heard about Shazam?  It’s a super cool new app that…”

Current expectations have the Thunder arriving in September but given that the Blackberry Bold will probably land around then, expect RIM to clear some PR time for the Bold before beginning the Thunder PR press.  So Thunder in time for the Christmas season or early 1Q2009?   Mobile sales have taken up the retail sales cycle pattern over the last 3-5 years and the Christmas season now represents a significantly disproportionate amount of a carrier’s annual sales.  Given this, expect that RIM’s and it’s partners Verizon and Vodaphone will be pushing hard for a pre-Christmas release.  No word on a Canadian partner or date yet.

So why is the Thunder so interesting.  It will probably have a weak download portal like the other competitors and RIM has typically received poor reviews for its difficult developer tools.  The Thunder is interesting because RIM, similar to Apple, understands its market very well and knows how to laser focus product into its market.  They usually do not try to pack in the best set of hardware features and a kitchen sink into their high end products but instead understand the basic needs of the corporate market and fulfill those needs better than anyone.  Heavy email, high security, Exchange integration.  No one beats RIM in the corporation.  With the Thunder, RIM is taking a risk going keyboard-less but I expect that it is a well thought out risk and we may be very pleasantly surprised by the innovation in their touchscreen keyboard.  Current rumours list a soft keyboard with tactile feedback, full QWERTY and SureType entry, and multi-touch capability.  Add a Webkit browser and it gets interesting.  A RIM device, with BES integration, an innovative touch keyboard, and the most focused corporate needs execution, could hold back or slow down the iPhone’s push into the corporate world.  Or conversely, if RIM can’t hold it’s corporate turf against Apple, then Apple will own everything - the consumer market and the enterprise market.

 

(I know there is a large camp that pines for a white knight in Android but I’m not drinking the kool-aid.  Android introduces more noise in an already noisy mobile OS ecosystem.  If anything, LiMo may be a stronger open source player than Android.  More on Mobile OS’s in another post.)

Apple iPhone vs Blackberry Bold

Side by Side

The early reviews are in on the Blackberry Bold and comparisons with the iPhone are inevitable.  In summary, the comparisons highlight that these are two distinctly different phones with different strengths.  Perhaps the real RIM vs. Apple showdown will come when the Blackberry Thunder comes out later in the year with a large screen and soft touch keyboard.

 Boy Genius has one of the better high level reviews and it summarizes into:

1. If you are a hardcore Blackberry email junky and have a preference for a hard keyboard, then go Bold.  It’s a bit larger than recent Blackberry’s but has great styling, great keyboard, an improved browser and the best Blackberry screen to date.

2. If you are not hooked to Blackberry’s and are a moderate email user then go iPhone.  It’s the best general purpose mobile device.  Great OS, great design, the best browser, good email, and a growing list of easily accessible and innovative applications. 

The Bold looks great though I prefer the smaller size factor of the Curve.  Big anticipation here at Cell Canada for the Blackberry Thunder.  It will be RIM’s first foray away from the hard keyboard tha thas defined their products and success for so long.  If it just keeps up with the iPhone and doesn’t come with an App store, then RIM’s chances of defending against Apple longer term are suspect.