A Review of 3G

Russell Beattie offers this description of his experiences using the new 3G services from AT&T wireless, with a 3G phone provided by Motorola. He writes "I was completely blown away and still am. Suddenly 3G which seemed far off and far away was real to me." But he was less impressed with the phone -- "...I eventually couldn't live without a more powerful Symbian phone." And the posting evolves into an interesting discussion of various smart phone technologies.

Zigbee Stardust

Mike Masnick, writing for techdirt catches two new stories out on Zigbee. First is a a good general article on the technology by Paul Korzenlowski of TechNewsWorld. Wondering what this whole Zigbee thing is anyway? Check out Paul's article.

Consumer devices, such as entertainment systems and home security products, are gaining intelligence and becoming more PC-like. As this occurs, users want to connect them to home local area networks and automate processes, such as moving music files from PCs to stereos or turning lights on and off. Because standard network protocols are needed to deliver such functionality, home security system suppliers formed the ZigBee Alliance and created the IEEE 802.15.4 standard, which is a low cost, low bandwidth technique for transmitting information.

Mike Masnick also points out an article in Australia's Electronic News announcing the first commercially available Zigbee chipset, from ATMEL Corporation.
How big will Zigbee be? The FocalPoint Group, a San Francisco market research company has just issued a report on just the healthcare implications of wireless (Zigbee included) -- "The study projects that more than $7 billion will be spent on wireless data applications in the United States by 2010."

Transmeta Stumbles

Om Malik asks whatever could be meant by "business changes" in this article that Mark Hachman wrote for ExtremeTech. Well, a quick glance at Transmeta's (TMTA) financials would tell you that the company is digging a big hole in the ground. The balance sheet shows that net tangible assets have declined to just over $100 million, which wouldn't be bad for a business with profits... but the cash flow statement shows that the company is losing money at a horrific rate. And that was just as of Dec, 2003.

The company's latest 8K filing on July 22nd reported that the company has lost another $50 million since December.

So what do technology companies do when their backs are against the wall? Look to SCO for an example -- start leveraging your patent portfolio. You have to reach for the off-balance sheet assets to shore up the balance sheet. The primary off-balance sheet asset for a tech company is the IP. So who will Transmeta sue?

Licensed vs. Unlicensed Bandwidth

Motorola announced its hybrid Wi-Fi/GSM/GPRS phone today, expected by the fourth quarter of this year. They are clearly targeting a business market for the devices, with Avaya and Proxim as partners. This is an intriguing move as cell phones have not typically been purchased by the enterprise...

A number of observers expressed consternation that Motorola's implementation was not "open" and was a "very limited device." At Techdirt, Mike Masnick complained that the phone really isn't that interesting due to its limitations... He wrote "This is really just a gimmick to try to sell a new mobile phone to business users."

Over at The Feature Carlo Longino wrote that the phone's "...use of closed systems and proprietary hardware doesn't bode well for its success." And Wi-Fi Networking News spells out the issue -- business users must buy an Avaya PBX and Proxim 802.11 Wi-Fi gear to make the new phones work.

But the story that isn't being written is the more interesting one -- that handset manufacturers are demonstrating that phones can be economically built with both GSM/GPRS and Wi-Fi standards. This dual use of licensed and unlicensed bandwidth in the same device is going to start a tidal wave of change in the mobile world. So what if I can't "hand off" a call from Wi-Fi to GSM? How many times does the GSM network drop your call anyway? When I am moving, I will make a GSM call. If I can stand still for awhile, in a hot spot, I will use Wi-Fi.

The more important opportunity is for users of unlicensed bandwidth to create pricing and innovation pressure on the slow moving licensed bandwidth world. When large companies control the airwaves, it seems there is little innovation and prices are high. The more competition, the more this equation changes. So having a number of mobile operators competing in a market, whether Europe or the US, has helped a great deal to lower prices and increase innovation. Now we open the floodgates altogether and make FREE the low end of the price range and innovation limited only by the imagination of every garage start-up.

This will put unprecedented pressure on the mobile operators and is exactly what we were thinking of when we named this blog IP INFERNO.

Why VoIP Regs Won't Work

Om Malik, writing in his VoIP column for Corante, reports that the US Senate has delivered a "stink bomb" by converting a bill originally intended to protect VoIP from state taxation into a bill that permits state taxation.

It seIn my view the Senate is ignoring an important divergence event in the telecosm. Lets put it this way -- there are two kinds of VoIP. Type (1) -- VoIP as AT&T or Vonage presents it, which is a replacement for PSTN as a back-end technology for delivering a voice signal, but looks just like PSTN to the end consumer. Type (2) VoIP as presented by Skype, FWD, etc -- a data application on the public Internet, impossible to manage, tax, control unless you want to manage, tax, and control ALL applications running on the Internet.

And here is the problem -- to the extent that a regulatory and tax burden is put on , type (1) VoIP, type (2) will diverge and separate from type (1). The laws of Darwinian evolution will generate a faster adoption of type (2) VoIP, more innovation around type (2) VoIP, and a separate class of citizens that use type (2) VoIP to communicate with each other without ever integrating with PSTN/type (1) VoIP. The government will have succeeded only in taking control of an increasingly marginal technology -- and will hasten that marginalization.

More Danger for Handset Market

There is an interesting new model for handset design and manufacturing being defined by a small company in the center of Silicon Valley called Danger. The new handset from this company, which according to Reuters will be manufactured by Sharp, has integrated GSM/GPRS/Wi-Fi/Bluetooth network access. The device has email, IM, web browsing, SMS, and of course voice communication but also integrates calendar, notepad, address book, and the rest of the basic organizer functions. Importantly, data on the handset automatically and constantly synchronizes with a personal web site for every user -- ensuring ubiquitous data access.

The rest of the handset market should be watching closely -- first because of the company's business model -- disaggregate the business of designing a handset from the business of manufacturing. Secondly, because Danger will prove with this device that there is a solid market for a converged computing/voice handset. But thirdly, and most importantly, that web-based data services will be an increasingly important part of offering a handheld computing platform. Its not just about the device or about the network -- but about how we will use the data.

No BREW, more Microsoft?

Mike Masnick of The Feature reports that Korea will be abandoning Qualcomm's BREW platform. This is a significant blow to Qualcomm, as Korea had been BREW's largest market. But it is a larger blow to the non-MS movement. Mike links to an article on Telecoms Korea entitled "Qualcomm's BREW leaves the Korean Market." Handset manufacturers seem to think that they can promote their own WIPI middleware for the Korean market.

Unfortunately, fragmentation of the API simply plays into Microsoft's hands. While a proprietary regional middleware standard may work for a short time in a market isolated primarily by language, such as Korea, in the long run there are enormous market network effects that will drive one or two platforms to dominate and squeeze out these small players. A few of these network effects -- education, books and magazines, conferences, interoperability with other software platforms, components, applications... The more fragmented the non-MS world is, the easier it will be for MS to become the plurality, and then the majority, and ultimately the dominant platform for handheld computing.

Nokia Wake-up Call Part 2

When Nokia reported its Q1 results we suggested that it might serve as a wake-up call in the company's Espoo corporate HQ... But if the slumbering giant has awakend, Q2 results, just in, are not demonstrating any movement as yet. Om Malik writes that Nokia is in "deep do-doo."

Conversations with friends in Finland tell me that the company is bracing for widespread layoffs when the traditional July holiday season comes to an end. It is important to understand that despite its technology driven organization, at the top Nokia is run by people from the financial world. There will be a focus on margins and a healthy near-term business before there is a focus on long-term structural issues. Given the "grim third quarter outlook" (International Herald Tribune) this financial focus will not turn Nokia around quickly. So what can save the company?

John Markoff writes today in the New York Times that "Small is no longer beautiful. At least not in wireless phones." He is referring to the next generation of mobile phones which are fully programmable computers. This is one end of the product spectrum, where Nokia champions the Symbian operating system. The two other tiers are the mid-market consumer phones, increasingly dominated by camera phones, and the basic voice phones (typically provided free by carriers with service activation). For the company to do well, it must succeed in all three categories.

Nokia has actually been doing well in the middle market. BusinessWeek reports that this division of the company "...booked $839 million in revenues, 24% higher than a year ago." But the company has been dissapointing consumers on the high-end and the low-end.

The company has announced aggressive discounting plans which should repair its market share on the low-end of the spectrum, if not improve operating results. The New York Times quoted analysts as saying that these price cuts "...could force other cellphone makers to merge or drop out of the business."

But the real threat to the business, in my view, is on the high-end. This is partly because of the higher margins available at this end of the spectrum, but more importantly -- this is where product innovation begins before moving through the lifecycle from high-end, to mid-market, to low-end. Giving up the high-end of the market would truncate innovation needed to fuel next year's mid-market devices.

And this is where John Markoff's article today, The New Miniature Computers (They Also Make Phone Calls), is particularly interesting. As the mobile industry and the computer industry collide, the mobile industry will learn that product success is not exclusively about physical design, hardware integration, voice quality, and manufacturing costs. Instead, a whole new value chain of 3rd party software applications will become critical for a product's success. Microsoft is the only OS vendor in the world that understands this symbiotic relationship between software development and platform success. Symbian, and by extension Nokia, are still struggling with their strategy and investment in this critical area. This is going to be the real battle to watch, not price cuts on today's low-end phones. Pricing games are just tactical noise in the long term battle for providing the way in which people will access voice and data networks in the future.

pulver.Communicator Beta Test

By special permission, Jeff Pulver has agreed to allow me to blog about my experiences as a beta tester of his companies new software product, pulver.Communicator which he describes in his email in the following way --

We've been working to develop this application that combines the elements of Instant Messaging, Presence, Voice and Social Networking (depending on your input, other things will be added in the future). Through Communicator, FWD subscribers can enjoy Instant Messaging not only with their FWD contacts, but with their friends on the four most popular IM networks as well (AOL, Yahoo!, ICQ, and MSN). They can also hurl call-me links to non-FWD buddies that will allow them to establish a VoIP call-back immediately via FWDTalk. The person receiving the call-me link need not be a Free World Dialup subscriber they just need to be running XP on a PC that has a microphone and speakers (or they need to have a headset plugged into the appropriate jacks).

I will be installing later this morning and will have frequent posts over the next few weeks to allow you to all share in the beta experience...

WSJ covers Wi-Fi Advances

Donna Fuscalado, writing for the Wall Street Journal (subscription) provides a roundup of next generation Wi-Fi technolgies for a broad audience. There is nothing new in Fuscalado's article, entitled "Crowded Frequencies Trip Up Wireless PC Users" that has not been covered in depth in industry articles such as Patrick Mannion's article for CommsDesign this past July 2. But it is interesting that the mainstream media has picked up on this story.

Fuscalado observes that, "...consumers who were once delighted to go wireless are now complaining of Wi-Fi's slow speeds, limited reach and dropped connections." She lists a number of companies working to resolve problems with the existing 802.11 standard including Propagate Networks (which by the way has an interesting Wi-Fi blog, self-described as "shameless promotion" called WiFinally); Motia (which IP Inferno recently wrote about at the Supercomm conference); Airgo Networks (MIMO proponent); and Cisco division, Linksys (who recently announced new longer range antenna technology).

Fuscalado provides a chart showing projections by market research firm Forward Concepts for sales of Wi-Fi equippment. According to the chart, sales in 2003 (numbers of units) were 50 million, growing to an expected 250 million by 2007. This includes "client network interface cards, access points, and wireless router gateways." However, this does not seem to include non-computer Wi-Fi products, which Fuscalado mentions in her piece as another potential source of problems for Wi-Fi users -- (referring to a conversation with Paul Callahan, CEO or Propagate Networks) "...more and more devices will eventually become Wi-Fi enabled, which will only exacerbate the interference problem."

WiMAX new target of patent enforcement

As reported earlier here on IP Inferno, Canadian company Wi-Lan has decided to enforce its collection of patents. Unstrung reported that Wi-Lan...

...has filed a letter of assurance with the IEEE Standards Association (IEEE-SA) for the patents and patent applications recently acquired from Ensemble Communications Inc. ...Wi-LAN believes the infringement of these patents is unavoidable in any implementation of the IEEE 802.16 WirelessMAN Standard.

In this letter, Wi-Lan asserts that they will license these patents under RAND (reasonable and non-discriminatory) terms.

Many express concern when companies step forward with such licensing requests. Mike Masnick, writing at TechDirt says that despite the promise of RAND terms, the move "...still is likely to make WiMAX much more expensive."

Without patent protection, and the promise of licensing fees, what motivation would companies have for investing in new technologies? The industry must make a choice at the outset of a standards process -- insist that companies contribute the underlying patents to the community with no licensing fees required, or insist that companies practice RAND licensing practices. To complain about Wi-Lan after the fact places blame in the wrong place.

Next up -- expect a battle over the 18 patents covering proxy servers!

New Symbian Licensee: Sharp

While not an enormous volume vendor, it was a helpful sign for Symbian to have captured a new licensee this week. Tony Smith, reporting for The Register said that Sharp will begin shipping Symbian-based handsets next year in an attempt to grow its handset sales outside Japan. Sharp Communications Systems president Masafumi Matsumoto is reported as having said that 70% of the companies handset sales are currently in Japan, but that the company would like to increase sales to 50% outside Japan. What will this mean for Sharp's Linux based PDAs?

3G services to Surge

Jessie Shen of DigiTimes notes that the Economic Daily News carried an interview with Mike Wang, general manager of Nokia Taiwan, on the state of 3G. The article is quoted as saying

The number of 3G subscribers should climb from 5.9 million at present to 20 million by year-end, said Wang, adding that there will be around 60 ISPs (Internet service providers) and telecom providers rolling out the service, from 33 currently. He also added that with 40 3G-phone models to choose from, the quick pace of adoption by the end of this year is not unusual.

Free Wi-Fi

ZDNet reports that Continental Airlines is the latest to offer free Wi-Fi.

VoIP Users Spoof Caller ID

Kevin Poulson, writing for Security Focus points out a dirty little secret about VoIP -- that users can fake their "calling party number" or Caller ID. In addition, consumers who "block" their caller ID can find that hackers are able to pick this information up from the network.

The underlying issue appears to be the insecure implementation of CPN in the traditional telecom companies' networks. The system "...relies on telephone equipment at both ends of the call being trusted: the phone switch providing you with dial tone promises not to lie about your number to other switches, and the switch on the receiving end promises not to reveal your number if you've asked that it be blocked."

This will likely become another argument for regulation of the emerging VoIP industry, though this will only stop legitimate companies from these practices. A better solution would be to revise CPN standards to be more secure.