• Newsletter Issue #590

    March 21st, 2011

    THIS WEEK’S TECH NIGHT OWL RADIO UPDATE

    Technology doesn’t just mean Macs and PCs, or iPhones and iPads. On our weekly episodes of The Tech Night Owl LIVE, we cover a whole host of fascinating tech subjects. We’ve had, for example, guests discussing a way for you to watch 3D movies on a TV without the glasses, although that technology might not be perfected and made available in affordable gear for a few years.

    In keeping with our tradition of covering fascinating examples of technology, this week we were joined by Steve “Mr. Gadget” Kruschen, who regaled us with the latest and greatest tech gear, including a choice selection of innovative housewares. When he got into a rap about some fancy new electric razors, I told Steve that I had no luck with them, and I had been using standard safety razors, the ones that require blades and shaving cream, for a number of years. Well, Mr. Gadget gave me a challenge, and that is to get ahold of a top-of-the-line electric model, use it three weeks to give my face time to adjust, and see if I don’t change my tune. This is definitely something you get an update about before long.

    Back to the more traditional consumer electronics beat, Macworld Senior Editor Dan Moren brought us up to date on Apple Inc. news and views, including the iPad 2, and the possibilities of the next version of Mac OS X, code-named Lion.

    From Macworld Lab Director Jim Galbraith, you learned the background of the recent tests they conducted of the iPad 2, and the new, more powerful MacBook Pro note-book family. I should mention that most of Macworld’s tests are done manually, with stop watches in hand. Very few canned suites are used, and that means that Macworld tends to offer a more realistic view of the kind of performance you can expect from one of the tested gadgets in the real world.

    On this week’s episode of our other radio show, The Paracast: Gene and Chris present an encore appearance by plasma physicist Dr. John Brandenburg, author of “Life and Death on Mars: The New Mars Synthesis.” What’s the source of our endless fascination with the Red Planet, and was Mars ever the source of intelligent life?

    Coming March 27: Gene and Chris present a rare appearance by Richard Sauder, Ph.D., a researcher who has explored the incredible mystery of underground bases and government conspiracies. Where are they, and what purpose do they serve? His books include, “Hidden in Plain Sight: Beyond the X-Files.”

    Now Shipping! The Official Paracast T-Shirt. We’re taking orders direct from our new Official Paracast Store, where you can place your order and pay with a major credit card or PayPal. The shirts come in white, 100% cotton, and feature The Paracast logo on the front. The rear emblem states: “Separating Signal From Noise.” We’ve also added a selection of additional special custom-imprinted merchandise for fans of our show.

    AND NOW THERE ARE THREE

    As many of you know, AT&T wireless was cobbled together from several mergers. This meant several years of growing pains, to integrate networks, and to make the wider system of cell phone towers compatible with each other.

    It’s fair to say that AT&T still gets ragged on for being way behind the curve, particularly when it comes to the iPhone. The arrival of Apple’s iconic smartphone on the Verizon Wireless network has made it possible for people who ran into connection problems with AT&T to find a superior alternative. Well, superior in some cities, but at the expense of not being able to use voice and data services at the same time. But if you can’t get a stable connection, or encounter frequent dropped calls, the tradeoff may be worth it.

    As to Verizon, they became number one on the basis of acquiring another compatible carrier, Alltel. But even before the merger, both companies were praised for superior networks and customer service.

    After that merger, there were four major wireless carriers, two of which, Sprint and T-Mobile, were not offering the iPhone. Indeed, one of T-Mobile’s controversial ads touts their alleged “4G” network, while criticizing the iPhone for being on networks that don’t offer the higher speed technology. In passing, the critics disputed T-Mobile’s claim that their network is anything but 3G.

    As for AT&T, the company continues to be saddled with serious network capacity issues in such major cities as New York City and San Francisco. Building out their network might take years, particularly in the latter city, where it can take several years to get permits to build new towers.

    The fastest solution meant buying an existing mostly compatible wireless system to increase capacity within months rather than years. The sole choice was T-Mobile, with 33.7 million subscribers, in large part because its variation of the GSM protocol is quite compatible with AT&T’s, except for using different frequencies in their 3G band. I presume that adding AT&T’s frequencies to those towers shouldn’t present an insurmountable problem.

    The new new AT&T will, with a total of 130 million customers, become the largest carrier in the United States. The deal, announced Sunday, is valued at $39 billion in stock and cash. According to a press release from the two companies, once the deal closes, AT&T “will immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double in some markets.”

    I presume it will take months to overcome expected government regulatory hurdles before the acquisition is final, and I wouldn’t be surprised to hear protests from people who fear that, with fewer competing carriers, the customer will suffer. There will be less incentive to cut prices, and to improve service. Worse, thousands of employees will eventually find themselves on the unemployment lines, simply because their services will no longer be required. I’m sure management will ruthlessly cut staff as they trim duplicate departments, and, in part, to recover some of the costs of this transaction.

    In fact, one of T-Mobile’s selling points against its larger counterparts was lower prices. I would expect that you’ll see that advantage vanish really quickly shortly after the deal is done. Of course, existing T-Mobile subscribers will continue to benefit from lower rates until their contracts are up.

    Perhaps the biggest winner, assuming the transaction passes muster with the U.S. authorities, is Apple Inc. Within a short time, there will be nearly 34 million potential new customers for the iPhone. The promise of improved network performance may also convince existing iPhone users at AT&T to think twice before jumping ship to Verizon. Indeed, I wouldn’t be surprised if AT&T’s sales staff made that singular pitch to improve customer retention.

    There will be two big losers. One is Google, simply because T-Mobile was one of the pioneers in offering Android OS smartphones in this country. Now many of those same customers will ultimately be able to buy iPhones without moving to another carrier. Of course, that assumes the merger is OKayed, and I expect it will be.

    Sprint will also be placed in a questionable position, being forced to occupy the bottom position in a three-way race. Despite those folksy TV ads featuring Sprint CEO Dan Hesse, they really can’t offer any meaningful advantage over the competition beyond price. The other carriers usually get the fancier phones of whatever OS persuasion.

    Some suggest that Sprint will want to tie the knot with Verizon Wireless. They have compatible CDMA networks, and Verizon might seek to restore their number one status. But even if the AT&T/T-Mobile merger gets the green light from regulatory agencies, a Sprint acquisition by Verizon will be a harder nut to crack.

    You wonder if Hesse is even now phoning up Apple in hopes of getting a deal to sell the iPhone as quickly as possible. But is it too late to matter?

    APPLE’S COMPETITION CONTINUES TO STRIKE OUT

    Almost every time you see an ad for a smartphone or tablet computer that competes with Apple’s iconic gadgets, you wonder who is running the marketing department. I mean, have they actually surveyed potential customers to get even a hint at what they need to do to sell their stuff against the monster from Cupertino? Or are they using the same vision, so to speak, which infects Microsoft when they continue to release those utterly idiotic ads for Windows 7?

    I can’t think it’s about price. Certainly Motorola and, to a much larger extent Microsoft, have enough money to fund state-of-the-art marketing campaigns, using the best creative people in the industry. However, management has to approve a promotion, and that’s probably where the trouble lies.

    Look, for example, at the Motorola Xoom, which might be the iPad killer du jour right now, but is destined to fail as quickly as other Android tablets.

    Whenever I see that futuristic TV spot touting the Xoom, I hit the Fast Forward button. It makes little sense. It doesn’t matter if it has a 3D interface, super powerful hardware, and you can shake it. What will it do for me? The answer seems to be not much. There are precious few compelling Android OS apps, and only a tiny number natively support the larger tablet-based screens.

    I won’t get into much detail about the notorious lack of consistency among Android-based products, due to Google’s lax enforcement of interface standards. Manufacturers and carrier partners are free to graft custom themes onto the basic OS, and even change the default software lineup. Developers have to jump hoops to build compelling apps that will work on the largest number of Android devices.

    Some early reviews report about the Xoom’s apparent OS instability. Not that the iOS is necessarily perfect. I do see a crash from time to time, but Apple is conscientious about delivering regular updates, not just to add sexy new features, but to fix problems. The easy iTunes-based update system is far superior to the chaos that prevails in Android-land, where you can’t depend on having your unit updated with the latest OS, not to mention critical security fixes. You’re at the mercy of the carrier or manufacturer.

    It might be a little more predictable with Windows Phone 7, but the customer response is a collective yawn. I wonder if this tie up between Nokia and Microsoft is the last desperate move for both to deliver compelling smartphones. Besides, it’s hardly likely that Microsoft’s existing partners will continue to push Windows Phone 7, when they know the company is throwing billions of dollars of cash at Nokia. Why not them too?

    And this isn’t the first time Microsoft has double crossed their partners.

    But the real dilemma these companies face is not necessarily finding a credible way to sell their gear. Apple has set the standard for 21st century smartphones and tablets. Yet it seems that, instead of looking for a better idea, the competition wants to build imitations. You have to think they regard Apple as having all the answers when it comes to innovation, and they just want to nip around the edges hoping to get some of the business.

    Surely there are product engineers and designers out there who can come up with a better idea. Not different, but better. Why is Apple one of the few tech companies on the planet who can change the rules, and earn lots of cash in the process? When it comes to real creativity, far too many of Apple’s competitors remain bankrupt of ideas.

    THE FINAL WORD

    The Tech Night Owl Newsletter is a weekly information service of Making The Impossible, Inc.

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
    Marketing and Public Relations: Barbara Kaplan
    Business Development: Gil James Bavel
    Worldwide Licensing: Sharon Jarvis



    Share
    | Print This Issue Print This Issue

    One Response to “Newsletter Issue #590”

    1. Kaleberg says:

      I remember when AT&T was split up maybe 30 years ago. I figured that all the pieces would come back together some day. After all, the telephone system is a natural monopoly as they used to call it. Any competition requires duplicating hardware, so a merger would always increase profits except during the most innovative periods. Consumer communications costs seem to have been static or rising for the past decade or two. (I keep waiting for a cheaper voice plan for my T720 flip phone.) I expect them to continue rising as the companies use “services” to carve profit centers from simple TCP/IP packet data transmission. (That is: Someone develops an app. It gets popular. It gets declared a service. It requires a per unit of service fee. Basically, it’s enclosing the commons, a proven path to profitability.)

      Eventually, there will be a reaction, though I doubt I’ll live long enough to see it. People will get sick of lousy service and an infinite list of fees. They’ll bring back regulation and force the telephone company to adopt more consumer friendly policies and use its monopoly profits on research. That will lead to all sorts of breakthroughs, just as Bell Labs’ transistor revolutionized electronics. Eventually there will be all sorts of new technologies, but the telephone company won’t be able to roll them out effectively. Companies and consumers will demand deregulation and the cycle will continue.)

    Leave Your Comment