Saturday, January 27, 2007

Mobile commerce for BlackBerry

Austin-TX based 30 Second Software announces the launch of "Digby", a mobile commerce service. It will allow BlackBerry users to make purchases on their phones

Dave Sikora, President and CEO of 30 Second Software, was quoted in the press release: “With Digby, we have created a shopping service that offers an effortless yet rich buying experience on BlackBerry handsets, enabling users to easily buy products for themselves and others while they are mobile.”

According to IGR Research, merchants have desired such commerce opportunities but have found it challenging to offer a purchasing experience comparable to that available through a PC.

image of a BlackBerry

More here:

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Wednesday, January 24, 2007

The year for mobile finance?

Caught an article in the ComputerWeekly (a UK based publication) about the possibilities of banking and payment initiatives coming to fruition this year. Along with new initiatives come new avenues for improper uses, such as malware that could exploit the new capabilities.

Here's a quote from the article:

Bob Egan, an analyst atTowerGroup, said, "The success of mobile banking and payments, as wellas the concept of the mobile wallet, will be measured against theindustry's ability to effectively contain malware problems to a levelthat is at least on par with that of the existing internet channel. .... "IT managers must examine extending their existing malware and virus security initiatives to include mobile phones.

I'd love to not have to carry a wallet someday but will I need anti-spyware software and anti-virus software and all the other add-ons that I currently use to protect my PC? I hope not.

Full story:

Mobile banking to be targeted by fraudsters - 24/Jan/2007 -

Monday, January 22, 2007

China Mobile to take 89% stake in PakTel of Pakistan

China Mobile currently has 300 million subscribers and is making its first foray into an emerging market. The deal is worth $284M. Apparently the Pakistani mobile market is still small with 46M users. China has 444M users. China Mobile is adding 5M users a month in the China market and this move seems to be in line with its current strategy. China Mobile's chairman was quoted in Businsess Week:

"We are particularly interested in emerging markets," said China Mobile Chairman Wang Jianzhou in an exclusive interview with Business Week late last year. "We are not interested in mature markets like North America or Western Europe."

It would be reasonable to say that the primary entrants in the US market would be MVNOs.

Full story: China Mobile Makes First Overseas Buy

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iPhone profits II

Our friends at TeleClick have an article on the profitability of the iPhone ... more here:
Apple iPhone Could Enjoy Profit Margins Over 50% » Telecommunications Industry News

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Friday, January 19, 2007

IAP class: Breaking down phone components

MIT's Independent Activities Period is a great time to try out new things, or work on things you've always wanted to but never got around to it. One of the classes I took was around product design, where you could develop prototypes using basic materials and then have users test the products (with a little bit of imagination).

A dismembered phone

My concept was a phone that was broken down into individual components:

  • A screen that was used for all data input and output
  • A headset for all audio input and output
  • A communication box for all infrastructural activities (data/voice communication, data storage, etc.)

The idea is that the components would communicate via bluetooth. The potential benefits are:

  • No need to carry all components on you -- the communicator can be stowed away in a bag, etc.
  • The screen has an ideal form factor for presenting data since it would be highly portable (light, small) yet highly functional because it is not encumbered by other functions (communications, etc.)
  • When using voice functions, only the headset is required, so all the other components can be neatly tucked away.

User test

The users found the touchscreen interface intriguing and confusing at the same time. The interface was similar to that announced by the new iPhone -- I wonder how the iPhone 's interface is going to fare. I suppose I could upload the videos of the user test on YouTube ... time permitting.

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LG and Prada to release iPhone like phone

LG is going to release the KE850 phone in collaboration with Prada. Many are touting it as an iPhone copy but given that it was a partnership wtih Prada, my guess is that it was in development for a while. These so

TrustedReviews - LG & Prada Make iPhone Look-a-Like

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Thursday, January 18, 2007 reports on RIM vs. iPhone

Just came across an article about how the iPhone might impact RIM. Some say it may not recover, even with two upcoming products in the pipeline, Indigo and Crimson. It's the first I've heard of these new models and the article mentions that these two models are not considered to be as much of a breakthrough than the Pearl. Here's a quote:

"They are hitting the sweet spot of product cycle for Pearl, and we think they have a bigger-selling proposition with Indigo," says Rob Sanderson of American Technology Research (who does not own shares or have an investment banking relationship with RIM.)

RIM Mounts iPhone Defense

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Wednesday, January 17, 2007

Sony Ericsson takes #3 spot in global mobile sales

Sony Ericsson overtook Samsung in mobile sales in Q4 '06, with sales of €3.8bn last quarter, up 64% year on year.

The top two players are Nokia and Motorola; Samsung's revenue had fallen 7 percent.

Contributing factors:
S/E sold 74.8M units in 2006, with 60M music enabled phones. 17 million of these were walkman phones.  Average pre-tax profits are about
21.5 per phone.
Strongest growth was in Latin America, Asia and Europe

According to the article on FinFacts,  "
Sony Ericsson increased market share during the quarter due to the continued success of products such as the K800/K790 Cyber-shot phone and Walkman phone line-up." The Average Selling Price was higher than expected because of strong demand for S/E's handsets.

It looks like S/E was able to increase market share with new products in a mid-tier, higher margin category, without reducing profitability.

Complete story at FinFacts:
Sony Ericsson overtook Samsung in mobile sales in Q4 2006

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Tuesday, January 16, 2007

Bollywood on the third screen

Just read a Business Week article about the creation of three short movies from Bollywood, made specifically for mobile devices. With low levels of literacy in India, Bollywood movies probably constitute a significant portion of media consumption. It will be interesting to see the broader implications of this new move.

Full Story: Bollywood on Your Mobile Screen

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Monday, January 15, 2007

Effects of iPhone release: lost iPod sales? huge iPhone margins? Cingular?

So I've been thinking a lot more about the iPhone launch (as you can see from previous posts) as well as preparing for case interviews. I've been doing too many cases on growth strategies and can't stop thinking about how the iPhone will affect the carriers, Cingular, Apple, and iPod sales.

I've come to the conclusion that ...

  1. iPhone will have double margins to counter iPod cannabalization
  2. Apple's profits should see a 10% boost
  3. Cingular will improve its customer mix, with more tech-savvy, higher spend customers

Let's observe what's happened in the past couple days ...

1. The WSJ reports that RIM's stock price (the makers of BlackBerry) fell 7.9% following the iPhone announcement.

2. T-Mo and Sprint launched new phones (varieties of existing phones) and lowered their pricing on phones.

3. iPhones are only available on Cingular.

Impact on iPod sales:

The 4GB and 8GB sell for $199 and $249 respectively, a $50 difference for increased capacity. iPhones with similar storage will go for $499 and $599 -- a $100 difference for the same increased storage capacity.

So what's Apple trying to do here? My guess is that they don't want to cannabalize their iPod sales, so they've built in two margins in this product. One to compensate for cannabalization of traditional iPod sales (since you're not likely to buy an iPod now) and the second for the iPhone. I was in the market for an iPod for myself and my wife, but now I might hold out and go for the iPhone instead.

One indication of the higher margins on the iPhone is the higher pricing for additional capacity. They are charging $100 for 4GB extra on iPhone vs. an extra $50 for the same on an iPod. The extra $50 amounts to about an increase of margins of ~8% more.

Verdict: Apple's gonna recoup lost margins from iPod cannabalization

Impact on Apple's revenues:

I haven't checked the analyst ratings on AAPL recently but it's not surprising that the analysts are trying to figure this out. Toni Sacconaghi, an analyst at Sanford C. Bernstein, told the WSJ that "cellphones priced above $300 account for only about 5% of the global market."

Albert Lin, an analyst at American Technology Research, was quoted in the WSJ: "If Apple is aiming to sell 10 to 20 million units, that's a realistic and achievable goal." Steve Jobs, Apple's chief executive, said the company aims to sell 10 million iPhones through the end of 2008, which would account for about 1% of the annual global handset market.

But some analysts are skeptical, considering that the iPhone will be available only to Cingular Wireless customers and initially only in the U.S. It is scheduled to become available in Europe in the fourth quarter and in Asia in 2008. "Given the timing, geographies and the fact there is only one device, we think that two million devices could be sold in 2007 in the best instance," writes Nomura Securities analyst Richard Winsor in a report.

I suppose it's reasonable to expect Apple to gain 20% of the >$300 phone market in two years (10M units), but it's only available in the US through 2007 and only with Cingular. The 2M figure from Nomura seems like a reasonable estimation.

I'm going to guess that the margins on the iPod are 25%, so $50 and the margins on the phone are 20% for the 4GB iPhone, and 25% on the 8GB iPhone. This comes to about $100 and $150. If 4GB version accounrs for 70% of the sales, Apple's profits should increase by: 2M * 0.7 * $100 + 2M *0.3 * $150 = $230M

AAPL's earnings were $2B last year, so we're estimating an increase of about 11.5%.

Just looking at the recent stock chart from Yahoo! ... the stock jumped from $86 to $95 over the past few days, or about 10.5%. Not bad for back of the envelope calculations ...

Verdict: Apple's gonna make loads of cash

Impact on Cingular:

According to WSJ: For its part, Cingular said it expects to attract high-end customers who are willing to pay the price of the device and for the data services the phone could offer, prices for which the companies didn't disclose. Cingular wouldn't say whether it was subsidizing the cost of the iPhone, as carriers typically do for most handsets. On average, North American carriers subsidize $70 to $90 per phone, according to research firm Gartner Inc.

Even if Cingular sold the phones at cost, they would make it up from the data services, which are high margin revenue streams for the carriers. There's hardly any cost associated with an additional user checking their email on the network. In fact, the carriers probably want greater utilization on their networks to recoup the costs of infrastructure.

The iPhone could help Cingular increase the ARPU (average revenue per customer) significantly, especially over a 2 year period. I'm just going to assume that the data plan will cost $19.99, and related variable costs are $4, this brings it to $16 per month or $384 for the lifetime of the contract. And this is just for data services. I'm sure the voice revenues will be rather healthy.

What's even better is that Cingular might be able to pull high-profit mobile consumers from other carriers, improving the mix of Cingular's customers. The longer other carriers wait to respond to the iPhone, the more they'll bleed in high-end customers.

Verdict: Cingular's profitability should see a boost from this deal.

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Carrier response to iPhone

Following Sprint's new phone release, T-mobile just announced a white version of the BlackBerry Pearl. The BB Pearl seems like a solid device, not sure if white's such a key differentiator but what's interesting is that they've dropped the price on the device from $199 to $149.

[BlackBerry Pearl]

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Spotted: Bio-monitoring phone from Korea

Korea is no doubt one of the most advanced in terms of mobile technology. A team from Korea's Research Institute of Bioscience and Biotechnology has developed a sensor that monitors Glutamine Oxaloacetic Transaminase and Glutamine Pyruvic Transaminase (indicators of liver function) and beams it off to a hospital or third party via the phone.

I'm sure they'll figure out privacy/HIPAA related issues in time. You don't want your friends to accidentally receive your GOT or GPT stats!

More importantly, this opens up a new model where the phone is merely the information relay device ... the data gathering piece is a special add-on and the data processing is done elsewhere.

Full Story at

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Sunday, January 14, 2007

Spotted: Sprint now offers their own version of the Motorola Q

Sprint has just added the Q to its lineup of phones. Makes one wonder what the impact of the iPhone is going to be on other carriers and phones. No one wants to get locked in for two years only to see all your friends carry new iPhones in a couple months and your new Q become obsolete.

Are you better off buying unlocked phones (I guess this only applies to TMobile and Cingular)?

Should phone manufacturers and carriers create more portable phones (i.e. usable across carriers)?

Full story from engagdt: Engadget

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Thursday, January 11, 2007

Spotted: Cellswapper; no more long contracts?

Spotted on techcrunch ... cellswapper enables people to swap contracts on their cellphones. Contracts are clearly a huge problem and this type of buyer lock-in is irritating customers. If only the pay-per-use voice guys also had unlimited data ...

CellSwapper Solves A Very Annoying Problem

New Jersey based CellSwapper is a cool service that came at just the right time. The site, which calls itself “the eBay of cell phone contracts” takes advantage of the fact that all U.S. cell phone carriers have clauses in their contracts that allow users to get out early, without the early termination fee that can range up to $250 per phone, just by transferring your account to someone else.

CellSwapper Solves A Very Annoying Problem

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2nd Flock founder leaves Flock

Techcrunch confirms Geoffrey Arone is leaving flock to join Bessemer Ventures as an EIR. Yes, this post was blogged using Flock :)

Update: This is now confirmed. Arone commented below, saying “I will be working closely with Flock, which is a Bessemer company. I have enjoyed working with Bessemer throughout and this opportunity presented itself. Flock is well-aligned with partners and is burning the midnight oil to get the 1.0 out. My Flock e-mail will still be in tact and if you know any good BD/Strategy folks, send them my way. Cheers, Geoffrey”

Second Founder Leaves Flock

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Apple sued over iPhone name

Apparently the iPhone name is not unique and was registered almost 10 years ago ... full story spotted on CNET ...

Cisco obtained the iPhone trademark in the year 2000 after it acquired a company called Infogear, which previously owned the mark and sold iPhone products for several years. Infogear's original filing for the trademark dates back to March 20, 1996. Linksys, a division of Cisco, has been shipping a new family of iPhone products since early last year. Last month, Linksys expanded the iPhone family with additional products.

Cisco sues Apple over iPhone name | | CNET

text of the suit:

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TeleNav's traffic offering unveiled at CES 2007

A new service is "Traffic," a capability to detect the flow of traffic and, if necessary re-route the user around critical events, such as accidents and traffic jams. The service is supported by data that is collected from road sensors maintained by the Department of Transportation (DoT) as well as fleet data that is collected from the GPS systems commercial systems installed for example in trucks. The traffic service is free if users sign up for the Telenav's general navigation service until June 30 2007, which is priced at $10 per month. Beginning in July 2007, the traffic service is available for an additional $4 per month.

CES 2007: Your cellphone can re-route you around traffic jams | Tom's Hardware

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Friday, January 5, 2007

Company Visit: Vocera

Healthcare facilities involve a mobile workforce that traditionally relies on a one-way paging system, which is often ineffective and can be a contributor to preventable deaths. Vocera's interactive messaging product enables healthcare staff to communicate with colleagues in a convenient and hands-free manner, compressing or eliminating several steps in their workflow. It also reduces the time to expedite patient care, which can be critical in emergency situations.

Customers using Vocera have experienced greater nurse satisfaction, patient satisfaction and increased patient safety. This directly contributes to lower nursing turnover, increased bed turnover and recovery of associated implementation costs through savings within 6 to 18 months.

Tech talk: Vocera links a company's employees using the communicator devices that utilizes the 802.11b network.

My favorite feature is the ability to locate a colleague. So if you're in an office and want to meet with John Doe, you simply hit a button and say (paraphrased) "Where is John Doe", and the response could resemble "John is near meeting room Alpha".

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Wednesday, January 3, 2007

California Trip -- TeleNav

Traveled to Califiornia with the Sloan E&I crew to visit VC firms and venture-backed companies. The visit to TeleNav was one of the most anticipated. They provide the software and service that allow a mobile phone to double as a GPS navigation devices. Their flagship product, TeleNav GPS Navigator is offered on Cingular and Nextel/Sprint. Pretty cool stuff!

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