Why AT&T and Verizon Are Rooting for Windows Phones(bits.blogs.nytimes.com)
bits.blogs.nytimes.com
Why AT&T and Verizon Are Rooting for Windows Phones
http://bits.blogs.nytimes.com/2012/04/24/carriers-windows-phone/?ref=technology
6 comments
in addition, i look forward to the days when mobile phones are nothing but web/html5 browsers where apple/google.microsoft lost the control over the stores. they'll provide the best web rendering and convenience; rather than crap apps and monetization needs that no one cares about.
I look forward to the day that the cellphone is just a generic computer, where you can install anything you want, including the operating system. I want more than a system locked down to only HTML/CSS/JS.
> The more the iPhone succeeds, the less leverage the carriers have, Mr. Kuittinen explained. All they have is bandwidth.
So what's the concern here? Carriers aren't idiots - is carrier commoditization necessarily a bad thing?
So what's the concern here? Carriers aren't idiots - is carrier commoditization necessarily a bad thing?
> is carrier commoditization necessarily a bad thing?
Depends on the POV you're considering.
From the POV of the carriers it's a very, very bad thing as it's going to eat into their money and their control. For some manufacturers it's not a good thing as they build handsets for carriers who may not want handsets built specifically for them once they're "nothing but dumb pipes".
For pretty much everybody else, it'll be a great day.
Depends on the POV you're considering.
From the POV of the carriers it's a very, very bad thing as it's going to eat into their money and their control. For some manufacturers it's not a good thing as they build handsets for carriers who may not want handsets built specifically for them once they're "nothing but dumb pipes".
For pretty much everybody else, it'll be a great day.
>For some manufacturers it's not a good thing as they build handsets for carriers who may not want handsets built specifically for them once they're "nothing but dumb pipes".
I think manufacturers are very pissed at having to make a different model for each carrier or make slight changes in the design and naming for each carrier.
This is the reason that Nokia stopped dealing with carriers and went the unlocked route a few years before having to eat crow and get back into bed with the carriers this year.
The manufacturers would be very happy to make one model and be able to sell it on multiple carriers with consistent naming.
I think manufacturers are very pissed at having to make a different model for each carrier or make slight changes in the design and naming for each carrier.
This is the reason that Nokia stopped dealing with carriers and went the unlocked route a few years before having to eat crow and get back into bed with the carriers this year.
The manufacturers would be very happy to make one model and be able to sell it on multiple carriers with consistent naming.
> I think manufacturers are very pissed at having to make a different model for each carrier or make slight changes in the design and naming for each carrier.
I'm guessing that depends on the carrier, Nokia had power and brand name but HTC was founded as a strict ODM.
The advantage is that you get money to build the phone (to specs, and usually shitty, but still build it) and are cushioned from device failure: currently, carriers want many devices in their portfolio (even if most barely sell).
I'm guessing that depends on the carrier, Nokia had power and brand name but HTC was founded as a strict ODM.
The advantage is that you get money to build the phone (to specs, and usually shitty, but still build it) and are cushioned from device failure: currently, carriers want many devices in their portfolio (even if most barely sell).
Yes, my thoughts exactly. If all you have to sell is a big dumb pipe you'll make it the best big dumb pipe you possibly can.
Things will go a lot smoother once the carriers realize that all they are IS bandwidth. Unlike Cable, they didn't offer valuable content to begin with, and don't have the same leverage to delay the inevitable. Charge users an acceptable price for bandwidth based on infrastructure costs, and call it a day. It is a fantasy of theirs that they can generate revenue in other ways at this point. They don't know how, otherwise they would make their own phones and app markets. It seems corporate executives with dying business models often resort to delusional flailing strategies. I'm just not sure if they believe this is the correct route, or have to appear to be doing 'something' for the investor's sake.
This is largely true, but I think it paints the telcos as more irrational than they are. They're using their "delusional flailing strategies" to "delay the inevitable" because those strategies are going to make them more money, at least in the short term.
Long term, yes, running a network is not going to afford them the kind of lock-in revenue they are accustomed to. I"m sure they know this. But still, they have a duty to their shareholders to produce revenue now.
They're only irrational if you see an obvious course to a future of greater profits. But you don't provide one, and frankly I don't see one either. The phone industry is going to need to shrink, revenue-wise.
Long term, yes, running a network is not going to afford them the kind of lock-in revenue they are accustomed to. I"m sure they know this. But still, they have a duty to their shareholders to produce revenue now.
They're only irrational if you see an obvious course to a future of greater profits. But you don't provide one, and frankly I don't see one either. The phone industry is going to need to shrink, revenue-wise.
The carriers have "delusional flailing strategies" because they really are delusional and flailing, at least in the parts of the organisations that are capable to driving structural change.
The cost structures, swivel-chair automation, arthritic processes, lack of an ability to rationalise their portfolios (many decision-makers on the infrastructure side don't even know what a portfolio is, let alone what rationalisation means, and why this might just help) lead them to panic every time people start cutting their cords (first copper, but soon anything that can be replaced by OTT services) and that is visible to their investors.
As someone (occasionally) on the inside, they are irrational, they are flailing, and yet they have no real sense of urgency as their escape paths from likely commoditisation are colonised by nimbler players.
[edit: I read the phrase "delusional flailing" as "delusional failing", but the essence is similar enough]
The cost structures, swivel-chair automation, arthritic processes, lack of an ability to rationalise their portfolios (many decision-makers on the infrastructure side don't even know what a portfolio is, let alone what rationalisation means, and why this might just help) lead them to panic every time people start cutting their cords (first copper, but soon anything that can be replaced by OTT services) and that is visible to their investors.
As someone (occasionally) on the inside, they are irrational, they are flailing, and yet they have no real sense of urgency as their escape paths from likely commoditisation are colonised by nimbler players.
[edit: I read the phrase "delusional flailing" as "delusional failing", but the essence is similar enough]
I actually meant 'flailing' but obviously 'failing' applies as well.
Simply: because the carriers want to be able to play phone manufacturers against each other like the good old days. Android alone hasn't given them as much ammo against Apple as they'd like and Android itself may be facing consolidation.
There's a real chance that consumer acceptance of the incredible range of Android phones is predicated on their belief that the Android brand makes those phones largely comparable, if not compatible.
So if manufacturers go a more Amazon-ish route with Android in retaliation for Google's buying Motorola, it's entirely possible that consumers may not be willing to follow the smaller outfits. And that would mean a further concentration of sales under the handful of manufacturers that do have some individual pull with consumers (say, HTC and Samsung). Which would only exacerbate the carriers' problem of not-enough-phone-manufacturers-at-each-others-throats.
There's a real chance that consumer acceptance of the incredible range of Android phones is predicated on their belief that the Android brand makes those phones largely comparable, if not compatible.
So if manufacturers go a more Amazon-ish route with Android in retaliation for Google's buying Motorola, it's entirely possible that consumers may not be willing to follow the smaller outfits. And that would mean a further concentration of sales under the handful of manufacturers that do have some individual pull with consumers (say, HTC and Samsung). Which would only exacerbate the carriers' problem of not-enough-phone-manufacturers-at-each-others-throats.
Rather: iphone financing is killing their cash flow, blackberry is lost as an alternative, android has a too big winner-samsung. Carriers need a third player, to push down financed device costs and microsoft is hopeless about mobile and has cash to throw in.
> Rather: iphone financing is killing their cash flow
Not sure why that would be, surely while Apple dictates their asking price they don't dictate financed price do they? So that's a self-inflicted wound, and one which carriers could fix by financing the phone less.
On the other hand, the iPhone precludes almost all carrier control, they don't control the initial load, they don't control the updates, ... Carriers control some features Apple gives them hooks for (e.g. tethering), but that's about it. And customers become loyal to the device (and its manufacturer) rather than the carrier, not hesitating jumping ships to a carrier providing the device.
> Carriers need a third player, to push down financed device costs
It's not like Apple had much say in this back in 2007~2008, and BlackBerry was still there...
I don't see sensible support for this narrative.
Not sure why that would be, surely while Apple dictates their asking price they don't dictate financed price do they? So that's a self-inflicted wound, and one which carriers could fix by financing the phone less.
On the other hand, the iPhone precludes almost all carrier control, they don't control the initial load, they don't control the updates, ... Carriers control some features Apple gives them hooks for (e.g. tethering), but that's about it. And customers become loyal to the device (and its manufacturer) rather than the carrier, not hesitating jumping ships to a carrier providing the device.
> Carriers need a third player, to push down financed device costs
It's not like Apple had much say in this back in 2007~2008, and BlackBerry was still there...
I don't see sensible support for this narrative.
>Not sure why that would be, surely while Apple dictates their asking price they don't dictate financed price do they? So that's a self-inflicted wound, and one which carriers could fix by financing the phone less.
The fact is that margins are down at Sprint, Verizon and AT&T because of the iPhone.
Last quarter:
http://business.time.com/2012/02/08/how-apples-iphone-actual...
This quarter, AT&T's and Verizon's profits are up because of lower iPhone sales:
http://www.reuters.com/article/2012/04/24/us-att-idUSBRE83N0...
I think Apple won't be too happy with it's primary device more expensive than $199 on contract as that's the sweet spot and any increase will cut into sales.
Apple's stock is down about 13% in two weeks because the carriers are getting tired of razor thin margins on iPhones while Apple laughs all the way to the bank and are pushing back. Not to mention the lower sales of iPhones this quarter.
http://blogs.marketwatch.com/thetell/2012/04/23/apple-slips-...
http://money.cnn.com/2012/04/24/technology/att-verizon-iphon...
The fact is that margins are down at Sprint, Verizon and AT&T because of the iPhone.
Last quarter:
http://business.time.com/2012/02/08/how-apples-iphone-actual...
This quarter, AT&T's and Verizon's profits are up because of lower iPhone sales:
http://www.reuters.com/article/2012/04/24/us-att-idUSBRE83N0...
I think Apple won't be too happy with it's primary device more expensive than $199 on contract as that's the sweet spot and any increase will cut into sales.
Apple's stock is down about 13% in two weeks because the carriers are getting tired of razor thin margins on iPhones while Apple laughs all the way to the bank and are pushing back. Not to mention the lower sales of iPhones this quarter.
http://blogs.marketwatch.com/thetell/2012/04/23/apple-slips-...
http://money.cnn.com/2012/04/24/technology/att-verizon-iphon...
Lies, damn lies and stats. "Apple sold 44% less iPhones last quarter" is technically correct. But last quarter saw around a 150% increase in sales because of pent up demand and the holiday quarter. If you compare this quarter from one a year ago you'll see that sales are actually up.
http://www.macrumors.com/2012/04/24/iphone-activations-drop-...
Also, I call bullshit on the "razor thin margins" that carriers are making. They make plenty over the lifetime of the device contracts. Also, ask Sprint if it would like to get rid of it's iPhone deal. They are getting plenty of new subscribers thanks to the iPhone and are banking on making up their initial loss over time on their new contracts. http://www.networkworld.com/community/blog/analyst-who-downg...
The problem comes in on their aggressive upgrade policies. In fact, I believe Verizon just added a $30 fee for upgrades on 2 year contracts.
Apple's stock is down because the market is full of idiots. Analysts have bet against Apple for years and every quarter Apple has come up on top. I'll bet dollars to doughnuts that this quarter won't be any different and overall sales will be through the roof.
Also, I call bullshit on the "razor thin margins" that carriers are making. They make plenty over the lifetime of the device contracts. Also, ask Sprint if it would like to get rid of it's iPhone deal. They are getting plenty of new subscribers thanks to the iPhone and are banking on making up their initial loss over time on their new contracts. http://www.networkworld.com/community/blog/analyst-who-downg...
The problem comes in on their aggressive upgrade policies. In fact, I believe Verizon just added a $30 fee for upgrades on 2 year contracts.
Apple's stock is down because the market is full of idiots. Analysts have bet against Apple for years and every quarter Apple has come up on top. I'll bet dollars to doughnuts that this quarter won't be any different and overall sales will be through the roof.
Building up Windows Phone is completely the wrong move if they want lower prices. Microsoft is not going to greenlight the component cost-cutting, nor match the license fees (even including patent royalties) that veritable no-name manufacturers get away with, with Android.
How much technological leadership do mobile carriers have to throw around, really? They're not exactly writing must-have apps or creating meaningful services. Their salespeople are Best Buy-style hucksters at best. The bottom line is they've fought the iPhone tooth and nail and it's still dominating U.S. sales.
> How much technological leadership do mobile carriers have to throw around, really?
Little to none, what they have is control of the airwaves and lobbying power.
Even the underlying tech generally isn't theirs, the network hardware is built by NEC, Nokia or other such manufacturers.
Little to none, what they have is control of the airwaves and lobbying power.
Even the underlying tech generally isn't theirs, the network hardware is built by NEC, Nokia or other such manufacturers.
Dear VZW and AT&T. Figure out a way to make your money providing a fast pipe at a decent price and we'll love you for it. Keep up the "Adversarial Value Extraction" (data caps, usurious text message pricing) and we'll abandon you like Blockbuster Video when a viable alternative arises.
Prediction: Google and Apple spin off a new, jointly owned company that enters the wireless market by buying sprint and /or t-mobile, and they create the wireless internet we need, not the one we deserve.
Prediction: Google and Apple spin off a new, jointly owned company that enters the wireless market by buying sprint and /or t-mobile, and they create the wireless internet we need, not the one we deserve.
tldr version:
"The carriers are tired of Apple calling all the shots[...]"
IMO, with Apple's momentum right now it will take A LOT to eat into their market, maybe that's why they are betting on Microsoft.
"The carriers are tired of Apple calling all the shots[...]"
IMO, with Apple's momentum right now it will take A LOT to eat into their market, maybe that's why they are betting on Microsoft.
I look forward to the day when mobile carriers are nothing but dumb pipes. Maybe then they'll focus on providing the most bandwidth and best coverage, instead of crap apps that no one cares about.