Hello Moto?

I was fortunate this past week to have the opportunity to attend the All Things Digital Conference put on by Kara Swisher and Walt Mossberg of the Wall Street Journal. The event is a melange of intimate interviews of tech titans spliced with demos of new products. Gates, Jobs, Diller, Otellini, etc., all took the stage. Between sessions, participants mingled over lunch, dinner, even wine tasting.  It would be futile to try to recap all of the action here. Nonetheless, one theme that emerged never ceases to intrigue me.

Jobs was asked about his feelings for the mobile carriers and replied by labeling them as "orifices". The term stuck and was used throughout the show as a wide cast of characters who have had to appease the carriers let off a little steam.

The reaction of Motorola's Ed Zander to the same question, though restrained, clearly evidenced  frustration. Here is a guy who depends upon carriers to put his handsets in consumer hands, yet, he has a demonstrated taste for paths to carrier disintermediation. For instance, Zander  flashed us the iTunes phone his crew developed with Apple. The two companies inked a licensing deal to make this happen last July and the handset has been ready for a while now. However, not surprisingly, virtually every US mobile carrier has rejected any deal to carry the device as they are almost all planning their own music download services launching this Fall. It sounds like Zander has talked just one carrier into releasing his stuff soon.

We are at an interesting inflection point in the history of interaction between the service providers and the handset makers. In a market with such disloyal customers, the carriers need to do everything they can to fight churn. It might seem that the impetus for consumer (non-enterprise)  spending in this space is who offers the swankiest handset. That is, with Motorola pushing 30.3M units in the last quarter thanks to the success of the RAZR V3 one has to wonder whether the hardware will drive consumer choice like during the Star-Tac days. Maybe the applications will have similar draw.  I think it would be a mistake for the carriers to underestimate the lock-in of iTunes.

Whatever the case, it is interesting to note that Motorola under Zander's leadership has made three  other significant moves toward creating a base for disintermediation of the carriers. First, Motorola bought MeshNetworks, a maker of wireless mesh routing software and hardware. Though the company has traditionally only  served public safety customers for police and fire municipal networks in the licensed spectrum, MeshNetworks is well-suited to provide WiFi connectivity for public access - a nightmare for 3G providers.

Moreover, Motorola has been working for over a year to perfect dual-mode handsets with WiFi chipsets. These phones will be sold directly to enterprises and integrated with their PBXs for local voice and will fall back to the carriers for roaming. 

To cap this effort, earlier this year,  Motorola signed a deal with Skype to collaborate, presumably, on the distribution of Skype clients on Motorola handsets. While the carriers would certainly reject an OEM of a Skype client in their consumer units, it remains to be seen whether they will tolerate such software to win/maintain enterprise deployments. Carrier leverage may be too weak.

How this will all sort out is anyone's guess. Motorola would be the first to dismiss these efforts as simply ways to ensure the 'seamless mobility' of their users. However, when you see a company make significant investments ($200M+) in the tools necessary for realizing  public WiFi networks, build hardware that talks over such networks, and partner with the world leader in software for doing so, well, exciting times are ahead.

 

Comments

[Hawkeye]

Thanks for the insight Chris---MOT has been a solid addition to my portfolio thanks to your 411.

Is too much functionality possible in a device?

[Michael Reed]

Very astute observation! You'd think the press might've picked up on this trend?

A little bit more on Mesh Networks: The company's products operated in unlicensed spectrum, specifically the 2.4 GHz band, same as is used by WiFi. However, Mesh Networks technology is not WiFi; rather, it uses a proprietary protocol they claim gives greater range and a cost of decreased throughput (6 Mbps maximum air rate in the same way WiFi provides a maximum of 54 Mbps).

Mesh Networks started in the WISP market, deploying a thousand or so units in a test bed around Maitland, Florida (near Orlando). When this strategy failed, they transitioned into public safety, yielding a handful of tier 3 city customers. Since the Motorola acquisition, a licensed product has emerged. It operates in the 4.9 GHz "public safety" band that is licensed to municipalities.

[Stuart18MELODY]

People deserve good life time and loan or commercial loan would make it much better. Because freedom depends on money state.

[abercrombie and fitch uk]

Well said, such a person should be a good sentence, or the future will be more rampant.

[Abercrombie fitch london]

In the meantime, welcome to all the new Microsoft search bots that I am sure this post will attract

[ed hardy outlet]

I read this sentence out loud to a group of engineers from my team at lunch the other day and they cracked up like I did.

[abercrombie fitch]

It is hard to say such a thing is clear.

[hollister]

talk about Oregon. It had a rhythm that kept me focused and didn't allow me to go numb at any point.11

[loan]

Every body remembers that humen's life is not cheap, however different people need cash for different issues and not every man earns enough money. Therefore to receive fast mortgage loans and just consolidation loans will be a right way out.