Japan’s The Super Phone

ntt_docomo.jpgForbes has a fascinating look at NTT DoCoMo and the changes inside the company, and its decision to embrace open standards. The story is about Kei-Ichi Enoki, an executive vice president at the company and how he is pushing I-Mode into new markets. “Consumers don’t care about standards,” says Enoki. “It does not matter so much if it runs on Wi-Fi or some other technology; what matters is the content and the services.” DoCoMo’s I-Mode has been a non starter in the US despite a 17% stake in AT&T Wireless, but apparently it is doing well elsewhere. Docomo has licensed the I-mode system to carriers in Taiwan and seven European nations, including Germany, with service beginning soon in Australia, Forbes says. “Mobile phones are going to become personal controllers for anything humans come in contact with. They will control the TV set and other electronic equipment. They will let you into the subway system, act as corporate ID, replace money when shopping, turn on your car and interact with anything else humans deal with,” Enoki tells Forbes.

Comcast out of the Mouse Trap

Comcast has finally called off its bid for Disney. Brian L. Roberts, President and Chief Executive Officer of Comcast, said “We have always been disciplined in our approach to acquisitions. Being disciplined means knowing when it is time to walk away. That time is now.” Right on Brian. We always have said that the merger does not make sense.

Now why Comcast stopped chasing the mouse: In the most recent quarter, the company reported higher revenues but fell short on earnings per share. Higher revenues were result of increases in subscriber fees and not new accounts. Higher expenses were because it is now having to fight tooth and nail for accounts with satellite and phone companies. Telephony subscriber base decreased by 20,000, as the company continues to focus on improved profitability and most importantly the High Speed Internet sales have started to slow down as Baby Bells ramp up their offerings to higher speeds and cut prices. The company added 394K new subscribers in the first quarter 2004, down 5.5 percent from 417,000 in the first quarter 2003.

Don Whitacre

SBC is finally flexing its muscles in the UNE-P side of things, The company and clueless Washington have once again proved that with enough money, anything is for sale. In case you were wondering about my rant, I was responding to this news that SBC has renegotiated its UNE-P pricing contract with Sage Telecom.

bq. SBC announced that it has reached a 7-year UNE-P pricing agreement with one of it competitors, Sage Telecom.  Sage is a CLEC that has around 500K customers in SBC’s region.  Financial details were not provided, but the companies did indicate that average pricing would be below $25/line/month.  This deal comes on the heels of the courts throwing out an FCC mandate that the state regulatory agencies set UNE-P pricing in their respective states.  The FCC is now urging the CLECs and IXCs to negotiate rates directly with the RBOCs. 

Exact financial details are tough to figure out given that all my research is sitting back in Office, but I can say this is a big win for SBC both monetarily and also from a PR standpoint.
Loop Capital analysts says that SBC is “probably going to pump this news to promote further agreements with other players in the industry.  Problem is, the bigger IXCs are fighting this tooth-and-nail and most likely will attempt to take this all the way to the Supreme Court in an attempt to return to state-set pricing.”

(Cell) Madness before the WNP-Bust!

The quarterly earnings data is in! A quick tabulation shows that the wireless industry is going through a mini-boom, and that just might be a harbinger of bad things to come. From Texas Instruments to RF Micro Devices to Nokia, to Cingular, AT&T and Sprint, everyone posted better than expected earnings for the third quarter of 2003.

Read between the lines that the third quarter mini-boom might be a one-off event which is being fueled by the wireless number portability. On November 24, when the number portability goes into affect, the wireless services business is going to enter a Darwinian phase that threatens to weed out the weakest. I address this issue in my recent Business 2.0 article, Take this number and run. (Download PDF file.)

bq. The advent of “number portability” is good news for any cell-phone user who has angrily sworn that he’d change carriers in an instant — if only that didn’t entail changing phone numbers as well. It’s less good news for wireless carriers, because it may well push several of the weaker players over the edge.

In this article, I contend that the increase in the churn, or wireless customer infidelity unleashed by the number portability is going to upset the delicate balance between cash flows and the debt servicing abilities of many carriers. As a result, many are desperately trying to get their customers to resign or attract new customers with really ludicrous offers. News media has been chockfull of such fantastic deal stories. Some are giving away the $250 dollar Sony Ericsson T-610 or T-616 handsets for free these days if you sign up for a phone service. Arm wrestle with your provider and you could walk away with a bonus 1000 minutes or in my case, unlimited GPRS access for free just to stay with the service.

The point is, that the service provider hustle is the main reason you are seeing a huge demand for new phones from the likes of Nokia and Sony Ericsson. Samsung is rocking as well. Strong demand for handsets has boosted demand for chips from two key vendors at the very least Ò Texas Instruments and RF Micro Devices. ARM, which provider the intellectual capital for the TI-processors has been posting great numbers for past few months. However, when the wireless number portability is about three months old, you are going to see a sharp decline in the demand for phones which is going to put pressure on earnings of the same companies which are experiencing happy days.

As an aside, I read in a recent research report that at present the forecasted demand for handsets for 2004 tops out at about 450 million handsets, but the total production is slotted to be around 700 million handsets. Oversupply? That cannot be good news for the makers of chip-sets and even hand-sets.