Category Business

iPhone, Verizon, Android, and the Carrier Model

Verizon iPhone on Flickr
Photo: jfingas on Flickr

Tomorrow, the wireless arm of Verizon will announce at a press conference in New York City that they will begin a CDMA version of Apple’s iPhone 4. This will end forty-two months of exclusivity in the US the device has had with AT&T Mobility. It will mean that Verizon is able to stem customer defection to AT&T for those wanting iPhone, will increase ARPU and data adoption, and cost AT&T in subscriber growth and post-paid customer churn. But that’s not what makes this announcement interesting. iPhone is important for many reasons, but it unique insofar as it has revealed quite a bit about the carrier relationship with subscribers and handset makers that was never a point of focus when the market was filled with dime-a-dozen flip phones and clunky email devices.

It’s rumored that when Apple first set out to partner with a US mobile carrier for its first foray into making a phone, it went to Verizon Wireless. This partnership was, of course, not to be — but why? It’s a story of control. Both Apple and Verizon are notorious for their need for control. Verizon has never seen itself as one to be a dumb pipe or merely a service provider. Nearly every device that has been released for use on their network has been branded and customized through and through to offer an experience that puts its services from and center (e.g., VCAST media stores, branded LBS products, mobile web), often at the expense of ODM (original device manufacturer) provided functionality. Even basic messaging products were rebranded to fall in line with their TXT/PIX/FLIX unified branding strategy. Smartphones were no different, and even presently sold handsets have undergone the same treatment where devices include the Verizon suite of “value-added” products that lead back into its walled content garden. iPhone, in all its iterations with AT&T and across the globe, are not this way. Software update schedules and functionality are managed by Apple and the carrier interference ends at the network backend for things like Visual Voicemail.

But it’s unfair to place Verizon under such scrutiny for how they managed their phone lineup and the device software. AT&T is in many ways the same with their Media Mall/AppCenter and similarly branded services. Sprint and T-Mobile too. But on iPhone, this wasn’t the case. Even when AT&T brought some of their services like its cobranded TeleNav offering to iOS and Family Map, the devices weren’t permitted to be preloaded on the device, but rather had to be downloaded from the App Store.

The phone is pristine from the consumer perspective, as though it managed to make it out of the wild without any battle scars from the carriers. iPhone bears no carrier marking on it to mar the clean design, and the software is all Apple. And it is this that defines the experience that smartphone buyers allude to when they express interest in iPhone by brand rather than fully articulating what about it is better. It has been doubly vexing for competing carriers to fully counter the demands by subscribers for why it isn’t available on their network. That is, because Apple has marketed it in a way that is carrier independent. They promoted an experience that customer’s could expect but didn’t tie it to their launch partner. It’s a phone that happened to be on AT&T, but it wasn’t an AT&T iPhone. For most, they thought it was like an iPod in that sense. CDMA, GSM, EV-DO Rev. A and HSPA+ are not things the average consumer worries about, and they shouldn’t have to.

In that sense, iPhone was a revelation about how Americans bought phones and how they carrier model was subject to change. Before this device, customers didn’t take the time or ever need to know that the BlackBerry 8310 was an AT&T exclusive with GPS but the 8320 had WiFi on T-Mobile, and that Verizon had the 8330 which had an unlocked location radio. They just walked into their carrier’s retail location when their two year was up and saw a BlackBerry there and were satisfied. It was around the time of the iPhone debut that phone exclusivity because a big deal in the US. Verizon scrambled to find something that would appease customers; this ended up being the colossal dud known as the BlackBerry Storm and Storm2, both exclusives to them in the US. AT&T currently holds an exclusive on the BlackBerry Torch for the time being.

And then there’s Android. While this deserves an article in and of itself, it’s necessary to briefly touch upon it. After the failure of the BlackBerry Storm to satisfy customers wanting a touch screen device on Verizon, they bet the farm on Android, Google’s iOS competitor that had been first commercially released in the G1 on T-Mobile. In October of 2009, Verizon, Motorola and Google announced the Droid A855, the first successful Android based handset to fall into consumers’ pockets. It was fully featured at the time, had strong branding licensed from LucasFilm, and an healthy advertising budget. Droid from Verizon was truly the first device that was at least 70% as good as iPhone, and for most people that was enough. But the interesting data point from here relevant to the carrier discussion is how Droid for Verizon was introduced in marketed.

DROID. When you read that, you knew it meant Android but you thought Verizon. And that’s how the story gets interesting. On marketing material and ads, you see the device but you’re shown it as though it was a Verizon product. It’s not the Motorola A855 Droid. It’s Droid on Verizon (from Motorola). And it was smart, because the Droid branding was not for just one device, it was for an entire class of phone that evolved with a new model every three months. But Android as an OS and concept became popularized as Droid even if it wasn’t on Verizon. And better yet, it worked because if you were to poll a random sampling of the public, a significant percentage would tell you that Android is a Verizon product. It’s epitomized by the launch event for the original Droid device in which the corporate logos were arranged, from left to right: Verizon, Motorola, Google.

You can’t count on that happening this time around. iPhone is not a Verizon property, it’s an Apple device that will run on Verizon’s voice and 3G data network. It will not be an LTE-capable device. It will not carry a Verizon logo, a checkmark, or a red and black splash screen before boot. Verizon knows this, and it’s why they’ve spent so much to differentiate themselves through marketing to position themselves as the market leader in reliability and overall coverage because the differentiation will not be on the device level. Even when it was taking on AT&T and its most popular device, it never sought to convey that the iPhone was a bad product (save for the ill-fated iDont ad), it was that it was on a sub-par and over-saturated network. That will change tomorrow.

And things just got a whole lot more interesting for Android ODMs that were relying on people who won’t or can’t leave Verizon, who now can get the device they actually wanted.

The Sad Tale of Palm and webOS – Part 1: Business and Marketing

Palm Pre Plus - App Image
Palm holds a soft spot in every gadget geek’s heart. I’ve been a fan since my first Palm device, the Palm III — perhaps the first device that showed me where things were headed and the potential of mobile computing. It was followed with a Sony Clie (a palm licensee), a Treo 600 and a few others. But Palm faced a problem in that the operating system was stagnating. While Windows Mobile, albeit less user friendly, was innovating at a solid clip and was the software powering some of the most compelling mobile devices of the mid-2000s, Palm was finding any way they could deliver rehashes of the same device running Palm OS 5. That version, which powered the Treo 600, 650, 700p, 755p and the Centro, a device that up until last year was still sold by the major US carriers, was introduced in 2002.

The company had many challenges ahead of it as BlackBerry hit the big time, securing not only the enterprise and SMB markets but also achieving success in the consumer space with the Curve and Pearl models, and Apple who released the iPhone in 2007 which spelled doom for last generation touch devices like the Treo.

In January 2009, Palm announced its answer to the competition and placed its future in the hands of its new webOS software. Early adopters and investors seemed impressed but unfortunately it failed. Palm was acquired by HP (HPQ) on April 28th, 2010. The failure is three fold: business and marketing, software, and lastly hardware. In this post, I’ll cover the business aspects of the situation.

Palm chose Sprint Nextel as their launch partner of the device in 2009. The exclusive launch partner. It made sense, somewhat. Sprint was still hemorrhaging customers because of its divided attention after the Nextel acquisition, lackluster customer service, and deficit of focus. Palm expected that it could divide marketing costs with Sprint, receive more prominent placement in stores and have the Palm Pre, the first webOS device, serve as the flagship device for Sprint’s rebranding campaign. Having announced the device five months before it would actually ship, the hype machine was in full force and many were hopeful for its resurgence. Palm was trading at $1.42 as of December 8th, 2008 on the NASDAQ and by the launch of the device, it was at $13.01 in early June.

The single carrier exclusivity strategy was ill-fated. It limited the audience of the Pre to just too few consumers. In the quarter leading up to the release of the device, Sprint reported that it had lost 1,250,000 postpaid customers, 531,000 from the Sprint CDMA side of the business. That meant that at launch time, Palm had an possible embedded sales base of just 25.3 million customers, because remember, even though Sprint had 49.3 million subscribers, only a little over half are on post-paid CDMA contracts. Sprint led the industry in the worst way possible with 2.25% postpaid subscriber churn. Sprint bet, and most likely made concessions for the exclusivity, to draw in and keep high-ARPU smartphone users who would want the Palm Pre.

Yet Palm, even riding the wave of pre-CES hype in 2009, didn’t have a magical and lust-worthy device like the iPhone which would lead to customers ditching their old wireless providers in droves. Apple didn’t have that problem; even though they were new to the phone business, they picked a huge carrier and had a built in audience that would pay an early termination fee just because Steve Jobs blinked in their general direction. Palm had no such luxury, and they blew it. It wasn’t until the following CES in January 2010 when Palm announced the device would land on its second US carrier, Verizon Wireless, which would prove to be too little too late as the momentum in the smartphone space had shifted to Android and BlackBerry for other carriers and to iPhone for AT&T.

Prove that Robert Scoble was not dropped as a baby

“Prove that Techcrunch did not pay @biz $10,000 to get on Twitter’s suggested friend list. They sure were not more popular than @leolaporte two weeks ago.” – Robert Scoble

Well, first. When you pull a ridiculous accusation out of your ass, I do believe that the burden of proof is on you. The issue here is that Robert Scoble has become increasingly more and more irrelevant as the whole free-money Web 2.0 “social networks as conversations” thing began to wane and he can’t handle that. For some inexpicable reason, there are a small few that actually do listen to him and we end up with gems like this.

Twitter has a feature called “Suggested Users” so people can find new interesting people to follow. It’s not really based on any true metric or algorithm as far as I can see and thus, it’s not a popularity contest in the way that Scoble would like things to be. Thus, he feels the need to accuse Michael Arrington of ‘bribing’ a Twitter founder to be on that list. Other people on the list are Veronica Belmont, Felicia Day, Kevin Rose and other assorted popular users. The problem here is that Scoble and others feel that every social network has to be open and trasparent so that “thought leaders” (and I mean that as a pejorative) can quantify their excellence through popularity and notoriety.

Robert Scoble is angry and whining because of the fact that he’s not on it. That’s all. He’s angry that nobody actually cares about what he has to say except desperate start-up owners looking for him to schill their product. Scoble has an always will be an attention grubing blogger who, much like Dave Winer, have completely lost sight of the revolutionary environment they were thought to be fostering in the early days of Web 2.0.

The quote link leads to a thread on FriendFeed which is an interesting read for the sheer ridiculousness of it all.

I'm A Problem Solver – DTV Transition

I can’t believe that Congress and the new administration actually passed an extension for the US Digital TV transition deadline, but alas – here we are. But look, I’ve solved the entire problem in two minutes. After the deadline, display this test card on the analog channels for one week. When old people find out their TV no longer works, they’ll call a somebody young and useful to the world and find they need a converter box or a new television in order to keep watching Wheel of Fortune and Matlock.

[image]

You’re welcome, federal government.

Apple and the Missing PowerBook Successor


“I missed you too” – on Flickr by süńdāyx

I’m disappointed with Apple. I’ve been using their machines since I was four years old and have been buying them personally for the past seven. It has been my preferred platform of choice and I’ve never been unhappy with the hardware choices available to me until now. I see a glaring hole in their portable line-up, a small prosumer notebook. This void had been previously filled with the 12″ PowerBook but has never been replaced since its discontinuation in early 2006. One might suggest the MacBook Air as it’s successor, but that’s not paying attention to what the 12″ PowerBook was – a small, lightweight notebook that made almost no compromises in performance and connectivity to achieve it’s minuscule footprint. I do not mean to suggest that there is not a spot in the marketplace for a thin and light MacBook Air, however it’s clear that Apple is leaving money on the table from consumers like myself searching for that elusive perfect computer in a perfect size.

But I have a dream. A dream where there is a speedy and capable notebook running Mac OS X that fulfills these wants and needs. All Apple needs to do is build it. I’ve taken the liberty of drawing up spec. sheet of what this computer should be. I give you, the perfect laptop…

MacBook Pro (13″) – Coming Soon from Apple

  • 13″ 1440×900 LCD (LED-backlight)
  • Discreet Graphics (Dual-Link DVI)
  • Intel Core 2 Duo (Montevina)
  • 2-4GB DDR3 1066MHz RAM
  • 64-128GB Solid-State Disk
  • Gigabit Ethernet Networking
  • 802.11N Wireless Networking
  • Integrated Sprint/AT&T WWAN
  • Bluetooth 2.1 + EDR
  • iSight Webcamera
  • Backlit Keyboard
  • 9-Cell Battery*
  • SDHC Reader

This would not require a feat of engineering, although I’m certain that Apple could work their usual magic and include some tremendously innovative features in this notebook. These features exist in many notebooks available today (such as the Sony VAIO SZ, ThinkPad X200/300) but prove to be flawed choices as they do not run OS X and lack the polish I expect from a laptop, which is why I’m an Apple buyer in the first place. An optical drive? Who cares about an optical drive? The world’s thinnest notebook? I don’t need it. Simply put, I want a small and powerful laptop that can handle a long day of on-the-go use and be backed by the operating system I can’t live without.

* To keep with the svelte and clean design of Apple notebooks, a smaller battery can be included and the larger 9-cell high-capacity battery would be left as a CTO option.

Customer Support Failure: Microsoft Xbox (Part 1)

Last week I wrote about a better than expected experience with a company, and now it’s time to take it in a different direction. I’ve mentioned the issue I’ve been having with my Xbox 360 a couple of times on Twitter, but I’ll detail the story thus far here.

About five weeks ago, my Xbox 360 stopped retrieving an IP address from my router. I waited until the weekend to start troubleshooting it. I powercycled all the devices involved (Xbox, cable modem, AirPort Extreme) and tried again. Nothing. I then proceeded to to reset the firmware of the router, tried plugging the Xbox 360 directly into the modem, hard reset the modem, cloned the MAC address of a different device onto the 360, manually assigned the 360 an IP address rather than using DHCP, and many more. Nothing worked. So, I reluctantly called Microsoft Xbox support on Sunday (20 July) to see what could be done about this. I was walked through extensive troubleshooting steps provided to me by the Xbox Live representative, and even though I had already been through all of them, I ran through them once more. After an hour and a half on that call, being placed on hold repeatedly and embarking on remedies that made no sense, I was told to call back after I had contacted my ISP to check with them why the issue was occurring. Rather than do this, I elected to borrow another Xbox 360 console from a friend and try that. After plugging it into my normal network configuration and tossing my hard drive onto it, everything connected just fine which shows there is absolutely nothing wrong with my home network or internet connection.

I called back about an hour after the previous support call had ended. After more holding and futile support remedies, I was told the issue would need to be escalated to Microsoft for “investigation” since they were hung up on the fact that I was using an Apple AirPort Extreme (oh noes, an Apple product!). They informed me that it would take about seven business days to completely this, and while this seemed like an extraordinarily long time for such a simple issue, I said I’d wait for a call.

Two weeks had passed without a call, so I called Xbox customer support a third time on the 3rd of August. The support representative looked into my case, placed me on hold, and came back after ten minutes to tell me that a supervisor would call me in three to five business days after they had looked at the case because it was still “pending” with Microsoft. I had other things to do that day, so rather than argue it, I said fine and waited. Another week passes without a call. A week after (10th of August), I phone once more to check on what the status was and again, I was told that I would receive yet another fictitious phone call within two to three business days. Yet another week passes without any action.

Frustrated and frankly, quite angry, I called customer support once more last Sunday. I was calm and polite throughout but became increasingly unnerved at the fact that I was receiving the same story yet again. I asked vehemently why I should expect a different outcome with the “wait for a call” routine than what I had seen over the past month, and I was simply told that it would be taken care of in two days by a manager. I ended the call and stewed for a while – thankfully I have the loaner Xbox from a friend so I could take out the frustration with some Call of Duty 4.

Welp, it’s Thursday now, four days after the last call and I have (surprise, surprise) have not received a callback. I’ll be calling back tomorrow and will not accept a callback or brush-off as an acceptable solution. I’m floored that such a simple issue can be taking this long and that the investigation of said issue is being treated as though it involves a completely different company. I’ll post again with the outcome, which will hopefully, be more positive than what I’ve experienced thus far. Astonishingly, this has not soured my opinion of the Xbox brand and I’d still recommend it to anyone as I truly think it is the best gaming experience. I just hope my case is an anomaly amongst tens of thousands they work through.

About that new 19-hour battery from Dell…

Dell made quite a bit of news when they announced the latest update to their line of Latitude business notebooks. The new E-Series models are indeed quite stylish and pack a great feature set and, remarkably for Dell, clean industrial designs. But the biggest talking point that people have latched onto about these notebooks is that 19-hour battery life claim that is being tossed around. No, there was not some magical breakthrough in battery technology exclusive to Dell, it’s just the addition of a very-large secondary battery. jkOnTheRun did a limited examination of this however let’s delve into specifics and prices. Here are the details on how this is feat is actually achieved by Dell…

Dell Latitude E6400 14.1″ Notebook (19-hours)

  • 9-Cell Primary Battery ($99 CTO)
  • 12-Cell Secondary “Slice” Battery – 84Whr ($399 CTO)
  • High-capacity 9-cell adds 0.4lbs over the standard 6-cell battery
  • Slice battery adds 1.78lbs to the overall weight of the laptop and 0.6″ in thickness

Overall, it’s quite a bit of asterisks checking to see how this battery life claim comes to fruition. It requires the addition of $500 in power accessories and adds some serious heft to the notebook but this isn’t too large a compromise for the serious business traveller or power user that needs all-day battery life when they don’t have the luxury of power-outlets for a top-up at every turn. Again, the claim from Dell needs to put into perspective – when I first read about the feature, I questioned my recent order of a Lenovo X200 (which offers 9 hour battery life off a single nine-cell). The X200 manages this with a still svelte form-factor and still weighs in at just a bit over 3 1/2 pounds. Dell does claim however, that the nineteen hour figure is based off realistic everyday mobile user, which we’ll see once the reviews and benchmarks begin to trickle out.

Customer Service Success: Backcountry.com

It’s rare that I’m ever extraordinarily pleased with customer service, but this afternoon, I was. While there are a few online stores that I frequent and am quite satisfied with such as Amazon (Prime!), Newegg and Apple; very few actually surprise me like Backcountry.com did. As usual with almost everything I ever order, I missed the UPS delivery attempt – but before I got home to see the dreaded yellow sticky, I received this email about the order…

Hi Carlos,

Thought you’d want to know – we just got word of a slight delay with your shipment. We hate waiting for new gear too, but it’s always better to know what’s up than be in the dark.

So here’s the deal: your package is on its way with a modified delivery date. The report from UPS says that since you were not available for delivery, UPS will make a 2nd attempt very soon.. To get the full details on your shipment’s progress, call UPS at 800-742-5877. We appreciate your patience, and can’t wait to get that brown box full of gear into your hands.

When you touch base with UPS, have your tracking number and order number handy to make your call quick and effective. We already did the legwork – check it out:

UPS Tracking Number: 1ZR7V93XXXX655XXXX
Backcountry.com Order Number: 44XXX62

I’ve never received a notice from a retailer after the order has shipped before. They went one extra step to make sure that the customer is aware of the status of their package rather than leaving it to them to dig up the tracking number had UPS not left a note. Good on Backcountry, and I anxiously await my new laptop messenger bag.

The problem with Windows software developers.

The independent and smaller software developers for the Mac platform are the best in the business – they’re committed to the operating system and identify with the experience that the end-user has come to expect. On the Windows side of the aisle, this isn’t the case. Windows developers, as a community, seem horribly fragmented and do not identify with the same goal. Each brings a product to market to fulfill a gap they believe they can fill, however just how an application will work and interface with the system and other software is almost always an afterthought. Consistent GUI? What’s that? Every program believes that it either will look as bland as possible or it will try and reinvent the wheel yielding a clusterfuck of a UI.

This morning, I was looking for a Quicksilver-inspired Windows application to use in my coming experiment (details to come soon – I have to check with Amnesty International to verify whether or not it falls in the realm of torture), and I found a new one that tries in their own special way to do the same. Dash is one that really caught my attention as it seems to best capture the basic nature of Quicksilver’s search, but it led me to another facet of the Windows developer problem which is how they market their software. Take a look at the seven reasons they suggest I use Dash at their product page. Item two on that list (because everyone loves reading lists) is “Reduce Repetitive Stress Injury”. Seriously, go look, I’ll wait… Rather than the pithy “act without doing” tagline adopted by Alcor, the developer of Quicksilver, Dash takes it in the opposite direction and is positioning this as a marvel of modern medicine. I say this in jest, but the problem is that it’s not addressing a problem they can solve or the strength of their product – it strikes me as something they pulled out of their butt to fill the empty space on the site.

And then there’s price. Dash is set at $50.00 except if you purchase now, you can get their “pre-release offering price” of $19.95 saving you $30.05. Let’s skip right past how this is on par with infomercial level “buy in the next thirty minutes and get a second free!” silliness and look at how it’s they’re establishing value. Software isn’t designed to be inexpensive and offering excessive discounts can make it seem as though you’re diminishing the worth of a product; a great example of this is Transmit from Panic Software for the Mac – it’s an FTP client, but it’s billed as the FTP client. As such, Panic doesn’t discount the software to entice those who undervalue what they offer, which is a fantastic user experience and just well-designed software. Cyberduck and Fugu are free, but I saw the value in the product that made $29 palatable. What the makers of Dash are doing is, in my opinion, either mispricing their product or using used car salesman tactics to win over customers. Ignoring the fact that Quicksilver, a vastly superior product to this knock-off, is completely free – Dash is selling an application at their ‘regular price’ that pushes it into the range of what full-fledged productivity apps cost. Launchbar, a product similar to Quicksilver for Mac is priced without the gimmicks, at $19. Fair.

I could continue, but for the sake of brevity, I’ll end this here. Windows developers and software vendors have so much to learn from the Mac developer community about creating better applications, but even more importantly, about marketing. If it can be summed up in a sentence or two, it would be this – stop selling simple consumer apps the same way Microsoft and Oracle sell enterprise CRM software. Home users don’t want to see how many different ways you can say the same thing on your “features” page, they want to see you solve a problem they have and do it elegantly.

Where Activision fails, Harmonix succeeds.

In 2006, Activision acquired game peripheral manufacturer RedOctane and as a result, the rights to the ‘Guitar Hero’ game series. Whether or not this would be a productive move was to be seen. A few months later, Harmonix, the game developer of ‘Guitar Hero’, was acquired by MTV Networks. Neversoft took over development for ‘Guitar Hero III’ at Activision and the Harmonix developers were able to focus on new exciting projects with expanded access to music licensing opportunities through MTV and Viacom. One of these acquisitions made something revolutionary and one led to the dilution of a once-in-a-lifetime brand, guess which?

Activision killed the ‘Guitar Hero’ brand. With the release of ‘Guitar Hero III’, Activision made it clear they were interested in expanding the reach of the franchise by any means necessary. This meant they were going to make it available on every platform possible, whether or not it made any sense. The result? Guitar Hero on a keychain, Guitar Hero for BlackBerry, Guitar Hero for the Nintendo DS, and more. By not innovating on the flagship product itself, Activision made it clear they were not committed to creating a compelling product that redefined the music space; just market penetration. The 100,000,000 USD acquisition was a boon for the shareholders of ATVI but a net loss for the consumer and game lover.

Harmonix, free to explore the music game genre which they made viable, churned out ‘Rock Band’. This new game title changed the what the public imagined a simple rhythm game could be by incorporating drums, vocals into the usual plastic guitar fare. Innovative hardware is not the only reason it has been so successful; Harmonix and MTV made downloadable tracks a priority and as a result, new songs are released on a weekly basis. As of the publishing of this article, 100 tracks are available for download by Xbox 360 and Playstation 3 users and over 10,000,000 songs have been purchased. Downloadable content was not new; Xbox Live users were familiar with map-packs and additional content game publishers made available for sale. PSN on Playstation 3 allows for similar functionality. ‘Rock Band’ as a game proved without a doubt that game developers had the opportunity to reach the consumer after the point of sale with compelling content and interactivity. Harmonix operates a user forum and a comprehensive site for players to explore and extend their game experience. At every point where Activision failed to capitalize on the brand they acquires, Harmonix nailed it. This is why ‘Rock Band’ will be the game title that reigns supreme: extensible, social, innovative.

The ‘Guitar Hero’ brand is certainly not dead, but is nowhere near as powerful as it once was due to the systematic dilution by Activision. Executives are Activision have indicated that the next iteration of the ‘Guitar Hero’ will most likely feature drums and a microphone; essentially making it a ‘Rock Band’ knock-off. That’s not quite ‘Guitar Hero’ anymore now is it?

Personally, I’m waiting for the ‘Guitar Hero MMORPG for Nokia N-GAGE’ to be released…