Telecom Monthly September Newsletter

Welcome to another roundup of the latest telecom news. This month’s newsletter runs the gamut as we see reports ranging from the expected (people continue to love social networks and smartphones) to the surprising (Steve Ballmer leaving Microsoft) and even the bizarre (a gold iPhone?). That’s just the tip of the iceberg, so read on to find out what lies below:

In a surprise announcement, Steve Ballmer revealed that he will be retiring from his position as CEO of Microsoft within the next 12 months. Ballmer took over the reins of Microsoft 13 years ago after Bill Gates left the company. The timing of Ballmer’s departure is unexpected as he will not remain to see through the reorganization of the company that he set in motion and the fact that no clear successor is lined up suggests he may have been forced out. Microsoft has suffered losses in recent years as Google and Apple have chipped away at its previously unassailable position and the company has fallen behind as consumers move to mobile devices such as tablets and smartphones. Perhaps this is an opportunity to trot Bill Gates out as interim CEO and generate some positive buzz for the ailing tech giant.

In the theme of CEOs making announcements, Mark Zuckerberg of Facebook fame showed off a new organization dedicated to bringing Internet access to developing countries. Beside Facebook, the group, going by the name Internet.org, is made up of Samsung, Qualcomm, Ericsson, Nokia, MediaTek, and Opera Software. Zuckerberg estimates that only 2.7 billion people, about a third of the global population, have Internet access and called the issue “one of the greatest challenges of our generation.” His heart may be in the right place, but Zuckerberg quickly received criticism from those who see the project as nothing more than a veiled attempt by Facebook to seek more customers.

Regardless of its ambitions abroad, Facebook has a thriving customer base back home according to a study from Pew which shows an increasing number of people are using social networking in the U.S. Of the 1,900 Internet users who were asked whether they used social networks, 72% responded affirmatively. Pew also broke down social networkers by various demographics, with 74% of women reporting the use of social networks compared to 70% of men. To no one’s surprise, the study found that usage was highest among younger respondents. However, older people are also adopting social networking in increasing numbers, with the percentage of people aged 65 and older rising to 43% from 13% back in 2009.

While Pew’s study may not be surprising, comScore raised some eyebrows when it reported that Yahoo beat out Google for web traffic in July. Yahoo topped the chart for the first time since 2011 with 196,564,000 unique U.S. visitors in July. That number doesn’t factor in the recently acquired Tumblr, which was ranked separately at 28th place with 38,367,000 visitors. Google fell to a close second place with 192,251,000, though comScore’s report did not account for mobile users, which are pretty much guaranteed to be in Google’s favor. Still, Yahoo’s ascendancy seems to validate the strategy of CEO Marissa Mayer, who has been working to rebuild the company through a number of strategic acquisitions.

Google will likely regain its throne before too long, but perhaps users should question if that’s a good thing. In a recent motion to dismiss filed as part of a class-action lawsuit, Google made the claim that users of its Gmail service have no expectation of privacy. The company’s argument is that “just as a sender of a letter to a business colleague cannot be surprised that the recipient’s assistant opens the letter, people who use web-based email today cannot be surprised if their emails are processed by the recipient’s [email provider] in the course of delivery.” It’s been known for a while that Google scans people’s emails in order to provide targeted ads, though the web giant claims that this process is not an intrusion since it’s done by an algorithm and no humans actually read the messages. With this news coming not long after the government NSA revelations, it may be time for a broader discussion on Internet privacy.

Of course, the government does occasionally do more than spy on people. Such an instance occurred when the Obama administration decided to veto an International Trade Commission ruling that would have banned the sale of older Apple products such as the iPhone 4. U.S. Trade Representative Michael Froman said that the ban, if it had gone into effect, would have hurt consumers and had a harmful effect on competition in the U.S. economy. The ban originated from a decision by the ITC in June, in which Apple was found to have infringed on Samsung patents. This veto marks the first time a presidential administration has overturned an ITC decision since 1987 and gives some hope that companies won’t be able to use the threat of product bans to unfairly stifle competition.

Outside of the courtroom, Apple is also facing a battle in smartphone sales. Market research firm IDC reports that Apple’s share of the smartphone market declined in the second quarter of the year to 13.2% from 16.6% one year earlier. IDC attributed the drop to the lack of a new iPhone so far this year. Meanwhile, Android solidified its hold on the market as its share increased to 79.3% from 69.1%. Samsung remains the big player among Android vendors and accounted for 39.1% of shipments in the quarter. Overall, 236.4 million smartphones were shipped in the quarter.

Apple should recover following the launch of its latest iPhone, which is rumored to be unveiled at an event on September 10. The iPhone 5S, as it is expected to be called, will be a relatively minor upgrade from the previous model, though it is thought to include the new iOS 7 and a fingerprint sensor. Features aside, the story that’s generating the most buzz is the rumor that the new iPhone will break tradition and be offered in a gold color. The glitzy coating will be quite a departure for Apple, which has traditionally stuck to the minimalist black and white. In another break from form, Apple is also thought to be working on a lower-cost iPhone 5C aimed at mid-range customers. In the past, Apple has targeted the lower end of the market through price drops on older models rather than with specific devices.

Whether the subject is iPhones or Android devices, no one can deny that smartphones are taking over the world. A report from research firm Gartner, Inc. shows that the second quarter of 2013 was a milestone in the invasion, as global smartphone sales surpassed feature phone sales for the first time. Smartphone sales for the quarter grew by 46.5% from the previous year to 225 million units, while feature phone sales declined by 21% to 210 million units. Growth was strongest in the Asia/Pacific region at 74.1%, followed by Latin America and Eastern Europe with growth rates of 55.7% and 31.6%, respectively. Overall, smartphones accounted for 51.8% of the 435 million mobile phone sales in the quarter.

Smartphones are doing well, but BlackBerry can’t seem to catch a break. The company is seeing poor sales for its recently released BB10 phones and consequently announced that it is looking at strategic alternatives, including the possible sale of the company. A special committee has been formed to consider options, though BlackBerry noted that there is no certainty that a transaction will result from the process. Even if a sale does occur, it may be for portions of the company rather than the whole thing. Outside of its phones, BlackBerry has seen success with its popular BlackBerry Messenger (BBM), and a rumor suggests that the service may be spun off as a separate company.

Another manufacturer that’s been struggling in the smartphone market is HTC, though a report suggests that it may find a solution in the Chinese market. HTC is said to be working on a mobile operating system exclusively for China that will integrate popular apps such as the Sina Weibo blogging service. The Chinese government has expressed concern about the large number of local companies using Google’s Android OS and wants to move away from relying on Western products, which gives HTC an opening. If successful, the company may be able to stop the financial decline evident in its last quarterly report.

Regardless of operating system, the latest smartphones don’t mean much without networks to support them. AT&T’s 4G LTE network currently covers 225 million people in 370 markets, though the carrier intends to surpass the 400 mark by bringing coverage to 50 additional cities by the end of the year. Verizon, with 500 markets covered, has said that its 4G LTE deployment is complete, though reports have shown AT&T is ahead in network speed, which proves size isn’t everything. Sprint is holding onto third place with 151 markets covered and has set itself the goal of reaching 200 million people by the end of 2013. T-Mobile was a latecomer to the 4G LTE race, but it’s coming up fast and already offers coverage for 116 locations.

Looks like just another crazy month in the telecom industry!

We’re running a special promotion for the month of September: simply comment on any of the articles on our website and you’ll be automatically entered into a contest to win a new iPad Mini. Just visit TelecomMonthly.com this month and leave a comment for a chance to win.

Cheers,

-The Telecom Monthly Crew

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