Top Ten 2011 stories – Mobile World Live

Top Ten 2011 stories

19 DEC 2011

Patent wars, multi-billion dollar acquisitions, “AWE-SOMMME” handset launches and video apologies – 2011 had it all. In time-honoured fashion, the MBB team has reviewed and analysed the biggest developments of the past twelve months to bring you our take (listed in chronological order) on the year’s top ten news stories.

1) Nokia announces Microsoft Windows Phone alliance
In a surprise move, Nokia announced a partnership with Microsoft in February that would see it shift its focus to Windows Phone as its primary smartphone platform (while phasing out the Symbian platform over time). Nokia CEO Stephen Elop said the tie-up would turn the smartphone space into a three-horse race, with Windows Phone and Nokia taking on the dominant Apple and Android ecosystems (Elop admitted at Mobile World Congress in February that Nokia considered Android but decided to go with Microsoft to avoid the creation of a duopoly in the mobile industry). Although Nokia continues to hold the lead in total mobile device sales, it has struggled to be as competitive in the smartphone market with a dwindling market share, something the Microsoft deal is designed to combat. The two companies said they also planned to work closely on combining their mobile services such as Nokia Map and Bing. By October, the first Windows Phone devices – the Lumia 800 and Lumia 710, running on the Mango version of the OS – were unveiled at Nokia World in London, to generally positive response (despite the cringeworthy, OTT unveiling by one Nokia exec) . The devices were soon launched in selected markets (albeit initial reports suggested sales had been lacklustre) with plans to extend sales to the US in 2012. Nokia’s reliance on Microsoft looks set to make 2012 a make-or-break year for the once-great Finnish handset giant.

Original news report

2) AT&T incurs regulator attention with US$39B bid for T-Mobile
A quiet Sunday in March saw US number two operator AT&T announce grand plans to acquire smaller rival  T-Mobile USA in a deal totalling US$39 billion. The surprise news followed months of speculation linking T-Mobile to a merger with Sprint Nextel. If it goes ahead (and that’s now a big if) the deal would make the combined company the US number one operator with a 42 percent market share, ahead of the 33 percent currently held by Verizon Wireless. T-Mobile parent Deutsche Telekom touted the merger as a way of providing an “efficient path” to help T-Mobile USA provide LTE services, with AT&T committing to increase its LTE expansion plans to 95 percent of the US population. Such was AT&T’s confidence in the deal back in March that it agreed a multibillion dollar breakup fee to T-Mobile if the merger fell through. However, the US Department of Justice took a dim view of the merger plans and filed a civil antitrust lawsuit to block the deal in August, arguing that it would “substantially lessen” competition for wireless services in the US. US operators Sprint Nextel and Cellular South also lodged suits opposing the deal. In November, the US Federal Communications Commission (FCC) chairman Julius Genachowski asked commissioners to refer the merger proposal for a hearing with an agency judge. AT&T continued to review its options, which reportedly included the potential sale of some of T-Mobile’s operations – including spectrum and customers – and a pledge to maintain T-Mobile’s low-cost subscriptions.

Update: AT&T and T-Mobile USA announced on 19 December that they were abandoning their merger plans, against the backdrop of intense regulatory scrutiny. The focus has now shifted on how the two companies will modify their strategies moving forward.

Original news report

3) Microsoft buys Skype for US$8.5B
Microsoft’s US$8.5 billion acquisition of Skype – the largest in the software giant’s 37-year history – did not send shockwaves through the telecoms industry in the way it would have done five years ago. Back in 2005, when eBay snapped up Skype from under the noses of the likes of Google, the VoIP pioneer was viewed as a dangerous disruptor. But eBay jettisoned most of Skype after failing to find a home for it (writing down the asset to the tune of US$1.4 billion in the process), and Skype has since failed to turn its sizable customer base into a profitable business. Plus, it has not really come close to replicating its desktop PC success in mobile. Microsoft, meanwhile, has suffered numerous embarrassing failures in its attempts to break into online services and the jury is still out on whether its re-launched Windows Phone OS will prove a success. But unlike the ill-fated eBay union, Skype does at least appear a tailor-made solution that would add connectivity to a range of existing Microsoft products, notably its Xbox and Kinect gaming systems – and possibly even its ubiquitous Office suite. And of course, it adds another element to the Windows Phone proposition. But as it attempts to create an “operator friendly” third eco-system to challenge Android and Apple, Microsoft must be careful not to revive the “bi-pipe” paranoia that Skype was once responsible for.

Original news report

4) Nortel sells patents for US$4.5B; Google misses out
The past twelve months have seen patents move to the centre of the picture, as companies far and wide look to intellectual property (IP) to protect their own interests – and as a tool to hit out at their rivals. The acquisition of the patent portfolio of Nortel Networks by a consortium of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony (announced in July), at the expense of Google, was the key transaction this year. The search giant’s interest in the IP came because of numerous attacks on its Android platform which, as a new entrant to the mobile space, it has been unable to defend using its own patents. This has also meant the company has been unable to defend partners such as HTC and Samsung, when they have ended up in court with their Android-powered devices. After failing to secure the Nortel patents, Google initially accused Microsoft, Oracle, Apple and others of a “hostile, organised campaign” against Android – although some observers noted that this could well have been a case of sour grapes. This Nortel deal also set the ball rolling on its planned US$12.5 billion acquisition of Motorola Mobility, as the cases against HTC, Samsung and Motorola itself rumble on.

Original news report

5) Google announces Motorola Mobility buy for US$12.5B
Google’s surprise deal to buy recovering handset maker Motorola Mobility has the potential to transform the Android ecosystem, and while the August news was met with positive comments from companies such as HTC and Samsung, they will surely be keeping a close eye on how the situation plays out during 2011. Fairly swiftly, the search giant began talking about Motorola’s patent portfolio, including its ability to “better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”  Google had been widely criticised for failing to support device makers against a raft of patent attacks, which was attributed to its weak hand in this area – and also been linked to a number of other patent deals, including a failed bid to buy Nortel’s intellectual property. But an important issue moving forward is how the various Android licensees will feel with Google owning one of their competitors. If there is any feeling that Motorola is receiving unfair favour, existing Android giants such as HTC and Samsung may rightly feel aggrieved. And if it doesn’t, Motorola is in danger of being little more than an “also-ran” Android device maker. Plus, there’s also the small matter of getting the deal agreed by regulators, with the acquisition currently facing close inspection in many regions.

Original news report

6) Apple announces the death of Steve Jobs
The outpouring of public grief that followed the death of Apple’s Steve Jobs was on a scale usually reserved for rock stars, royalty or religious leaders. To the Apple faithful, he was a mix of all three. In his tribute, President Obama said “there may be no greater tribute to Steve’s success than the fact that much of the world learned of his passing on a device he invented.” And it was with these epoch-defining devices that Jobs was able to revolutionise not just one industry, but several, including the music business (iPod/iTunes), the mobile phone industry (iPhone); and the computing world (from 1984’s Macintosh to last year’s iPad).  Jobs stepped down as CEO of the company he co-founded in 1976 just six weeks before his death, handing over responsibilities to his chosen successor, Tim Cook. But he was still at the helm to witness two major landmarks for Apple in 2011: in Q2, thanks to the ongoing success of the iPhone (and to Nokia’s woes), it (briefly) became the world’s largest smartphone vendor, an astonishing achievement for a firm that had only been in the market for three years. Around the same time, Apple also (even more briefly) became the world’s most valuable company, equally astonishing considering the firm was on the verge of bankruptcy when Jobs returned as CEO in 1997. His will be an extremely large pair of boots to fill.

Original news report

7) Sprint unveils ‘aggressive’ LTE plans
Sprint’s confirmation in October that it would deploy LTE technology for its next-generation network plans not only signalled a massive u-turn in strategy for the US number three operator but also all but sounded the commercial death knell for competing ‘4G’ technology WiMAX. Back in 2006 Sprint became the biggest operator supporter of WiMAX when it committed to the technology for its 4G plans. In theory, the move made sense at the time; as its rivals continued to offer 3G CDMA/WCDMA services Sprint would be first to market with networks offering average download speeds of around 4Mb/s. But, saddled with a technology incompatible with its rivals (therefore restricting any roaming services) and a limited supply of devices, rumours began to emerge that the operator would have to follow the global move to LTE technology in order to remain a serious player. Although eventual confirmation of the move to LTE surprised few, the speed with which Sprint plans to rollout the network has garnered attention (it is targeting completion by the end of 2013 and is already eyeing a move to LTE-Advanced technology). Serious question marks remain over both its ability to cope financially with this commitment and the extent to which its spectrum ownership (and a complex deal with fellow WiMAX-turned-LTE supporter Clearwire) can cope with the deployment. Meanwhile Sprint looks set to wind down its WiMAX offering over time and the technology will become a niche play offered by a select group of smaller operators.

Original news report

8) RIM apologises – via video – for BlackBerry outage
On 13 October, RIM founder Mike Lazaridis took the unprecedented step of making a video apology following a long-running and widespread BlackBerry service outage. This marked the lowest spot in what has undoubtedly been a terrible year for the company. RIM announced a series of poor quarterly reports, and in June it announced 2,000 job cuts.  By November, its book value was lower than its market capitalisation – indicating it would be worth more if it was split up and sold.  Of particular note was RIM’s entry into the tablet market, the PlayBook. The device was launched late to the market with a number of core features missing.  A software update intended to address some of its shortcomings has been delayed. And the company announced an expected charge of US$485 million in the third quarter related to this device. Mike Lazaridis and Jim Balsillie, who jointly hold the chairman and CEO roles, have come under increased pressure from disillusioned investors, but have resisted the numerous calls for a change in leadership structure. But while Lazaridis and Balsillie have held firm, there has been an exodus of other executives from the ailing smartphone vendor. Closing its ‘annus horribilis,’ the vendor last week admitted that there is no short-term solution to its woes, with the first devices running the new BlackBerry 10 OS delayed until late next year. Meanwhile Lazaridis and Balsillie have taken a pay-cut to just US$1 while they work through the problems.

Original news report

9) Samsung grabs number one smartphone spot
In October it was confirmed that Samsung had become the world’s largest smartphone vendor –overtaking Apple in the process. The company sold 28 million smartphones in the third quarter for a 24 percent market share, with Apple selling 17.1 million (15 percent) and Nokia, 16.8 million (14 percent). However, it’s worth noting that Apple’s sales dip was attributed to customers waiting for the launch of the iPhone 4S in October, and Q4 sales figures will be worth watching. Samsung’s rise to the top was fuelled by its Galaxy line of Android-powered devices, although the company was reported to also be working on the next version of its home-grown Bada platform and ramping up production of Bada phones in India; with the potential acquisition of Motorola by Google prompting concerns about the future of the Android ecosystem, Samsung is perhaps making sure it has a back-up option. Maybe as a reflection of its smartphone success, Samsung was engaged in a series of patent battles with Apple during the year. Apple accused Samsung of “slavishly” copying the design of its iPhone and iPad with the Galaxy S II smartphone and Galaxy Tab, while Samsung accused Apple of infringing its wireless technology patents. Legal battles between the two companies took place in Australia, France, Germany, Japan, the Netherlands and the US and look likely to rumble on for the foreseeable future.

Original news report

10) NSN to cut workforce by 23%
The sheer scale of Nokia Siemens Networks’ (NSN) restructuring came as a major surprise to the mobile industry last month. While few will argue that, since its inception, the performance of the Finnish-German joint network venture has been lacklustre, it was largely unexpected that the company would take such drastic steps as to cull almost a quarter of its global workforce (17,000) and sell off its less appealing businesses. CEO Rajeev Suri attempted to sum up the state of today’s telecom vendor business by claiming that “the industry does not any longer allow for end to end players to be successful.” To that end, NSN aims to put a particular focus on mobile broadband and services in an effort to more closely compete with market leader Ericsson and Chinese players Huawei and ZTE. Less than a month after the big restructuring announcement it has already sold off its microwave, WiMAX and fixed-line broadband access businesses. The mobile network industry needs strong competition, and it is hoped that a rejuvenated NSN will be able to provide a focused offering against rivals which offer a broader product portfolio across both fixed and mobile networks.

Original news report

 
By: The MBB Team.

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Justin Springham

Justin manages the editorial content for the Mobile World Live portal and award-winning Mobile World Live TV service. In the last few years Justin has launched and grown a portfolio of premier media products, which include the Mobile World Congress...

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