Wireless

It's no secret that Windows Mobile has hit a rough patch as the iPhone and Android-based smartphones have take center stage. Recent statistics from AdMob shows that Windows Mobile market share of Web surfing was way down during the past 12 months--more than 70 percent year over year.

Any number of people postulate that Windows Mobile will be dead, some say as soon as 2011, unless Microsoft figures out a way to not only make the operating system better but to convince users that they should care.

On the New York Times Bits blog, Steve Lohr wrote earlier Thursday on analyst Mark Anderson's comments suggesting that Microsoft abandon their consumer efforts entirely--that the company has lost the battle for consumers:

Except for gaming, it is 'game over' for Microsoft in the consumer market. It's time to declare Microsoft a loser in phones. Just get out of Dodge.

I'm not a huge fan of Windows Mobile, but Microsoft certainly can't give up on smartphones and really has no alternative but to make a big move in the mobile operating system space. And Windows Mobile is not nearly as bad as many people think--if you don't believe me, check out these results from mobile blog jkOntheRun.

I recently toyed with Windows Mobile phones at both Verizon and AT&T stores and I could absolutely see the appeal of the common desktop functional paradigm if I were a Windows user. But consumers are fickle and don't want to add an OS decision into their buying process. They just want the phone and its applications to work and be easy to use.

There remains a huge opportunity for Microsoft to take its dominant position and make Windows Mobile truly great, even if it means walking away from the status quo. And while that's not typically the Microsoft way, the company has shown with Bing that it can make those kinds of decisions (as well as less-positive choices.)

There are two very simple moves Microsoft could make that would not only shake up the whole market, but also build a path for the future:

... Read more

Correction made December 9 at 7:51 p.m. PDT: An earlier version of this story incorrectly stated that AT&T had announced a tiered pricing plan. The company is considering incentives to curb heavy wireless data usage.

AT&T wants its iPhone users to use less wireless data, and it may consider new pricing models to curb users' data usage as it tries to keep up with growing demand.

At an investor conference in New York on Wednesday, Ralph de la Vega, AT&T's head of wireless, said the wireless operator is considering incentives to get consumers to reduce their data usage.

De la Vega said 3 percent of smartphone users are consuming 40 percent of the network capacity.

"We're going to try to focus on making sure we give incentives to those small percentages to either reduce or modify their usage so they don't crowd out the other customers in those same cell sites," said de la Vega according to a transcript of the conference. "And you'll see us address that more in detail."

He went on to say that most consumers aren't aware which applications use a lot of bandwidth and which do not. For example, email does not consume a lot of bandwidth, whereas streaming video and audio do consume a great deal of bandwidth.

"What's driving usage on the network and driving these high usage situations are things like video, or audio that keeps playing around the clock," he said, according to the transcript provided by AT&T. "And so we've got to get to those customers and have them recognize that they need to change their pattern, or there will be other things that they are going to have to do to reduce their usage."

AT&T has been struggling to keep up with demand for wireless-data usage on its network. The iPhone, launched more than two years ago, has revolutionized mobile Web usage. The device, which was built more for accessing the Net than making calls, can access more than 100,000 applications, many of which use the mobile Internet.

iPhone users on average consume five to seven times more data per month than average wireless subscribers, according to analyst firm Sanford Bernstein. And all this usage is clogging the network, causing many iPhone users, especially in large cities such as New York and San Francisco, to experience dropped calls, slow 3G service, and issues connecting to the network at all.

AT&T has been reluctant to admit that there is a problem, but recently, the company has acknowledged that problems exist. According to The Wall Street Journal, de la Vega admitted that New York and San Francisco have been experiencing service issues. And the company recently launched an iPhone application that allows users to report service problems.

AT&T has been upgrading its network to the next generation of 3G wireless service to increase network capacity. But now the company is saying it needs to actually curb usage in order to get a handle on demand.

De la Vega didn't provide specifics about how the company would actually get consumers to use less data. But he said that a usage-based pricing model may be considered in the future.

"I think longer-term, there's got to be some sort of a pricing scheme that addresses the usage," he said. "But that's going to be determined by industry competitive factors, regulatory factors and customer [successes]."

The idea is that usage based pricing may actually deter consumers from using high-bandwidth applications. Unlike voice service, which is already tiered, wireless-data service is charged at an all-you-can-eat flat rate. iPhone users select a voice plan, then pay an extra $30 a month for unlimited data usage. By contrast, AT&T has limited the amount of data that its wireless-data card users can consume each month to 5GB. After that limit has been reached, customers who use the AT&T network to access the Net from their laptops get charged more based on their usage.

But asking iPhone users and other smartphone subscribers to cut back on their data usage may be somewhat unrealistic, and it could actually stifle innovation and development of the mobile Internet.

AT&T seems to realize that this is not a long-term solution. And not only is the carrier upgrading its network, but it's also asking the Federal Communications Commission to find more spectrum to auction off that can be used for wireless-data services. Jim Cicconi, senior executive vice president of external and legislative affairs for AT&T, said in a separate interview with CNET on Wednesday that something needs to be done to deal with the flood of wireless-data traffic.

Cicconi and AT&T's CEO Randall Stephenson met with FCC staff members earlier this week to discuss the spectrum issue.

"Clearly, there is a looming crisis that needs to be addressed when it comes to spectrum availability," Cicconi said in an interview at his office in Washington, D.C. "Wireless-data usage is growing far faster than anyone had expected. And if we don't do something soon, we will run out very fast. And then we will have to start telling wireless customers that they can't do all the things they want to do with their devices."

FCC Chairman Julius Genachowski has made freeing up more spectrum a top priority. And he has already proposed that the FCC look into taking some spectrum away from TV broadcasters to give to wireless operators to deliver more wireless-broadband services.

Naturally, the TV broadcasters oppose such a proposal.

Verizon Wireless, AT&T's main competitor, has already amended wireless-data pricing for its low-end phones in an effort to squeeze out more revenue from users. But drastic changes in data pricing could scare off some customers and curb smartphone adoption altogether.

If you were watching Florida impersonate a headless chicken against Alabama Saturday, you might have been aware that Luke Wilson, AT&T's disarming new pitchman, had also lost his head.

For the game was interrupted by Wilson's need to talk, with his filmic features and without.

The battle between AT&T and Verizon has been peppered by startling doses of objectivity. So to demonstrate the clear, obvious, incontrovertible fact that Verizon's 3G is but a Wendy's-stuffing, cake-loving, 15-beers-a-night slob when compared with AT&T's Usain Bolt, Wilson performs a side-by-side that would put the Pepsi Challenge to shame.

On AT&T's 3G, Wilson, finally not dressed in a painful shade of tree bark, downloads himself with the speed of an unfaithful, burglarizing vicar fleeing from the press.

When he tries using the Verizon 3G, which AT&T declares is very much slower, Wilson is up to his neck in it. There is no time to bring his head into the picture.

Naturally, AT&T's hope is that Wilson's charm will encourage people to use their hearts at least as much as their heads. No one using the latter will really believe he is using Verizon's 3G to materialize his headless self.

So smartphone seekers will be left trying to decide between a network that is allegedly everywhere, but is slow, and one which, according to critics, isn't remotely everywhere, but is faster and, oh, has that supposed digitally clueless pageant queen of an iPhone.

It's not quite George Clooney vs. Brad Pitt, is it? It's more, well, Luke Wilson vs. Owen Wilson.

Motorola's and Verizon Wireless' $100 million marketing campaign for the Motorola Droid seems to be paying off with strong sales that will likely result in more than 1 million devices being sold by the end of the year.

The Droid, the only smartphone currently on the market that uses Google Android's 2.0 operating system, is Motorola's second Android device and it's available only on Verizon Wireless's network. The device is turning out to be the hit phone of the season, thanks in large part to an expensive and extensive advertising campaign.

Motorola Droid

(Credit: Motorola)

Neither company is reporting sales figures. But analysts say sales look good. The companies have likely sold between 700,000 and 800,000 Droids since the device was launched in early November, according to equity analyst Mark Sue of RBC Capital Markets.

"Verizon's big marketing push for the Droid is strengthening as we close in on the holidays, and following our round of checks, we believe about 700,000 to 800,000 Droids have been sold, making our hurdle of 1 [million] Motorola Droids achievable for 4Q09 [ending December 31]," Sue said in his research note. "Motorola, for its part, has done a good job on the production side, and our survey of over 100 stores indicates strong demand, limited stock outs, and very few returns."

John Stratton, executive vice president and chief marketing officer for Verizon Wireless, said when the device was launched in late October that Verizon would be pouring in more money to market this device than any other phone it has ever sold. And now it looks like the money has been well spent. From advertisements that specifically highlight the Droid to ones that focus on Verizon's extensive and reliable 3G wireless network, it's clear that the company has AT&T and the Apple iPhone in its crosshairs.

AT&T has actually sued Verizon over the advertisements about its 3G wireless network coverage.

Some Verizon Wireless stores, especially in major cities, are selling between 100 and 200 Droids per week since the launch in early November, Sue added.

The success of the Droid is good news both for Motorola and for Verizon Wireless.

Motorola comeback
For Motorola, the Droid represents a chance to make a comeback in the cell phone market. The iconic American company that practically invented the cell phone market has struggled for the past several years now. After the runaway success of the ultra-thin Motorola Razr in 2004, the company has been unable to come up with a hit phone. And it has steadily lost market share to other competitors, such as Nokia, Samsung, and LG Electronics. It's also ceded market share in the fastest growing segment of the market, smartphones, to newcomers like Apple and Research In Motion.

Motorola's mobile devices CEO Sanjay Jha took a bold gamble more than a year ago when he decided to dedicate the company's resources to building phones using the Google Android operating system. The Droid and the Motorola Cliq, which is exclusively sold on T-Mobile USA's network, are the first two Motorola Android phones to hit the market.

But Jha said the Google Android operating system will not only be used in high-end devices like the Droid, but it will also be used to power less expensive phones, creating a new tier of smartphones that will eventually replace the basic feature phone category. Jha said the company will launch at least 20 more Android devices in 2010.

The success of the Droid is an important first step in getting Motorola back on track. But equity analyst Ittai Kidron of Oppenheimer said in a research note Monday that sales of the Motorola Cliq are falling short of expectations. Motorola is expected to sell 1.5 million smartphones in the fourth quarter. And two-thirds of them are expected to be Droids.

Kidron said the Cliq is not selling well mostly because of issues with battery life. Motorola is supposedly preparing a software patch to fix the problem. But he also noted that T-Mobile appears to be losing interest in the device and is not marketing it heavily.

But T-Mobile says that the Cliq is doing just fine. And the carrier said that it's committed to marketing the phone through the holiday season.

"The Motorola Cliq is very popular among our highly connected customers and is the only device with Motorola's innovative Motoblur solution," a company spokesman said. "T-Mobile is excited about the Motorola Cliq for the holidays and continues to showcase it prominently in T-Mobile retail stores and with recent holiday deals."

Verizon's iPhone alternative
The Droid's success is also important to Verizon Wireless, the nation's largest wireless operator in the country. It is the first device that offers a true challenge to Apple's iPhone, which runs exclusively in the U.S. on AT&T's network. While Verizon has a strong reputation for its network, consumers often complain about its lack of cool phones. Up to this point, Verizon has mainly competed against AT&T and the iPhone with RIM's BlackBerry devices. But RIM's touch-screen BlackBerry Storm, which was first introduced a year ago, was largely a disappointment.

The Droid offers Verizon customers an alternative to the iPhone on the Verizon network. This fact could help Verizon retain some consumers who were thinking of leaving for the iPhone. But it might also attract new customers who are either disappointed with AT&T's service or have heard bad things about the network.

Verizon Wireless representatives say the Droid is certainly an important part of the company's device line-up.

"We are pleased with sales over the holiday weekend," Brenda Raney, a spokeswoman for the carrier said in an e-mail. "This phone clearly fits the needs of a number of customers who are excited about its availability on the Verizon Wireless network."

But if analyst data is to be trusted, it is clear that the huge marketing budget for the Droid is at least part of the reason why the device has been so successful. The HTC Droid Eris, another Android device sold exclusively on Verizon's network, is not selling as well as the Droid, Sue said in his note. The HTC Droid Eris went on sale the same day the Droid was launched, but with much less fanfare.

Part of the problem is the fact that there are many Android devices coming to market. And the number will only increase next year. The lesson from the success of the Motorola Droid is clear. If device makers and carriers hope for break-out success, then they will have to spend big on marketing.

In its attempt to redress the imbalance created by the latest Verizon ads, AT&T has hurriedly cobbled together not just one Luke Wilson ad, but several.

Curiously, one ad features precisely the same strategy as that of the latest iPhone advertising: reminding those who might still be on the fence, on the phone, or even on the lam that you can't simultaneously enjoy voice and Web surfing on the Verizon 3G network--and hence on the Motorola Droid.

So here we have Luke Wilson, still looking a little peaky and dressed in a difficult brown. Behind Luke, we have a man trying to use two phones (by implication, Verizon phones) to perform a task the iPhone will manage alone.

Some might find it entertaining that as his friend attempts to download something on one of his Verizon phones, he complains that it's all going rather slowly. Others might find this both true and funny.

AT&T hasn't merely paid Wilson a little more than 3G to make this comparison. Someone, somewhere, has, perhaps even wisely, said, "We need a map to counter Verizon's map."

So the writers hit upon the idea of a two-part extravaganza (this already aired during Tuesday's "Dancing with the Stars" finale), in which Wilson produces postcards from all the different American towns that really do--no, really--have AT&T 3G coverage.

Wilson says his job is to set the record straight, with respect to Verizon's vicious besmirching of the AT&T network. He tries his best. He tells us that AT&T covers 97 percent of all Americans--yes, 300 million people.

The AT&T map also seems far more filled-in and far more colorful than it appears in Verizon spots, though one suspects that local word of mouth might be rather stronger, in this instance, than national advertising. If you live in Spokane, Wash., for example, and you know someone there who has spotty 3G service on a particular network, that is far more powerful an influencer than any number of Wilson's postcards or Verizon's barbs.

It's enlightening, however, to discover that Wilson once dated someone in Tulsa, Okla., and it didn't work out. Did she catch him simultaneously calling and Web surfing? Perhaps we will never know.

Another iPhone worm has been spotted in the wild.

Unlike the previous exploitation, which merely changed a jailbroken iPhone's wallpaper to a picture of Rick Astley of "Rickrolling" fame, this new threat allows hackers to steal sensitive information.

According to security firm Sophos, which wrote about the exploitation after a Dutch ISP spotted it late last week, the worm attacks jailbroken iPhone and iPod Touch devices only.

The worm "uses command-and-control, like a traditional PC botnet," Sophos wrote in a blog post on Saturday to warn users about the exploit. "It configures two startup scripts, one to execute the worm on boot-up, and the other to create a connection to a Lithuanian server to upload stolen data and cede control to the bot master."

Jailbreaking, which has been around for about two years, is a hack that enables iPhone and iPod Touch users to download applications unavailable through Apple's App Store.

Sophos wrote that the worm attacks users on several ISPs, including UPC in the Netherlands, Optus in Australia, and T-Mobile in several countries worldwide. Worse, the worm spreads faster on a Wi-Fi connection than a 3G connection. Users with affected devices might notice extremely short battery life while on Wi-Fi. According to Sophos, that's mainly due to the worm engaging in "so much network activity."

When a device is infected, it's assigned a unique number so that the attackers can easily pinpoint a single device. It also looks for authentication systems that use SMS, better known as mTANs. mTANs are frequently used by banks that send an SMS message with a password to mobile phones, allowing people to log in to their online accounts, Sophos wrote.

In essence, this threat is serious.

Sophos recommends that people with infected iPhones and iPod Touch devices restore them back to Apple's most recent firmware update. For now, there is no other way to fix the problem.

When you've lost the first round in your case against Verizon's persistent and persuasive mockery, who do you turn to?

Luke Wilson, that's who. After all, he starred in "Legally Blonde" and, well, "Jackass Number Two."

Actually, Wilson is lovable. Truly lovable. Perhaps if he'd dressed down a little and Justin Long had suffered an interminable hiatus hernia, Wilson might have got the part of Mac, the Microsoft Mocker.

Instead, he has the slightly more difficult task of persuading the folks who adored him in "Old School" that AT&T's 3G will serve them well on the 3.10 to Yuma.

The creators didn't give him much of a script, as I suspect they wrote it a couple of lattes and a shot of bourbon before this opus was filmed in what looks like the empty space above Victoria's Secret in Santa Monica, Calif.

Luke is forced to stand before a board and prove that AT&T has the fastest 3G network, lets you talk and surf at the same time, and offers you more apps that feature people making strange noises, half-clothed women, and animals that smile when you touch the screen. (Disclosure: slight exaggeration)

Sadly, it all looks a little analog. Luke looks as if he'd prefer to be surfing, as he really doesn't have the tools to make you believe what he's being paid to say.

His hair looks as if it's been hurriedly greased with Czech lard and his face offers a certain hemorrhoidal mien as it offers a little jape at the end of the spot. Yes, a jape about Verizon beginning with "V" and AT&T not beginning with "V." That rumbling you can hear is the collective guffaw from Verizon Central.

Verizon is hurting AT&T with its clinical, delighted unpleasantness. And I fear that before "Legally Blonde 2: AT&T's Revenge" can possibly be effective, the iPhone carrier needs to dramatize its argument rather better than the gospel according to Luke.

U.K. wireless carrier Orange just started selling the iPhone, and it is trumpeting first-day sales numbers for the device.

(Credit: Apple)

The carrier signed up 30,000 people with a new iPhone contract on Tuesday, its first day selling Apple's smartphone, according to a post on Twitter from a member of Orange's marketing department.

While 30,000 isn't necessarily a lot, compared to the "hundreds of thousands" of iPhones AT&T sold in its first weekend selling the iPhone 3GS in the United States, it's not bad for being the second carrier in a much smaller country, where the iPhone 3GS has been available for four months.

Until Tuesday, wireless provider O2 was the exclusive carrier of the iPhone in the United Kingdom. Orange currently has 16 million mobile customers, compared to O2's 22 million. Incidentally, Orange's experience as the second carrier of the device in a country would seem to make a decent case for Apple releasing the iPhone to more than one carrier in many other countries, including the United States.

The numbers were far more impressive than the iPhone's debut on China Unicom's network last week. China's first crack at selling the iPhone was by most accounts disappointing, with 5,000 units sold over the first four-day period.

Of course, China Unicom is dealing with factors Orange is not. Besides having to sell the iPhone without Wi-Fi connectivity, China has to contend with something U.K. and U.S. carriers largely do not: a vast market for iPhone knockoffs, or gray-market phones.

In the race for mobile phone profits, Apple has overtaken Nokia, according to figures for the latest quarter.

Apple earned $1.6 billion in the third quarter from the iPhone, outpacing Nokia's $1.1 billion cell phone profit to grab the top spot among all mobile phone vendors, said research firm Strategy Analytics on Wednesday.

(Credit: Strategy Analytics)

This is the first quarter that Strategy Analytics has seen Apple surge past Nokia in mobile phone profits, according to Alex Spektor, the author of the research, who spoke with CNET News.

The contest between Apple and Nokia for top phone profits has been tight in recent months. ... Read more