YouTube Saves the Day August 16, 2006Posted by NoWires in Web, Wireless.
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After one false move at the security check at Dulles Airport last month, my Treo 650 flew off my belt clip and landed on the concrete floor. I have dropped other cell phones on the floor countless times without breaking any of them, but I guess the large screen size of the Treo seems to make it particularly vulnerable. Either way, I was staring at the picture on the left when I picked it up.
Now I love my Treo. Of all the “smart phones” I tried, nothing comes close to Treo to its usability. Save for an early reboot glitch that was fixed by a patch, my Treo has performed very well for me. Faced with a $300 price tag for new unit, I started to look for alternatives. A clerk at a neighbourhood phone shop offered to replace the screen for me for $150, parts+labor. That’s when I realized there are screen replacement parts I can get. I quickly found one for sale on eBay for $49. After getting the delivery all I need is to figure out how to put the new one in.
That’s where YouTube comes in.
I found a video clip showing exactly just that on YouTube. With 10 minutes my Treo is back in business, with a shiny new screen. Total cost: $49. Additional benefit? A new found appreciation for YouTube.
Prepaid Phones and Walled Gardens August 16, 2006Posted by NoWires in China, Wireless.
The Wall Street Journal reported a story (subscription needed) about people buying up cheap prepaid cell phones and resale them for quick profit. After years of pushing for annual contracts, US mobile carriers suddenly discovered the benefits of pay-as-you-go services and started pushing it by handing out heavily subsidized cell phones. It is rather odd that marketers at these carriers were caught by surprise since the arbitrage opportunity is quite obvious.
Pay-as-you-go services have been popular in Asia for years. In my previous life I needed to travel to China and HK frequently. The choices for were either to pay the $2.5/minute Cingular slapping on me for international roaming, or to give up on the idea of using cell phone all together. Luckily, the local carriers in those places offered me an alternative: I would buy a SIM card at the airport with a local phone number, pop it into my GSM phone and ready to go. I buy minutes in chunks which costs me about $0.2/minute depending on which country I am in. Considering my local friends and colleagues can reach me on a local instead of an international number, it is a bargain all around.
What’s interesting about the WSJ article is the carriers are selling a handset for this service. So I would have to buy a phone if I wanted this service here. This is a direct result of the “walled garden” approach these carrier practiced for years. In the US market, carriers wield enormous power over phone manufacturers. Carriers decide which models can be used, and in many cases which features can be turned on. Most of the handsets are locked – it works only on one carrier’s network.
This walled garden approach will hurt the carriers, as the article illustrates. Ultimately, man-made barriers make developing applications for cell phones a mini water torture. (I know because I am in the thick of it.) You are forced to deal with one carrier, one platform, one manufacturer, even one model at a time. Speaking of choking off the innovation.
China Mobile’s Market Value August 15, 2006Posted by NoWires in China, Wireless.
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Woke up to the news that China Mobile is now the world’s largest telecom carrier in terms of market value, surpassing former leader Vodafone. Although China Mobile has had more subsribers than Vodafone for a while, it has less revenue $31B vs. $45B, and until recently is an almost exclusively Chinese market operator whereas Vodafone has a more global foot print. A closer look at some other KPIs, such as ARPU (Average Revenue per User), China Mobile trails Vodafone ~$25/month vs. ~$36/month in the latest quarter. And majority of China Mobile’s revenue comes from voice services, not the new sexy data services. So what gives?
Many attributed this high valuation to the growth expectations of the Chinese telecom market. This certainly is a factor – cell phone penetration rate in China is about 25%, comparing to >60% rate of the developed countries in which Vodafone operates. However I think investors have already learned to avoid the trap of multiply whatever revenue by 13 Billion to estimate the Chinese market: the 300 million cell phone users in China today represents most of the urban affluent population. In terms of total addressable market, there is not a vast void as the 25% penetration rate suggests.
The main driver for this high valuation is the strong competitive position China Mobile occupies in the Chinese market. Although there is a second mobile operator in China (China Unicom), China Mobile is by far the dominate player in China. It has been pushing others around with ease, be it competitors, content providers or value-added service proviers (SP). One clearly indication of this market power is the extremely high margin China mobile maintains: EBITDA margin of 54% vs. Vodafone’s 36%. As the flagship operator of the Chinese government, China mobile also enjoys strong backing of the government. This virtual monopoly is what the market paying the premium for.
However backing from the government is not without its drawbacks: top management of Chinese telcos are subject to frequent shuffling. For example, current CEO of China Mobile was the CEO of China Unicom, its main competitor, until he was re-appointed to his current post. Although they are independent companies in their own right, in the eyes of the administration, China Mobile and China Unicom are more like two departments of a single organization. Management talents are on a rotation program and can be freely moved among different telcos.