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February 25, 2005

Powerline broadband set to grow in 2005

By Grant Gross

Broadband customers looking for an alternative to cable-modem or DSL (Digital Subscriber Line) service may not have long to wait for broadband over powerline service (BPL), according to a white paper published Thursday by a technology-focused research group. After more than 20 BPL trials across the U.S. in 2004 and more expected this year, BPL is ready for commercial rollout and "primed for real growth," according to the paper published by the New Millennium Research Council (NMRC), a Washington, D.C., group made up of scholars and telecommunications experts. The group's report is an attempt to examine the BPL market without taking sides or recommending policy, said Allen Hepner, NMRC's executive director.

"Broadband over powerline technology is getting more and more attention today," Hepner said during a press conference. "There are a number of experts who suggest that this could be the time the technology begins its emergence as a viable competitor in the broadband market."

BPL supporters, including members of the U.S. Federal Communications Commission (FCC), have championed the technology as giving consumers more broadband choices. By modifying existing electrical lines, BPL vendors are able to transmit data at speeds similar to cable or DSL, and some advocates of the technology see BPL as a way to bring broadband to rural areas now underserved by cable or DSL.

In October 2004, the FCC approved a set of rules designed to limit BPL interference to other radio frequency devices such as amateur radios. But groups such as the American Radio Relay League continue to protest rollouts of BPL, saying BPL transmitters cause significant interference to ham radios.

Despite the protests, it's estimated that more than 250,000 U.S. households already can choose BPL service, Hepner said. Included in those numbers is an ongoing citywide rollout in Manassas, Virginia, through Communication Technologies Inc., called COMTek.

In July, the company, based in Chantilly, Virginia, received a 10-year franchise from the city to provide citywide BPL service. More than 10 percent of the homes passed so far have signed up for COMTek's service, and by April, the company's BPL service will be available to all of the city's 12,500 homes and 2,500 businesses, said Joseph Fergus, COMTek's president and chief executive officer.

The company has a waiting list in Manassas of about 1,300 people, and it hopes to eventually win the business of 20 percent to 30 percent of the homes and businesses in the city, Fergus said. BPL is "moving beyond theoretical stage," he said.

"COMTek is in the business of commercial deployment of BPL, not the technology trial and not merely service pilots," Fergus said. "What I'm excited about today is that BPL has arrived. It is out there in commercial deployment, and it's being embraced by consumers."

While some commentators have called BPL a third broadband wire, Fergus called it the first wire, because electrical lines came to most U.S. homes before telephone and cable lines. "Now that millions of Americans are abandoning their traditional phone lines for wireless cell phones and cable for satellite TV, it may mean that the electricity coming into your home will be the last wire," he said. "We certainly don't have to worry about the infrastructure we use for BPL going anywhere anytime soon."

Two other speakers at the NMRC raised questions about BPL's future. While BPL has the potential to serve 13 million U.S. households in the next three to five years, interference problems and a reluctance from many electric companies to offer new services may slow its development, said Barry Goodstadt, vice president at market research firm Harris Interactive Inc.

A handful of BPL trials in Europe and elsewhere have been shut down because of interference problems, added Robert Olsen, an electrical engineering professor at Washington State University. While the FCC has set down rules about interference, those rules have not yet been challenged in the real world, he added.

Interference is "the real wild card," Olsen said.

The NMRC white paper is at http://www.newmillenniumresearch.org/archive/bpl_report022405.pdf.

Posted by Chad Dickerson at 04:22 PM

February 24, 2005

IDC likes what it sees inside iPod Shuffle

By Martyn Williams

Analysts at IDC recently took apart an iPod Shuffle and come up with an estimate of how much the diminutive music player costs Apple Computer Inc. to make. They found that Apple makes a healthy 35 percent to 40 percent profit on each player sold, and stands to make even more from iTunes music purchases and expected drops in flash memory pricing. The iPod Shuffle's flash memory, which was supplied by South Korea's Samsung Electronics Co. Ltd. in the model examined by IDC, is estimated to be the most expensive component used in the player by far, said IdaRose Sylvester, a senior semiconductor research analyst at IDC. (IDC is owned by International Data Group, the parent of The Industry Standard)

She estimated the 512M bytes of flash in the cheaper of Apple's two iPod Shuffle models costs the company around US$37.50 for each player. That's about two thirds of the estimated total $59 that Apple spends on materials needed to make each 512M-byte iPod Shuffle. The product retails for $99 giving the company a profit of about $40, or roughly 40 percent.

"Apple is making very, very good margins on the Shuffle," Sylvester said. "We based our cost analysis on fourth quarter production prices, which would have been when they sourced (the components). At some point they'll switch to cheaper flash and the margins will improve."

IDC estimated the average price of the same flash memory will slip to $31.25 during the current quarter, cutting the materials bill further and pushing Apple's margin on the 512M-byte player to around 46 percent, assuming there are no major changes in the price of other materials.

"Apple's margin can only improve," Sylvester said. "It's certainly not a loss leader."

Any discussion of Apple's profits from the iPod Shuffle must also include the iTunes Music Store, which is an integrated part of the company's business model. Like game console makers, Apple expects hardware sales to drive content sales, in this case music files. However, unlike some consoles Apple is making money on the hardware it sells and isn't so reliant on these later content purchases.

The second most expensive single component is judged by IDC to be the digital music decoder chip, which in the iPod Shuffle is the STMP3550 chip from SigmaTel Inc. That marks a change from the hard-disk drive based iPods which use a chip from Portal Player Inc.

The SigmaTel chip supports MP3 and Windows Media Audio files, although Apple has programmed it to play the AAC and Audible music formats, said Sylvester. The chip also includes a digital-to-analog converter, a controller for the USB2.0 interface, SDRAM (synchronous dynamic RAM) memory for buffering, and the headphone driver amplifier. Other functions present in the chip that aren't used in the Shuffle include an analog-to-digital convertor for voice recording, a driver for an LCD (liquid crystal display) and an FM tuner.

While these unused components are present in the chip, it doesn't necessarily mean Apple will use them at any time in the future, said Sylvester.

"If it had a screen, it would no longer be a Shuffle," she said. "Apple is getting a lot of marketing mileage out of clever slogans about shuffling."

Speaking at the recent Macworld Expo in San Francisco, Apple's vice president of hardware marketing, Greg Joswiak, said Apple had experimented with a screen on the iPod Shuffle but that it hadn't been able to come up with a navigation system that it liked.

Posted by Chad Dickerson at 04:31 PM

February 23, 2005

NTT DoCoMo's 3G subscriptions hit 10 million

By Martyn Williams

Subscriptions to NTT DoCoMo Inc.'s 3G (third-generation) cellular telephone service hit 10 million on Monday, the company said. The service, which was the first commercial WCDMA (Wideband Code Division Multiple Access) 3G system, was launched on Oct. 1, 2001, and initially failed to attract subscribers in the numbers that NTT DoCoMo had originally predicted. However, subscriber numbers began to improve after problems, including a limited range of handsets and technical issues, such as short battery life and network coverage area, were resolved.

The 3G system is currently aimed at high-end users. However, NTT DoCoMo will shortly begin selling a new range of handsets aimed at mid-market consumers. The carrier said these new handsets, which are expected to cost around ¥10,000 (US$96) less than existing models, are expected to further boost the number of 3G subscriptions.

Rising subscriptions to the service is good news for NTT DoCoMo. Not only does this give the carrier a chance to recoup the cost of building the network but 3G subscribers are spending more on average than 2G subscribers. During the final three months of 2004, which was NTT DoCoMo's fiscal third quarter, the average revenue from each 3G subscriber was ¥9,650 per month compared to ¥6,710 per month for the company's 2G subscribers.

Part of the reason for this difference is that 3G services have so far been aimed at high-end subscribers and as the 3G user base has expanded, the average monthly bill for 2G subscribers has fallen.

However, as the 3G user base expands, the average revenue earned from these subscribers is falling, although it's still well above 2G levels. The average revenue of ¥9,650 per month earned from 3G subscribers during NTT DoCoMo's fiscal third quarter was lower than the ¥10,280 per month spent on average by 3G users during the company's previous fiscal year.

Posted by Chad Dickerson at 03:51 PM

February 15, 2005

Symbian-based smart phones reach 25M mark

By John Blau

Shipments of smart phones based on the Symbian operating system (OS) increased 115 percent in 2004 compared to the previous year, Symbian Ltd. announced at the 3GSM World Congress in Cannes. Last year, 14.4 million Symbian-based smart phones were shipped, compared to 6.8 million in 2003, the London-based company said Monday.

Shipments reached 5.7 million in the fourth quarter of 2004, compared to 2.8 million in the same period a year earlier. Nearly 2.5 million phones were shipped in December alone, Symbian said.

Symbian added 14 new phones in the fourth quarter. As of December 31, total shipments of Symbian-based smart phones reached 25 million, with eight handset manufacturers supplying 41 phones with the OS. Nokia Corp., the world's largest handset manufacturer, owns slightly under 50 percent of Symbian.

In addition to the increased use of the Symbian OS, the number of third-party applications for Symbian devices doubled during 2004, the company said.

The new Symbian 0S version 9 will begin shipping in the second half of 2005, the company said. The new version will feature several enhancements, including improved multimedia and security capabilities, and will take on smart phone OS competitors Microsoft Corp. and PalmSource Inc.

At 3GSM, Symbian also announced an agreement with Renesas Technology Corp., which provides an advanced silicon platform for 3G (third-generation) mobile phones.

Under the agreement, Renesas Technology will port the Symbian OS to its mobile platform, enabling handset manufacturers to create smaller and differentiated handsets while reducing development time and phone costs, Symbian said.

Together with Japan mobile telecom company NTT DoCoMo Inc., Renesas Technology is developing a single-chip that integrates GSM (Global Standard for Mobile Communications), GPRS (General Packet Radio Service) and W-CDMA (Wideband-Code Division Multiple Access) technologies, as well as an application processor for improved multimedia performance.

Posted by Chad Dickerson at 03:45 PM

February 11, 2005

Few European consumers have RFID on their radar

By Scarlet Pruitt

While the use of radio frequency identification (RFID) tags in consumer products has set many global suppliers and retailers abuzz, it will take more to spark the enthusiasm of the European public, a new survey suggests. Pubic awareness of RFID in Europe is low, and those who are familiar with the technology have some privacy concerns, Capgemini SA said this week. The consulting group recently surveyed more than 2,000 European consumers on their perceptions of RFID.

The technology is a method for storing, receiving and transmitting data via antennas on tags that respond to radio frequency queries. It has captured attention as retailers such as Wal-Mart Stores Inc. and Tesco PLC begin to use RFID to increase the efficiency of their supply chains. By placing tags on product cases and pallets the companies can automatically identify items when they pass near an RFID reader. That information can then be transmitted to an inventory control system.

RFID has been hailed by some retailers and technology proponents as the new bar code and they would like to see it spread into store aisles to better track and target sales. RFID has already taken hold in other applications such as automatic toll passes.

Capgemini found, however, that only 18 percent of European consumers surveyed had heard of RFID. Of those familiar with the technology, 52 percent had a favorable perception, while 8 percent had an unfavorable perception, and 40 percent were unsure.

These results were not surprising to Ard Jan Vethman, Capgemini's RFID lead for Europe, who saw similar results during a study in the U.S. last year. RFID is primarily being used in supply chains now, so there is no reason why consumers should be very aware of the technology, he said.

Survey respondents who were familiar with the technology had some privacy concerns, however.

Tracking of consumers through their purchases, use of data by third parties and increased direct marketing were all listed as potential issues, Capgemini said.

"A little knowledge is always dangerous," Vethman said of the results.

For current RFID applications the privacy fears are somewhat unwarranted since retailers do not care what happens to tags once they are outside the store, Vethman said. Future applications are what need to be discussed so consumers can voice their privacy concerns, he said.

"Retailers should very clearly state their intentions and perhaps proactively engage with privacy groups," Vethman said.

The survey found that most consumers expect RFID to have the same impact on their privacy, or greater, than other consumer technologies such as cell phones, ATMs and store loyalty cards, Capgemini said.

Some of those surveyed did recognize the technology's potential benefits, such as increased access to more products, instant recognition of preferences and in-aisle product suggestions.

It makes sense for retailers to concentrate on improving the intrinsic value of their products through RFID, Vethman said. Tags can provide proof of purchase and warranty information, and be deterrents for theft, he added.

While it is still early days for RFID in consumer products, the public needs more information on the technology to garner greater acceptance, Capgemini said.

After all, 36 percent of those surveyed said that they expect RFID tags to appear on most products they buy within two to five years, while 22 percent expect them to be widely used within two years.

Because of the high price of tags and readers, consumer product tagging is probably only appropriate for the high-tech and apparel sectors right now, Vethman said.

But even in those circles, more consumer education appears needed.

Only 14 percent of those surveyed said that they would like the tags to be widely used within two years, and 13 percent said that they never want them to be used.

The Capgemini survey was conducted online in November and polled consumers in the U.K., France, the Netherlands and Germany.

Posted by Chad Dickerson at 04:06 PM

February 09, 2005

Mobile users blame operators for spam

By Scarlet Pruitt

Internet service providers may be used to dealing with customer frustration over spam, but mobile phone operators may have it worse. Cell phone users are more likely to blame their operators for unsolicited text messages, and even cancel contracts, according to a study released Wednesday. "Many operators are seeing this as a critical situation," said Janos Hee, co-author of the study and business development manager for Intrado Inc. subsidiary Bmd Wireless AG, a network messaging product and services provider.

The worldwide survey of mobile phone users and mobile services professionals was conducted by the University of St. Gallen in Switzerland and Bmd Wireless, with collaboration from the International Telecommunication Union. It found that eight out of 10 mobile users surveyed have received unsolicited messages and are more likely to change operators than change their cell phone number to deal with the problem.

Unlike Internet spam, mobile spam, in the form of text messages, directly affects the brand of the mobile operator, said Christopher Tiensch managing director of worldwide data services at Bmd. The study also found that mobile users don't differentiate between third-party messages or messages from their operator -- to them it's all spam.

This perception concerns operators who want to market their services, or those of their partners. Operators have not been doing as many text-message promotions over the past six to 12 months, according to Tiensch, as they try to define how to effectively use the technology without offending customers.

"Operators have to decide if their messages are annoying or add value," Tiensch said.

Mobile phone spam is considered more intrusive than Internet spam, Tiensch said. Operators, many of which are getting the brunt of anger over spam, are taking the problem seriously, he added.

Many operators have even gone so far as to cancel roaming agreements with carriers who appear to have a large amount of spam coming from their networks, the survey found. Some operators have cancelled five or six roaming agreements, while a few have cancelled over 30, Hee said. This has a direct impact on customers who find that they have no roaming voice or data access on these networks.

Mobile customers want operators to engage in more self-regulation to solve the problem, but so far most mobile network operators are in a trial-and-error phase, the survey found. Some are looking at technological means, like spam filters, while others are looking into adopting industry rules to eliminate the spam problem.

In the meantime, 83 percent of the telecom industry respondents surveyed see mobile spam as a critical issue today or within the next one to two years, according to the study.

The study was conducted in November and December and took into account surveys of 1,659 mobile users and 154 mobile services company professionals throughout Europe, Asia and North America. More details of the findings will be discussed at the 3GSM World Congress in Cannes on Monday.

Posted by Chad Dickerson at 03:54 PM

February 03, 2005

Worldwide handheld market declines again, IDC says

By Johan Bostrom

The worldwide market for handheld devices experienced its third straight year of decline in 2004. Fierce competition from converged devices such as smart phones, explains the decline, according to analyst firm IDC. "Consumers don't see the need to invest US$600 in a handheld device if a smart phone can do the same basic tasks," said David Linsalata, an analyst in IDC's Mobile Devices program.

In 2004, handheld device shipments slipped to under 10 million devices for the first time in five years. During 2004, 9.2 million units were shipped, which is a decrease of 13 percent over last year's shipments of 10.6 million devices.

"The vendors haven't been able to break away from the personal information manager-market (PIM)," Linsalata said. "The handheld computer needs to evolve beyond its core functionality."

One such example is GPS (Global Positioning System), which most vendors offer today. However, Linsalata couldn't point out any new drivers that are going to push the market up to the peak levels of 2001. "Not yet, but the handheld computer has certain adequate advantages such as larger and brighter screens, bigger batteries and attached keyboards," he said.

In 2004, two top vendors, Toshiba Corp. and Sony Corp. left the handheld market outside of Japan. Linsata doesn't think that indicates a trend. "I haven't heard anything from the top five vendors. The handhelds do complement their entire enterprise, offering a mobile solution."

The conversion of handheld computers into smart phones and mobile phones being equipped with PIM features, sometimes makes it difficult to define a handheld device. The devices included in the IDC survey do not include telephony, but may include wireless capabilities that enable Internet access and text communication.

Even though the year-over-year market for handheld devices has declined in the last three years, shipments increased 37.4 percent the last quarter of 2004 probably due to the holiday season.

IDC is a subsidiary of International Data Group Inc., the parent company of IDG News Service and The Industry Standard.

Top five vendors, worldwide handheld device shipments and market share, 2004.

RankVendor2003 shipments2004 shipments2004 market share
1 PalmOne 4,035,125 3,645,399 39.6 percent
2 HP 2,286,052 2,492,539 27.1 percent
3 Dell 584,511 695,171 7.6 percent
4 Sony 1,402,044 418,832 4.6 percent
5 Medion 198,505 234,325 2.5 percent
Other 2,069,613 1,716,895 18.7 percent
Total 10,575,850 9,203,161 100 percent
Top 5 vendors, worldwide handheld device shipments and market share fourth quarter, 2004.
Rank Vendor Q3 Q4 Q4 market share
1 PalmOne 736,481 1,174,371 42.0 percent
2 HP 615,515 769,170 27.5 percent
3 Dell 188,200 196,572 7.0 percent
4 Medion 15,000 115,000 4.1 percent
5 Medion 54,172 87,407 4.1 percent
Other 426,425 454,347 16.2 percent
Total 2,035,793 2,796,867 100 percent

Posted by Chad Dickerson at 12:23 AM

February 02, 2005

Study: 2004 was 'turnaround' year for telecom industry

By Grant Gross

The U.S. telecommunications industry appears to have come out of its slump from earlier this decade, with spending projected to grow 9.5 percent a year from 2004 to 2008, according to a study released Tuesday by the Telecommunications Industry Association (TIA). TIA, a trade group representing IT vendors and telecom carriers and equipment vendors, predicts that U.S. telecommunications revenue will increase from US$785 billion in 2004 to $1.1 trillion in 2008, after four years of modest growth. For the first time in four years, U.S. telecommunications spending grew in 2004, and U.S. telecom spending grew 7.9 percent in 2004, noted Matt Flanigan, president of TIA, based in Arlington, Virginia.

"I believe it's fair to say that the 2004 year was a turnaround for the overall telecommunications industry," Flanigan added.

Several factors will drive the revenue increases, including rapid adoption of voice over Internet Protocol (VOIP) among enterprises and other consumers, growing adoption of broadband Internet access and the ability of major telecom vendors to provide a full range of services, including Internet and voice, said study co-author Arthur Gruen of telecom consultancy Wilkofsky Gruen Associates Inc.

Growth in the industry has been fueled by decisions at the U.S. Federal Communications Commission relaxing rules that incumbent telephone carriers share parts of their networks with competitors, as well as U.S. President George Bush's push for universal broadband availability by 2007, Gruen said.

The announcement this week that SBC Communications Inc. plans to acquire AT&T Corp. is an example of telecom companies combining to become full-service providers, Gruen said. SBC, with its focus on residential phone service and broadband, is planning to buy AT&T, which has focused on enterprise telecom and IP services.

Regional Bells such as SBC and cable television companies are "all looking to offer everything in one big bundle," Gruen said.

Among the study's predictions:

In addition to the growth predicted in the U.S. telecom market, the study's authors projected faster growth outside the U.S. The study predicts non-U.S. telecom spending will grow at a compounded rate of 10.6 percent between 2004 and 2008, from less than $1.4 trillion in 2004 to more than $2 trillion in 2008.

"This is perhaps the most up-beat report that we've been able to do since 2000 or 1999," Gruen said. "It's nice to be able to see a market that we think is expanding."

Independent telecom analyst Jeff Kagan called the report good news for the telecom industry. "Telecom was growing until it hit a brick wall a few years ago," Kagan said in an e-mail. "By late 2004 it seemed obvious that telecom was getting hot again. I think 2004 was the turn-around year and 2005 will hit the ground running, both domestically and worldwide. Phone companies and wireless companies and cable companies are spending again and investing in their networks and getting ready for a new level of competition with each other."

Posted by Chad Dickerson at 03:38 PM