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Apple and Samsung…Two Distinct Approaches to Maximize Profitability and Market Share

20 May

It has been almost 6 years since Apple launched the iPhone. The iPhone was priced at $499 and $599 for the 4Gb. and 8 Gb. version respectively. It was not until Apple reduced the price of the iPhone to $199 that sales increased dramatically. Essentially,  Apple set a standard for the price point for future smart phone offerings.

In 2007, Samsung too had a smart phone portfolio of Windows and its proprietary OS. Most of these smart phones were QWERTY based and Samsung was trying to take share from Blackberry with it’s  Blackjack device. It was the first 3G phone in the US and yours truly enjoyed the blazing fast internet speed on my Samsung Blackjack. It was not until the Summer of 2008 (a full year after the launch of the iPhone) that Samsung launched an all touch Samsung Instinct on Sprint. The phone had limited success in the marketplace. Eventually, Samsung embraced Google’s Android operating system and launched its Android portfolio in  late 2009. These devices supported a QWERTY and touch interface. Like the Instinct, these devices were marginally successful.

GALAXY PROPELS SAMSUNG

Samsung’s struggled with its smartphone strategy until the launch of the Galaxy S in the summer of 2010. The Galaxy S when compared to the iPhone offered a bigger screen, a higher resolution camera and a replaceable battery. Moreover, Samsung capitalized on the success of the Galaxy S by offering 4-5 variants of the device and simultaneously launching the Galaxy on different operators.

GalaxyS Launh

Samsung followed the success of the Galaxy S in 2010 with wildly successful releases of the following:

2011: Samsung Galaxy S II – 4.3″ Display

Samsung Galaxy Note II – 5.3″ Display “Phablet”

2012: Samsung Galaxy S III – 4.8″ Display

Samsung Galaxy Note II- 5.5″ Display “Phablet”

2013: Samsung Galaxy S4 – 5″ Display

In January 2013, Samsung announced that they had shipped a total of 100 million Galaxy devices since launch. Moreover, Samsung has shipped numerous other models of smartphones based on the Android OS. For instance, In the UK and USA, Samsung offers 46 and 63 smartphone respectively.

 

APPLE STICKS TO ONE SMARTPHONE AND MAKES MAJOR DESIGN CHANGES EVERY TWO YEARS

Since launching the iPhone in 2007, Apple stuck with its mantra of “simplicity” and “elegance.” It’s smartphone’s were exactly the same across the different operators. It has made significant product design changes effectively every two years barring the redesign of the second generation iPhone 3G launched in 2008.

OLYMPUS DIGITAL CAMERA

Apple has released the following iPhone’s:

2007: iPhone – 3.5″ Display, aluminum rear

2008: iPhone 3G – 3.5″ Display, plastic rear

2009 iPhone 3GS – 3.5″ Display, plastic rear

2010 iPhone 4 – 3.5″ Display, glass rear

2011: iPhone 4s – 3.5″ Display, glass rear

2012:iPhone 5 – 4″ Display, metal rear

Unlike Samsung, since 2008 Apple has offered the iPhone in only two colors and it only sells the current year model and the previous two years model. Moreover, in the US, Apple did not add another operator (Verizon) till 2011. However, Apple has leveraged its approach to design, iTunes ecosystem and the App store to sell roughly 250 millions iPhones to date.

Personally, I would have liked to see Apple take the same approach to its iPhone family as it took to iPod’s – offering various models to its customers. It should have started offering choices in screen sizes in 2011 and it may have had a stronger market share. There is much speculation about a “cheaper” iPhone launch later this year. It will be interesting to see how the product is perceived in the market place.

In summary, Samsung has to be congratulated for executing and delivering on its strategy with not only its Galaxy family but also its other smartphone offering – especially since it launched its portfolio three years after the iPhone was released. Apple had virtually no competition for the first three years since the launch of the iPhone. Did they get a bit complacent based on its initial success? I have to guess, “they did.” Both companies have dominant market share in the smartphone segment and have developed a loyal customer base. Various reports indicate that Samsung won the crown for market share based on unit shipments and Apple won the crown for share of profits.

 

Network congestion is a problem…Ruckus Wireless has a compelling offering….Offload to WiFi will solve the problem temporarily!

27 Feb

A common problem facing wireless operators today is network congestion, especially in areas that have high densities of population. Mobile customers have experienced poor voice/data quality in some of these locations:

  • Convention Centers
  • Downtown Business districts
  • Fairgrounds
  • Shopping Malls
  • Sports arenas and stadia
  • Transit

Wireline network operators faced similar challenges 12-14 years ago, as internet services like dial-up access, cable modems and DSL were experiencing hyper growth.

Most of us have experienced slower Internet speeds while using our smart phones, tablets and laptops. One solution to this problem is off-loading some of the traffic from the 3G/4G wireless networks  to a Wi-Fi network.

I did not realize the severity of the problem that wireless carriers were facing with data congestion until I spoke  with Dr. Andrew Odlyzko, Professor at the University of Minnesota and formerly the Director of its Digital Technology Center. “Carriers will have to embrace WiFi as spectrum is scarce and there is a limit to the number of cells that can be added” said Dr. Odlyzko.  In 1998, as a researcher at AT&T, Dr. Odlyzko was the first person to challenge UUNET’s (part of Verizon now) overly optimistic forecast that Internet traffic was doubling every 3-4 months. Dr Odlyzko published a memorable paper estimating that Internet traffic was at best doubling every 12 months. He proved to be right.

Ruckus Wireless has developed a compelling carrier grade WiFi product by using its experience in the following products:
  • Residential and enterprise wireless access products.
  • iPTV carrier products
  • Wi-Fi carrier products
I have not  examined either Ruckus’ or its competitors offerings in detail. However, the demand for Ruckus’ Wireless products and those offered by its competitors like Alcatel-Lucent, Belair Networks (acquisition pending by Ericsson), Cisco Systems, Nokia Siemens and others will be strong. It will be interesting to see how Ruckus competes with larger rivals in a market that not only has a limited number of customers per country but also competing with established competitors that have a broader portfolio offering. My experience tells me the company will succeed in selling its carrier product as  as carriers typically have two sources for a network element.

According to Steven Glapa, Senior Director, Ruckus Wireless, “Ruckus wireless offers unparalleled adaptive antenna technology which combined with the intelligence of its gateway make its offering the best in the market.”  An exuberant  Mr. Glapa, added by saying.”We have the possibility of being the next generation Ericsson.”

Ruckus’ customers include:
  • An Australian operator
  • KDDI (Japan)
  • PCCW (Hong Kong)
  • Cloud, a division of BskyB
I  will not be surprised in the coming months if the  company announces a large operator in North America like Comcast that will enable Comcast it to offer WiFi services in high density locations that I mentioned earlier in the post.
To date, Ruckus has raised about $70 million in capital. Revenues were $100 million last year and are expected to double this year. The company was  founded by Ms. Selina Lo in 2004. Previously, Ms. Lo was a founder of Centillion and AlteonWeb Systems which were  acquired by Bay Networks and Nortel respectively. Coincidentally, Bay Networks was acquired by Nortel in the late nineties.
Finally, history has shown us that whether it is bits or bytes – the increased capacity in networking and computing generally gets consumed rather quickly.

Samsung Charge…on Verizon's LTE Network is Superfast

11 May

I have been using the Samsung Charge for over a week now. This is the first LTE phone that I have used. I primarily used the phone in the Puget Sound Area and also in the San Francisco Bay Area. Here is why I like the Charge:

  • LTE – The fastest “True” 4G phone on the market
  • Camera – 8 MP  and its video conferencing capabilities are truly amazing
  • Processor – Faster than my iPhone 4G
  • 4.3″ Display

I prefer the Samsung Charge to the HTC Thunderbolt on Verizon because of the form factor and the ease of use. The HTC phone may have a few more bells and whistles but the Charge is newer and I know that the Charge provides faster access to Verizon’s LTE network given the history that Samsung has with Qualcomm (chip supplier and 3G/4G technology developer).

Verizon and Samsung have priced the phone at $299 with a 2 year contract. Naturally, I expect the price of the phone to drop to $199 within 3-6 months.

For the customer that need the super fast Internet connectivity that LTE offers, I recommend the Samsung Charge.

Dude, where is my 3G service?

31 Dec

The biggest positive telecom story to come from India this year would have to be the successful auction of 3G spectrum, which netted the government a cool Rs 67,718.95 crores. However, of the seven private carriers that won spectrum in some circles, only two – Tata DoCoMo and RCom – have commercially launched 3G services. RCom has launched only in four cities – Mumbai, Delhi, Kolkata and Chandigarh. So far, 3G services have failed to impress, especially with the Indian government asking Tata DoCoMo and RCom to stop offering certain 3G services like video calling as it cannot be lawfully intercepted in realtime.

After bidding and winning 3G spectrum in 13 circles for Rs 12,295 crores, Bharti Airtel had promised to commercially launch its 3G services by the end of 2010. Today it is the last day of the year and still there is no sign of its 3G service. Earlier this month, Airtel’s Sanjay Kapoor had said that the company was ready to launch its services but was waiting for government clearance. Probably that could be one of the reason why Airtel is yet to launch its service despite running a television ad campaign for over a month advertising its 3G service!

In this regard, we believe that Vodafone had the best strategy when it announced that it will launch its 3G services only in the first quarter of 2011 and ensure that users get the best possible indoor 3G experience. On the other hand, others like Aircel and Idea are keeping their 3G cards very close to their heart, but we expect them to flip on their 3G switch in the same timeframe as Vodafone.

But we, as consumers, should be prepared to pay high 3G data tariffs. Unlike current 2.5G services where carriers face cut-throat competition and are forced to offer dirt cheap tariffs, carriers won’t have any compulsion when it comes to 3G services. First, these carriers have paid through their noses to acquire spectrum, which they will pass on to consumers. Second, carriers will ink 3G roaming agreements with each other to provide 3G services to their subscribers even in circles where they have not won 3G spectrum. Such deals are likely to kill competition.

In a nutshell, if you are hoping your carrier will offer you an all-you-can-eat 3G data plan for, say, sub-Rs 1,500, it ain’t gonna happen in 2011.

Sanjay Kapoor: Airtel still on track to launch 3G services this year

22 Dec

Airtel’s CEO, Sanjay Kapoor, maintained that the carrier was set to launch 3G services in India before the end of this year while speaking at the Nokia Conversations event in New Delhi. Kapoor said that the carrier was awaiting government clearances to flip on the 3G switch.

When asked about unlimited data plans, he insisted that fair usage policies are here to stay. “Unlimited data plans are not sustainable in India because of the high cost of spectrum allocation and the scarcity of spectrum. However, consumers will have the choice of affordable Internet access with sachet plans for daily or weekly access,” he told the audience of this invitation only event.

Kapoor also revealed that the carrier is looking at alternative technologies to cater to ‘hotspots’ – areas where network congestion might lead to poor service experience. Airtel is likely to go with LTE as Kapoor was present at a recent LTE demonstration by Nokia Siemens Networks at the India Telecom event held in Delhi earlier this month.

The panel, which comprised of Nokia’s D Shivakumar apart from industry analysts and Kapoor, opined that the success of 3G in India would eventually depend on the user experience and the government’s ability to provide more 3G spectrum in the future.

RCom launches 3G services in India

13 Dec

RCom today announced the launch of 3G services on its GSM network. Like most other private carriers, RCom is offering HSPA+ services with theoretical speeds of up to 21 Mbps. The 3G network is live in Mumbai, Delhi, Kolkata and Chandigarh at the moment with plans to launch it in all 13 circles where RCom has 3G spectrum by the end of this fiscal year. RCom has spectrum to offer 3G services in Delhi, Mumbai, Kolkata, Punjab, Rajasthan, Madhya Pradesh, West Bengal, Himachal Pradesh, Bihar, North East, Jammu & Kashmir, Orissa and Assam.

Unlike Tata DoCoMo, which offers tiered data pricing depending on the data transfer speed, RCom has announced a simple tariff structure that is independent of speed. The data speed will depend on the capabilities of the device used. Also, RCom won’t distinguish whether a connection is used on a cellphone, a USB modem or an Internet Tablet. The same SIM card can be used across devices.

Data tariff plans start from Rs 100 a month for 100 MB and go up to Rs 2,100 for 21 GB.

100 MB – Rs 100; 500 MB – Rs 399, 1 GB – Rs 649, 3 Gb – Rs 849, 10 GB – Rs 1,499, 21 GB – 2,100

In addition, RCom is also offering Pay As You Go (PAYG) plans where subscribers will be charged 10 paise/10 KB if their consumption is under 50 MB in a monthand 1 paisa/10 KB if they exceed 50 MB of usage. There is also a 25 MB 1-day pack for Rs 20 and a 125 MB 1-week pack for Rs 98. RCom will also offer two USB modems – an HSDPA 7.2 Mbps capable modem for Rs 2,599 and an HSPA+ 21 Mbps USB modem for Rs 4,499. Both these modems would be unlocked.

RCom won’t be offering video calling service at the moment as it awaits government clearance to offer the service. Other services on offer include a mobile TV service that would mimic RCom’s DTH service. It will offer over 120 channels with an electronic programme guide where users can set reminders for their favourite shows. Users will be able to subscribe to individual channels or packs for daily, weekly or monthly durations. Unlike other mobile TV services, users won’t have to pay data transfer charges while watching a channel. Which means, watching mobile TV won’t eat up your data plan.

We hope to get hold of a RCom 3G connection soon and review its service. Stay tuned in.

Airtel set to launch 3G services in India next week?

20 Nov

Airtel today rolled out its television advertising campaign for its new branding that also doubles up as its advertising for its upcoming 3G services. We have also been getting reports from our readers who are getting 3G signals on their handsets in Delhi. Of course, they have been unable to access 3G services in the absence of a valid Access Point Name (APN) that is required to connect to any data service. One of our sources tells us that Airtel will launch its 3G services as early as next week. Next week or not, Airtel is gearing up for a launch any day now.