Apple Set to Grow This Quarter

Apple sold more than nine million new iPhone 5s and iPhone 5c models in the three days after the launch of the new models on September 20. Apple now expects total company revenue for the quarter ending September 28 to be near the high end of the previously provided range of 34 billion to 37 billion U.S. dollars. The upper band would represent a year-on-year revenue increase of 2.9%. source: Apple statement

Apple Sees Sustainable Advantage from Silicon

Tim Cook, CEO of Apple, sees his company's expertise in semiconductors as a source of sustainable advantage. "Now, we’re well beyond just the surface level of design of hardware and software," he told Bloomberg Businessweek. "We’re deep in the guts. This week you saw the A7. You saw our new M chip. Well, these are only possible because many years ago we elected to start building our own silicon team, and now we have many, many people designing silicon.

"And you saw us go to 64-bit. Well, why are we able to do that first? It’s because we’re at that level of being vertical. Does anybody—do these other three companies* have silicon expertise? You can answer that. Maybe they have something that I’m not aware of, but in terms of the depth of it …

"So it will be interesting in the next round, the next wave, to see what happens there. What do people do? When we looked at it, we concluded we needed to do our own stuff because we were dreaming of products that couldn’t be done with silicon that you could go buy. So we designed our own and built an incredible team." source: Bloomberg Businessweek article

*He appears to be referring to Google, Microsoft and Nokia or BlackBerry. 

China Throws Money at Broadband

China plans to invest 2 trillion Chinese yuan (323 billion US dollars) to improve its broadband infrastructure by 2020 with the aim of bringing almost the entire population online, a vice minister said on Wednesday. In an interview published on an official website, Shang Bing, a vice minister at the Ministry of Information and Industry, said the government is aiming to boost the average broadband speed in Chinese cities to 20 Mbps by 2015 and to 4 Mbps in rural areas. source: Reuters article

Europe’s Net Neutrality Time Bomb

This post is sponsored by the Enterprise Mobile Hub and BlackBerry

There is a fundamental contradiction at the core of Neelie Kroes' new telecoms package, which she billed as "the single biggest thing the European institutions could finalise in 2014 to boost growth and jobs."

Announcing a raft of so-called net neutrality measures, Kroes, vice president of the European Commission, said: "We want to support a thriving app economy and possible new Internet industries in Europe. Therefore, companies are still able to provide “specialized services” with assured quality (such as IPTV, video on demand, apps including high-resolution medical imaging), so long as this does not interfere with the internet speeds promised to other customers."

While the business world should be applauding the fact that telecoms operators will be able to offer customers different tiers of service, how can that be done in the cellular sector without impacting the quality of other people’s Internet access? Radio spectrum is a finite resource, so if you give more to one customer, there is less for other customers. It is a zero-sum game.  And in Europe, there isn’t a great deal of mobile bandwidth to go round (see separate post).

As you dig into the detail of the proposed package, it becomes clear that the net neutrality proposals are somewhat circumspect. The European Commission’s “plain language guide” says “those specialised services must not impair in a recurring or continuous manner the general quality of Internet access.”

Passing the buck to national regulators

How do you define recurring and continuous? That buck has been passed onto the national regulators.  The guide says that national telecoms regulators should “ensure that Internet access continues to be available without discrimination with quality that reflects advances in technology, and that specialised services do not impair other Internet access. They should monitor this, and the impact on cultural diversity and innovation.”

The proposals do offer the regulators a stick to help them enforce net neutrality, saying “national regulators can require that internet providers offer a minimum quality of service.” However, a minimum quality of service is going to be very tough to police in a mobile environment – if an individual’s internet connection drops when they stray into a black spot not covered by the local base station, will the mobile operator be deemed to have failed to provide a minimum quality of service? How do you measure a subjective user experience?

As reliable and quick Internet access becomes ever more crucial to businesses, mobile operators are inevitably going to have to make tough choices about how to allocate bandwidth in busy cells.  As the “Internet of Things” takes off, cars, heart monitors, CCTV cameras and a host of other machines are going to be competing for mobile bandwidth with smartphones and tablets.

The Chinese approach

Europe isn’t the only region grappling with these issues. Densely-populated East Asia is in the same boat. Presumably with the blessing of the government, China Mobile, which now has more than 27 million machines and 700 million people connected to its networks, has established a centralised and dedicated network for the Internet of Things. European mobile operators may have to take a similar approach, but it is not yet clear how national regulators would react to valuable radio spectrum being cordoned off for machines.

China Mobile is also making extensive use of Wi-Fi hotspots, putting the unlicensed technology on a par with its 3G and 4G mobile networks (see graphic). Europe will also need more fixed mobile convergence to achieve the European Commission’s delicate balancing act.

To the Commission’s credit, the telecoms package does make some encouraging noises about Wi-Fi and small cells. Its plain language guide says:

• The Commission supports the use of RLAN / Wi-Fi access points without the need for individual authorisations.
• There should be no restrictions on private users sharing their RLAN / Wi-Fi with the public.
• In addition, unnecessary restrictions to deploying and interlinking RLAN access points should be removed; the public should have more access to the RLAN "hotspots" of large companies, public bodies etc.
• The EU should set out technical specifications for deploying and using low power small-area wireless access points...to encourage wider use without unnecessary individual planning or other permits.

But the Commission’s net neutrality proposals are less helpful. They simply signal that Europe wants to have its cake and eat it, leaving national regulators with the tough job of deciding exactly when specialised services have degraded the general quality of Internet access. And, in all likelihood, the 27 different national regulators in the EU will each take a slightly different approach depending on how they balance corporate demand for rock solid enterprise mobile solutions and the needs of start-ups who can’t afford to pay for a higher quality of service.  The Commission’s stipulation that the quality of the public Internet “reflects advances in technology” leaves a lot of room for interpretation.

In the most densely-populated parts of Europe, the battle for bandwidth could be bloody.

This post is sponsored by the Enterprise Mobile Hub and BlackBerry

Europe’s Connectivity Crisis

This post is sponsored by the Enterprise Mobile Hub and BlackBerry

The sale of Nokia’s devices and services business to Microsoft has prompted some serious soul searching in Europe’s mobile industry. Although the rise and fall of Nokia is an extraordinary story, it shouldn’t obscure a much more fundamental issue – Europe's slide from mobile leader to mobile laggard and the impact of that on the competitiveness of individual companies and the region’s economy.

In Europe, the quality and quantity of mobile connectivity now lags well behind North America and parts of developed Asia. At the end of 2012, just 0.3 per cent of mobile devices in Europe could access LTE connectivity, compared to 11 per cent in the U.S. and 28 per cent in South Korea, according to a report published last week by mobile trade group the GSMA at its Mobile 360 event in Brussels. 

And the availability of LTE isn't the only issue. At the GSMA event, Jon-Fredrik Baksaas, CEO of Telenor, described how his mobile device dropped a connection as he travelled through a road tunnel on his way into Brussels. Baksaas noted that if Europe’s mobile operators had matched their U.S. counterparts by spending 15% of sales on capex (rather than 8%) in the past few years, “that would have led to a tremendous difference to connectivity when we travel in Europe.”

The GSMA’s report claims the average mobile data connection speed in Europe today is 1.49 Mbps, well behind North America’s 2.62 Mbps (see chart above). For mobile workers, looking to access documents on the go, that disparity is big enough to have a significant impact on their user experience and mobile productivity. 

The under-investment in Europe is a reaction to intense competition, tough regulation and a shortage of reasonably-priced spectrum. Although the GSMA report shows a sharp decline in the average price per minute in the major five European economies over the past seven years (see chart below), you get what you pay for. Enterprise CIOs should be concerned about the number of dropped calls in congested areas of Europe, such as central London's South Bank, where it can be tough to hold a signal. While Wi-Fi hotspots are taking some of the strain, Europe clearly needs more investment in both 3G and 4G networks.

But European mobile operators' are grappling with a deteriorating business case – the GSMA report says that Europe is the only region of the world to see mobile revenues decline – from €162 billion in 2010 to €151 billion in 2012.

At the GSMA event, Neelie Kroes, vice-president of the European Commission, contended that Europe should look to regain the lead with the rollout of 5G technology. But her remarks were greeted with some skepticism. “I don’t know if there is a 5G that can solve this," responded Baksaas. "I haven’t seen him or her.” He was more concerned with the need to develop a separate mobile data channel for machine-to-machine communications that would ensure that the transmission of critical healthcare data, for example, is not competing in real-time for bandwidth with consumers watching video.

For ardent advocates of net neutrality, that kind of concept could be anathema. But the European Commission seems more pragmatic. Referring to the potential of telecoms to improve healthcare, energy, transport and the administration of cities, Anthony Whelan, a senior European Commission official and close advisor to Kroes, told the Mobile 360 event: “We need connectivity solutions that are managed, managed in a way that are reconciled with the recognisable public interest in the open Internet as a low barrier, cheap means of entry and innovation for society and the economy as a whole. That is a very delicate balance to reach.” Whelan stressed that the Commission won’t take a populist approach to policy in this area (as it has done on roaming prices).

As an aside, Whelan described roaming as “crack cocaine”, suggesting the mobile industry will have to be weaned off this revenue stream, but it can’t be done overnight.    

As Whelan is probably one of the primary architects of a far-reaching package of telecoms reforms being prepared by Kroes, his words on net neutrality, at least, should provide some comfort to Europe’s beleaguered telecoms industry and its enterprise customers. With enough capacity to support the managed connectivity Europe's businesses need, LTE is a potential game-changer. But the game won’t change until there is a better business case for 4G.

This post is sponsored by the Enterprise Mobile Hub and BlackBerry

Microsoft Aims for 15% of Smartphone Market

Announcing plans to acquire Nokia's Devices and Services division, Microsoft forecast that it could ship 255 million smartphones in 2018, capturing 15% of the global smartphone market. The software giant also estimated that smartphone sales could generate 45 billion dollars in annual revenue for the company in that year. In the past four quarters, Nokia has shipped approximately 20 million smartphones running Microsoft's Windows Phone software. source: Microsoft presentation

DOCOMO Predicts Big Expansion in New Revenues

NTT DOCOMO, Japan's largest mobile operator, said it is aiming to increase its revenues from new businesses, such as digital commerce, financial services, media and content, to 1 trillion Japanese yen (10 billion US dollars) in the financial year ending March 2016. In the year ending March 2013, it made 535 billion yen from such services and is aiming to increase that to 700 billion yen in the current year.

DOCOMO predicted that its average revenue per user from these new services will rise to 510 yen (about 5 US dollars) in the current financial year from 420 yen in the year ending March 31, 2013. source: DOCOMO presentation