Skip to content “Reality Check: The rise of the super phone”

February 9, 2011

What’s this article about? Rapidly increasing processor power, and “brand loyalty matters little in telecom.”  Red highlights are mine.

Reality Check: The rise of the super phone

February 8 2011 – 6:00 am ET | Jim Patterson, founder and CEO, Mobile Symmetry | RCR Wireless News

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.

If we learned anything from the events of the past week, it’s that brand loyalty matters little in telecom unless you are a) Apple Inc., or b) Verizon Wireless (for now). Even with AT&T Mobility’s announcement that 90% of iPhone customers are under contract, customers appear to be more than willing to break away for the latest network or handset technology (one-third of them by several reports). In the extreme case, that could mean 8 million to 9 million AT&T Mobility customers moving to Verizon Wireless by the end of June.

With Verizon Wireless-only customer sale (which acts as a pre-game event for the internal systems and processes, but not for Neustar who would handle carrier porting), we learned that current BlackBerry and Android customers were ready to jump ship en masse. I have seen several analyst reports touting 100,000 sales, but my experience would say that they may have moved up to 300,000 devices (or .3% of their total base) to make it a “best first day ever” event. Note: It’s important to keep in mind that these moves a) were likely changes in device only, and there were not a lot of plan changes, and b) likely came from existing smart phone users. It’s excellent for loyalty, but should not be viewed as a guarantee that this week’s iPhoneapalooza will be smooth as silk.

Late in the week, the market survey firm uSamp reeased a survey (with a very small sample size) indicating that 66% of BlackBerry users and 44% of Android users were likely or very likely to switch to the iPhone. Not surprisingly, the younger you are, the less brand loyal you are. We need a few more surveys to draw a trend line, but even for the 150 or so BlackBerry and Android users surveyed, it’s pretty telling that many of them are willing to learn a new operating system and throw away their current apps to move to the iPhone.

A study released earlier in the week from research firm The NPD Group Inc. confirmed how difficult it is for newcomers to break into the market. Despite lots of advertising by AT&T Mobility and Microsoft Corp., the “Despicable Me” –like characters in the Windows 7 commercials failed to lure new smart phone customers away from Google Inc. and Apple. NPD summarized the Windows performance as follows:

“Despite buy-one-get-one promotions at both AT&T and T-Mobile, the Windows Phone 7 OS claimed less market share than its predecessor, Windows Mobile, for which handsets are still available at all four major U.S. carriers. Windows Phone 7 also entered the market with lower share than either Android or webOS at their debuts, according to NPD’s Mobile Phone Track.”

The Windows Mobile market share was pretty low to start with and declining – mid single digits. Also, according to NPD, all five of the top selling phones in the United States were smart phones. Apple iPhone 4 (AT&T Mobility) led the way, followed by Motorola Inc.’s Droid X (Verizon Wireless), HTC Corp.’s Evo 4G (Sprint Nextel Corp.), Apple iPhone 3GS (AT&T Mobility), and Motorola Droid 2 (Verizon).

So what’s next? We’ll explore these over the next several weeks, but there are three trends that are inevitable:

1. Phone processing power will increase considerably. To use a car analogy, we will move from a 4-cylinder to an 8- or 10-cylinder engine practically overnight. For e-mail it’s irrelevant, but for video and other connected low latency applications, it’s essential. As SUVs were in the last decade (remember the rapid progression from the Ford Explorer to the Expedition to the Excursion?), so goes the smart phone in this decade.

2. Data throughput will also increase, tripling the data consumption for the average smart phone user by the end of 2012. The carriers, who will largely be using fiber to cell sites by the end of next year, will be able to carry an incremental megabyte of data for (much?) less than a penny (or $10 per gigabyte). Wireless data will eat into other discretionary expenses, especially video and entertainment.

3. Applications providers will be in hog heaven, and the rise of the “designer app” (yes, the Ralph Lauren, Giorgio Armani) will emerge.

So a brief note on processing power. Let’s look at what’s on the market today from each of the leading carriers:

1. AT&T Mobility is set to release the Nvidia Corp. Tegra chip on the Motorola Atrix. This is a dual-core 1 GHz chip, so we can multi-task with ease. The Atrix carries the latest version of Android (2.2, dubbed Froyo) and includes 16 GB of memory. It’ll be a terrific phone, but, as we discussed in last week’s column, it’s an indication of how far AT&T Mobility is willing to go to integrate the desktop with the wireless device.

2. Currently, the most powerful BlackBerry out there is the Torch, and its exclusive to AT&T Mobility. We use one as a test unit at Mobile Symmetry, and our reaction is “better than the Curve or Bold.” (This is odd as the Bold has the same processor). The Torch has a decent 624 MHz processor, but it’s very clear when demonstrating our web-based application over the iPhone 3GS versus the Torch, it struggles to keep pace. The Torch fails to keep pace with the Droid or Evo – it’s not even close.

3. The HTC Evo rocks. It’s my daily phone and has been since its launch (for those of you new to this column, I used to work for Sprint Nextel, and I am quick to praise when they release a good product). It has an absolutely terrific 1 GHz Qualcomm Inc. Snapdragon processor. The smaller version of the Evo, dubbed the Shift, also has a great 800 MHz Qualcomm MSM 7630 processor to go with a decent keyboard. The problem: It rocks for no more than six hours. Worthy of its own “Really” commercial (made famous by Microsoft until they were drowned by the little AT&T Mobility creature advertising), I would trade in my Evo for a phone of similar size and weight that had an eight hour battery life, even if that meant I had to leave Sprint Nextel! The carrier’s response to their customers, to turn off 4G and/or location based services, is ludicrous. First the Palm Inc. Treo, then the Samsung Electronics Co. Ltd. Instinct, then the Palm Pre, now the Evo – it’s time to get the battery life right.

4. Verizon Wireless has gone processor crazy, with the Droid lineup sporting 1 GHz processors in the Droid X, Droid 2, HTC Droid Incredible, and Droid Pro. Enough said – they got on the 1 GHz bandwagon early, and this has driven their bandwidth usage higher per average smart phone user.

5. The iPhone 4 boasts the A4, Apple’s proprietary processor. It’s also used in the iPad. Unlike any other device, the A4 is designed in an integrated manner, so even if the clock speed is slightly lower, the performance within the device is actually as good or stronger than 1 GHz devices.

There are more processors to assess (e.g., the Google G2 device marketed by T-Mobile USA Inc. has the Qualcomm Snapdragon processor), but this gives you a good feel for where we are headed. 1 GHz is the minimum moving forward, preferably with a dual processor. Qualcomm starts the party shortly with a 1.2 GHz processor, and likely 1.5 GHz by the end of the year. This processing speed will increase the perceived performance gap between LTE and 3G.

It’s the first step in the conversion from mere phones to super phones.

Jim Patterson is CEO and co-founder of Mobile Symmetry, a start-up created for carriers to solve the problems of an increasingly mobile-only society. Patterson was most recently President – Wholesale Services for Sprint and has a career that spans over eighteen years in telecom and technology. Patterson welcomes your

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