Archive for July, 2010
Best Buy Inc. plans to use Clearwire Corp.’s higher-speed network to power its recently launched Best Buy Connect mobile broadband service, as the consumer-electronics retailer wades further into the wireless industry.
To tap into the fast-growing wireless business, Best Buy last month began selling cellular laptop cards, which carried its name but which ran on Sprint Nextel Corp.’s third-generation, or 3G, network. Starting next year, Best Buy will also offer store-branded cards running on Clearwire’s 4G network.
For Best Buy, the agreement underscores the importance of wireless to the consumer-electronics chain, which has opened mobile-centric stores and carved out valuable retail space to push cellphones and wireless services. Having its own wireless service is seen as a logical next step, since it can be paired with the laptop and netbook computers that drive much of its traditional sales.
"This agreement paves the way to providing one-stop shopping and support for mobile broadband as more people become more connected across all kinds of devices," said Jed Stillman, vice president of Best Buy Connect, in a statement.
For Clearwire, Best Buy represents the first wholesale customer that isn’t an existing investor. Currently, only Sprint and a few of the cable companies that initially helped fund the deployment offer 4G services, which are available only in a few dozen U.S. markets now, but which are expected to hit nationwide coverage by the end of the year.
Best Buy, however, doesn’t get the same preferred wholesale rate as Sprint and the cable companies since it doesn’t have a "most favored nation" status, as Clearwire Chief Executive William Morrow put it. Still, he said that the economics and volumes are strong enough that Best Buy will still make a decent profit.
"It’s a great distribution channel," Morrow said in an interview with Dow Jones Newswires.
A Best Buy spokesman declined to comment on terms of the wholesale agreement, but said the pricing would be competitive. The company plans to provide more details on pricing closer to next year’s launch.
Clearwire will plan the marketing of its Clear brand around the Best Buy, Sprint and cable offerings, Morrow said.
LightSquared, a rival 4G network funded by Philip Falcone’s Harbinger Capital Partners, would be a welcome competitor in the wireless market, Morrow said. The venture is still trying to round up more funding, and recently awarded a $7 billion contract to Nokia Siemens, a joint venture of Nokia Corp. and Siemens AG, to build its hybrid satellite-terrestrial wireless network. But it, too, will operate on a wholesale model.
"Our model is what they base their business plan, which is a compliment," Morrow said."It’s good news for Clearwire and the industry."
The success of Clearwire is a crucial element to the recovery of Sprint, which owns a majority stake in the company. The Evo 4G, made by HTC Corp. and based on Google Inc.’s Android operating system, performed better than expected, with Sprint suffering spot shortages due to the phone’s popularity.
But Sprint executives are frustrated with the pace of the rollout of the service, which isn’t yet available in key markets such as New York and San Francisco, according to The Wall Street Journal. It also reported growing disagreements over strategic issues.
Morrow declined to comment on the reported differences between Sprint and Clearwire.
In recent trading, Clearwire shares fell 2.7% to $6.96, while Best Buy declined 2% to $34.45. Sprint shares fell 2.6% to $4.71.
REDMOND, Wash.–Aiming to show it is still winning customers against Google, Microsoft on Thursday announced deals to provide hosted e-mail and portal software to three big corporate customers.
The software maker said Dow Chemical, Hyatt Hotels, and the University of Georgia are all using the company’s hosted e-mail and portal software, known as Microsoft Online. The announcements were timed to come just as Microsoft is set to host its financial analyst meeting here.
In an interview, Hyatt CIO Mike Blake said the company, which had been running Lotus Notes, chose Microsoft after considering cloud-based options from Google, Microsoft and IBM’s Lotus division.
“I would not say that I was a Microsoft zealot,” Blake said. “I worked most of my career to find ways not to use Microsoft. I’m a huge Apple fan.”
However, going with Microsoft allowed the company to not only provide e-mail to its current group of PC-equipped workers but also to 40,000 additional “deskless” workers, such as housekeepers and porters that historically haven’t had work e-mail. Although that might have been possible with both Google and Microsoft, Blake said when it came to cost “Microsoft was probably a little more compelling.”
And while Blake said he personally enjoyed the fact that Google was constantly innovating, he said more of his workers prefer stability where they can rely on programs working a certain way until a scheduled upgrade.
“Microsoft offers a proven solution,” Blake said. “Google is still is working through it. Will they work through it? I am sure they will. The Google people were outstanding and probably the brightest people I’d ever met.”
Hyatt plans to fully move to the Microsoft products by the first quarter of next year, with many workers getting access before the end of this year.
Meanwhile, Dow Chemical decided to move from Exchange servers to hosted exchange after considering a variety of private cloud options. Among the selling points of Microsoft’s products was the fact that the company’s workers were already familiar with the products that make up Microsoft’s Business Productivity Online Suite, or BPOS.
“They already know Outlook, they already know (Office Communications Server and they already know Live Meeting,” said David Day, Dow’s director of global IS operations. The big new product for Dow will be SharePoint, Microsoft’s portal server, which Day said that the company had just been starting to adopt.
Dow plans to start piloting the hosted Microsoft products in the fourth quarter of this year and, assuming things go as planned, move fully next year as the company also moves its desktops to Windows 7, a move which should be done by the end of next year.
Day said that the company didn’t consider Google or other public cloud options because of security and privacy concerns.
In the United States, Google Inc. is defending itself against lawsuits, a congressional probe and a 37-state investigation led by Connecticut Atty. Gen. Richard Blumenthal regarding personal information the Internet giant collected from unsecured wireless networks while assembling photos and data for its Street View mapping service.
But Great Britain's data protection watchdog says that its review of the information collected by Google found that it included only fragments and no “meaningful personal details that could be linked to an identifiable person.”
"There is also no evidence as yet that the data captured by Google has caused or could cause any individual detriment,” according to the statement.
That was the point that Google made to Congress last month, that it believed its mapping vehicles had captured only fragments of data.
Google has apologized for collecting the data and said it had not done anything illegal.
British authorities did say they had no knowledge of the information Google collected from unsecured wireless networks in more than 30 countries.
Google grounded its Street View fleet after disclosing in May that it had gathered snippets of information by mistake. Some vehicles are now back on the road, minus the wireless scanning equipment.
– Jessica Guynn
Despite the fact that Apple has sold a whopping 3,000,000 units of its newest iPhone 4 since its release last month, the tech company has been swamped with complaints over the smartphones spotty reception and its problematic antenna design. The problem, Apple CEO Steve Jobs revealed in a press conference a few weeks ago, is twofold: First, users are unintentionally disrupting antenna reception when they touch a certain spot on the phone, and second, remember that it’s AT&T we’re dealing with here, so the coverage already sucks.
But in defence of the struggling telecom giant, Jobs did point to one glaring issue that companies establishing wireless coverage in major metropolitan areas face on a regular basis in America, it’s hard to get approval to build cellphone towers. So before you once again start blaming Apple and AT&T for delivering a shoddy product, remember to blame your local municipal government as well.
In a recent post on the popular tech site CNET news, an investigation was conducted into Jobs’ comments regarding the difficulty of establishing cellphone towers in cities like San Francisco and New York, and the results were surprising. It turns out that in cities such as these the process of applying for permission to build a new cellphone tower can take upwards of three (3) years!
The problem, it turns out, is that dense metropolitan areas deal with several factors that influence the addition of cellphone towers, and thus impact the improvement of cellphone service in these areas. First, most cities are concerned about aesthetics, and the fact is, cellphone towers are ugly and unsightly monstrosities. Most municipal governments are hesitant to approve cellphone tower construction because of the fear that it will appear as a stain on the city’s faade, ruining the dcor and beauty that city planners have worked so hard to create.
Second, even if permission was granted to build a cellphone tower, in cities where space is already at a premium it can be difficult to find a useful location. Sure it would be easy to build towers on the edges of communities and neighbourhoods, but they would be of little use in those areas.
While cities such as New York and San Francisco have offered alternatives, such as incorporating smaller cellphone towers (which are more like panels) onto the tops of existing structures (church steeples, building antennas, utility poles etc…) the problem with these sorts of cellphone panels is that there simply aren’t enough places to put them to deal with the high volume of metropolitan mobile traffic.
In the end, with so many barriers standing in the way of improving wireless coverage in many major America cities, one wonders how companies like AT&T can ever even hope to improve their networks enough to handle the traffic generated by increasingly powerful smartphones? But with that said, at least the next time your iPhone 4 drops that incredibly important call you’ll have one more place to direct your anger, right back at your municipal government.
Apple Inc.’s iPhone will likely dominate the high-end smartphone market in the next five years but faces strong competition from handsets using Google’s Android platform, a research firm said Tuesday.
By 2015, total mobile application downloads in the Asia-Pacific are forecast to reach 5.3 billion, of which 597.15 million, or about 11%, will be for the iPhone, technology industry consultancy Ovum said.
Downloads of iPhone applications are estimated at 62.16 million in 2010, Ovum said in an analysis released four days before the launch of the new-generation iPhone 4 in another 17 countries and cities worldwide Friday.
The iPhone 4 is expected "to face much stiffer competition than its predecessors," Ovum principal analyst Adam Leach said in a statement.
"The rise of Google Android over the last two years has been phenomenal and is allowing manufacturers to create appealing alternatives to the iPhone, critically at cheaper prices," Leach said.
Handsets using the Android operating platform are more than just clones of the iconic iPhone, he said.
"The risk to Apple is that these devices offer greater freedom with available content and may prove more appealing, if it offers the right user and developer experience, than a device with Apple-approved content only," said Leach.
"This may ultimately be what puts the brakes on unlimited iPhone growth."
From July 30, customers can purchase the iPhone 4 in Australia, Austria, Belgium, Canada, Denmark, Finland, Hong Kong, Ireland, Italy, Luxembourg, Netherlands, Norway, New Zealand, Singapore, Spain, Sweden and Switzerland.
It will be available for purchase through Apple’s online store.
Apple this morning announced new products including upgraded iMac and Mac Pro desktop computers, a multi-touch trackpad and a 27-inch Cinema Display.
The all-in-one iMacs, starting at $1,199, get faster Intel i3, i5 and i7 microprocessors and improved graphics chips.
At $69, Apple’s glass and aluminum Magic Trackpad “brings the intuitive Multi-Touch gestures of Mac notebook trackpads to the desktop,” the Cupertino company said in a news release this morning.
Apple’s top-of-the-line Mac Pro, starting at $2,499 for a model with a quad-core Intel Xeon multiprocessor, can accommodate as many as 12 processor cores.
“The new Mac Pro is the most powerful and configurable Mac we’ve ever made,” Philip Schiller, Apple’s senior vice president of worldwide product marketing, said in the news release.
The widescreen 27-inch Cinema Display, at $999, can be connected to Mac desktops and notebooks. The display includes features such as a built-in video camera, speakers and microphone.
In its earnings report last week, Apple said it sold a record 3.47 million Mac computers in its most recent quarter, up 33 percent from a year earlier.
At 11:04 a.m. PDT, Apple stock was at $263.35, up $4.07, or 1.6 percent.
Contact Frank Russell at 408-920-5876. Follow him at Twitter.com/mercspike.
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NEW YORK – AT&T Inc. (NYSE: T) said Thursday that its earnings rose 26 percent in the latest quarter and raised its forecast for the year, helped by its iPhone-fueled wireless arm.
The country’s largest telecommunications provider said it now expects a "strong" increase in earnings over last year, compared to its previous forecast of "stable-to-improved" results.
The company, based in Dallas, also posted its first-ever decline in wired broadband subscribers, capping a decade of growth.
Its shares rose 52 cents, or 2 percent, to $25.44 in premarket trading.
AT&T said its net income rose to $4.02 billion, or 68 cents per share, in the April-June period, from $3.2 billion, or 54 cents a share, a year ago.
Excluding a gain from the sale of stock in an overseas firm, earnings would have been 61 cents per share, still beating the average forecast of 57 cents per share by analysts surveyed by Thomson Reuters.
Revenue was $30.8 billion, compared with $30.7 billion a year ago and slightly below analyst expectations at $30.9 billion. However, AT&T is no longer including e-business subsidiary Sterling Commerce in its results, which analysts have not taken into account. The unit is being sold.
The company signed up a net 496,000 new wireless contract customers, down slightly from the 512,000 it signed in the first quarter. That’s about half of what it has signed up in recent years, but it will still likely prove a strong result compared to the rest of the industry, where contract signups have collapsed this year.
AT&T is helped by the iPhone, for which it is the exclusive U.S. carrier. AT&T said it once again activated a record number of iPhones: 3.2 million. That was boosted by the launch of the iPhone 4 in the last few days of the quarter.
Contract-signing customers are the most lucrative, but AT&T also added 300,000 no-contract, prepaying customers, more than it has in any quarter since 2007. That’s in the face of tough competition from Sprint Nextel Corp. and smaller upstarts.
With signups of new phone subscribers slowing to a crawl in the industry, AT&T and other carriers are banking on keeping growth going by providing wireless services to non-phone devices, like the iPad tablet and Kindle e-reader. AT&T said it add 896,000 such devices, less than the 1.05 million it added in the first quarter.
Wireless service revenue grew 10 percent from a year ago, as average monthly fees rose 3.4 percent, bucking the industry trend. Data plans for iPhones and other smart phones help AT&T offset declining prices for voice calls.
AT&T keeps laying off workers, mainly from the dwindling wireline business. It has cut more than 10,000 jobs this year, ending the quarter with 272,450 employees.
The layoffs helped AT&T cut costs faster than the 3.7 percent year-over-year revenue decline in wireline, letting it post a tiny increase in operating income for the segment. The revenue decline was the smallest since the first quarter of 2008.
AT&T stemmed revenue declines despite losing 92,000 wired broadband connections during the quarter, to end at 16 million. The decline reflects cut-throat competition from cable companies and saturation of the market, at least where broadband is available. The FCC reported recently that 14 million to 24 million people in rural America still can’t get broadband.
AT&T is the first major telecommunications company to report for the quarter. Verizon Communications Inc., the second largest, reports early Friday.
Mexico’s No. 2 fixed-line telephone company Axtel SAB on Tuesday raised its capital expenditure forecast for 2010 by about 10% to $220 million as the carrier signs up more clients than it originally expected at the beginning of the year.
"Most of the overrun in capex is related to customer premise equipment both in the mass market and the business segment," Chief Financial Officer Felipe Canales said during a conference call with analysts to discuss second-quarter results.
"We expect significant growth in our mass-market business as well as in our corporate business," said Canales, who sees 2011 capex at levels similar to this year.
The company expects to report negative free cash flow of about $15 million and earnings before interest, taxes, depreciation and amortization, or Ebitda, a measure of cash flow, of around $290 million this year, he said.
Axtel reported a 10% year-on-year increase in lines in service to nearly 1.01 million at the end of June. Broadband accounts rose 81% to 223,000.
Investor relations director Adrian de los Santos said the company is aiming for 120,000 net broadband account additions this year.
Axtel competes with former state telephone monopoly Telefonos de Mexico SAB, or Telmex, which had 15.7 million fixed phone lines in service and 6.95 million broadband accounts at the end of June. Telmex is a subsidiary of Latin America’s biggest wireless carrier, America Movil, which is controlled by Mexican billionaire Carlos Slim.
Axtel faces an increasingly difficult operating environment in the years ahead due to its lack of pay TV and wireless services. Mexico’s largest cable companies already sell telephone, broadband and pay-TV service packages. America Movil has been offering mobile broadband since early 2008 and two other mobile operators have said they plan to launch similar services if they obtain enough wireless spectrum at two government auctions.
Axtel has pushed back its plans to enter the pay-TV market to the second quarter of 2011, from early this year, Canales said.
"We are studying different [pay TV] alternatives," he said."The upfront investment in this project isn’t significant. It’s about $10 million to $12 million."
Axtel’s CPO shares were trading 1% higher at 7.97 pesos ($0.63) around 2:05 p.m. EDT. The shares are down nearly 33% so far this year, compared to a 2% rise in Mexico’s benchmark IPC stock index.
Axtel reported Monday a net loss of MXN220 million, compared to a net profit of MXN486 million in the second quarter of 2009 due to higher interest expenses and foreign exchange losses. Sales rose a scant 0.6% on the year to MXN2.76 billion, while Ebitda fell 8% to MXN920 million. The company’s total debt rose 12.5% to MXN10.55 billion.
"Although the 2Q10 results were better than those of the first quarter, the company continues to bleed cash. We reiterate our negative view and our underperform recommendation," BBVA Bancomer telecoms analyst Andres Coello said in a note Tuesday.
Ofcom unveiled what it claims is the UK’s most comprehensive research into broadband speeds today, showing an increasing gap between ISPs’ claimed speeds and those actually delivered.
Even though the average residential broadband speed delivered increased more than 25 per cent in the past year from 4.1Mbit/s to 5.2Mbit/s (26.8 per cent), the advertised average rose from 7.1Mbit/s to 11.5Mbit/s (61.8 per cent), the research revealed.
Ovum senior analyst Matthew Howett said that Ofcom’s research "paints an interesting picture".
"On the face of it there is good news: average broadband speeds are increasing. The worrying thing is that the gap is widening between what is advertised and what people get in reality," he said.
Ofcom said: "ISPs need to do more to ensure they are giving their customers sufficient information."
Such information about the services they provide and the factors that may affect the actual speed they will receive needs to be clear and accurate.
To combat ISP sleight of hand, Ofcom plans to get ISPs to sign up to a new code of practice, so that customers get more information about the performance they can expect.
The code is scheduled to go live in the next 12 months, and will require all ISPs to sign up.
Ofcom also said it was in consultation with the Advertising Standards Authority (ASA) on how ISPs advertise their services, which is important as ISPs are increasingly offering and moving their customers to higher-speed broadband packages.
The Committee on Advertising Practice, a body administered by the ASA, is also conducting a review looking at how broadband is marketed, which Ofcom says may lead to new advertising guidelines.
Ovum’s Howett said that marketing standards in the telecoms sector could be tightened.
"’Up to’ broadband speeds are not unlike ‘unlimited’ data tariffs. Rarely do they reflect reality," said Howett.
Ofcom already has a consumer guide to broadband speeds and a guide to help consumers when choosing a broadband deal available on its web site.
Mobile broadband, broadband delivered by cellular mobile network operators, was excluded from this research.
However, the comms regulator has commissioned separate research into mobile broadband performance, with the results scheduled to be published in early 2011
Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.
MORRISVILLE, N.C. – IT and computer spending is forecast to increase rapidly over the next five years in China, a new report says, and Lenovo is positioning itself to capitalize on emerging trends.
Lenovo, the world’s No. 4 PC maker, generates a great deal of headlines worldwide for its new machines ranging from 3-D to sophisticated laptops and desktops. It is preparing to roll out a tablet (LePad) to counter Apple’s iPad and already is selling its own smartphone (LePhone).
But Lenovo also is maintaining its focus on the homeland where it was launched 25 years ago and is the dominant player even as it increased PC shipments 47 percent from a year ago and grew its global market share to better than 10 percent, according to analysis firm IDC. (Gartner reporter similar figures.)
A new report from Companiesandmarkets.com forecasts IT spending in China to grow at a compounder annual growth rate of 16 percent, rising to $139.1 billion by 2014 from $86.9 billion this year.
“A number of factors, including a vast potential rural market, government spending and gradual modernization in sectors such as education, healthcare and manufacturing, will help to sustain market growth,” the company says in a summary of the report.
Hardware sales, meanwhile, are forecast to grow to $89.8 billion by 2014 from $57.1 billion this year.
So how does Lenovo, which bases its global headquarters in Morrisville, benefit?
The smartphone group was reacquired by Lenovo, and LePhone is timed to capitalize on China’s growing 3G wireless network.
Notes the report: “The roll-out of 3G mobile services by China’s mobile telecoms network operators will stimulate sales of netbooks, while government subsidy programs will boost demand from the vast, under-penetrated rural areas.”
Companiesandmarkets also forecasts small business, “smaller towns and rural areas driving growth.”
How does Lenovo benefit?
“Vendors face the challenges of geography and channel underdevelopment in China’s vast rural hinterland, where villages are often widely dispersed and far from the nearest large town,” the report says. “Vendors such as Lenovo and HP have been aggressively expanding their sales networks outside China’s largest cities.”
“Lenovo said that it aims to sell 5mn computers in rural areas and cover 320,000 villages across the country,” the report pointed out. The company is in the process of opening “700 new county-level stores in the next three years and introduce 15 new models specifically designed for the rural market.”
Companiesandmarkets notes that Lenovo is already No. 1 in China in desktop and notebook sales with a 33 percent share in notebooks alone.
Just a few days ago, Lenovo Chairman Liu Chuanzhi said of Apple and CEO Steve Jobs in an interview with the Financial Times:
“We are lucky that Steve Jobs has such a bad temper and doesn’t care about China. If Apple were to spend the same effort on the Chinese consumer as we do, we would be in trouble.”
The bet here is that Lenovo already is far along in preparing for any efforts Apple might make. The Companiesandmarkets reports that there are some 100,000 iPads already available in China and much cheaper copies are available. So the LePad comes as no surprise. Lenovo sees the threat.
Throughout the company’s reorganization last year, Lenovo management made clear that protecting the home turf remains essential even as it seeks to grow overseas.
The LePhone and the LePad are clear signs that while competition is growing in China Lenovo plans to win.