Avi Greengart is the Research Director for Consumer Devices at Current Analysis (Cellphones, Connected Devices, and Digital Home). He also writes for Slashgear, blogs at Home Theater View and Tweets as @AviGreengart. Avi's expertise lies in understanding consumer electronics marketing, consumer behavior, and technology adoption patterns: where new technologies meet the mass market. 

 

 

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July, 2009

7/21/09

Sorry, I let the posts lapse a bit while I was catching up on recent reports:

Nokia Surge Is the Company’s First Smartphone Designed In (and For) the U.S.

Sony Ericsson Launches First Cyber-shot and Another Walkman Phone at AT&T

T-Mobile's myTouch is No Hero

HTC Company Assessment (New!)

Nokia Company Assessment (Update)

Samsung Company Assessment (Update)

LG Company Assessment (Update)

 

7/8/09

I attended the T-Mobile myTouch launch event this morning, and I should have a full report up tomorrow.

Also in the news: Google's new Chrome OS, which seems designed not only to compete with Microsoft's Windows 7 for netbooks, but with Google's own Android. Google's "throw stuff at the wall and see what sticks" development approach is perfect for the Internet, but may not work with hardware vendors who are trying to build a business around this stuff. I have an Advisory report on smartbooks vs. netbooks that's in the works; I'll be covering the OS angle there as well.

Also in the news: the DOJ is opening investigations into wireless carrier practices, specifically the notion of exclusive contracts. I’m not a lawyer, so I don’t know what part of contract law or antitrust law could be used to force handset vendors to sell to all comers. Before making any changes, regulators should be concerned about unintended consequences to the handset industry overall. For example, when Apple launched the iPhone exclusively at AT&T, that left an opening for other handset vendors to compete with Apple at other carriers using those rival carriers’ resources. Exclusives are fueling handset innovation and speeding competition, and if you remove that structure, who knows what will happen? (One possible scenario is that regulators’ next investigation will be into lack of competition among handset vendors.)

But if exclusive contracts were abolished somehow, here is who would benefit:

bulletSmall regional carriers and MVNOs who don’t have large order sizes or marketing budgets and therefore can’t counter an exclusive Product X with an exclusive Product Y of their own.
bulletPoliticians and regulators who will claim that they are looking out for consumers and putting big telcos in their place.
bulletThere is also the chance that consumers will benefit if carriers can’t get exclusive access to devices and are forced to compete on price instead.

In addition to the possibility that innovation would be slowed, here are the players who would be negatively impacted:

bulletConsumers who would pay higher prices for the devices without the outsized subsidies on exclusive products.
bulletHandset vendors who no longer have access to the benefits of an exclusive deal, which can include enormous carrier marketing spend, larger than average subsidies, guaranteed order sizes, and extra sales training at retail.
bulletCarriers who can no longer compete with their rivals based on unique or superior products.


There is another aspect to this, and it is a recurring point of confusion in my conversations with people outside the wireless industry: most handsets are effectively custom products for carriers thanks to different network standards and frequencies used. In other words, even if exclusive contracts were banned, you still wouldn’t be able to use an iPhone on Verizon Wireless unless you forced Apple to build a new version just for Verizon Wireless. Is the DOJ going to plan Apple’s product roadmap, too?

That said, there are plenty of areas where the DOJ needs to shine some light on carrier practices. Are ETF’s tied to the actual subsidies? Why not? Are they uniformly pro-rated? If there’s so much competition, how come SMS pricing has gone up? How come a customer who pays full price for a handset (or another connected device like modems and netbooks) without signing a contract doesn’t get better service terms? Why are subsidies low compared to some European countries like the UK? Finally, this isn’t a carrier issue, but if you’re concerned with the competitiveness of the industry, why are the average taxes and fees now 15% of the customer’s total bill?