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(Credit: Corinne Schulze/CBS Interactive)

Helio Ocean 2 photos

Remember that Helio Ocean 2 we mentioned last week? Well, we got our hands on it and reviewed it.

It has the same dual-slider form factor as the original and, of course, the same bulky shape, but it has a couple of improvements over the first Ocean. First, it now has a unique optical-sensor touch pad, which makes scrolling through menus and long Web pages a lot easier. Second, the keypad and keyboard buttons are improved: they're a lot more tactile and easier to press now.

But perhaps more interesting are its features: it has all of the EV-DO and GPS functionality we've come to love from Helio products, plus we can't say enough about the new tabbed HTML browser and the updated messaging dashboard. That said, is that sufficient enough for people to get over its hefty size? We let you be the judge. It's available today February 12 from Virgin Mobile for $149. Oh, and don't forget to read our full review of the Helio Ocean 2.

Helio Ocean 2: Possibly on its way soon.

(Credit: MobileCrunch)

It appears that the much-awaited sequel to the Helio Ocean has finally surfaced...or at least its photos have, anyway.

MobileCrunch posted some pics of the Ocean 2's unboxing, and Engadget Mobile mentioned that Virgin has released a press release stating that the Ocean 2 will be making an appearance in Britney's big comeback tour.

Looks like a sleek little device. We'll definitely have more information about the Ocean 2 for you soon.

As part of the Virgin Mobile Shuttle launch earlier Wednesday morning, Virgin Mobile has also relaunched the Helio brand. Now known as Helio by Virgin Mobile, Virgin Mobile has enhanced the Helio $80 a la carte plan to include unlimited minutes as a replacement for the 1,500 minutes previously provided. This new plan will be available for both current and new Helio members.

In addition to all this, Virgin Mobile representatives told us they are looking forward to incorporating more of Helio's previous offerings into their current lineup. The Shuttle already has the location-based feature with applications like Buddy Beacon and Where, but Virgin says it hopes to incorporate more, like Google Maps and turn-by-turn directions. What's even more exciting is that Virgin is interested in going high-end with its future devices, and is hinting at a possible launch of the Ocean 2, the much-awaited sequel to the Helio Ocean of last year.

It certainly looks like the acquisition was a good deal for both parties, combining the distribution of Virgin Mobile with the high-end devices and services of Helio. We certainly look forward to future offerings of the new Helio by Virgin Mobile brand.

Virgin Mobile now owns Helio.

(Credit: Virgin Mobile)

Well, it finally happened. Less than two months after Virgin Mobile USA made its move to purchase Helio, the acquisition is now official. Virgin Mobile USA paid $39 million in stock for the nascent MVNO, and as part of the purchase, Virgin Group and SK Telecom will each invest $25 million in the combined company, as we reported back then. It'll be interesting to see how the two companies mesh their brands--Virgin Mobile is known for its cheap prepaid phones, while Helio is almost the exact opposite, known mostly for its high-end monthly subscription devices.

Certainly, there's a big chance that the two will complement each other. Both are youth-oriented, but for different segments of the market, and it makes sense to bring both under the same umbrella. That said, I wonder if the Helio side of things will continue to offer innovative and full-feature handsets like the popular Helio Ocean, or if the combined company will end up with a midtier compromise. Whatever happens, it'll be interesting to see what the future holds for both Virgin and Helio.

Virgin Mobile USA will pay $39 million in stock to buy operator Helio, the company said Friday.

The deal ends more than a month of speculation that the two troubled mobile virtual-network operators would combine forces.

As part of the purchase, Virgin Group, which owns Virgin Mobile USA, and SK Telecom, the South Korean phone giant that holds a majority stake in Helio, will each invest $25 million in the combined company. In exchange for its investment, SK Telecom will be given a 17 percent stake in Virgin Mobile.

Helio, which was created to bring advanced cell phones and services to the U.S. market, will add its 170,000 post-paid customers to Virgin's 5.1 million prepaid customer base.

Virgin Mobile hopes that Helio's offering will also help it retain existing customers. About 20 percent of those ditching Virgin Mobile's service leave for subscription services, said Dan Schulman, CEO of Virgin Mobile USA.

Helio's customers are considered to be among the industry's most valuable, spending on average about $80 per month on voice and data services.

I have said in previous blog posts that this merger simply makes good sense. For one, the companies each use Sprint Nextel's network to deliver service. In anticipation of this deal, Virgin Mobile has already renegotiated terms with Sprint to review the terms of its existing network contract. Virgin Mobile expects to achieve a minimum of an 8 percent reduction in cost per minute in 2009. And it anticipates further reductions over the next three years.

Virgin Mobile also anticipates that it can cut costs in other areas by more than 70 percent by combining the companies. Most of these savings will come from combining operations and reducing headcount.

The companies also have complimentary strategies that target the youth market. But Virgin Mobile, which is considered a hip brand, has targeted customers with little or no credit. The prepaid service allows them to get a cell phone with no credit check or contract. And it offers them great value. The company just introduced its $79.99 unlimited talk time plan, which beats similar plans from competitors.

Helio has gone after customers at the other end of the spectrum by targeting tech-savvy hipsters with cool new phones like the Ocean, and voice and data plans with unlimited usage. It also offers integration with popular Web sites, such as MySpace and YouTube. Other unique services allow subscribers to share or recommend music, and track their friends using GPS.

The cost savings and strategic synergies should help the combined company compete more effectively against the big four nationwide carriers: AT&T, Verizon Wireless, Sprint Nextel, and T-Mobile USA. These operators have been aggressively trying to meet the needs of value customers, such as the ones Virgin Mobile addresses. And they've also been introducing new phones to attract high-end data subscribers, such as the ones Helio has targeted.

"We believe that the acquisition of Helio, and the related strategic investments by SK Telecom and Virgin Group, are of enormous benefit to our business, both financially and strategically," Schulman said in a statement. "It provides us with a firm foundation to create a truly holistic, leading-edge product suite to service all of our existing and prospective customers."

Helio Ocean 2?

(Credit: Engadget Mobile)

It looks like a few details have slipped about Helio's probable successor to the Ocean, currently dubbed the Ocean 2. From Engadget Mobile, the Helio Ocean 2 is purported to have a 3-megapixel camera, a dual-slider design like the first Ocean, 1GB internal storage, Flash support in the browser, 30fps video recording, a touch-sensitive pad, a microSD card slot, plus PC sync capability. Obviously, this is still strictly in vaporware/rumor stage, but it's exciting to see if Helio can pull this one off; perhaps even before the iPhone release?

Virtual cell phone operators Virgin Mobile USA and Helio are rumored to be in merger talks, a move that could bring a lot of benefits to both companies.

The tie-up between the two MVNOs, or mobile virtual network operators, was first reported Thursday by the wireless blog MocoNews. According to the blog, SK Telecom, one of Helio's parent companies, would buy out Virgin Mobile USA and then Virgin Mobile would buy Helio in an all-stock transaction.

(Credit: Helio)

As the economy tightens and other larger wireless carriers look to consolidate, it makes sense for these smaller players, who essentially resell service from Sprint Nextel, to look for alternatives. The companies are also rumored to be in talks with private equity firms.

Over the past 18 months, Helio and Virgin Mobile USA have seen many of their MVNO brethren die. ESPN Mobile, Disney Mobile and youth-targeted Amp'd Mobile have all closed shop.

And even though Virgin Mobile USA and Helio are still in business, the companies have not been immune to the increasingly competitive market place. For the first quarter of 2008, Virgin Mobile USA reported that its earnings fell 75 percent compared to a year ago. Meanwhile Helio, which is jointly owned by South Korean carrier SK Telecom and Internet service provider EarthLink, lost $327 million in 2007 on $171 million of revenue. All told, the company has lost more than $560 million since it was started in 2005.

While combining the two companies won't magically solve all their problems, they may fare better as a combined entity rather than individually.

The main reason is that the companies' businesses compliment each other nicely. Helio was originally created by Sky Dayton, EarthLink's founder, to bring cool and cutting edge devices and services to the U.S. market. The original idea behind the company was to target a young technically savvy crowd. Virgin Mobile USA, a subsidiary of the European-based phone company, has made a name for itself as a hip brand also focused on the youth market.

But it's the companies' differences that could really benefit a merged company. Even though both companies are going after a younger demographic, they are really addressing different segments of this population. For example, Virgin Mobile is a prepaid service that targets users who don't have a lot of money to spend and who have poor credit or no credit history at all. By contrast, Helio is targeting high-end users, who spend an average of $85 a month on their cell phone service. Most wireless users only spend $50 a month on service from bigger carriers like AT&T and Verizon Wireless.

Virgin Mobile could greatly benefit from Helio's high-end customers, who are voracious data users. In 2007, Helio subscribers sent an average of 550 text messages per month. And 95 percent of the company's subscribers accessed the Web through their mobile device compared the industry average of just 13 percent.

On the flip side, Virgin Mobile USA gives Helio the opportunity to expand its customer base. Initially, Helio only tried wooing a small niche of technology elite, a set of high-end consumers who wanted cool phones and were willing to spend a lot on new services and devices. But then came Apple's iPhone, which literally changed the game overnight. And the very people Helio wanted to entice with cool devices, such as the Ocean, were instead more interested in an iPhone.

Now Helio has shifted its strategy to appeal to a wider audience. And Virgin Mobile, which has relationships with a wide circle of retailers and over 5 million subscribers, could significantly improve Helio's reach.

Even if the companies merged, it will still be a difficult market for them to survive. More than 84 percent of the U.S. population already subscribes to a cell phone service. And as the bigger carriers more aggressively address both the high end and low end of the market, it could be harder for Virgin Mobile USA and Helio to compete.

Users will no longer have to hack their Helio to use Opera Mini.

(Credit: Heliocity.com)

For mobile service Helio, it's a sure sign you're doing something wrong if the most popular app among your user community is a hack. For Opera Software, the fact that it's your app is a sure sign you're doing something right.

Since last August, users at the Helio community site Heliocity have been peddling a re-engineered version of the Opera Mini browser that was specially hacked with the Ocean smartphone in mind. Seven months later, Rod Hamlin, senior vice president of sales and marketing at Opera Software, got on the phone to confirm that starting Wednesday, Opera Mini will be officially available on Ocean phones.

"We've always been really impressed with the Ocean as a device and (with) Helio for really listening to their user community," Hamlin said of the partnership. "Opera Mini became a popular hack, so the Helio folks came to us and wanted to make it an official download."

While Norway-based Opera has benefited from deals with American manufacturers--Opera Mobile and Opera Mini have shipped with select Motorola phones since 2003--this agreement with Helio marks the first time that the company has inked a deal with a U.S. mobile service provider.

Opera Mini for Helio Ocean will be available on Wednesday via the Ocean's on-deck Web portal and will also ship on Helio Ocean phones. According to Hamlin, the two companies may soon discuss support for other Helio models.

There's a reason why no mobile social-networking company has broken out yet. They haven't found themselves--on a map, that is.

Mobile networking, at least in the U.S., remains a limited extension of the social-media industry's biggest PC-based players: lighter, messaging-focused versions of Facebook and MySpace.com, as well as instant-messaging software like Yahoo Messenger and AIM. Social-networking start-ups with a major or exclusive focus on mobile use, like Twitter, have failed to amass a following outside the alpha-geek crowd. For mobile social networking to really take off, it's going to have to move beyond providing new ways for people to bug their friends with text messages.

Yahoo demonstrated OneConnect at the Mobile World Congress in Barcelona.

(Credit: Marguerite Reardon/CNET Networks)

Recent announcements and developments in the mobile media world have indicated that location-based services are going to be the game-changer. These applications, using GPS technology or cell tower triangulation, are being talked about as the move that will push mobile social networking forward--and with good reason. Crafted correctly, a location-aware mobile service could not only tell you which of your friends are nearby, but also inform you of the nearest place where you could grab a slice of pizza (and whether your neighbors recommend it)--as well as serve up advertisements that give "hyperlocal" a whole new meaning.

And with Yahoo's just-announced OneConnect launching in a few months--featuring "proximity alerts" when friends also using the service come within a certain distance of one another--it's clear that the biggest names on the Web see this as a promising market, too.

But don't hold your breath. Location awareness is going to make huge strides in how mobile devices are used, but it's not going to be a quick revolution. Services like Yahoo OneConnect, though brimming with hype, face both technological and psychological barriers that have kept their progress slow and will keep any company, start-up or conglomerate, from making an immediate splash in the space.

Right off the bat, there's the gadget factor: A whole lot of people are using cell phones that can't handle geotagging or "proximity alerts," and they aren't going to upgrade anytime soon. Those of us living in New York or the San Francisco Bay Area can easily forget that not everyone has a BlackBerry or an iPhone. Not everyone has a data plan, a built-in camera, or an unlimited text-message plan--let alone GPS capabilities. Plenty of people don't use their cell phones for anything other than boring old phone calls.

And even if they can handle GPS or the lower-tech triangulation, there's a good chance many cell phone customers don't even know about it. "Getting the customer to understand that (GPS) is on their phone has historically been the biggest hurdle," said telecommunications industry analyst Jeff Kagan. "All these cool technologies are available on the phone but nobody knows it. Customers don't know it."

Beyond handsets, cellular carriers play a crucial role in whether a location-based mobile service can take off. Loopt, a mobile social-networking site that relies on location awareness, is still only available on Sprint Nextel and its Boost Mobile subsidiary. Buddy Beacon, a similar service launched by mobile virtual network operator Helio, is available exclusively to the carrier's subscribers. To whittle it down even more, such applications are only available on compatible handsets.

There's a "lack of ability all around," said John Poisson, founder and CEO of mobile photo-sharing start-up Radar.net. "If you're talking about location-based services that are social in nature, you've completely broken the model because you can't do anything social with just a subset of an audience."

"It's like that old William Gibson cliche that everyone keeps recycling," said Michael Sharon, co-founder of geographic tagging site Socialight, which has been making small steps toward integrating location awareness into its mobile service. "It's that the future is already here, it's just not evenly distributed yet."

A service like Yahoo OneConnect, backed by a well-connected dot-com giant rather than early-stage investor cash, could even the playing field with cross-carrier compatibility, but few details have been released about the product--and a beta test release is months away. It's a gamble as to which phones and carriers will actually work with it.

Privacy worries
There's a bigger issue, though. Beyond any technological challenges, a sizable portion of the population might not like the idea that their locations could be broadcast to others--or logged by their cell phone providers. "There are big privacy concerns," Poisson said. "Privacy is a huge concern when it comes to location-based services, especially when it comes to mobile devices. Any time that the end user doesn't have control over who's knowing where they are, whether it's another human being that they know or don't know, or a company that's collecting that data on an automatic basis, that starts to become problematic."

Some Facebook users were up in arms over their profile updates being shared on the News Feed and later their third-party shopping activity showing up in Beacon advertisements. What would mobile phone users think if their location were to be broadcast to a big list of social-networking contacts? Such a service would clearly have to be opt-in, which mitigates some of the Big Brother-esque worries but can also slow adoption rates.

Socialight's Michael Sharon suggested that location-aware social media will have to find some creative new applications so that it's not just a way to stalk your friends. "I think perhaps one of the reasons they haven't taken off is because friend-finding is an edge use case," he said. "It's the first thing that comes to mind, but it's perhaps not the most comfortable thing."

Socialight, which Sharon co-founded with Dan Melinger, has started to roll out location-aware features, but the start-up has stopped short of the Buddy Beacon route and currently only plans to use location as a way to show you which bars, restaurants, and other attractions (as tagged and annotated by fellow users), are nearby. Helio has launched a similar service and plans to work GPS into it soon. "It's not going to broadcast that to anyone," Sharon said of Socialight's foray into geotagging. "It's just going to show you what's around you."

Perhaps that's the natural order of things. GPS and other location-aware technologies will likely transform other aspects of the mobile experience--search, events listings, business reviews, not to mention mapping and directions--before they move on to influence social networking. After all, this is how the Internet as a whole evolved. Most Web users were trusting Google and Yahoo with their search queries long before they were comfortable uploading dozens of photo albums to Facebook.

This could be a disappointment to those digital socialites drooling at the prospect of interactive maps that chart out exactly where their friends are at a given moment. But on the bright side, this means it'll probably be awhile before your boss is using a BlackBerry to learn exactly where you went on your lunch break.