WCA November 2008

Elsewhere in telecom . . .

Sony Ericsson’s Xperia is here, but excitement dwindled between announcement and launch

A study released 12 ✆ th September by the University of Oxford’s Saïd Business School and Spain’s Universidad de Oviedo ranked 42 countries on broadband quality, awarding each a score based on Internet upload and download speeds and on the length of time required for online data to reach a computer. The researchers bestowed the highest score on Japan, with Korea in fifth place. The others in the top ten were all European, including Germany, Switzerland, Scandinavian nations, the former Soviet states Latvia and Lithuania, and Slovenia in the Balkans. The US made only 16 th place. Nokia Corp said 6 ✆ th September that its third-quarter global market share would decline from second-quarter levels, citing aggressive price cuts by its rivals that induced a 10% decline in the Finnish company’s share price. The world’s biggest cellphone maker had issued a more optimistic forecast in July, when it said its market share would be about the same in the two quarters: about 40%. Nokia said it had made a “tactical decision” not to match the price cuts of some of its competitors, seeking instead to be “sustainably profitable in the longer term.” The company, which sells more phones than its three main rivals combined, said it still expected to increase its market share in 2008. Preparing to compete for busi- ✆ ness from cellphone handset makers, Sweden’s Ericsson and the French-Italian chip maker STMicroelectronics said that they will combine their wireless chip and software units into a new joint venture to be based in Geneva. The new company, with sales projected at $3.6 billion a year, will be a rival to Qual- comm (San Diego, California) and Texas Instruments (Dallas), currently the major providers of cellphone chips. Not long before, STMicro had merged its wire- less business with that of NXP of the Netherlands.

Sony Ericsson unveiled its much-anticipated Xperia X1 mobile device on 15 th September. Sales of the Windows-based product are set for 30 th September in Britain, Germany, and Sweden; and across Europe, Asia, and Latin America during the fourth quarter. As noted by BusinessWeek Paris correspondent Jennifer L Schenker, much is riding on the Xperia for Sony Ericsson as it strives to differentiate itself from rivals such as Apple, of the US, Samsung of Korea, and Finland’s Nokia. She wrote, “Analysts say Sony Ericsson has become too reliant on its Cybershot and Walkman brands, which have grown a bit stale. The London-based company’s performance in 2008 has been lackluster.” (“Can Xperia Redefine Sony Ericsson?”, 15 th September) The Xperia was well received at the Mobile World Congress Barcelona, in February, but analysts told Ms Schenker that the six-month lag between announcement and launch let the buzz go off. Ericsson is working with a third-party manufacturer, Taiwan’s HTC, which has experience with Windows. But HTC has come out with its own Windows-based high-end phone, the Diamond. Also in the interim, Apple launched the iPhone, and Samsung and Nokia introduced high-end models that compete directly with the Xperia.

As it gets harder to make a profit in the hyper-competitive line rental market, this source asserted, operators and suppliers have to look to add value, and revenue, with their service offerings. In the second of these studies on wireless usage and where it is headed, Jupiter Research, a division of the American technology and market research company Forrester Research, predicts that US carriers will add only 26 million new subscribers by 2013 – for a grand total of 266 million users. Wireless-based social networking applications will thus become a centre of communication that will become almost as vital a cell phone function as voice is today. Mr Allen noted that, while the Jupiter report does not break out VoIP revenue figures for wireless mobile devices, it does suggest the increased role data applications will play in wireless service bundles. He took note of “a slew of announcements for new location-based services,” even over the few weeks before his article was posted.

Trends in wireless buying and usage show data applications gaining on voice In Telecommunications Online, Doug Allen reviewed two recent studies offering “solid proof” that mobile devices are fast reaching market saturation for key demographics, pushing providers to look beyond VoIP (voice-over-Internet protocol) calls for revenue. The trend will compel them to look more closely at data appli- cations, including broadband, to increase margins. (“A Revenue Shift for Cell Phones: Data Is King,” 17 th September) The British broadband analysis company Point Topic reports that broadband value-added services brought in $25.7 billion globally in 2007. John Bosnell, senior analyst at Point Topic, told Mr Allen, “[We] estimate that value-added services were 10% of total broad- band revenues, which includes subscriptions, in 2003. But by the end of 2007 that had increased to over 30%.”

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Wire & Cable ASIA – November/December 2008