What’s going on in Phoneland?

Connecting the dots on some news stories from Phoneland.
First, the CEO of Ericsson has been sacked:

Kim McLaughlin, Ericsson Ousts Vestberg as CEO After Turnaround Plans Stall
Vestberg’s departure caps a turbulent period for Ericsson, which is cutting jobs while battling fierce competition from from Huawei Technologies Co. and Nokia Oyj. The company said last week it would accelerate cost cuts after reporting four straight quarters disappointing revenue and profit. Vestberg has faced questions on probes into alleged corruption in Asia and Europe, and last week the company rejected a report in Swedish media that it may be inflating sales by booking revenue before some clients are invoiced.

As usual, that’s the proximate cause, but the deep structure is that 4G tech has been rolled out worldwide already, and no one’s buying much these days.

With much of the so-called fourth-generation networks already built in the U.S. and China, Vestberg had vowed to improve profitability, but the stock has declined since reaching a more than seven-year high in April last year.
Vestberg had carved out new business units targeting media and enterprise customers to get back to growth, while investing in a next generation of so-called 5G wireless technology, which represents the next wave of spending at Ericsson’s telecom carrier customers. However, he refrained from big, dramatic moves like Nokia’s purchase of Alcatel-Lucent SA, opting instead for a partnership with Cisco Systems Inc. for Internet products like routers.

So, he’s out for thinking small bore, and we’re seeing the hiccups from the 4G/5G transition in Phoneland.
Second story: Steven Russolillo says that Apple is ripe for a Rally, despite the fact that market watchers are negative on the giant:

Much of the bearish thesis is due to weakening iPhone sales, which account for more than half of revenue. The iPad isn’t selling as well as it used to and the jury is out on the Apple Watch. Tech investors are allergic to anemic growth, which explains why the tech-heavy Nasdaq has lagged behind the Dow industrials and S&P 500.
Still, Apple has been punished more than enough. The iPhone slump appears priced in. And while the next iPhone, expected later this year, likely won’t be a significant upgrade, there is optimism that sales growth will soon bounce back. Analysts forecast iPhone unit sales will rise 5% for fiscal 2017, which ends next September.

The real question is not about stock price (or profits, either, with $10.52 billion in the March quarter), but about consumer buying behavior. Will we have to wait for a new mobile device — like AR/VR goggles? — before there is another huge surge in consumer demand for mobile? Watches aren’t the future, but goggles will be, I bet. Not a 2016 trend, though. Maybe 2017?
The third and last data point for today: Aaron Pressman digs into AT&T’s efforts to convince Wall Street its wireless business is healthy. His argument reviews the standard argument that postpaid subscribers — the ones signed up for monthly accounts — are generally considered to be better sources of reliable revenue than prepaid subscribers, who generally ‘spend less for service, buy cheaper phones, and tend to defect to other carriers more frequently’.

The bottom line is that so far this year, AT&T’s postpaid subscribers grew only 1% while prepaid subscriptions increased 21%. That’s disturbing to Wall Street, based on the ruling assumption that postpaid customers are preferable.
Thus, Stephens has been trying to push some new math on the analysts. In essence, his argument is that the best customers in prepaid are actually a lot better—and more profitable—than the worst customers in postpaid.
The average service revenue AT&T collected from postpaid customers who have left—and who mostly had not upgraded to smartphones yet—was only $35, he said during a conference call with analysts on Thursday afternoon. But the new prepaid customers signing up with Cricket are bringing in “closer to a $41, $42” of average revenue. Additionally, it costs less to acquire a new prepaid customer and less to provide them with customer service, he noted.
“So from that standpoint, the economics are better, and it is being shown in our margins,” Stephens told analysts, pointing out that while total wireless revenue was down slightly, profit margins were at record highs.

So AT&T has landed in a different dimension, where the economics are reversed, with T-Mobile and others screwing up the numbers for postpaid, while the supposedly poor prepaid sector looks good. However, this may be only true for a short transient period.
And the back office transitions around cable and internet, suggest other churn as the world is turning:

The telco is shedding expensive-to-maintain cable TV customers at its U-Verse unit while adding less costly satellite TV customers for DirecTV. AT&T is dropping broadband Internet customers who connect via older DSL lines while trying to add fiber optic broadband customers. And it’s trying to move corporate customers from traditional managed networks to cheaper virtualized networks. If all of the transitions succeed, both revenue and profits should grow.

Putting all the dots together? The consolidation in Phoneland is accelerating. Old technology is maturing, while new technologies and business models are only slowly emerging, which is leading to the downdraft at Ericsson, and financial analyst disdain for Apple and AT&T. The slowing rate of purchasing — by telcos and consumers, both — is leading to consolidation, the classic market maturation that comes right before a new era of breakthroughs and growth. But those breakthroughs won’t be in 2016.

You can try out a beta version of Windows 10 on your phone now

It’s here: Windows 10 for phones is ready for the public to preview. Microsoft announced that it was pushing the beta OS to intrepid testers through its Windows Insider program on Thursday.

To download the new technical preview, you’ll need to grab it through the Windows Insider app after signing up for the Windows Insider preview program. You’ll also need an eligible Windows Phone. Once you’re signed up, you’ll receive new builds as over-the-air updates. Here’s the full list from Microsoft:

  • Lumia 630
  • Lumia 635
  • Lumia 636
  • Lumia 638
  • Lumia 730
  • Lumia 830

You might notice that this list of devices does not include many of the high-end devices that run Windows Phone, including the 900 series and HTC’s One M8 with Windows Phone.

Update 2:30 ET: Good luck if you’re trying to install the update. Many power users and Microsoft journalists are furiously complaining on Twitter that even devices that are supported may not be able to pull down the update, as well as various other installation issues. If you’re having trouble getting the update to show up, try reinstalling the Windows Insider app. Our own Kevin Tofel has successfully installed the preview on a Lumia 830, but he reports that it’s a slow process.

However, a French language page briefly listed HTC’s Windows Phones as among the devices can grab the preview, so availability might differ by country in the future.

The Technical Preview is a close cousin to the version of Windows 10 for phones that Microsoft previewed at its big consumer-oriented summit last month. Bigger changes expected for Windows 10 on mobile devices include a revamped notification center that syncs with desktops running Windows 10, Skype integration with the its text messaging app and Microsoft’s new Spartan browser, although some of Microsoft’s promised features (like the new browser) might not be available in this build. There should also be a host of subtle interface tweaks that should improve the user experience. Here’s a Microsoft blog post about what to look for in the technical preview.

The Windows 10 technical preview for desktops has been available through Windows Insider since last fall.

Keep in mind that you probably shouldn’t install this on your main phone. It’s a very early beta version and there’s sure to be bugs. So get your spare Lumias out and charged — Microsoft appreciates your willingness to test its pre-release software:

Microsoft launches two sub-$100 Lumia smartphones

Microsoft announced two new Lumia devices on Wednesday, but if you were hoping for a new high-end Windows Phone, you’ll need to keep waiting.

Both the Lumia 435 and the Lumia 532 will cost under $100 when they launch in February in Europe and Asia regions. The Lumia 435 will be the less expensive of the two: For 65 euros (US $77) it offers a 4-inch 800 x 480 screen, a 1.2GHz dual-core Qualcomm chip, and a 2-Megapixel rear camera. It’s a 3G phone, and won’t be able to tap into speedy LTE networks.

Lumia 435

Lumia 435

The more expensive 79 euro (US $93) Lumia 532 comes in single and dual-SIM versions, and it’s slightly nicer. Like the Lumia 435, it’s a 4-inch 3G phone with a 800 x 480 display, but is powered by a higher-end quad-core 1.2GHz chip. Its camera takes 5MP photos, which isn’t great but it’s a huge step up from the 2MP shooter on the 435.

Those are close to the same specs on the existing Lumia 535, the first Lumia Windows Phone without Nokia branding, which has the same processor, RAM and camera and a better screen but costs $135.

Lumia 532

Lumia 532

As Microsoft’s been doing lately, it’s packing in some of its services for free with the purchase of one of these devices. Users who activate their camera backup will get 30GB of OneDrive storage. [company]Microsoft[/company] Office is also pre-installed on the handsets. The Lumia 532 will also be powerful enough to run Cortana, Microsoft’s voice assistant.

Although Windows Phone devotees in the United States and Europe would appreciate a new high-end Lumia, Microsoft seems to understand that the best hope for Windows Phone growth is from customers in emerging markets looking for their first, inexpensive smartphone. So if the Lumia 435 and Lumia 532 are successes, expect more cheap Lumia devices.

For $29, the latest Nokia will send Facebook Messages for weeks

Microsoft still makes legacy feature phones under the Nokia brand, and on Monday, the company launched the Nokia 215. The $29 2G candybar phone runs the old Series 30+ operating system and it will come pre-installed with the Opera Mini browser as well as Facebook Messenger.

Obviously, specs aren’t what most consumers consider when buying a feature phone. The dual-SIM Nokia 215 comes with a 2.4-inch 320 x 240 pixel display, Bluetooth, a FM radio, and a 0.3-megapixel camera.

But the installed internet services on the Nokia 215 might just be enough for someone in Asia, Africa or the Middle East to pick this device over other feature phones. The Nokia 215 uses Opera Mini to provide a rudimentary browsing experience by processing webpages over the cloud and sending them to the device. Preinstalled Facebook, Messenger, and Twitter apps will allow people to use those social networks even without a 3G connection. And [company]Microsoft[/company] wouldn’t allow this phone to ship without at least a light dusting of its services, in the form of a preinstalled MSN weather and Bing Search apps.

Like other feature phones, the Nokia 215’s battery life blows away that of smartphones. The device can manage 29 days between charges and 20 hours of talk time — just try to match that with your iPhone. The device will launch “this quarter” in a few markets, but the United States isn’t among them.


Opera’s app store will replace Nokia Store on feature phones

Microsoft’s purge of Nokia branding and services continues: Opera announced Tuesday that its Mobile Store will replace the Nokia Store on Nokia feature phones, as well as devices running Symbian, and Nokia X devices that run Android. The change will take place during “the first half of 2015.” It’s not Nokia that signed this deal — it’s Microsoft, which has to support those odd devices it got as part of buying Nokia’s mobile business. The move comes a week after Opera signed a deal with Microsoft to become the default browser on legacy Nokia devices, and on the same day that Nokia announced it was working on an Android tablet for China.