Moto’s Meltdown
April 30, 2009
The once powerful Motorola is in a head first plunge toward the icy waters of irrelevance since it’s leap from the peak of the cellular handset world. As a result, Moto is preparing to separate its handset losses from the rest of the company with a planned spin-off of its wireless phone division. However, results from the last quarter don’t bode much better for the rest of the company.
Motorola saw its net loss grow to $231 million in the last quarter with a fall of nearly $2 billion in sales over the same period last year.
At its high in 2005, Motorola held a 25% share of the mobile handset market. That share is currently 6% with a wince inducing loss of 23% from the previous quarter alone.
Moto will attempt to turn the death slide around with new Android based smart phones later this year, but many fear that tough competition in the smart phone market may make such a move too little too late.
The remainder of the company saw heavy, if not as dramatic, losses as well. Sales in the home networking division fell 16% in the last quarter and 11% in the enterprise business unit.
The company lost over $1 Billion of its cash reserves in the last three months with about $5.8 billion remaining.
Tweeted To The Max
April 29, 2009
What happens when a little free word of mouth gets out of hand . . . let’s look at Twitter to find out. 
Like the rest of the world, I’ve been hooked by the simplicity of Twitter.com, the newest social networking phenom. But lately, I’ve had the sneaking suspicion that Twitter was having a hard time keeping up with me. Increasingly, instead of being able to post a 140 character message, I’ve received a picture of a whale being lifted out of the water by little birds - the infamous Twitter “Fail Whale”. Cute, but annoying, and a sign that Twitter is drowning in its own success.
Twitter has caught fire and is now growing at the hard to imagine rate of 2,565 percent.
Twitter has become a household name, in no small measure due to celebrity shout-outs from the likes of Oprah, Ashton Kutcher, Larry King and and many other well know folks from the entertainment and corporate world. Kutcher became the first person to reach one million followers, followed less than an hour later by CNN. But it is the use by business for marketing purposes (ourselves included) who have made Twitter a sudden necessity for corporate communication. Even stogy old stalwart like AT&T are now happily tweeting away.
The question that so many are wondering is will Twitter be able to scale quick enough to match its success, or will the fail whale become a symbol for what can happen when your free business model suddenly leads to more success than you can handle?
-iTodd
Telecom Monthly is on twitter too, you can follow us at twitter.com/telecommonthly
Consumer VoIP Dying?
April 27, 2009
AT&T has announced the impending death of CallVantage, their Vonage-esque consumer Internet phone service. Verizon also plans to shut down their Internet phone service dubbed “VoiceWing.”
For a while, it seemed as though it was only a matter of time until VoIP (Voice Over Internet Protocol) would take over the universe and put the long distance companies out of business. But something happened which changed that line of thinking.
The old long distance companies realized that there was more money to be made in wireless and Internet and abandoned their old “long distance” focus. They have transformed themselves into cellular and Internet companies. It turns out that the future may not be about making VoIP calls over wired lines after all. Consumers speak with their wallets and they seem to be screaming for mobility.
What is dead for consumers is very much alive for business. Companies everywhere are buying new IP enabled phone equipment which allows for low cost SIP trunking (Session Initiation Protocol). Essentially, they are buying Internet from a carrier and then placing all their calls via VoIP. Where consumers want to be untethered, most businesses still chain their employees to a desk.
Consumers want fast Internet at home for Facebook and YouTube, and mobile devices for fun and phone calls. Business wants internet too, but need huge bandwidth to handle the increasing load from web based information systems, video, online customer interaction, file sharing, and a host of Unified Communications (UC) options. While DSL or Cable Internet may be good enough for home, they aren’t even even an option for modern companies with more than a hand full of employees.
As futuristic as CallVantage and VoiceWing may have seemed a few years ago, they are practically Jurassic by today’s standards. Can Vonage be far behind?
Is The Dialer Doomed? The Short Duration Call Panic of 2009
April 23, 2009
Telecommunications carriers make their move against the telemarketing industry’s auto-dialers.
You may have noticed that you aren’t receiving as many unwanted calls during the dinner hour lately. It has nothing to do with a sudden sense of morality by telemarketers or even the National Do Not Call List. This time around, it is a simple matter of economics.
Most telemarketing companies use specialized high volume outbound dialing equipment (auto-dialers or predictive-dialers) which make a flood of outbound call attempts in order to connect just a few through to an agent. Some centers dial 10 or more calls before getting a customer on the line. But what happens to all those calls which never make it to an agent in the Call Center? They are terminated after just a few seconds or, in many cases, the call is disconnected before it is ever connected.
That’s a great deal for the telemarketer. Make thousands of free or nearly free calls in order to keep your agents busy. Busy agents presumably result in more sales. But the telecom carrier is left holding the bag.
Verizon recently noticed an “unprecedented” increase in calls from auto-dialers which have led to network congestion and call blockage. What’s a carrier to do? Well, they could expand their network at great expense. But they aren’t likely to do that for calls which are lasting 6 seconds or less. Rather than build, Verizon has drawn a line in the sand that it doesn’t want customers who make an unreasonably large number of short duration calls. Customers who fall into Verizon’s danger zone, risk being suspended.
Verizon isn’t alone in the war against short duration calls. In the past few months, AT&T, Qwest Communications, Global Crossing, and others have all targeted the unwanted side effects of the auto-dialer: in some cases refusing to accept dialer traffic and in others attempting to force the worst offenders off the network through surcharges and other penalties.
Surcharges can be levied at a rate of a penny or two per call attempt. A penny may not seem like much, but to call centers accustomed to getting free call attempts (when hanging up before an answering machine) or a fraction of a penny on a 6 second or less call, a penny is a huge amount of money: an effective 10 fold rate increase for some customers. Many call centers will face the very real threat of going out of business.
But if so many carriers all push the auto-dialer traffic off of their networks, doesn’t that make a great opportunity for someone? It might. A few smaller carriers and resellers, like AireSpring, are offering products without short duration surcharges, but they aren’t likely to get rich doing so.
Unless the FCC steps in to prevent the move by carriers against short duration call penalties, the pressure will be on the Call Center industry to change. Rather than using auto-dialers which hang up as soon as they detect an answering machine, or even before one can answer, they will have to adopt more customer and carrier friendly dialing practices.
Simply slowing down the number of call attempts per live agent and keeping the line open to leave a voice mail message might be enough to prevent falling onto carrier hit lists. It is also likely to cut into profits and make agents less productive.
Like so many other industries, telecom is in a time of rapid change, fueled in part by the economy and in part by changing technology. This time around, it is forcing another industry into a state of panic and change as well. Smart telemarketers will find ways to adapt. And those who fail to check their phone bills, or who are unable to change, will find themselves on the unproductive side of a dead phone line.
A Yahoo Microsoft Deal After All?
April 22, 2009
Yahoo just released 1st quarter earnings and they were tepid at best. Yahoo generated revenue of $1.58 billion, 13 percent lower than the same period last year. The company reported net profit in the first quarter of $118 million,just shy of expectations.
In another bit of dark news, Yahoo is preparing to enter into a third dramatic round of layoffs. But there is some potentially good news as well.
The Boom Town Blog is reporting that Microsoft and Yahoo may in fact be very close to a “Search and Advertising Partnership.” That would be welcome news to Yahoo shareholders who have taken a bath in the company’s stock since the bust of the Microsoft attempt to buy the company last year.
Much has changed since then, former CEO Jerry Yang has been replaced by Carol Bartz, the company has been looking to lower costs and refocus its efforts, and shareholders continue to place pressure on the company to increase value or sell.
If a Yahoo Microsoft deal is reached, we’ll all be able to hear the cursing from Google Headquarters.
Nortel Attempts To Carry On
April 21, 2009
Nortel issued a press releaseearlier this month touting the addition of “Regional Carriers” to its CS 1500 solution. In normal times, the promotion of minor carriers would seem out of place, but as Nortel prepares to enter the dark cold void of bankruptcy, this news seemed like a valiant attempt to prove that business carries on and that carriers are still evaluating and selecting the company’s equipment.
Hancock Telephone **, ArkWest Communications **, Venture Communications Cooperative ** and Dakota Central Telecommunications ** are the latest regional carriers to select Nortel’s CS 1500 solution. This IP multimedia softswitch gives regional subscribers and small and medium sized businesses (SMBs) a low-cost but highly-reliable solution for providing traditional voice services, as well as multimedia applications like IPTV, fiber to the premises, and end-user Web portal access.
Not big news by most standards but encouraging in these difficult times.
Skype O U T
April 15, 2009
Ebay is preparing to cut the umbilical cord and let Skype operate on its own. An initial public offering for Skype could be held as soon as early 2010.
The purchase of Skype by Ebay was widely seen as a bad move on the part of former Ebay CEO, Meg Whitman. The two companies were simply a bad fit for each other, and Ebay paid at least a billion dollars too much for the company.
Skype can likely hold its own as a stand alone company. Of course, news of Skype’s impending release, may also bring suitors to Ebay’s door.
Skype has largely been seen as treading water since its acquisition by Ebay for 2.6 billion in 2005. However, the company has recently made moves to break into the small business space with call center application partnerships and the beta of a new SIP Trunking product.
Skype is far from a dead company and would likely be able to stand alone or make a potential acquisition target for any of a number of companies looking to branch into the VoIP space.
Telecom Monthly - April Newsletter: Springing Forward
April 6, 2009
April showers bring cloud manifestos; at least they do 
this year as industry players attempt to work out a framework for an open cloud computing network. But “manifesto” is such a loaded word; couldn’t we just have light fluffy clouds without all the revolutionary rhetoric? Perhaps the soon to be new FCC Chairman, Julius Genachowski will have something to add to the conversation. We may have a hard time spelling his name, but word on the street is good. If we’re lucky, we’ll actually see an FCC that cares about competition and which will help prevent companies from getting “too big to fail” while helping small companies and innovators succeed.
Speaking of failure, some companies just don’t know how to recognize it. Take Sprint for example: they lost nearly 3 billion dollars last year and still rewarded their CEO with a compensation package worth an estimated 14 million dollars. Of course, thousands of laid off Sprint Nextel workers can’t count on being rewarded so richly. But they can look forward to lowered phone bills with a couple interesting new options.
Google has finally done something with their GrandCentral purchase and has launched the very promising “Google Voice.” Once Google Voice is out of beta, you’ll be able to place free phone calls and SMS in the US, along with conference calls and free voice mail transcription. Pretty cool. Not to be outdone, Skype is on the move as well, launching a fancy new desktop client, SIP Trunking for Small Businesses, and a new iPhone app all within the last couple of weeks!
Everything eventually turns to the iPhone these days, and so will we. Apple teased us in March with oodles of soon to be released new features in the iPhone 3.0 software due this summer. Yes, we’ll finally be able to cut and paste like crazy this summer, but we’ll also be able to search across the device for words and phrases, type in landscape mode, and receive multi-media messages. Perhaps these are all features which should have been included in the first version of the phone, but they will go a long way toward cementing the iPhone as a transformative force in the telecom industry.
It was a busy month in telecom. Times may be tough, but people still need to communicate. And that means the dollars will keep flowing into telecom, if not quite as fast. And for those companies hurting for new subscribers, there is always the hope of getting a slice of President Obama’s broadband stimulus – over 7 billion dollars worth. Welcome indeed, and very good for underserved customers in rural and urban areas.
Sure, there may be a few storm clouds in our update, but without periodic trouble to shake the debt from the balance sheet (are you listening Charter Communications?), we’d never be able to sort the winners from the losers. We’ve got a long way to go before the pain is over, but there is much to be hopeful for in telecom these days. We can see a bright spot on the horizon and it brings with it a greener telecommunications landscape.
Did you miss these hot stories in March?:
- Julius Genachowski nominated to chair FCC
- The Great Broadband Cash Giveaway
- Google Voice Too Cool For Comfort
- iPhone 3.0 Wishes Granted
- Stormy Weather - The Open Cloud Manifesto
Also featured in March:
- Rewarding Failure The Sprint Nextel Way
- Skype Surging Forward
- Loading The Future - The Journey From 3G to 4G
-iTodd
Easy Bake iPhone Apps?
April 6, 2009
Something really interesting came out of the Web 2.0 Expo last week - easy conversion of JavaScript to iPhone app. Development of iPhone apps has been slow and difficult for many companies due to the complicated framework and a lack of Objective-C developers. That will likely change with the release of the open source project PhoneGap. PhoneGap fills the void between web developer and iPhone app creation by allowing JavaScript developers to port their apps to iPhone. In fact, it will also create apps for Blackberry and Android as well. Just write the app once and you quickly develop apps for three different mobile platforms.
We plan to play around with PhoneGap and see what creative smartphone apps we can come up with. That is if any good ideas are left in the App world and we can manage to think of something cool.
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