16May

Sprint won’t make any money from iPhone sales until 2015

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I’m all for iPhone availability, and I was more than happy when Apple’s flagship handset made its way to Sprint, but I’m very surprised that Sprint execs felt the same way when they signed on to carry the phone. That’s because, according to recent comments from Sprint CEO Dan Hesse, his carrier won’t actually make any money from the iPhone until at…

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16May

Sprint won’t make any money from iPhone sales until 2015

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sprint-iphone2-o

I’m all for iPhone availability, and I was more than happy when Apple’s flagship handset made its way to Sprint, but I’m very surprised that Sprint execs felt the same way when they signed on to carry the phone. That’s because, according to recent comments from Sprint CEO Dan Hesse, his carrier won’t actually make any money from the iPhone until at…

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16May

Gartner: Q1 2012 Phone Sales Declined 2%, Dragged Down By Asia-Pacific. Samsung Leads All

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Sign of a maturing marketing flattening out, a lack of compelling devices, or a contraction in the economy? Gartner today released figures that note that worldwide sales of mobile phones were actually down by two percent this quarter, to reach a total of 419.1 million units — the first time the market has declined since the second quarter of 2009, the analysts say.

Gartner’s explanation is a slowdown in demand from Asia-Pacific, because of a lack of compelling new devices getting launched in the period: users are simply holding out until something better comes along. Nevertheless, of the vendors that are doing well, Samsung is riding at the top of the list, with 20.7 percent of all mobile sales globally, and among smartphones, it is the only Android vendor to have more than 10 percent market share — with Android now accounting for 56 percent of all smartphone sales in the quarter.

This will be the quarter that people remember as the one when Samsung swapped places with Nokia, with others like Strategy Analytics also showing a similar shift. In Gartner’s calculations of mobile sales, Nokia has now slipped down to second position with 19.8 percent of all mobile sales to Samsung’s 20.7 percent, equivalent to 86.6 million units.

Nokia, Gartner notes, had been in the number-one position since 1998 — but from the looks of its earnings for the last few quarters, it doesn’t appear that Nokia will be regaining the lead any time soon.

(Don’t rule it out yet, though. Nokia just yesterday launched two more low-cost, souped up feature phones that play to the developing markets where it has continued to do alright, despite its market share losses in more advanced countries.)

Among the other trends that Gartner noted, it pointed out that white-box vendors — the long tail of device makers that fill in the “others” category seemed to have been hit the hardest.

It notes that while companies like Nokia may have been selling in less at the retail level, white-box vendors have a supply issue in that they overproduced and now have a build-up of inventory. That will mean very cheap devices will be hitting stores in the next couple of quarters as they try to shift their stock for the next generation of devices. (This by the way was a similar problem Nokia had in Q2 2011, when Gartner suspected this might have made Nokia appear to have a bigger share of sales than it actually had.)

Overall, Samsung and Apple were the only two vendors in the top 1o mobile rankings to have gained market share: the rest all declined, as you can see from the list below.

In smartphones the power of the two is even more pronounced. Samsung and Apple now represent 49.3 percent of all smartphones sold — a sure sign of the consolidation being that a year ago the pair only accounted for 29.3 percent. Nokia’s smartphone share is down to 9.2 percent, Gartner says.

Samsung also managed to wrest the leading smartphone maker crown from Apple this quarter: it sold 38 million units to Apple’s 33 million.

Among Android makers, Samsung is also proving once again that it is the brand to beat: it accounted for 40 percent of all Android smartphone sales. (In that respect, Google’s Motorola buy seems less and less like a device play, or that it can realistically be one.)

But even with Apple in second, its actual growth was hugely impressive, at 96.2 percent over the year. China, Gartner notes, is now Apple’s second-largest market after the U.S. It looks like those sales were 8 million in total: 5 million from Apple’s official sales channges, and another 3 million from “transshipments” from Hong Kong.

More worryingly, RIM sold only 9.9 million units in the quarter and its global mobile share declined down to a mere 2.4 percent (in smartphone-only, that share is 6.9 percent, roughly half of what it was a year ago). BlackBerry 10, its new OS, will hopefully be the knight in shining armor that RIM desperately needs. Also, while Windows Phone actually grew in real terms, with 2.7 million sales in the quarter compared to 2.6 million a year ago, it’s not at all keeping pace with overall growth, and its share is now down to 1.9 percent from 2.6 percent a year ago.

Overall, smartphone sales accounted for just over one-quarter of all mobile sales: they stood at 144.4 million units, out of total mobile sales of 428 million units. That represented growth in smartphone sales of 44.7 percent, Gartner says.

Samsung’s Galaxy S III, the follow up to its best-selling Galaxy S II, was launched only last month and is now gradually getting rolled out worldwide — although it has seen mixed reviews and so it remains to be seen whether it will prove to be a similar blockbuster for the Korean company. In the meantime, we all continue to guess when Apple might release its next iPhone — with many suspecting it will not be until the later half of this year.



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10May

Deutsche Telekom Q1: 510,000 Contract Customers Left T-Mobile USA; DT Sales Down 1.1% To $18.6B

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T-Mobile USA’s parent Deutsche Telekom today reported earnings for the quarter that ended March 31, with revenues and earnings in slight decline compared to a year ago: sales for the carrier came in at €14.4 billion, a decline of 1.1 percent; and earnings of €4.48 billion ($5.8 billion) were down by 0.1 percent. Both figures, however, still managed to beat forecasts from analysts polled by Bloomberg.

With the future of T-Mobile USA still in play — there are reports that the carrier may be merged with MetroPCS, in the wake of T-Mobile’s merger with AT&T getting scuppered by regulators — Deutsche Telekom noted in a separate release that the carrier performed well with earnings up by eight percent to $1.3 billion (€1 billion) even as revenues were down by 2.3 percent to $5 billion. And customer retention issues still persist at the carrier — the last major mobile operator in the U.S. not offering the popular iPhone: it lost over half a million (510,000) contract subscribers in the quarter.

And that loss in higher-value contract customers was not offset by gains in lower-value prepay subscribers, which grew only by 187,000. Still, Philipp Humm, the chief executive of T-Mobile USA, noted that the contract churn is the company’s lowest-yet in seven quarters.

DT says T-Mobile USA is “well on schedule” in its $4 billion LTE migration for 2013 — a big part of the company’s bid to refresh the T-Mobile brand under its so-called “Challenger Strategy”. It’s building that 4G network using spectrum it picked up from AT&T as a consequence of that deal falling through, and adding to it by refarming some of its own older spectrum. As part of DT’s relaunch of the network, the company also says it plans to expand its sales and marketing activities.

Despite the loss of contract subscribers, T-Mobile is managing to make some good gains in the U.S. ARPU was up slightly to $58 from $56 a year ago.  Although it noted in its release that it was the first carrier to offer a Lumia smartphone from Nokia in the U.S., it did not give out details on how well it sold.

DT is also trying to look to the future and build out new services, like its multi-screen entertainment business, in a bid to further offset declines in its traditional retail phone business. In Germany, “Entertain,” as DT’s TV service is called, now has 1.7 million subscribers, the company says, up 37.2 percent compared to last year, with 173,000 new customers picked up in the quarter. DT’s approach with TV has been one of multiple technologies, and in Q1, 81,000 of those new subscribers actually look a satellite-based rather than fiber-based service.

DT’s home market remains the single-biggest operation for the company with revenues of €5.7 billion ($7.4 billion). Overall that figure was down by “only” 2.3 percent, with the decline fuelled by strong competition in both mobile and broadband services, but slowed by a strong performance in wholesale. Overall mobile revenues were down by 1.8 percent in Germany, although mobile data revenues grew by 20 percent to €462 million.



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08May

Funzio Was Making $5M In Sales Per Month When It Sold To GREE For $210M

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San Francisco-based mobile gaming startup Funzio had just come off making more than $5 million in sales per month when it sold to Japan’s GREE for $210 million last week. Profits may be another story, and there’s less visibility into that. But Funzio had to decide between raising additional funding or selling at the time the deal happened.

The numbers were revealed in GREE’s earnings statement today. Funzio’s acquisition comes at a very fascinating time for GREE, a $4.8 billion mobile gaming company from Japan. Like Zynga in the U.S., GREE and its archrival DeNA are part of a younger vanguard of freemium gaming companies that have found success in their home market of Japan. The company made $168.5 million (13.4 billion yen) in net income on $578.9 million in revenue (46.2 billion yen) in the quarter ending in March. Just for comparison, that’s about 80 percent more revenue than Zynga in the same time period.

But there are threats on the horizon. GREE’s shares were absolutely slaughtered on the Tokyo Stock Exchange on Monday. The company’s shares fell a record 23 percent after the Japanese government said it was investigating the legality of various game mechanics in the social gaming industry. Many Japanese games have a slot machine-like mechanic called “Gacha,” where players will randomly win different special items. If they win all the items, they might get a grand prize. The National Consumer Affairs Agency said it’s now looking at regulating this tactic, which could seriously crimp revenues for GREE.

If anything, this underscores the urgency there is in expanding the company abroad. With the Japanese market becoming saturated, GREE is looking to the West and it’s done two major acquisitions to break into the U.S. with the $104 million deal to OpenFeint and last week’s $210 million deal to buy Funzio. The plan is to be a dual games platform and developer, just like the company is in Japan. They’ll make their own in-house games, but they’ll also distribute, publish and promote games from other developers.

San Francisco’s Funzio fits into the first-party game development side. The company, which was started by experienced game developers who had spent time at Zynga, Storm8 and hi5, had three mobile gaming titles to its name. They were behind graphical role-playing games like the mafia-themed Crime City, the military-themed Modern War and the fantasy-themed Kingdom Age.

They only arrived on mobile platforms last August with the debut of Crime City, a brand that the company had already put on the Facebook platform. That set them up to have a $2 million quarter between July and September of last year. Then they launched Modern War in November and the two titles got them to a $6 million quarter during Christmas. Finally, Kingdom Age, launched last month, got them to a $12 million quarter.

Just after Kingdom Age launched, I spoke with Funzio’s vice president of business development Jamil Moledina. Even though the game was downloaded at roughly the same pace that the company’s earlier games were, engagement was up. Both Modern War and Kingdom Age got to 1 million downloads in about the same time. But Kingdom Age saw the equivalent of 93 years of gameplay, while Modern War saw about 50 years of gameplay in its first five days.

Again, I don’t really have visibility into profits. But it wouldn’t be surprising if margins were tight as the cost of marketing apps and acquiring users has gone up dramatically over the past year. Glu Mobile, another San Francisco-based mobile game developer that’s publicly traded, posted very strong quarterly growth with $17 million in smartphone revenues for the first quarter. But it still reported a net loss of $6.8 million, which was probably partially fueled by its lingering featurephone gaming business.



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