Daniel Eran Dilger
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Android threats from Verizon iPhone, Windows Phone 7

Daniel Eran Dilger

Enthusiastic backers of Google’s Android project are excited to see a increasing market share for the platform, but the figures seem neither sustainable nor relevant as two new competitors enter the smartphone marketplace.
The Verizon iPhone

The first is a CDMA version of iPhone 4, which is expected to arrive at the beginning of 2011 (that’s less than three months away). Apple is reportedly shopping the new CDMA model to a variety of carriers in China and India, but the most important market for the device will be Verizon Wireless in the US.

That’s not because Verizon has an astonishing number of subscribers; it’s because Verizon acts as a protected enclave of Android sales. Outside of the US, Android has very limited relevance because it competes directly against the iPhone, which means there’s simply no fertile ground to sprout in.

But existing iPhones couldn’t take root on Verizon’s CDMA network, leaving a wide open environment that demanded an iPhone-like device that needn’t necessarily be as good as the iPhone because there were plenty of subscribers who couldn’t or weren’t going to switch.

The Battle of Verizon

It will be interesting to see how well the new CDMA iPhone competes against the handful of existing Android models currently available on Verizon; unfortunately, there won’t be any way to do a control group testing the outcome of an earlier iPhone entry by Apple on Verizon.

If the iPhone does very well on Verizon and beats back Android gains, it will be hard to argue that Android is competitive at all.

On the other hand, if customers continue to choose Android devices and the iPhone only exists as a minor player on Verizon’s network, it will likely be written up in the history books as a grand mistake by Apple to wait so long in its exclusive partnership with AT&T.

Anything in the middle and we’ll have more disputed agreements about the actual merits of Android and the level of brilliance of Apple. However, there’s reason to believe that Apple will do well at Android’s expense. The main reason is Verizon itself.

If Verizon was really pleased with Android offerings, it wouldn’t be seeking to negotiate concessions with Apple to carry the iPhone. Verizon isn’t at all acting like PC makers in the late 90s who found the Mac OS irrelevant; it’s acting like a big box retailer of the past decade that already carries cheap MP3 players but desperately wants to sell the iPod.

Verizon and Microsoft

The second threat to Android comes from Windows Phone 7, but this threat isn’t going to debut at Verizon. The carrier has gone out of its way to not support Microsoft’s WP7, and with good reason. It was Verizon that partnered with Microsoft on KIN, which was essentially WP7 in an early larva stage.

KIN failed so miserably that Verizon was left hating Microsoft for dragging it into its catastrophically incompetent fiasco. That turn of events also likely played a part in accelerating the alignment of Verizon behind Apple’s intent to deliver a CDMA iPhone.

Without WP7 debuting on Android’s primary carrier, Google’s Windows Mobile-killer platform will get a reprieve from Microsoft’s last gasp efforts to resurrect its ailing smartphone platform and recapture territory. But Microsoft is unlikely to make any real progress anyway. Instead, the arrival of WP7 will really just demonstrate how bad Google is at doing something it’s not experienced at.

The third party candidate

In other words, WP7 will make Android look bad without really achieving any great success on its own, ultimately acting in the role of a third party candidate to erode the anti-iPhone sentiment that has been focused on Android. After all, if you only have two options, people will generally get extreme in their support of one or the other.

But when you introduce a third that could appeal to some members of one side more than the other, you split and weaken the interest in that option. Windows Enthusiasts loved to hate the Mac until Linux began to appear; then you had a significant number of former Windows users who were drawn to the advantages of a Unix-like operating system, something Apple later leveraged under Mac OS X, inhaling lots of interest from former users who had never historically been interested in the Mac.

In smartphones, the opposite occurred. Windows Mobile has never been a real favorite, but Android seemed to deliver an Apple competitor that PC and Microsoft fans felt comfortable rallying around in their hate for Apple. The problem is that Google has done a poor job in actually delivering a great platform, largely because Google has no experience in building or maintaining a platform.

Now that Microsoft is entering the ring again, interest in Android is splintering between those who like Microsoft in general and those who like centralized control of a platform, deflating the giddy support for Android that had ballooned under the frustrated sighs of people huffing and puffing about the success of Apple’s iPhone.

As I’ve pointed out before, the more competitors Apple has, the better it does. When it faces a monoculture of competition (as it did with Windows on the PC, or as it has this year as Android emerged as the only competitor in smartphones), it’s more difficult for the company to show off its strong points.

Google vs itself

In addition to the debut of Apple on Verizon and the entry of WP7 on the GSM carriers outside of Verizon, Android also continues to face problems created by Google. The core strengths of Android are supposed to be its openness and status as a freely available operating system. But those aspects are also its core flaws.

When adherents talk about Android’s market share, they forget that Android isn’t a product, it’s a technology portfolio. Android’s popularity doesn’t benefit Google in the way that Windows made Microsoft extremely rich. Google gives Android away, and in some cases pays hardware makers to use it. Pointing out that lots of phones being sold use Android is like saying that a large number of smartphones are black. So what?

As soon as white or silver or woodgrain becomes more fashionable, devices will shift. The same applies to their core OS. The problem for Google is that, unlike Microsoft, it has done little to establish Android as a de facto standard or necessary piece of the puzzle. Had Google pushed a strong, centralized UI the way Microsoft did for Windows, at least customers would begin to recognize “Android” as something they thought they needed. They do not today.

Microsoft’s unification of branding, UI, and APIs meant that PCs couldn’t really be sold without Windows. Today, anyone can put together their own OS and deliver a phone, just as Palm/HP, Nokia, Samsung, and RIM’s Blackberry are doing. Google hasn’t established a strong platform, it just co-opted Java and made a half-hearted attempt to set up an app store that hasn’t achieved the same sort of industry-changing influence as Apple has.

Partly, that’s because Google isn’t catering to customers who actually want to pay for things. It’s attracting users who don’t want to pay for anything, and want the freedom to bootleg and hack. That demographic is not really attractive to commercial development for obvious reasons.

There’s no reason preventing Motorola or HTC from shifting to another operating system once Android begins to lose its allure, just as there was little holding either back from switching from Windows Mobile to Android a couple years ago.

Of course, the other problem for Android is that Oracle is now focusing on Java as a core asset, following its acquisition of Sun. And that means it is not just taking legal efforts to force Google to pay for its use of Java-related IP, but also that it is partnering with IBM to develop open source Java independent of the now to be abandoned Harmony, the software Google borrowed for Android.

End of the excitement

For these reasons, I’m still predicting 2010 will be the year where the giddy excitement about Android will fade as the platform becomes the utilitarian way for second rung hardware makers to dump out lower end products. Its wondrous premise as a free and open operating system has collapsed as users realize that it’s no more open than the carrier and hardware maker wish it to be.

Android phones have all the same vendor locks and bloatware as Windows PCs, but unlike Windows, Android doesn’t deliver a unified UI, nor do Android phones of the same release date even all exist on the same version of the platform. Nor can you easily update the software on a given device any earlier than your carrier and hardware maker choose to support.

Android isn’t a platform, it’s a technology portfolio; a codebase. The nebulous fantasy of Android competing against the iPhone as real product is evaporating, leaving a rather dull layer of reality behind.

Meanwhile, Apple continues to face a series of half-baked products that will likely enable it to maintain a strong lead, while Microsoft’s late entry with WP7 butts up against the reality that it’s hard to compete against an established player with a me-too product with little novelty, a lot like the Zune from a couple years ago.

  • gus2000

    I assume you meant 2011, since October is a little late for a prediction of the current year. =P

    Android will maintain it’s core supporters, but it’s broader appeal will fade. WM7 can possibly strong-arm it’s way into some corporate shops, but I don’t see mall shoppers picking one up.

  • http://motorizedmount.com Alan

    You know someone is going to say it, so let me go ahead and get it out of the way. What about all your previous and numerous articles saying No Way No How for a Verizon CDMA iPhone until LTE is rolled out? You went into great detail about how CDMA was a dying technology and it made no sense for Apple to produce a CDMA iPhone.

    The fact of the matter is that even with LTE, CDMA will be here for a very long time and any LTE enabled Verizon phones will probably still have to carry a CDMA chipset for at least 5 or maybe even more years.

    You did correctly analyze the reasons for Apple finally going to more carriers in the U.S. I just hope that they will not stop at Verizon and also bring it to T-Mobile and Sprint.

    [From 2007 through 2010, Apple has experienced tremendous growth with the iPhone without needing to supply a CDMA handset. The articles I wrote through last year recognized this, and downplayed CDMA as something Apple needed to support to gain subscribers and grow.

    However, something new began to happen in 2010; even before the Android-enclave began to develop, I began reporting on the potential of a global iPhone. As Android began to gain traction at Verizon (and globally in China and some other markets as the replacement for embedded or Linux devices), the buildout for LTE increasingly appeared further out into the future.

    At this point, it appears unremarkable that Apple would be looking at shipping an iPhone 4 with a CDMA chipset, because Apple needs to broaden its US market penetration outside of AT&T (in part because of Verizon, and in part due to slower progress by AT&T than expected in certain markets) and because LTE is still immature and basically experimental and will remain so for the next year or two at least.

    If you look at the last several years of predictions I’ve made and general outlook I’ve printed, it’s remarkably accurate in the near term and changes as new information becomes available. As Jobs has pointed out, it’s impossibly difficult to predict what’s going to happen 5 years out in the tech world. But it’s often pretty obvious what has to happen in the next year or two (at least from my perspective).

    As for my comments that ‘CDMA-makes no sense,’ much of this reasoning was based on things that were true over the last few years, but have since been fulfilled or have evolved. For example, I pointed out that it was more important for Apple to enter markets like China than to target Verizon. But now Apple has a UMTS model in China, and Verizon (and CDMA in certain other markets) is beginning to make sense, given the glacial deployment of LTE.

    It will be interesting to see whether Apple uses CDMA only chips for Verizon, or whether it can deliver a hybrid phone (which now appears less likely). An LTE model appears at least 2 years out, perhaps iPhone 6 in 2012 at the soonest. I think expanded WiFi hotspot coverage makes more sense for many carriers than trying to rebuild their multibillion networks every two years to maintain state of the art mobile coverage, particularly in the US. – Dan]

  • brew57

    >>Outside of the US, Android has very limited relevance because it competes directly against the iPhone, which means there’s simply no fertile ground to sprout in.

    I am no Android fan, but it seems unlikely that Android 200+ activation rate is achieved mostly on Verizon. Perhaps Verizon was a catalyst initially, but clearly the activations indicate that Android has spread is selling well in volumes on other carriers and other countries.

    I don’t know, but I wouldn’t be surprised if Android devices now sell in very high volume even on the ATT network.

    Short of a legal injunction, or Google’s pulling the plug (both possible), I doubt Android’s growth will be stopped. Slowed down perhaps, but not stopped.

    One has to consider that its very flaws, clearly outlined in this post, are possibly the very reasons for its continued “success”.

  • http://www.metrokids.ca Conrad MacIntyre

    Companies like HTC who do not develop their own software will continue to use whatever people buy. The real test is whether WP7 can upset the Android universe. The iPhone stands on it’s own, as does BlackBerry. I’m willing to bet that despite regardless of Android or WP7 success I speculate that Apple will continue to have the lion’s share of handset profits.

    Also, Dan, care to comment on the CDMA hell-freezes-over iPhone scenario??

  • broadbean

    Dan did address the CDMA iPhone soon after it emerged the existence of the Qualcomm chipset. Funny how people remember one side not the other of his write-up.

  • http://spacecynics.wordpress.com Thomas

    Hey, count me in as an iPhone customer the instant there’s one available for Verizon’s network. ATT simply won’t reach my house, and it’s hateful for other reasons. Yes, Verizon has its faults as a company, but its network isn’t one of them. I’m ready to toss my 1G BB-Storm into the ocean, and my contract isn’t up for renewal until April. So I hope you’re right on this one. I could use some holiday cheer from Apple/Verizon.

  • Aussie

    Dan’s right, if the Australian experience is anything to go by. Here in Oz, we have 4 or 5 carriers for iPhone and telco rates are more competitive. I am traveling to work on the bus and around me I see 1 iPad and lots of iPhones. About 50% of my fellow travelers have iPhones, I would say. Yesterday, while waiting for the bus there were 6 iPhones out and there must have been less than 10 people waiting in the queue. I would see about 2 Androids a week and untold numbers of iPhones.
    We’ve had tethering for ages, iPhone has never been restricted to a single carrier and its market share is huge. There is no way Android can compete here in a truly free market place. The growth figures for Apple in Australia are amazing and we’re always now among the first overseas markets to get new Apple product. Android’s “success” in the US appears to me to be due to AT&T’s monopoly.

  • OneGeV

    @broadbean: I looked at his write-up from July 2nd, and his points are still valid.
    “Apple’s real growth is not going to come from picking up the minority of Verizon users in the US who can’t switch but do want the iPhone; it’s from global expansion.”
    In other words, would Apple develop a CDMA phone for US Verizon, if it wasn’t making one for the Indian and Chinese markets?

  • http://motorizedmount.com Alan

    Nice and thorough response Dan. I did disagree with you back then when you were saying that a CDMA iPhone was unlikely for the very same reasons you listed in your response above saying it now made sense. You are correct that LTE will roll out very slowly, and it will take many years for any carrier to reach the level of penetration of their 3G map.

    CDMA Rev B is also a possibility since it offers far higher speeds (up to about 9MB) as well as SVDO (voice and data simultaneously) From what I understand, it is rather cheap for Verizon and Sprint to upgrade their existing 3G network to take advantage of Rev B. This would allow them to maximize their investment in all the money they spent on 3G while they fully deploy their 4G in the future. The standard for voice over LTE has not even been finalized so all those people hoping to get a LTE phone on Verizon will have to wait as Dan pointed out to around 2012 or even later. It will mainly be used for data mifi type devices for the first year. Much like Sprint did with WiMax at first until the Evo and Epic were finally released.

    I am really happy that Apple is ending their exclusivity with AT&T (assuming this rumor finally pans out) AT&T coverage sucks for me at my house so it was never an option. I just pray that if it does come to Verizon, it will come to Sprint very soon after. Assuming the iPhone would cost the same as the Evo plan, I would have basically unlimited everything for only $50 a month thanks to SERO premium. Since Verizon charges about the same as AT&T for their plans, this won’t effect pricing on AT&T. But one big difference is a far better network not to mention unlimited data. I bet once people’s contracts start ending on AT&T, you are going to see a lot more cancellations than the analysts predict.

    I do have to say thank you for AT&T though. Because without their help and agreeing to meet Apple’s demands, we would not have the iPhone or even the Android phones, at least not as open as they have become. It wasn’t too long ago that Verizon disabled bluetooth data on phones and didn’t even allow wifi. It would have been far more locked down and not nearly as feature rich if Apple had caved to Verizon’s demands years ago. So thank you AT&T for laying the groundwork and for basically being a very good partner to Apple. But you really should have expanded your 3G coverage in that time and now you are going to suffer the consequences of that mistake.

  • http://madhatter.ca The Mad Hatter

    In Canada Android has done fairly well with all of the carriers. The other major players are RIM and Apple, you see a lot of BlackBerry’s and IPhones in use.

    While there was still a lot of advertising for Windows Mobile up to the start of the summer, no one was buying the phones, except those locked into a corporate environment. Win Mobile is practically a dead issue in Canada.

    Both RIM and Apple have a wide base of satisfied and loyal users. I’m seeing more and more people who seem to really like Android. So in Canada at least, Android does appear to have a fan following, and it’s not the geek crowd. A lot of young adults appear to have picked up on it as a neat thing, and it appears to be on a level with the IPhone in some circles.

    Microsoft is coming into a market that they’ve already lost once. Since the three major OS players (Nokia isn’t a major in Canada) all have a core following, that leaves Microsoft with only a small portion of the market to chase. And of course the failure of the Kin has a lot of people skeptical about WM7. I rather expect it to fail miserably in Canada, and if they didn’t retain the old business friendly features, they’ll loose their business market as well (mostly to Rim, though some firms may move to Apple).

    What’s worse from Microsoft’s point of view, is that their continual failures in a wide range of markets have a lot of people skeptical of Windows. For a long time there wasn’t any competition to Windows due to Microsoft’s anti-competitive actions. In phones, tablets, and to a certain extent netbooks, Microsoft is a failure. The server market is also moving away from Microsoft, after all, why pay for 1000 seats to run a file server when you can download and install CentOS for free.

    Last year I predicted that Microsoft would enter Chapter 11 within 5 years. If WM7 is as big a failure as I think it will be, it may happen sooner.

  • gus2000

    More than CDMA, the problem with getting a Verizon iPhone is…Verizon.

    Remember, they got approached by Apple first and laughed at the idea of letting users make their own ringtones without paying $3.99, or watching non-VCAST videos from YouTube, or letting the handset maker dictate terms of any kind.

    There are simply some points that Apple was never, ever going to concede (ummm, Steve Jobs everyone, hello!) no matter how much “market share” they were losing. It looks like Verizon is ready to play ball now.

  • berult

    In Canada I believe Android is riding RIM’s nationalistic wave. The iPhone is felt, surreptuously, to be a threat to Canada’s input into the global tech market place.

    The alternative to the home made self-proclaimed wonder has therefore got to be the most anti- Apple competing device on the market: Google’s patent infringing Android. It soothes the nationalistic sores of being pushed by the iPhone into irrelevance.

    A double negative, a tip of the hat for Apple’s disruptive ground breaking position.

    If RIM were Australian, they would also most certainly hold the irreverence against Apple; Australia’s pride is not on the line, so they simply go for the best.

    Nationalistic stances sell on insiders esoteric, buy on outsiders fair play; micro eco systems, biased by nature, iterate into equilibrium. a balancing out of sort of the Global Mobile Market Sphere.

  • KenC

    I still won’t believe there’s a CDMA iPhone until it ships. I think it’s more likely that Apple will build a TD-SCDMA iPhone than a CDMA2000 one. Heck, if they can sign a deal with China Mobile with their 500M subscribers, that’s almost equal to all the CDMA2000 users in the world, about 600M.

  • brew57

    @ mad hatter

    Your post made sense until I read the “Microsoft in chapter 11” satement.

    You don’t read much financials, do you?

  • Jim F.

    I may be stubborn, but I think the CDMA iPhone for Verizon is wishful thinking. The China market is the goal here as the existing iPhone has made little traction with the current provider. Verizon will not meet Apple’s demands like at&t did, and so it remains a red herring. I truly think that Apple does not care about Andriod as it is so fractured in its implementation that it is not a relevant concern. Apple is sticking to business plan and not losing focus here. I understand the iPhone4 is still has a delay of 5-7 days for delivery, so demand is still strong as is. I am thinking that they are not resting on their laurels, but the need to branch out to “swat” the fly that is Android is not a need for anyone but pundits. My .02.

  • gus2000

    In 1990, IBM posted a $5B profit. By 1993, their loss was over $8B, then the largest annual loss in US corporate history.

    Businesses can evaporate quickly when they’ve been caught flat-footed. IBM managed to survive by restructuring and reinventing, but it was a tough road.

    And we’re seeing some of the same behaviors from Microsoft that were evident in IBM two decades ago.

  • http://madhatter.ca The Mad Hatter


    Yep, I read a lot of financial filings, it’s part of my reporting. It’s not the current profit you need to look at, it’s the trend lines. They are trending down.

    Second you look at product and market. Market is getting tight due to recession, and lots of competition in the Office segment where majority of profits are made. Why buy $250.00 Office when you can buy $50.00 IWork from Apple, and it does all the same things (FYI, I run my business using IWork).

    Third is direction. Microsoft has not introduced one successful new product since 2003. Revamped products (Vista, Windows 7) sold, but were meet with yawns. Other revamped products (Office 2007) turned off users.

    Conclusion? The company is in deep shit. On the surface everything looks fine, like everyone thought GM was fine seven years ago, before they filed for Chapter 11.

  • harrywolf

    The big problem with iPhone 4 in Canada is that it takes about a month to get one.
    In the meantime, Android crap is everywhere and you can buy it now.
    However, when I looked at Android, it seemed that the software was mostly 1.6, and the phones were cheap and plasticky.
    Finally, Rogers got my iPhone 4 32gb.
    What a beautiful object it is!

    Really not like anything else, not like a phone, more like a work of art that has stunning capability.

    Apple must make more versions – like the iPod.
    Two or three different iPhones would crush the competition flat.

  • John E

    it doesn’t take much to recognize that Android simply filled the vacuum left by the obsolesence of the two prior commodity smartphone OS’s (licensed to any OEM/telco), WinMobile 6 and Symbian 2. the failure of MS and Nokia to update those two for three long years after the iPhone revolution left the door wide open for Android to beat them to market, and it did. so of course now that MS and Nokia have at last viable products Android’s rapid growth is certainly at an end. the overall market will wind up fragmented among multiple OS’s. and unlike the 1990’s when the necessity of file and software standardization mandated a universal OS – Windows – nowadays the web and cross platform standards have made that totally unnecessary.

    instead consumers will be looking for maximum convenient “ecosystems” to simplify their lives. this is obviously Apple’s strength with the iTunes platform and all the integrated hardware for it. but Apple is weak in the “cloud”. whereas Google has the strongest cloud package of “free” services, but doesn’t control its hardware and is splintering its own package with Chrome OS. MS has some of both, but it doesn’t all add up. and Nokia doesn’t have enough of either to compete. while RIM is stuck in a niche it does well, but that niche will keep shrinking as the others peel off chunks of it.

    my point is, the game is afoot and who will come out on top is not at all clear. we have been hearing about Apple’s giant server farm in NC being finished soon … so what are they going to do with it? when they make MobileMe free for all Apple product owners and it will let you play your iTunes media anytime, anyplace in the world, i’ll know Apple is finally serious about the cloud. in the meantime i guess we will have to be happy with iLife ’11 bringing FaceTime to your desktop Mac. and i guess Steve J is going to torture us and make us wait for January’s WWDC before releasing the AppleTV SDK for 16:9 TV apps … bottom line being, to keep ahead of the pack Apple really has to finish all this stuff it has half done next year.

  • Ludor

    I realize now, I love how Dan’s logic and rhethorics inspire us readers to practice what you might call good storytelling: making a convincing case. Myself, I’m skilled in neither analysis nor English, but I do enjoy reading here. So good.

  • gslusher


    “Since Verizon charges about the same as AT&T for their plans, this won’t effect pricing on AT&T. But one big difference is a far better network not to mention unlimited data.”

    I have a sneaking suspicion that, if Verizon starts selling the iPhone and gets hit with the huge data load that ATT has (supposedly more than all their competitors combined), they’ll can the unlimited data plan and start metering and charging as much or more than ATT does.

  • mamboleo

    Mad Hatter, you certainly read a lot financial reports, but whether you actually understand them and can interpret them is questionable. Microsoft is here to stay, unlike GM its cash flow position is solid. WP7 will be number 2 product around the world by end of 2011 as well as offsetting RIM in the corporate environment.

  • OneGeV

    I thought Verizon’s “unlimited” plan always had a 5 GB cap (before more fees are required)?

  • ChuckO

    Great article and terrific comments as usual. After reading both I would think the CDMA phone makes sense for Apple regardless of Verizon and the Verizon deal lives or dies based on whether they will let the iPhone be the iPhone. If they want to Droid it and deliver the “iPhoney” (an iPhone kneecapped by Verizon in some ways but with verizon “value” added in others) I hope Apple walks. It sounds like they are selling plenty of phones worldwide and I don’t think smartphones are going to be as sticky as iPod turned out to be for MP3 players. I think the iPhone will be most sticky but more because of iTunes.

    Although it will be interesting to see what happens with Amazons plans to takeover Android.

  • http://themacadvocate.com TheMacAdvocate

    People in the U.S. who buy a smartphone with the carrier as the only consideration will buy a Verizon Android phone; people with any carrier flexibility whatsoever will buy an iPhone. A Verizon iPhone will spur an immediate defection from inferior handsets and carriers.

    The myth that a smartphone OS has anything to do with a non-iPhone purchase in this country, with the exception of the de minimis hobbyists and people who have better coverage with AT&T, is hilarious.


  • http://motorizedmount.com Alan

    I am not sure about Verizon, but on Sprint, there is no cap on phone data, it is truly unlimited. I have used as much as 15 GB in a month before due to tethering with my MBP and Sprint didn’t say a word. Normal phone usage I average anywhere between 2GB to 6GB. (Pandora, Sprint TV, GPS, and streaming videos using the most data I would imagine.

    For data devices like the mifi or usb devices, Sprint caps data at 5GB a month for 3G with unlimited data for 4G data. Apparently the 4G is a lot cheaper for them than 3G.

    [That may be the case with some phones, but the Evo “4G” is artificially limited in data thru-put to 4mbps, which isn’t much faster than basic 3G UMTS at all, making the unlimited cap less exciting. Also, it’s likely a matter of time (or subscribers) before Sprint falls in line with the others carriers that sell data in limited tiers of service. – Dan]

  • jdeleon

    I am still thinking that the CDMA iPhone, even though it was make especially targeted at Verizon, won’t come out with them to start.
    Verizon’s CEO mentioned that it would be Apple announcing that they had accepted Verizon’s terms. I can’t believe Jobs will allow the phone or Apple to be manipulated, (if he did it for them, the Chinese would also probably want something else crippled.)
    I’m thinking that everybody else will get it first, especially Sprint. When all of Verizon’s customers start screaming, Jobs will probably use that to say, “That announcement will come from Verizon. We will not bend over for no one.”

    One thing else. I am kinda glad that Verizon got tough with Google and decided to put all their stuff in the Android phones.
    It would take something like this to make Google realize AGAIN, that the carriers (especially Verizon) will fight with all their might, (hey I made a rhyme) to keep things like they always have been. After all it is a matter of financial survival for them.
    Now Google can pay it back. They should include FaceTime on the new Froyo or next FruitCake coming up. They should know by now that they don’t owe anybody anything.

    In the end. That’s why it is important that Apple and Google remain friends. Imagine between just these two with just this one cooperation, (and you can be sure that Microsoft also will want to include this also, even just to appear as cool as the other guys.)
    Then with most all their customers going only with the smallest phone package with all the carriers. They will start seeing the reality sinking in. Dumb Pipes will start having a good ring to it.

  • MarkyMark

    It Verizon management is now ready to deal with Apple on their terms, then hell really has frozen over. I won’t believe it until I see an iPhone on display in a Verizon store – minus Verizon’s bloatware. I still don’t see any compelling reason for Apple to currently sell anything but a GSM worldphone, unless obviously if they have some miraculous opportunity to sell 500 million non-GSM phones in China or wherever.

    Note to persons possibly confused about Sprint’s 3G/4G data caps – their 4G is actually Clear WiMAX, which has no caps so far as I know (so you can for example safely stream video). 3G data is still VERY much capped. Sprint sells a few data-devices which support both modes, presumably giving priority to 4G with fallback to 3G; these are actually an excellent option for certain types of mobile users, But note that “4G” WiMAX coverage is still limited to selected areas, and is not remotely as widely deployed as 3G.

    Its going to be VERY interesting to see what Verizon’s LTE data-plans look like, when they are finally announced. Will they be tiered? Will they simply (like AT&T) charge extra if you exceed the monthly cap, or will they throttle bandwidth (like T-Mobile) or cut you off? Will the T.O.S. allow video streaming?

  • http://motorizedmount.com Alan

    Dan, where did you hear the Evo is capped at 4MB? That is absolutely not true. I have reached 8.6MB (Midtown to Lenox seems to be fastest area) with my Evo in Atlanta and average around 3 to 6MB, but certainly no download caps. They did cap the upload at 1MB, is that what you might be confusing? Other people have even reported 9.8MB. It certainly beats most home DSL speeds, so no complaints. Any faster on a phone really seems pointless to me since I never have to wait for pages or videos to load now.

    The new Samsung Epic had a glitch with slow upload speed but I think the fix has already been released or will be very shortly. I like my Evo with 4G but I would love an iPhone even more, so the Evo would go on Ebay as soon as a Sprint version is released. I can only imagine that my data use would stay around the same or even increase on an iPhone, so 2GB would really not come close to meeting my needs. I don’t really care if I am using GSM/UMTS/HSPA/LTE/WiMax or any other alphabet soup of chipsets or technologies. I just want a reliable network, few to no dropped calls, fast data, and a reasonable monthly bill. Sprint offers all of that to me at least. Now just waiting to get my favorite phone on my favorite carrier.

  • OneGeV

    @Alan: On the Sprint forums, they pointed out that there was a 5 GB cap on the 3G plan, although it looks like 4G (Clear) was unlimited. There are some more posts in September stating that the wording about the 5GB cap has been removed, but the footnote about 300 MB cap on roaming data is still in place.

  • JPTJr

    @ Madhatter and mamboleo

    Microsoft’s growth has suffered, and one can begin to see an inflexion point where MS indeed begins to shrink. It’s important to remember though that MS has virtually no debt; Chapter 11 would only happen if MS blew through its cash, stopped generating it’s prodigous free cash flow from operations and needed to fund its ongoing business / R&D with DEBT, and then was unable to service its debt. Not going to happen in the next 5 years!

  • JPTJr

    @ Madhatter

    By the way, comparison with GM is unrealistic. One of GM’s major failings, among many, was that it had astronomical pension liabilities from years of union labor / defined benefit pension plans. MS has none of this.

  • http://motorizedmount.com Alan

    @OneGV That 5GB cap is for mifi type devices. You know the ones you use either by USB or as a separate portable modem type device. There is no 5GB 3G cap for using your phone for data.

  • FreeRange

    Dan – it’s so great to have you back! Feed us more!!!!!

    One note about AT&T. I have been living in China for the past year and a half and just returned to the states for a month on business. I went to the AT&T store to get a pay as you go plan for my legitimately factory unlocked iPhone 4 which I purchased from Apple online in Hong Kong yet AT&T told me that it wouldn’t work here in the US on AT&T’s network as it would be prevented automatically from activating if I put in an AT&T sim. I was forced to therefore go to T-Mobile here in Denver with lame coverage and equally lame Edge service. AT&T blamed Apple for the restriction, but I’d be willing to bet it was in fact AT&T that established this policy. Anyone have the real facts on this policy?

    As to some of the posts here regarding China, one of the key things holding back the iPhone (and make no mistake, there are already MILLIONS of them in use in China purchased through the gray market) is the fact that there is no number portability. Users with carriers other than China Unicom typically don’t want to switch because they don’t want a new number. Interestingly, a significantly large number of iPhone users in China actually stay on the China Mobile network, but can only get Edge for their high-speed connection as the iPhone isn’t compatible with their homegrown version of CDMA 3G service.

  • http://madhatter.ca The Mad Hatter

    Yes, I read everyone’s posts.

    1) Microsoft is in debt – about 10 Billion worth. This debt appears to affect the US operations only. As to why the US operation took out the debt, your guess is as good as mine. One suggestion that I heard was that this was a tax dodge of some sort, apparently there’s all sorts of tax benefits for a corporation that is in debt.

    2) General Motors pensions weren’t the issue, the issue was that General Motors was badly run. Ford had the same pension liabilities as GM, and they didn’t go into Chapter 11.

    3) If you go back seven years ago, GM was pulling in huge profits. Five years later they are bankrupt.

    4) GM still had a market for their product. I don’t see that Microsoft will have a market for their product. If Windows Mobile 7 is as big a failure as I think it will be, it will only serve to prove to the OEMs that they don’t need Microsoft, after all, Apple doesn’t.

    FYI, I was involved with both the Delphi and General Motors bankruptcies. Despite all that you’ve heard about the Unions being the major issue, they weren’t. The problem was management that was used to short term thinking, and didn’t properly plan ahead.


  • gslusher

    @The Mad Hatter:

    Re: Microsoft’s debt. My understanding is that they issued bonds rather than repatriate money from outside the US. It was actually cheaper to do this, as the interest on the debt is a less than the taxes they would have to pay. They were given authority to sell up to $6B in debt to pay for dividends and stock buy-backs. This article:


    suggests that Microsoft was under pressure to increase dividends because the stock was doing poorly.

    Good points about GM, especially the contrast with Ford. OTOH, GM (and probably Ford) was paying a lot for healthcare for current employees and retirees. The company should have been pressing for universal healthcare (the “public option”) long ago. I remember quips that GM was really a healthcare provider that just happened to make cars.

    I guess the proof of what you say is that GM seemingly has been turned around after being forced to do what should have been done a long time ago, like drop some brands, consolidate (including reducing the number of dealers), and especially to dump upper management. People sneer about Apple’s and Steve Jobs’ “arrogance,” but that pales in comparison to the arrogance and tunnel vision of US automakers.

  • http://madhatter.ca The Mad Hatter

    Tunnel Vision? GM Management rather reminded my of Wylie Coyote.

  • JPTJr

    One last note on MS’s viability. As of FYE 2010 (June) they had about $6Bn in debt and $5Bn in cash, leaving about $1Bn in net debt. Although that sounds like a lot, it is almost a rounding error for a company that generated $27Bn in EBITDA in the year.

    Add to that the fact that, as gslusher alludes to, dividends and share buybacks are a significant use of cash (~$15Bn in FY2010) that could be shut off if need be, and I’m sticking with my assertion that MS will be around for quite a while yet. I agree that MS today is a very different company from the ascendant MS of the 90’s – in fact the perception is the opposite (and we all know how public perception can be prophetic). The fundamentals, though, point to a company that will chug along even when (if?) WP7 fails and could survive many more failures after that. Leaving the boring Office / Windows suites aside, you have to admit that their flailing attempts at consumer relevance at least keep things interesting!

  • gslusher

    @The Mad Hatter: “Wylie Coyote”

    Much better image. I was searching for a terse way to put it and you found it. My other image was of someone who puts his hands over his ears and intones “lalalalala” and “I can’t hear you” to avoid hearing something he doesn’t want to hear, as if that would make it go away, but Wylie Coyote is even better.

  • http://madhatter.ca The Mad Hatter

    Microsoft’s viability as a company assumes that they can sell Office (the real profit center). But there are competitive pressures on Office which will force Microsoft to cut prices (IWork, OpenOffice, GoogleDocs). Without Office, Microsoft can’t survive.

    Go read the SEC filings, it’s all laid out clearly. That’s why Apple is now worth more than Microsoft.

  • brew57

    @mad hatter

    The comparison to GM is ridiculous as far as financials go. If you really knew how to read financials you would know that is is not possible for Ms to go chapter 11. (that is not to say their business can’t decline, but chapter 11 is not mathematically possible in any foreseeable future, let alone a few years.)

  • gslusher


    You’re probably right, but consider this: who predicted the complete collapse of Lehman Brothers 5 years before it happened?

  • brew57

    It is going to be interesting to see what happens to the Ms Office franchse over time. Right now if you are a business of any meaningful size or deal with one as a supplier or a customer, it I’d not feasible to switch out of MS Office.

    I worked for a few that tried. And have seen the results first hand. Theory meet reality.

  • brew57


    Re. Leeman. Apples and oranges. Leeman and the likes were leveraged 30 to 1 and by their very nature a business-heartbeat away from collapse. Still are.

    Microsoft’s worst case scenario I’d revenue decline.

  • brew57

    Sorry for misspelings. My iPhone keeps auto-correcting “is” to “I’d” .

  • http://madhatter.ca The Mad Hatter


    I don’t think you understand what I’m saying. Yes, I know that Microsoft is in a certain position right now. Yes, competent management could keep the company going for a long time.

    But Microsoft management is not in my opinion competent. They haven’t managed to respond to the threat posed by Apple on the desktop or on mobile with any skill at all. Four years ago they were downplaying the IPhone, three years ago they started chasing it, and as of today they still haven’t released anything to compete with it.

    And then there’s the threat of free software. Have you see the Microsoft Attack Ad aimed at Open Office? Consider the market share drop that IE has suffered, mostly to Firefox. Consider that Microsoft has lost a huge amount of server business to Linux, the only server product they have that is doing well is Exchange.

    Consider that Apple can deliver IWork for $50.00, and it outperforms Microsoft Office for the Mac, which costs $250.00.

    I can understand why you don’t think that they will die. I’ve made an estimate, or a prophecy if you will, and I’m pretty sure that I’m right if nothing changes. But would even Microsoft be stupid enough not to change? I don’t know. Steve Ballmer is Bill Gates friend. I think that this may interfere with his removal. But that’s a guess.

    The company is in massive trouble though. The trouble isn’t immediate, but it’s the sort of trouble that you have to handle fast, before it builds momentum. It’s rather like a supertanker. It can’t turn on a dime, like a ski boat.

    As to the IPhone’s auto-correct feature – I used to curse the thing, but I’ve gotten used to it.

  • brew57

    @mad hatter

    I wasn’t arguing competency of Microsoft (although one has to give them credit for a certain type of business competency to get to where theynare right now – a nearly impossible to dislodge position in IT)

    I merely pointed out the impossibility of Chapter 11 in the foreseeable future, let alone in a few years, and questioned the competencynof the writer who would make such an assertion.

  • harrywolf

    Have to comment on the comparison between GM and M$oft.

    GM was absolutely defined by its Trade Union deals and pension liabilities. Like all older industries, the unions had made deals when the company was doing well, and refused to change those deals as the company went downhill. Management in these situations becomes frozen, fearing strikes, etc. which will further weaken the company.
    At that point, GM needed innovation and courage; with management and unions entrenched and staffed mostly with folk from the 1940’s this was impossible.

    Ford managed to cut deals, had Ford Germany and Ford UK to help, and were capable of innovation, especially in Europe.
    They arent in great shape, despite that.

    Microsoft has its own aging and rigid staff problems, but they arent under fire from any Japanese OS (read auto) maker as far as I can see; only Apple have a viable OS that could entirely replace Windows.
    That wont happen because all the companies that use Windows are also staffed with older and rigid people who wont change.
    Its almost the definition of Windows.
    Linux can be found in servers and tech companies, but not so much in more mainstream business.
    Apple OSX in graphics and film and music, with smaller less mainstream business also using it.

    M$oft can keep going on Windows and Office for a LONG time – their yearly revenue is more than Apple, or very close to it, and they could easily reduce staff, dump Yahoo, drop the phone business (!), dump Zune, Xbox,etc.etc.
    The fact that all the techies love Windows 7 helps them too.

    Its interesting to see such passionate prediction from Mad Hatter, but it doesnt make it right.

    A LOT would have to change to finish M$oft.

    A more solid prediction would be that Apple shares will plateau soon and drop a little – every darling of the stock market sometime becomes a villain – its how the money is made.

    You might also say that Apple have reached a great height, but where is the next increase to come from?
    They would almost certainly have to increase product variety in order to attract more business – perhaps they could spin off the IOS products to a wholly-owned subsidiary with a new name. The public is fickle and needs new shiny stuff to attract them. That may be the big challenge for Apple.

    Its good times for Apple right now, but that does not necessarily mean its bad times for M$oft, although a few more failures may see the end of Ballmer.

  • macpeter

    @ harrywolf
    First – without relevance in smartphone und tablet devices Microsoft can bury its high expectations in windows azur cloud computing.
    And if iworks 11 offer seamless integration with a webbased, fully-featured WebClient version which can address every internet-connected Windows PC on earth for only lets say 30 Dollars per account, than Microsoft will be soon in real trouble.

  • rufustfirefly

    Why does the President nd his administration actively promote election fraud as their chief means of getting elected? They just used their corrupt cronies to steal the right of soldiers who are at war to vote in both Illinois and New York – in broad daylight. And their DoJ refused to prosecute the armed thugs who intimidated voters in Philadelphia. And the continued use of ACORN to create massive fraudulent votes for their candidates is not even debated. I guess Democrats don’t really care about the means to the end.