The ills of the once dominant Finnish mobile phone maker Nokia ADR (NYSE: NOK) are many and, to some extent, getting worse. The company may be at 'The Last Chance Saloon.' The bartender is Steve Ballmer of Microsoft (Nasdaq: MSFT). He is pouring Nokia not the Finnish traditional 'long drink', but what he hopes is a nice, smooth and profitable drink of Windows 8 for smartphones.
Windows 8 had better be all that Microsoft has promised for Nokia's sake. It sold fewer of its flagship Lumia smartphones in the third quarter than Apple (Nasdaq: AAPL) did of its new iPhone 5 in its opening weekend!
Poor Sales and Market Share Trend Continues
Nokia's smartphone sales in the third quarter amounted to just 6.3 million units. There were 2.9 million Lumias sold in the quarter, down from 4 million the previous quarter. In the important U.S. market, sales amounted to a mere 300,000 smartphones. That is down about 50% from the previous quarter. In addition, revenues in China fell 80% year-on-year. Much of the blame lies with the fact that consumers globally were waiting for the Lumia smartphones that run on the new Windows 8.
Right now the Windows operating system accounts for only 4% of the global smartphone market, badly trailing Apple's iOS and the Android operating system from Google (Nasdaq: GOOG). Samsung's new Galaxy III runs on Android. That's just another reason it wasn't a great shock that Nokia was bumped out of the top 5 smartphone makers in the third quarter. That was the first time that happened since researchers at IDC began compiling such data in 2004.
Sales are unlikely to improve as much as initially expected in the short term either. This quarter is traditionally the strongest for sales of phones due to the holiday season. However, for Nokia, the flagship 920 Lumia smartphone will not be available for several more weeks. It will also be available only through one carrier, AT&T. This combination will likely hold back sales despite Nokia's market-leading mapping and photo technology.
Carriers Want an Alternative
There is one huge positive in the corner of Nokia and Microsoft though. The telecom carriers such as AT&T, Sprint, T-Mobile and Verizon (NYSE: VZ) want a viable third choice to the current duopoly of Apple and Google.
Verizon's CEO, Lowell McAdam, told the Financial Times recently that “the carriers are beginning to coalesce around the need for a third ecosystem. It'll between [Blackberry maker] RIM (Research in Motion) and Microsoft, and I expect Microsoft to come out victorious.”
He may be right about Microsoft beating out RIM. According to the consumer research firm Kantar Worldwide, in Europe, Windows will overtake RIM's operating system by the end of the year. Nokia's entry-level smartphone Lumia 610 seems to be winning over cost-conscious consumers there. In a first for Windows, it now has more than 10% of the market in Italy.
The Future
Europe could prove to be very fertile ground for Nokia and Microsoft since more than 50% of European consumers have yet to purchase their first smartphone and still have older phones. The brand these consumers is most familiar with is Nokia.
Another plus is that the launch of Windows 8 should give an impetus to developers to build applications and content that is currently lacking on Windows phones. The myriad of apps and content is a huge selling point for Apple.
But getting that content is a slow process and Nokia may not have the luxury of waiting too long. It is burning through its cash position rather rapidly thanks to its continuing operating losses. Standard and Poor's has forecast that, by year's end, Nokia will be down to 3 billion euros in cash. Some credit analysts even doubt whether the company can make a 1.25 billion euro bond repayment in April 2014.
So the Windows 8 effect had better kick in and fast. The next six to nine months will be critical to the fate of Nokia.
This article was originally published on the Motley Fool Blog Network. Make sure to read all of my articles for the Motley Fool at http://beta.fool.com/tdalmoe/.
Showing posts with label t. Show all posts
Showing posts with label t. Show all posts
Thursday, November 8, 2012
Tuesday, October 30, 2012
Why AT&T and Verizon Fear Softbank
As discussed previously, there is a shake-up underway in the U.S. mobile provider market. Japan's Softbank taking a 70% majority position in Sprint Nextel (NYSE: S) is just step one in its plan to shake the complacency out of the two leaders in the industry domestically, Verizon Communications (NYSE: VZ) and AT&T (NYSE: T).
Another part of Softbank's plan was revealed recently when Sprint resumed majority control of Clearwire (Nasdaq: CLWR). It bought a 4.5% stake in Clearwire from Eagle River Holdings LLC, the investment vehicle of Clearwire founder, Craig McCaw. This additional stake gave Sprint a 50.8% controlling interest in Clearwire.
With Clearwire's stock falling upon announcement of this transaction, it was clear that its shareholders were disappointed that Sprint did not launch a full takeover offer for the company. At the moment, Sprint with its own heavy debt burden - $4 billion due next year – does not want to consolidate Clearwire onto its balance sheet with Clearwire's $2.9 billion of debt due in 2015.
But shareholders should be patient. It is highly likely that once the Softbank–Sprint deal is finalized, a full takeover of Clearwire will be at the top of the agenda. Sprint's current arrangements give it full access to Clearwire's wireless spectrum through only 2014.
Softbank's Agenda
Why will Clearwire be at the top of Softbank's agenda? Because without it, Sprint will always be a very distant third in terms of spectrum behind both Verizon and AT&T. With it, according to the Financial Times, Sprint will control more spectrum in the 100 largest U.S. wireless markets than Verizon and AT&T combined! With the advent of data-eating smartphones and tablets, spectrum is needed in order to build networks that are both fast and reliable.
In addition, Clearwire uses a form of 4G LTE technology, TDD-LTE, which is different than Sprint's version. However, it is the same technology that Softbank has used very successfully in Japan for years. Sprint does say phones which work on its network will also work on Clearwire's planned 4G network.
Both Verizon and AT&T are well aware of the potential that a Sprint-Clearwire combination, backed by Softbank's financial muscle and acumen, has. They do not favor having a strong new competitor in the market they now control. That is why AT&T already is raising objections to the deal. It has called on regulators to scrutinize Softbank's plan for the U.S. mobile market very closely.
There is one possible hiccup, from a technology standpoint, to Softbank's plan. Clearwire's spectrum is in a higher frequency range than the more desired lower frequency ranges owned by Verizon and AT&T. Higher frequencies do not penetrate obstacles such as buildings as well or travel as far. This means that in urban settings more cell towers may have to be built. Softbank can finance such an undertaking. . .but it may actually be harder getting local approvals to build additional towers in certain locations across the country.
The Future
What's next in this telecoms soap opera? AT&T and Verizon know how Softbank came from a very distant third in the Japanese market to today rival the big two players in that market. They see that Softbank has a bold vision for the U.S. market as well. Look for both to push U.S. regulators very hard to block the deal. In the spirit of competition and for the benefit of consumers, hopefully that does not happen and a strong, viable third mobile provider is allowed to happen. This article originally appeared on the Motley Fool Blog Network. Please read all of my articles for the Motley Fool at http://beta.fool.com/tdalmoe/.
Another part of Softbank's plan was revealed recently when Sprint resumed majority control of Clearwire (Nasdaq: CLWR). It bought a 4.5% stake in Clearwire from Eagle River Holdings LLC, the investment vehicle of Clearwire founder, Craig McCaw. This additional stake gave Sprint a 50.8% controlling interest in Clearwire.
With Clearwire's stock falling upon announcement of this transaction, it was clear that its shareholders were disappointed that Sprint did not launch a full takeover offer for the company. At the moment, Sprint with its own heavy debt burden - $4 billion due next year – does not want to consolidate Clearwire onto its balance sheet with Clearwire's $2.9 billion of debt due in 2015.
But shareholders should be patient. It is highly likely that once the Softbank–Sprint deal is finalized, a full takeover of Clearwire will be at the top of the agenda. Sprint's current arrangements give it full access to Clearwire's wireless spectrum through only 2014.
Softbank's Agenda
Why will Clearwire be at the top of Softbank's agenda? Because without it, Sprint will always be a very distant third in terms of spectrum behind both Verizon and AT&T. With it, according to the Financial Times, Sprint will control more spectrum in the 100 largest U.S. wireless markets than Verizon and AT&T combined! With the advent of data-eating smartphones and tablets, spectrum is needed in order to build networks that are both fast and reliable.
In addition, Clearwire uses a form of 4G LTE technology, TDD-LTE, which is different than Sprint's version. However, it is the same technology that Softbank has used very successfully in Japan for years. Sprint does say phones which work on its network will also work on Clearwire's planned 4G network.
Both Verizon and AT&T are well aware of the potential that a Sprint-Clearwire combination, backed by Softbank's financial muscle and acumen, has. They do not favor having a strong new competitor in the market they now control. That is why AT&T already is raising objections to the deal. It has called on regulators to scrutinize Softbank's plan for the U.S. mobile market very closely.
There is one possible hiccup, from a technology standpoint, to Softbank's plan. Clearwire's spectrum is in a higher frequency range than the more desired lower frequency ranges owned by Verizon and AT&T. Higher frequencies do not penetrate obstacles such as buildings as well or travel as far. This means that in urban settings more cell towers may have to be built. Softbank can finance such an undertaking. . .but it may actually be harder getting local approvals to build additional towers in certain locations across the country.
The Future
What's next in this telecoms soap opera? AT&T and Verizon know how Softbank came from a very distant third in the Japanese market to today rival the big two players in that market. They see that Softbank has a bold vision for the U.S. market as well. Look for both to push U.S. regulators very hard to block the deal. In the spirit of competition and for the benefit of consumers, hopefully that does not happen and a strong, viable third mobile provider is allowed to happen. This article originally appeared on the Motley Fool Blog Network. Please read all of my articles for the Motley Fool at http://beta.fool.com/tdalmoe/.
Thursday, June 21, 2012
A Look at the Corporate Tablet Market
In the battle for the consumer market in tablet PCs there seems to be a clear winner so far – the iPad from Apple (Nasdaq: AAPL). The latest figures from research firm IDC for 2012 show that Apple's worldwide market share grew from 54.7 percent in the fourth quarter of 2011 to 68 percent in the first quarter of 2012. Samsung was second and Amazon was third.
But it is still anybody's game in the corporate market for tablet PCs, although Apple is leading. A survey earlier this year by NPD In-Stat found that 68 percent of tablets provided by companies to their were iPads. Then there is the whole BYOD phenomena. More and more corporations are allowing their employees to bring their own device to work, adding even more growth in this sector.
Companies are doing so because, once security issues are addressed, BYOD projects result increased employee satisfaction, greater worker flexibility and significant cost savings. Take Citrix Systems (Nasdaq: CTXS), the cloud networking and visualization technologies company, for example. Just three years after launching a limited BYOD program, it has already met the 20 percent cost savings goal it initially set thanks to a large drop in desktop PC support requests.
The other major players in this market include tablets based on either the Android operating system from Google (Nasdaq: GOOG) or ones based on Windows from Microsoft (Nasdaq: MSFT). Google's Android does lead Apple in sheer numbers in the smartphone sector but that success has not translated to tablets. Its growth seems to be hindered by security concerns (very important to corporations) over a lack of control over the download of apps. Meanwhile Microsoft is being held back by the fact that many employers are awaiting the release of the new Windows 8 later this year as to whether to allow employees' Windows devices.
This is a fast growth market for the telecommunications companies. In fact, AT&T (NYSE: T) recently said that over the past year it has seen “an explosion in use” of tablet PCs by corporations. The company reported that the number of companies using tablets grew by 194 percent in the first quarter of 2012 versus the same year-ago period. It added that more than 27,000 business customers have adopted mobile device management deals with the company.
AT&T and its main rival, Verizon Communications both view the trend among companies to mobilize their business operations as a significant opportunity to add a large amount of revenue to their bottom line. Both firms have invested heavily into mobile app development and services that target business customers. AT&T says that 50 percent of Mobile Enterprise Applications Platform customers purchase additional software or services from the company, justifying the investment into these apps.
Investors can be assured that this macro trend of companies adopting BYOD will only continue in the future. This is probably good news for Apple, although rivals are still nipping at its heels. But for certain, this trend will turn into a major cash generator for the large telecommunications companies as they offer to manage BYOD programs for their customers.
This article was originally written for the Motley Fool Blog Network. Make sure to read ALL of articles daily for the Motley Fool at http://blogs.fool.com/tdalmoe/.
But it is still anybody's game in the corporate market for tablet PCs, although Apple is leading. A survey earlier this year by NPD In-Stat found that 68 percent of tablets provided by companies to their were iPads. Then there is the whole BYOD phenomena. More and more corporations are allowing their employees to bring their own device to work, adding even more growth in this sector.
Companies are doing so because, once security issues are addressed, BYOD projects result increased employee satisfaction, greater worker flexibility and significant cost savings. Take Citrix Systems (Nasdaq: CTXS), the cloud networking and visualization technologies company, for example. Just three years after launching a limited BYOD program, it has already met the 20 percent cost savings goal it initially set thanks to a large drop in desktop PC support requests.
The other major players in this market include tablets based on either the Android operating system from Google (Nasdaq: GOOG) or ones based on Windows from Microsoft (Nasdaq: MSFT). Google's Android does lead Apple in sheer numbers in the smartphone sector but that success has not translated to tablets. Its growth seems to be hindered by security concerns (very important to corporations) over a lack of control over the download of apps. Meanwhile Microsoft is being held back by the fact that many employers are awaiting the release of the new Windows 8 later this year as to whether to allow employees' Windows devices.
This is a fast growth market for the telecommunications companies. In fact, AT&T (NYSE: T) recently said that over the past year it has seen “an explosion in use” of tablet PCs by corporations. The company reported that the number of companies using tablets grew by 194 percent in the first quarter of 2012 versus the same year-ago period. It added that more than 27,000 business customers have adopted mobile device management deals with the company.
AT&T and its main rival, Verizon Communications both view the trend among companies to mobilize their business operations as a significant opportunity to add a large amount of revenue to their bottom line. Both firms have invested heavily into mobile app development and services that target business customers. AT&T says that 50 percent of Mobile Enterprise Applications Platform customers purchase additional software or services from the company, justifying the investment into these apps.
Investors can be assured that this macro trend of companies adopting BYOD will only continue in the future. This is probably good news for Apple, although rivals are still nipping at its heels. But for certain, this trend will turn into a major cash generator for the large telecommunications companies as they offer to manage BYOD programs for their customers.
This article was originally written for the Motley Fool Blog Network. Make sure to read ALL of articles daily for the Motley Fool at http://blogs.fool.com/tdalmoe/.
Thursday, March 8, 2012
US Leads Way in Telecom (LTE) Innovation
There is a transformation occurring in the telecommunications industry, particularly in the United States, thanks to consumers' movement to smartphones and tablet PCs. These popular new phones and tablets, like the iPhone and iPad from Apple (Nasdaq: AAPL) and various devices powered by the Android operating system from Google (Nasdaq: GOOG), are forcing telecoms operators like Verizon (NYSE: VZ), AT&T (NYSE: T) and others to upgrade their networks.
As evidenced in 2007 with AT&T's network problems due to the launch of the iPhone, carriers need to upgrade their networks to cope with the tidal wave of mobile data unleashed by data-hungry advanced smartphones and now tablets. Unlike the first generation of such devices, today's gadgets have fueled a surge in mobile data usage thanks to their ease of use, ultra-fast processors and a proliferation of 'cool' third-party apps.
This need for U.S. carriers to upgrade their networks over the next few years was pointed out by the recent market and traffic data report from telecommunications equipment company LM Ericsson ADR (Nasdaq: ERIC) which predicted that global mobile data traffic will expand tenfold by 2016. Even the Federal Communications Commission chimed in saying that the country's wireless carriers will face a 275 megahertz “spectrum deficit” by 2014 if no new spectrum is opened up for use.
Not only that but it's well known that wireless carriers are losing a good amount of money on a growing number of subscribers that are heavy data users. The solution for U.S. wireless carriers?
At least a partial one is 4G or LTE (Long Term Evolution) technology which uses scarce spectrum much more efficiently than older 2G or 3G technologies and thus allows companies like Verizon to better handle the massive and growing data loads. It gives wireless firms a scalable technology that will drive down the cost of delivering data to subscribers for them.
U.S. telecoms companies have wisely already begun the shift towards LTE technology. All four leading US mobile firms including Sprint and T-Mobile are spending billions of dollars toward having LTE networks up and running by the end of 2013, several years ahead of schedule. In a few years, LTE networks will be absolute necessity for telecom operators since more and more smartphones on the market are LTE smartphones.
This move toward LTE technology is sure to continue in the years ahead. Several months ago, Juniper Research released a report which forecast that the number of LTE subscribers would reach 428 million by 2016. An impressive number, but that is only 6% of all global subscribers. Juniper expects a sharp bump in consumers' use of LTE to begin in 2013 as LTE networks are rolled out by the phone companies.
As telecom companies do so, it will allow them to free up some 2G and 3G spectrum which they intend to use for the next generation of technology. Current LTE technology in a few years time will be followed by the next generation of LTE technology called LTEAdvanced. This technology is projected to deliver average download speeds in the range of 100 megabits per second which should no doubt make smartphone and tablet users very happy.
And as these new technologies lower the cost of delivering mobile data to subscribers, it will also give a payback to the likes of Verizon and AT&T on their multi-billion dollar investments into LTE.
This article was originally writeen for the Motley Fool Blog Network. Check out my daily articles for the Motley Fool at http://blogs.fool.com/tdalmoe/
As evidenced in 2007 with AT&T's network problems due to the launch of the iPhone, carriers need to upgrade their networks to cope with the tidal wave of mobile data unleashed by data-hungry advanced smartphones and now tablets. Unlike the first generation of such devices, today's gadgets have fueled a surge in mobile data usage thanks to their ease of use, ultra-fast processors and a proliferation of 'cool' third-party apps.
This need for U.S. carriers to upgrade their networks over the next few years was pointed out by the recent market and traffic data report from telecommunications equipment company LM Ericsson ADR (Nasdaq: ERIC) which predicted that global mobile data traffic will expand tenfold by 2016. Even the Federal Communications Commission chimed in saying that the country's wireless carriers will face a 275 megahertz “spectrum deficit” by 2014 if no new spectrum is opened up for use.
Not only that but it's well known that wireless carriers are losing a good amount of money on a growing number of subscribers that are heavy data users. The solution for U.S. wireless carriers?
At least a partial one is 4G or LTE (Long Term Evolution) technology which uses scarce spectrum much more efficiently than older 2G or 3G technologies and thus allows companies like Verizon to better handle the massive and growing data loads. It gives wireless firms a scalable technology that will drive down the cost of delivering data to subscribers for them.
U.S. telecoms companies have wisely already begun the shift towards LTE technology. All four leading US mobile firms including Sprint and T-Mobile are spending billions of dollars toward having LTE networks up and running by the end of 2013, several years ahead of schedule. In a few years, LTE networks will be absolute necessity for telecom operators since more and more smartphones on the market are LTE smartphones.
This move toward LTE technology is sure to continue in the years ahead. Several months ago, Juniper Research released a report which forecast that the number of LTE subscribers would reach 428 million by 2016. An impressive number, but that is only 6% of all global subscribers. Juniper expects a sharp bump in consumers' use of LTE to begin in 2013 as LTE networks are rolled out by the phone companies.
As telecom companies do so, it will allow them to free up some 2G and 3G spectrum which they intend to use for the next generation of technology. Current LTE technology in a few years time will be followed by the next generation of LTE technology called LTEAdvanced. This technology is projected to deliver average download speeds in the range of 100 megabits per second which should no doubt make smartphone and tablet users very happy.
And as these new technologies lower the cost of delivering mobile data to subscribers, it will also give a payback to the likes of Verizon and AT&T on their multi-billion dollar investments into LTE.
This article was originally writeen for the Motley Fool Blog Network. Check out my daily articles for the Motley Fool at http://blogs.fool.com/tdalmoe/
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