A report in French newspaper Les Echos claims that Orange France is preparing to cut the price it charges for an iPhone. The paper goes on to say that top officials from the French mobile operator have travelled to California to ask the handset maker what can be done about the stocks of unsold iPhones it is currently carrying, amid fresh industry rumours that a 3G version of the innovative device is soon to be on the way. Indeed, the Italian newspaper La Repubblica has claimed that the 3G iPhone is coming shortly to Telecom Italia without a revenue sharing deal and without long-term exclusivity. In the meantime, the French cellco could opt to subsidise the price of the iPhone – a move that has already been taken by O2 in the UK and T-Mobile Germany – although Orange France has denied all the rumours, saying that ‘everything is going well’ where the iPhone is concerned. Earlier this month, Orange France released sales figures for the iPhone, reporting that it had shipped just 96,000 units since launching the device in November.
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If investors believe that a company can become too big to remain a growth stock, China Mobile is here to change your mind. Despite a market capitalization of $275 billion, the largest base of mobile subscribers in the world at 376 million, and a network that spans all 31 Chinese provinces and Hong Kong, China Mobile still rings in double-digit growth.
In its latest earnings release, China’s dominant mobile-services company showed unequivocally that the big can indeed get bigger. For the full year 2007, revenue grew 21% to $50.4 billion, while profits accelerated by 32% to $12.3 billion. The company added an average of 5.67 million new subscribers each month in 2007, with most of these coming from rural areas.
China Mobile absolutely dominates its closest competitor, China Unicom, in almost every measure. Its 24.4% profit margin is the envy of local telecoms China Telecom and China Netcom , and even of U.S. wireless powerhouses such as AT&T and Verizon.
China Mobile was also able to maintain its average revenue per user (ARPU) at $12.56 per month with value-added services that now make up 25.7% of its total revenue. The company reported that it sees great interest in mobile information products tailored toward customer groups in categories such as agriculture, finance, and business. Plans to launch further profitable services include introducing Research In Motion’s Blackberry product and potentially offering the Apple iPhone though no deal has been struck yet with Steve Jobs.
So if China Mobile’s continued growth is all so great, why is the stock down 4% after the earnings release? It’s been said here many times before — China Mobile was reasonably priced before its big run-up, but it now stands as one of the pricier Chinese plays. At a current earnings multiple of about 26, China Mobile is still a bit above fair price for its 21% projected future growth. With this type of performance, I’d be tempted to pick up shares if they fall down into the mid-$50 range, but somehow, I doubt the market will let that happen anytime soon.
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Despite Microsoft’s aim to take on Adobe Flash with Silverlight, the company has decided to support Flash on Windows Mobile devices. Microsoft has also licensed the Adobe Reader LE software, so owners of Windows Mobile devices will be able to view PDFs. The two companies are working together on integration and OEM distribution, but Microsoft is still mum on when consumers will be able to use Flash or Silverlight on their Windows Mobile phones. The article points out that Nokia, Samsung, Motorola, Sony Ericsson, and LG already support Flash, but only Nokia has announced Silverlight support, and only on some models starting later this year. The other major handset maker — Apple — doesn’t support Flash on the iPhone and has no plans to do so in the near future.”
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Mobile operator to recruit more sales staff as it focuses on data services.
Vodafone it is to cut 20% of its U.K.-based management staff as part of a broader scheme to streamline its operations and boost mobile data sales.
The U.K. mobile operator announced on Tuesday that it will make a total of 450 redundancies at its Newbury headquarters as it seeks to simplify its operating model, but it will take on additional sales staff in other areas of the business.
A Vodafone spokeswoman told that the management cuts are all being made at middle management level.
“We want to re-focus our business on our customers rather than what we’re doing in the background,” she said.
At the same time, the operator is hiring more staff across its consumer and enterprise divisions in a bid to drive sales of its mobile data products.
“Vodafone UK is clearly focused on building on its market leading position in data products and services. Today we are announcing a series of targeted investments to meet growing demand in this area,” said Nick Read, CEO of Vodafone UK, in a statement.
Under the plan, Vodafone is creating 130 sales and services roles in its enterprise business, and hiring 330 employees to work in its retail stores advising on and selling data products.
“Customers need a greater understanding of what they can do with their phone – they’re not always aware of what it’s capable of,” said the spokeswoman.
She explained that by hiring extra retail staff Vodafone will be able to offer customers better in-store advice on its mobile data products.
“This is something we haven’t always been able to do when our stores have been busy,” she said.
Tuesday’s announcement is indicative of a wider reorganisation of Vodafone’s operations, according to Ovum senior analyst Steven Hartley.
“Vodafone is shifting emphasis away from centralised management, not just in the U.K., but at group level, and putting more personnel on the front line,” he said.
The mobile operator is also creating a further 30 roles to work on its online sales, customer services and e-billing operations, and building a new customer service centre that can host a further 850 employees.
Flat-rate data offer not on horizon
Vodafone declined to comment on Tuesday on whether its shift in focus to mobile data products is a forerunner to the adoption of unlimited flat-rate data plans, as a number of its rivals have done.
O2 unveiled a flat-rate data plan, albeit subject to a fair use policy, with Apple’s iPhone, and subsequently extended the tariff to all of its pay monthly of contracts, for example.
“I don’t think today’s announcement leads directly to un-metered access,” said Ovum’s Hartley.
“If you want to succeed in mobile data services then tariffs do need to be simpler… it’s one of the elements, but Vodafone is not likely to be that aggressive. They’re seeing mobile data growth at the moment without introducing unlimited data,” he said.
Indeed, in its fiscal third quarter Vodafone Group generated data revenues of £558 million up 42% from £368 million a year earlier.
Hartley warned that the introduction of flat-rate data in the ultra-competitive U.K. mobile market would be a risky move, since it would likely drive down data prices rapidly, leaving companies like Vodafone unable to offset declining voice revenues.
“Nobody wants to end up a bit pipe – no-one more so than Vodafone,” he added.
And CEO Arun Sarin is well aware of the risks. At last month’s Mobile World Congress he once again warned that mobile operators need to bring Internet services to life, or risk becoming bit pipe providers.
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- March 12th, 2008
- 12:38 pm
Dutch electronics major Royal Philips is set to mark its re-entry into the mobile phone segment with the launch later this month of a range of accessories in India, a company official said. The company will thus tap a higher margin business in the world’s fastest-growing mobile phone market a year after selling its mobile business to China Electronics Corporation.
Philips has signed up with Nokia to make accessories supporting Nokia’s music-enabled handsets, Alexander Bakkeren, vice-president and category leader for the mobility segment in Philips Consumer Lifestyle, told ET. “Nokia is by far the market leader in the handset market in India, and hence the decision to enter into an agreement,” he said. Mr Bakkeren said Philips is in further discussions with the handsetmaker for bundling its products with Nokia handsets.
He said that the accessories market in India, estimated to be $100 million, is quite nascent and dominated by unbranded players. “This allows huge opportunity brand like Philips to get an initial advantage in a mobile telecom market that is ready to explode in the next 2-3 years,” he said. He, however, declined to comment on how the foray would contribute to its revenues. The consumer lifestyles vertical contributes nearly 45% to Philips’ overall revenues.
Philips in its quarterly report for Q1 of 2007 had said that it had completed the sale of its remaining mobile phone activities to China Electronics Corporation. As a part of the sales agreement, CEC is allowed to retain Philips’ brand name for the next five years. And now, Mr Bakkeren says that mobile accessories market has better margins to offer as branded players are yet to settle down in this market.
In addition to mobile accessories, Philips is also set to launch accessories to Apple iPods, Nils Leseberg, senior director for strategy and alliances at Philips Consumer Lifestyle told ET. “On an average, every iPod user buys at least two accessories and spending nearly $70 per accessory, presenting a company like us with interesting margins in the business,” he added. The company is also exploring opportunities of launching iPhone accessories and is in talks with both Apple and network providers offering iPhone in Germany, France and the UK for this purpose.
The company had recently bought out US-based Digital Lifestyle Outfitters, which designs and distributes accessories for mobile audio-visual devices such as MP3 players and video players. Philips for its foray into the India market has outlined a roadmap to reach nearly 1,000 cities in the next 2-3 years, initially reaching 60 cities in the first phase of its go to market.
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- March 11th, 2008
- 12:32 pm
After Apple’s SDK event, I drove north to Sunnyvale to meet up with Yahoo’s mobile group. I figured since I was in the neighborhood, and I’m from Seattle, I might as well make the most out of the trip. As I headed into the meeting with Steve Boom, Yahoo’s SVP of Broadband and Mobile, it was my goal to understand Yahoo’s mobile strategy, which has trickled out over the past year. As an unintentional outcome, I also found myself bouncing off what Yahoo was telling me with what Apple said earlier that day. What I learned is that both companies are trying to bring the Internet to the mobile phone, but in entirely different ways.
One of the first things Steve Jobs said on stage was that 71 percent of mobile browsing in the U.S. is conducted by Safari. “The iPhone is bringing the Internet to a mobile device for the first time,” he declared. That’s clearly a lot of usage and reach, but one might argue Yahoo’s goals are much grander. In a nutshell, Yahoo wants to be on every phone, not just the iPhone. By the end of the year, Apple guesses it will have about 10 million handsets in the market. Compare that to Yahoo, which can potentially reach 600 million subscribers today.
At that size, Boom said it’s a big enough market for applications and advertising to become truly successful. That’s also why he found it interesting that John Doerr, partner of world-famous VC firm Kleiner Perkins Caufield & Byers, said they were committing $100 million to a fund exclusively for iPhone applications (what could be conceived as a relatively small market). “The opportunity of the mobile Internet is much bigger than the iPhone—that’s why I was very interested in the Kleiner Perkins fund. I’m interested in them focusing a fund specifically on the iPhone…but in order for the Internet to take off, it can’t be limited to big companies like Yahoo, Google and Apple.”
Since we’ve been inundated with Apple news thanks to last Thursday’s event, take a minute to catch-up on Yahoo’s mobile strategy, which isn’t lucky enough to have a $100 million fund backing it.
Yahoo has three segments to its overall mobile strategy:
1. To build the best starting points for consumers on the mobile Internet.
2. To be the “must-buy” for advertisers, by having the broadest and best audience.
3. To provide an open platform to promote Yahoo services.
Yahoo has three consumer applications:
1. oneSearch: A search bar, launched in January 2007, that tries to provide answers for what you are looking for. For instance, type in a celebrity’s name, you’ll get the latest news about that person. Type in a company’s name, and you’d get stock quotes.
2. oneConnect: It’s a communications hub, where users can check, mail, SMS, social networks all in one. Announced at Mobile World Congress; expected to ship in Q2.
3. onePlace: Stores a person’s content, such as information on their interests that’s consistently updated in the background. Announced this week; should ship in Q2.
This is where it gets a little confusing. On top of all of that is Yahoo! Go, the delivery mechanism for Yahoo’s widget strategy, where third-party apps can be found, or Yahoo’s oneSearch, oneConnect and onePlace. Yahoo’s widget strategy allows third-party developers to use their code to write applications once to work on multiple phones, whether it’s in a browser, in a downloaded version of Yahoo Go, or in a native client, such as a carrier’s deck. That’s the golden promise that everyone’s platform is trying to fulfill. But realistically, it means developers will still have to support multiple platforms. Boom said: “We will continue to be aggressive in mobile. We have the opportunity to win on the future of the Internet, which is mobile. We aren’t saying when, but we are predicting that there will be more users on mobile than the PC—and today we have 1/2 a billion users on the PC. It’s a pretty lofty objective.”
As for Apple’s plans to help developers sell apps through a widget on the iPhone, and in return take a cut of the revenues, that’s not Yahoo’s next step. Boom: “We have no plans to do paid-for widgets. If there was demand from developers, we’d consider it, but it is not our intention to become the merchant of record on mobile … We are not creating an alternative deck, we are creating a kick-ass Internet experience.”
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Worldwide handset sales increased 16% to 1.153 billion units in 2007, driven by rising demand in emerging markets, says Gartner.
Nokia, the biggest phone vendor, increased its market share to 37.8%, up from three percentage points from a year earlier. In a disastrous last quarter, Motorola fell nearly ten points to 11.9% over the previous year.
Strong sales in China and India lifted Chinese handset supplier ZTE into top ten for the first time with a 1.2% market share. But the popularity of high-end BlackBerry and iPhone devices also put smartphone vendors RIM and Apple in the top ten. Taiwan’s BenQ, France’s Sagem and China-based Bird were the three displaced from the top group.
Gartner predicted growth to decline to 10% in 2008, with western Europe and North America contributing to just 30% of sales.
Gartner mobile devices research director Carolina Milanes said the strength of emerging market demand meant that handset sales were likely to be “relatively immune to a recession” in the US and western Europe.
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Worldwide sales of mobile phones surpassed 1.15 billion units in 2007, according to market research firm Gartner. The company also said that three new companies entered the top ten in sales for the first time including Apple with its iPhone.
Apple was joined in the top ten by ZTE and Research in Motion with its popular BlackBerry device.
Nokia is leading the way in mobile phone sales with a 37.8 percent market share, followed by Motorola (14.3 percent), Samsung (13.4 percent), Sony Ericsson (8.8 percent) and LG (6.8 percent). Total worldwide phone sales increased by 16 percent from 2006, according to Gartner.
While 2007 was a good year for mobile phone-makers, the same does not hold true for 2008’s outlook. “After another strong year, we expect the growth in sales of mobile devices to end users will decelerate in 2008 and fall to about 10 per cent growth as mature markets become more saturated,” said Carolina Milanesi, research director for mobile devices at Gartner.
Apple introduced the iPhone last June and has sold over 4 million units since, including 2.3 million units in the last quarter alone.
At the Goldman Sachs investor conference earlier this week, Apple’s Chief Operating Officer, Tim Cook, said the company is confident it will make its goal of selling 10 million phones by the end of 2008. Cook also said that Apple is not married to the single carrier model of selling iPhones, although that is the strategy the company has adopted to this point.
Apple is holding a special event in Cupertino, Calif. next week where it will unveil a new software development kit (SDK) for the iPhone, which will allow third-party developers to write applications for the device. This will take away one major complaint from consumers of not having the option to install applications on the iPhone.
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- February 29th, 2008
- 12:15 pm
Apple, Research In Motion and ZTE took places among the world’s top 10 mobile phone makers in 2007, new research from Gartner Inc. claims.
Despite being available in only four markets — the U.S., U.K., Germany and France — the iPhone transformed Apple into the world’s 10th largest handset maker in the fourth quarter of 2007, the analysts said.
RIM took sixth place, while low-cost handset manufacturer ZTE, which specializes in delivering devices to emerging markets, took seventh place.
Apple holds 0.6% of the world market, while RIM has 1.2%. Motorola saw its share fall to 11.9% from 21.5%. Nokia, at 40.4%, and Samsung, at 13.4%, continue to dominate global handset sales.
Gartner analyst Carolina Milanesi observed, “The global mobile devices market will remain relatively immune to a recession in the U.S. and Western European economies, as the majority of growth in 2008 will come from emerging markets. The mature Western Europe and North America markets are driven by operator contract terms and replacement cycles and will account for just 30% of the global mobile devices market in 2008.”
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- February 27th, 2008
- 11:50 am
Apple(R) today announced that iTunes(R) (http://www.itunes.com/)is now the number two music retailer in the US, behind only Wal-Mart,based on the latest data from the NPD Group*. Apple also announced that there are now over 50 million iTunes Store customers. iTunes has sold over four billion songs, with an incredible 20 million songs sold on
Christmas Day 2007 alone, and offers the world’s largest music catalog of over six million songs from all of the majors and thousands of independent labels.
“We’d like to thank the over 50 million music lovers who have helped the iTunes Store reach this incredible milestone,” said Eddy Cue,Apple’s vice president of iTunes. “We continue to add great new features like iTunes Movie Rentals to give our customers even morereason to love iTunes.” Last month, Apple launched iTunes Movie Rentals featuring movies
from all of the major movie studios including 20th Century Fox, The Walt Disney Studios, Warner Bros., Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer (MGM),Lionsgate and New Line Cinema. Users can rent movies and watch them ontheir PCs or Macs, all current generation iPods**, iPhone(TM) and on a
widescreen TV with Apple TV(R). iTunes Movie Rentals will offer over 1,000 titles by the end of this month, including over 100 titles in stunning high definition video with 5.1 Dolby Digital surround sound which users can rent directly from their widescreen TV using Apple TV.
iTunes 7.6 is available as a free download at http://www.itunes.com/. iTunes Movie Rentals are available in the US only and are $2.99 (US) for library titles and $3.99 (US) for new releases, and high definition versions are priced just one dollar more with library titles at $3.99 (US) and new releases at $4.99 (US). Movie rentals from the iTunes Store for Mac(R) or Windows require iTunes 7.6. iTunes Movie Rentals require a valid credit card with a billing address in the country of
purchase.
*Based on data from market research firm the NPD Group’s MusicWatch survey that captures consumer reported past week unit purchases and counts one CD representing 12 tracks, excluding wireless transactions.The iTunes Music Store became the second-largest music retailer in the US after Wal-Mart, based on the amount of music sold during 2007.
**Movie rentals work on iPod(R) classic, iPod nano with video and iPod touch. Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the
Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its
revolutionary iPhone.
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Orange to slice cost of Apple’s iPhone (France)
