This year was somewhat an anomaly for the wireless industry. A lot of things got done: the impossible of mergers closed; new phones launched that hold the promise of significant industry change; new business and distribution models emerged; and higher-speed networks were more prevalent, making for a better user experience. The industry does tend to move quickly, but the number of big events in 2008 seems staggering. Because of this, I wanted to provide a look back at some of the biggest mobile headlines of the year, and project forward as to what these deals and companies will have to do to remain relevant in the new year. In a lot of ways, the deals may have been done, and the products and services may have gotten out of the gate, but 2009 will be a year of execution.
2008 Olympics in Beijing: The worldwide Olympic games were considered the biggest example of a digital event, where content would be available en masse on the three screens: mobile, online and TV. The event was largely a success with NBC reporting surprising mobile traffic, and others seeing customers experiment with new content for the first time.
—Looking forward: The big question is whether these one-time users, who logged in for an addictive event like the Olympics, will continue to come back to the mobile phone for events with less significance. Already there’s predictions that massive numbers of people will turn to their phones for history-making events, such as the president-elect’s Barack Obama’s inauguration, but it will be more important to see an uptick for other major sporting and political events.
More after the jump on the App Store, Virgin-Helio, and other topics…
iPhone 3G and App Store: In July, Apple (NSDQ: AAPL) launched the iPhone 3G, while simultaneously launching the iTunes App store, which provided developers more direct access to consumers than ever before. The App store has encouraged a number of copycats that will be launched in the new year. As of early December, the App store had 10,000 apps, and there had been 300 million downloads.
—Looking forward: In order for the the App store and others to be relevant in coming months, they will have to provide a profitable business for developers and other companies in the ecosystem. One easy gauge of success will be whether a company making iPhone apps is acquired. Well, we don’t need to wait until next year to see that process starting. We saw one of the first sales a couple weeks ago. (German application developer FutureTap bought Where To, an application that lets users find points of interest around them using their iPhone’s GPS, from fellow iPhone developer Tap Tap Tap for $70,000). Others should follow.
Virgin Mobile (NYSE: VM) USA-Helio Merger: Earlier in the year, we reported first that this tie-up was likely to happen, and it turned out to be true. Publicly held Virgin Mobile worked together with Helio’s majority shareholder SK Telecom (NYSE: SKM) to craft a merger that would help Virgin succeed. The deal even includes support from Sprint (NYSE: S) Nextel, which has incentive to see the carrier do well since it’s piggy-backing on its network.
—Looking forward: So many MVNOs have not worked out. In 2009, Virgin Mobile will have to figure out the business model that works, but may have the additional benefit of being able to leverage the poor economy as people hesitate to sign long-term contracts with the major operators. Also, as an outcome of the merger, Virgin took over Helio’s content and development division, which wasn’t previously an area of focus for the budget-minded carrier. In 2009, we’ll closely watch Virgin’s transition into becoming a carrier that also caters to higher-end handsets with more data and services. While it may be able to rely on its lower-end subscribers, graduating to higher-end services, it will also be competing head on with the major U.S. carriers.
Clearwire-Sprint merger: After two tries, Clearwire (NSDQ: CLWR) finally completed a partnership with Sprint’s WiMax division. Clearwire will be responsible for building and operating a WiMax network, while Sprint will continue to own a substantial stake in the company. The deal included $3.2 billion in funding from Google (NSDQ: GOOG), Intel (NSDQ: INTC), Comcast (NSDQ: CMCSA), Time Warner (NYSE: TWX) and Bright house Communications.
—Looking forward: There are so many moving parts in this deal. Clearwire is up against a clock. It must roll out in as many markets as it can to beat its competitors, which have picked a competing standard. It will also face dwindling cash reserves and a tough economy. In early January, Clearwire will launch its first true WiMax network in Portland, Ore., and will have to stick to a rapid build-out schedule, while being strict on spending cash. It will also be marketing a new product—mobile Internet—to the mass market. To remain a going concern, it will have to convince Wall Street that it’s sitting on a huge opportunity. Good luck: This is how companies fail—or are made.
Google releases Android, and launches its first phone: Google delivered its first phone, the T-Mobile G1, built by HTC and sold by T-Mobile. While it is not clear how well it is doing, HTC says it will sell more than one million by the end of the year.
—Looking forward: In order for Android to be successful, it will have to sell tens of millions of devices, not just one million, built by one handset maker, sold by one carrier. The competition is intensifying with Apple and RIM (NSDQ: RIMM). Look for devices to be sold by Samsung, Huawei and Motorola (NYSE: MOT) in 2009. Ultimately, it may be the developers who decide which platforms succeed, and it is still unclear how successful the Android Market will be. To date, it has only distributed free applications, but that will change in the new year as Google opens it up to application sales. Interestingly, the revenues will be split by developers and carriers, unlike the model used by the Apple’s App store, which shares none with the carrier.
Sprint Nextel launches the Simply Everything Plan: It was rumored that Sprint was going to offer a $100 unlimited voice plan, but in the end, the struggling carrier offered voice plus data and services like navigation all for that $100 price. All the other carriers hopped on board, offering $99 unlimited voice plans, with only some including text messaging for free.
—Looking forward: Sprint is losing customers at such a rapid rate, it may yet offer an even more compelling plan. Still, the promotion seems like a flop at this point, as Sprint is not winning over new customers. Look for more marketing campaigns from Sprint to increase the hype in 2009.
Nokia (NYSE: NOK) buys Symbian and makes it open source: Nokia is undertaking one of the largest open-source endeavors ever, by paying $410 million to buy the remaining shares of Symbian that it did not already own and then turning the assets into a foundation that provides open-source software to developers and handset makers.
—Looking forward: In 2008, Symbian was on target to surpass 200 million cumulative sales since its inception 10 years ago. According to Canalys, it was the the leading operating-system smartphone market for the past year as of Q1 and had about 60 percent market share (with Linux having 12 percent; Microsoft (NSDQ: MSFT) (NSDQ: MSFT, 11 percent; RIM 11 percent; and Apple 2 percent). Clearly, the move was defensive, with competitors such as Linux and Google’s Android starting to ramp up, and others not charging a license fee. Timing will be everything, but it won’t be a 2009 event. By the first half of 2010, the foundation expects to release its first software version, which may be too late given that several more Android handsets will be out and maybe even Microsoft will have a new Windows Mobile version out.
Nokia Comes With Music: This was definitely one of the most anticipated events of 2008. Nokia launched its first handset that included unlimited downloads for a year that users were allowed to keep for life from the four major music labels, representing millions of tracks.
—Looking forward: The service in the end was a bit disappointing because it was inherently not mobile. Users could download all the music they wanted on their computer, and then tether their phone to the computer to transfer the music. It is not changing consumer habits. In 2009, Nokia will have to make this service more mobile. That may require Nokia to create a partnerships and possibly a rev-share arrangement with a carrier. The companies will have to be creative in order for each partner to continue to make money. Think advertising. If successful, the model could spread to other niches, like games.
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Kirkland, Wash.-based Clearwire (NSDQ: CLWR) has named David Sach as CFO, replacing John Butler, who stepped down in September after Clearwire completed its merger with Sprint Nextel’s WiMax unit. Most recently, Sach served as CFO at Millicom International Cellular, a wireless company in Latin America, Africa, and Asia. Prior to Millicom, Sach served as SVP, finance and chief accounting officer of Equant, a Dutch telecom company. And before that, Sach’s background included a stint at EMI Group, where he worked to develop reporting and financial systems to support the conversion from records to CDs. Release.
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Early results from Nokia’s Comes With Music service are showing that one of the more surprising demographics that are adopting the service are mothers, said Trevor Madigan, Nokia’s manger of entertainment and communities Americas for software and services. “Madigan told me at CES that it’s an “agitated” mother who’s bothered by their kid asking for money for music, who are quick to buy the service. It’s unclear how well sales are going for Nokia’s Comes With Music service, which launched in the U.K. recently, and allows users to get unlimited music tracks from a catalog of 4 million songs free with the purchase of a phone. “That is our consumer proposition. We know some people will download everything, but once you’ve built up a substantial catalog, I find that I want someone to recommend something to me….Once you have unlimited access, recommendation is key.”
—MobiTV gets ABC content: MobiTV has struck a deal with Disney-ABC Television group to distribute ABC Mobile, a channel which includes full-length episodes ABC series, Desperate Housewives, Grey’s Anatomy, Samantha Who? and Ugly Betty, among others. ABC Mobile also features additional content from ABC Daytime, ABC Family and ABC News. Full episodes on ABC Mobile will be available to MobiTV subscribers on AT&T (NYSE: T) Wireless and Sprint (NYSE: S) the day after their broadcast airing. Release.