Wireless Watch 507, 1 Aug13

Volume 11, issue 16: August 1 2013
WIRELESS WATCH
In-depth analysis of WLan, cellular and broadband wireless markets
Holiday Notice: Wireless Watch will be taking its annual summer break for the next two weeks. The next issue will be published on August 22. We wish all our subscribers happy vacations. Key issues: LTE/Wi-Fi integration becomes real in major operator deals this fall ALU enlists Qualcomm in battle for AT&Ts small cell contracts O2 UK highlights complex networks that will add up to 4G Clearwire in, iDEN out the new Sprint emerges at last Comment: Moto X and Sony Xperia raise hopes of credible challenge to the big two MediaTek targets tablets with firsts in security and multiprocessing Microsoft and Google: different end games for universal access projects AT&T continues to squeeze out DSL with fixed LTE services Microsoft joins growing band of tablet failures Telco groups vye for new assets in high growth markets Start-Up Watch: Quip brings word processing to post-mobile era M&A Watch: Samsung acquiring Novaled? Alvarion may find buyer for remaining businesses 2 2 7 13 18 25 27 29 31 32 34 35
4G Watch: 36 LTE spectrum consolidating in hands of Russias big four; SK reaps rewards of LTE-A Mobile Apps and Content: 38 Facebook offers alternative to iOS for small games publishers; Android fragmentation continues to plague the OS Devices and Components: 39 Samsung trebles smartphone memory speed; Smartphone growth boosts MEMS sensor vendors
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LTE/Wi-Fi integration becomes real in major operator deals this fall

Wi-Fi moves towards more strategic role, from mere offload to full integration AT&T is the hot deal, vendors forming alliances to chase its small cell contracts In the UK, O2 shows the way to use Wi-Fi zones as a template for metrocells
1. ALU enlists Qualcomm in battle for AT&Ts small cell contracts

A familiar pattern is emerging at Qualcomm in a time of economic downturn, spot the companies which have that essential combination of smart technology and an urgent need of investment. Invest cash and credibility in the firm and gain access to the innovations more cheaply than by developing them from scratch, gaining position for Qualcomms own platforms in the process. Its a neat approach, and one the chip giant has applied most recently to Sharp, for its mobile displays, and now Alcatel-Lucent, in which Qualcomm will take a stake in return for collaborating on small cells. A particular focus will be multimode metrocells combining 3G, LTE and Wi-Fi which are an important element of AT&Ts next wave LTE deployments. With Cisco marshalling its forces to steal some of that business, and Ericsson promising multimode access points in the fourth quarter, ALU is enlisting Qualcomm to help it maintain its own share of the treasure. ALU, for all the financial troubles of the past few years, has certainly made a splash in one area, that of small cells. It has been the most ardent of the big six vendors in supporting first residential femtocells, and now public access metrocells, as part of its broadening lightRadio architecture. Although it will come under pressure from the rising interest of Cisco and others, it remains the small cell partner of preference for silicon providers, and for those, like Qualcomm, which seek to shape the future direction of a key platform. We can assume that acquiring a minority stake in ALU, however small, will not just net Qualcomm the far-reaching R&D partnership announced in the public statement, but a strong chance of a customer deal. This would be a good boost while ALU has been a long term customer of Mindspeeds former Picochip division, Qualcomm has been more vocal than commercially successful in small cell silicon so far. It supplies specialist vendor Airspan via its acquisition of Israeli system-on-chip supplier DesignArt, and it recently added new models to its homegrown platform, sporting Qualcomm trademarks such as high levels of integration, including with Wi-Fi. But the company saw itself sidelined in the residential market by Picochip and Broadcom/Percello, and is in danger of suffering the same in metrocells with the entry of the base station chip giants, Texas Instruments and Freescale. Both TI and Broadcom are suppliers to Cisco via the latters purchase of Ubiquisys. Forming close ties to ALU, then, could reap medium term commercial gains and, if Qualcomm gains a role in lightRadio, a return to the infrastructure market after selling most of those assets
Copyright Rethink Technology Research 2013
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to Ericsson in 1999. The partners stress their interest in multimode small cells, integrating 3G, LTE and Wi-Fi at chip level. Against the odds, some carriers pursue full Wi-Fi integration: This is a controversial stance some operators believe multimode versions of the tiny base stations will be unnecessarily expensive and inflexible, as do some SoC makers, notably TI, which points to the different upgrade cycles for the 3GPP and Wi-Fi standards. Specialists like Spidercloud also point to the complexity of repurposing mobile cores to manage thousands of multimode small cells efficiently, and believe it will be another year at least before capabilities like self-organizing networks are ready for commercial use. Other complex challenges include intelligent automatic section of the best connection for a particular task; RF coexistence and interference issues; and the different nature of Wi-Fi and 3GPP standards. Broadcom's general manager of broadband carrier access, Greg Fischer, pointed out in a recent briefing that Wi-Fi hotspots would ideally be deployed at a different density from cellular access points, since they have different range and rate, and so carriers may make compromises in network design to achieve the economies of integration. He said: "Cellular tends to have more sensitivity and robustness and better capability on distance from the same output power level than Wi-Fi. If you collocate Wi-Fi, you may still have areas where there is not enough Wi-Fi coverage." So many cellcos will still need additional Wi-Fi access points perhaps twice the number as 3GPP small cells even when those cells all contain WLan connections. But some flagship carriers are keen to reduce lamp-post space with all-in-one products, and AT&T has said it expects to deploy some such cells next year. AT&T is developing its Multi-Standard Metrocells (MSMs), with partners, in AT&T Labs and plans to deploy the first versions in the field in 2014, combining 3G, LTE and Wi-Fi in one housing with a single backhaul link. The cells will also support carrier aggregation between the 700 MHz and AWS spectrum bands. Vendors scrabble for AT&T spoils: The major AT&T roll-out was one of the motives for Cisco to acquire Ubiquisys and Intucell (the latter already a preferred AT&T
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technology for SON). It hopes these acquisitions will enable it to expand its existing femtocell alliance (via ip.access) with AT&T into the public access area. But ALU will also have a role, since it provides some of the LTE macro layer infrastructure. The US carrier, then, will be a proving ground for two giants determined to get into the RAN space, at least on the small cell layer Cisco via Ubiquisys and Qualcomm via ALU. Cisco says it will plan multimode small cells later this year and make them live in 2014. Partho Mishra, VP of Cisco's small cell technology group, said it has mature 3G and Wi-Fi capabilities, having acquired Ubiquisys, and is now finishing work on integrating LTE both on the access and packet core sides. The firm is likely to look for further acquisitions, especially in the small cell transport area. "In the areas of small cells, we've done five acquisitions in the past year and spent close to $2bn," Mishra said in an interview. "We're not shy about making an investment to make the market happen." For ALU, any weapon against Cisco will be welcome. Despite the innovative nature of its lightRadio distributed RAN and small cell platform, there have been delays and missteps in actual execution, and time to market will now be crucial as the carriers ramp up their LTE roll-outs. Combes said the Qualcomm alliance would help here, and would focus initially on enterprise multimode small cells, followed by residential and possibly metro products. He said: "We expect to be quicker to market with a best in class product. Qualcomm has a very efficient chipset with low power consumption. We expect to be first to market with multimode small cells. Ericssons small cell plans: Of course, the largest supplier in AT&Ts LTE macro layer is Ericsson, which has been the laggard in small cells, preferring to focus on reducing cost and power in the macro layer with its AIR (antenna integrated radio) range. However, it acquired carrier Wi-Fi company BelAir Networks last year and is leveraging that purchase to create its own multimode Wi-Fi/3GPP small cell, essential if it is to extend its macrocell deal with AT&T into the emerging metro layer. The companys CEO Hans Vestberg told GigaOM that the BelAir technology is now fully integrated into Ericssons mobile core and management tools, and combination mini-base stations will follow in the fourth quarter. He said that, from late 2013, Wi-Fi
We're not shy about making an investment to make the market happen Partho Mishra, Cisco
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will become a standard feature in Ericssons small cell offerings, and it sees economies of scale in delivering the functionality even to operators which do not plan to use it at first, a strategy that will seed the market and make it easier for cellcos to add Wi-Fi in future, often via a software update. Vestberg said Ericssons system will be able to manage handover from macro to micro, micro to Wi-Fi and back to micro or macro all over again a significant step towards a fully heterogeneous network, operating with different air interfaces, spectrum bands and cell sizes and creating a seamless pool of capacity. In this scenario, Wi-Fi access points are managed just like cellular nodes, rather than merely sitting on the sidelines to receive offloaded traffic. ALU, Nokia Siemens, Cisco and others have all been working on the back end capabilities for HetNet, including common gateways and mobile core interfaces for all kinds of cells. The Qualcomm/ALU alliance: As with its agreement to take a shareholding in Japanese electronics vendor Sharp a deal which brings Qualcomm access to advanced display technologies and manufacturing, and a home for its Mirasol invention the ALU alliance seems to look beyond short term contracts and aims to improve the chip suppliers influence on the innovations and IPR of the future. A deep R&D collaboration with ALU inevitably exposes the partner to the treasures of the network makers fabled Bell Labs and its participation in many of the key standards processes for small cells. This highlights how companies like ALU may be torturing their shareholders, but they still have key strategic assets, and Qualcomms injection will reassure those investors, lending credibility as much as actually financial help. The exact holding will not be revealed but will be added gradually and will below the 5% disclosure level in other words, a symbolic statement of support and common interest, not to mention a way to reduce ALUs own R&D costs in a key area (Bell Labs, of course, is not the only one with huge stores of IPR and innovation). Indeed, the Qualcomm partnership is timely as it allows ALUs new CEO, Michel Combes, to offer a practical demonstration of his new R&D strategy, which will be radically realigned around a smaller number of business critical technologies, such as small cells, and
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will rely more heavily on alliances with best in class vendors, especially from the US. As well as co-funding their program, Qualcomm will provide chips and software. Combes said he was seeking three to five strategic partners to participate in R&D in key product areas, and to buy stakes which would total about 5%. ALUs Q2 results show some progress:
A new organization is in place, weve accelerated on cost savings, and the announcement with Qualcomm shows were moving ahead with technology partners like we said we would Michel Combes, AlcatelLucent
The Qualcomm arrangement was the highlight of ALUs second quarter results announcement, which saw sales and profits exceed analyst estimates as the firm embarks on its latest significant turnaround scheme, unveiled last month under the new leadership. This centers on IP-based technologies as the main growth engine while the mobile infrastructure business is treated largely as a cash cow, except where it feeds into new IP architectures. All R&D, sales and marketing will be focused on these areas, and non-core businesses will be sold or closed more ruthlessly than under former CEO Ben Verwaayen. In its second quarter, ALUs operating profit, excluding restructuring and impairment costs, was 24m ($32m), well ahead of analyst predictions of a loss of 39.4m and reversing a year-ago loss of 85m and one of 202m in Q113. Sales had been forecast to decline slightly, but in fact they rose by 1.9% year-on-year to 3.61bn. However, net losses widened on reorganization and other costs, to 885m from 396m a year earlier. That included a 552m impairment charge and 194m restructuring costs. Good progress has been made in the implementation of the plan, Combes said on a conference call. A new organization is in place, weve accelerated on cost savings, and the announcement with Qualcomm shows were moving ahead with technology partners like we said we would. By division, the Networks segment posted improved sales but managed services reported a year-on-year revenue drop of almost 15% to 215m ($285m) as the firm accelerates its strategy of exiting lossmaking and low margin contracts. It says it has now addressed 14 of the 15 deals it had identified as expendable. Within Networks, the IP line, which is the flagship growth engine under Combes Shift Plan to refocus the company, was the best performer, while Wireless, now designated a cash cow, turned in revenues of 1bn ($1.33bn) mark, including a contribution from LTE products of more than 200m ($265m), higher than CDMA revenues.
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2. O2 UK highlights complex networks that will add up to 4G

The UK is belatedly set to become a competitive 4G market, with a second carrier, Telefonica O2, due to launch commercial LTE services at the end of August, and the regulator, Ofcom, announcing that the 800MHz digital dividend spectrum is cleared for use ahead of the EU deadlines. In addition, O2 is becoming a major flagwaver for carrier Wi-Fi, a platform which is increasingly become part of the 4G patchwork rather than merely a supplementary system for offloading unwanted data. The trend for operators to harness Wi-Fi for strategic purposes, not just for simple offload, is seen across Europe. Carriers in France, Germany and The Netherlands, as well as the UKs incumbent telco BT, have been promoting the homespot idea, where subscribers allow part of their residential Wi-Fi access point to be opened up to provide broadband connections to passers-by. This significantly adds to the capacity and coverage enabled by commercial hotspots, creating clouds of Wi-Fi which may then be offered, for free or with a charge, to the operators subscribers, adding value and providing broadband at virtually no cost to the carrier. In future, this community approach could be extended to cellular femtocells, a capability which has already been demonstrated by Qualcomm, as a way to harness residential 3G or 4G capacity for the public. This would supplement the carriers own small cell layer without the challenges of finding backhaul and sites, since these are provided by the home user. O2s free Wi-Fi strategy paves way for small cells: While the most common business case for investing in hotspots and homespots has been to add value for existing broadband or mobile customers, O2 UK has gone a step further and, a couple of years ago, said it would offer free access to its hotspots for everybody. It now has about 9,000 Wi-Fi locations and says it gains significant marketing and branding benefits from offering access without charge (users have to sign in on first usage but then it is automated at all O2 locations). However, there is another important reason why O2 is prepared to forego direct revenue returns from its carrier-grade Wi-Fi. It sees the creation of hotzones in the licence-exempt spectrum as a way to
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Weve doubled the rate at which were adding 4G customers and doubled our 4G speeds across 15 cities to deliver the worlds fastest network for our customers indoors, outdoors and on key commuter routes Olaf Swantee, EE
lay the groundwork for the more delicate and business critical process of deploying dense networks of public access small cells in future. By creating a Wi-Fi zone first, it can acquire sites and backhaul connections that could later be used for cellular mini-base stations too, and it can gain expertise in user traffic patterns in dense urban environments, and other areas which will be critical to a successful and resource-efficient metrocell roll-out. The cellcos first free Wi-Fi metrozone to blanket a busy urban area was built last year for the London Olympic Games, in the citys West End region. Now it has added a second London deployment, working with Ruckus Wireless in Canary Wharf, the capitals second financial district after City of London, which hosts 100,000 workers each business day. Importantly, the Ruckus Wi-Fi access points can be upgraded in future to house cellular radios too. Operators like AT&T are looking to deploy some multimode metrocells from next year, a key step to integrate carrier Wi-Fi into the heart of the 4G network to provide a seamless pool of capacity. This is being driven by standards like HotSpot 2.0 and Next Generation Hotspot, which support handoff between Wi-Fi and cellular; by upgrades to Wi-Fi with the 802.11ac standard; and by the rise of small cells, which can logically share sites and other resources with WLans though there is debate about whether the two technologies should be integrated right down to chip level. Qualcomm is a proponent of this approach, which is a focus of its newly announced R&D alliance with Alcatel-Lucent (see separate item). Ruckus will install both indoor and outdoor access points in Canary Wharf public areas, including four shopping malls and 20 acres of public parks and plazas. O2 also recently announced a new backhaul deal with fiber provider Virgin Media, which is increasingly competing for this business with incumbent telco BT. O2 joins UKs LTE race: And the Spanish-owned operator is to pip Vodafone and 3UK to the post in launching LTE services, also pointing towards a future strategy where the different access technologies will be increasingly integrated (though Telefonica does not believe it will roll out a 4G small cell layer for public access until 2015 or so. Its main metrocell activity is currently about 3G coverage holes).
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Leading cellco EE has been offering LTE services on an exclusive basis for nine months - having been allowed to refarm its 1.8GHz GSM spectrum ahead of the UK auctions of new 4G frequencies it will now face competition from O2, from August 29, followed by Vodafone and 3UK in the fall. O2 says it will launch commercial services initially in three cities capital London plus the northern centers of Leeds and Bradford followed by another 10 cities by the end of the year. The network will cover 5m people at launch and will be expanded at a rate of 2m POPs per month until the cellco reaches 98% indoor and outdoor coverage. The firms licence terms set a deadline of end of 2017 to achieve this goal. The operator has not yet revealed details of its data plans, except to say that LTE tariffs will start at 26 a month, and that it will provide various incentives to choose its network, including 12 months of free music content for subscribers who sign up directly with the carrier. An important aspect of O2s branding campaign in the UK is its sponsorship of large music venues, including the London O2 Arena. EE on target for 1m LTE users: EE has reduced some of its prices in advance of competition and its LTE deals start at 21 a month for 500Mbytes of data with a 12month SIM-only contract. It announced recently that it signed up 369,000 LTE customers in the second quarter, and is well on its way to its target of one million 4G subscribers by year end. In the second quarter, EE reported a 4.4% year-on-year drop in service revenue, to 1.42bn, but its EBITDA margin rose by 2.6 percentage points to 22.9% as its user base shifts towards higher value 4G and postpaid customers. It blamed the top line decline on regulatory measures affecting mobile termination rates and roaming revenues, without which service revenue would have been flat. And it said its early LTE deployment was reaping rewards in its last quarter as the exclusive 4G provider. More than half its base is now on postpaid contracts, which generate six times the ARPU of prepaid customers, and LTE accounts for 56% of new or upgrading subscribers. LTE users add an extra 10%, on average, to ARPU.
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CEO Olaf Swantee said: Weve doubled the rate at which were adding 4G customers and doubled our 4G speeds across 15 cities to deliver the worlds fastest network for our customers indoors, outdoors and on key commuter routes. Its rival will now start on a marketing campaign to whet consumer and enterprise appetite for its services. "It is our intention to use 4G to inspire the nation through the possibilities of technology, encouraging people to live more, do more and be more," said O2 UK CEO Ronan Dunne, in a statement. "The full potential of 4G is as yet unexplored. Ofcom clears 800MHz band for 4G use: The UK carriers will also be able to deploy LTE in the 800MHz digital dividend spectrum - which they acquired in the February auction and which is prized for its coverage capabilities earlier than anticipated, and ahead of many other European countries. A few, notably Germany, have already got LTE running in the low frequency band, but only 11 of the 28 EU states will hit the deadline for clearing the spectrum of its legacy analog TV signals, and making it ready for mobile broadband services. No such problems in the UK, where all four UK cellcos have 800MHz licences, which they will be able to deploy this year. EE plans to trial carrier aggregation over its bands later this year to boost capacity and speed. Opening up 800MHz as quickly as possible was one of the concessions made to secure the agreement of EEs rivals to Ofcoms green light for the biggest cellco to refarm its 1.8GHz spectrum. Since it is the only UK carrier with its 2G network in that band considered a particularly good one for LTE because of a growing global ecosystem and its balance between low frequency coverage and high frequency capacity EE gained significant competitive advantage by rolling out 4G before the auction took place. That left the other three cellcos waiting to secure new licences before they could catch up Ofcom auctioned 800MHz and 2.6GHz frequencies earlier this year. The agency has also cleared the way for the 900MHz GSM band operated by Vodafone and O2 and the 2.1GHz 3G band, to be refarmed for LTE. However, neither of these options has anything like the global device and roaming base
The EU is teetering on the edge of network collapse. Global mobile traffic is predicted to grow 66% a year, smart devices are everywhere and people want to watch video on those devices. Without more spectrum being made available the whole thing falls apart Neelie Kroes, European Commissioner
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of 1.8GHz and they are unlikely to be repurposed for 4G on a broad basis for many years. Freeing up the 800MHz spectrum, which had to be vacated by analog TV services migrating to digital, was finished five months ahead of schedule, and was finalized this week (Wednesday). O2 has been promising a summer launch of LTE services, while Vodafone is waiting until late summer or early autumn, perhaps to coincide with a new iPhone launch (though the iPhone 5 supports EEs 1.8GHz LTE band, but not 800MHz or 2.6GHz. However, given the number of launches in these bands, especially in Europe, in 2013-14, Apple is expected to extend support to these frequencies with the next model). The last UK TV signals were transferred in northeast Scotland and the Scottish Western Isles this week, by the organization in charge of the clearance program, Digital UK. Ofcom CEO Ed Richards said: This week we are clearing the path for 4G mobile broadband, allowing mobile companies to provide coverage across the UK. Kroes angry at 800MHz delays in EU: The UK is one of 11 EU countries which has met the European Commissions deadline to free up 800MHz, but the remaining states have failed to do this, to the frustration of digital commissioner Neelie Kroes who commented: Every delay in releasing spectrum hurts our economy and frustrates citizens. That is why spectrum reform will be a centrepiece of the Commissions September proposal for a telecoms single market. She said the delays by member states provided further evidence of why radio spectrum needs to be assigned with greater coordination across the EU. Kroes blames national regulators for the slow progress of 4G rollout compared to the US. She says 75% of EU citizens cannot access LTE and rural access is almost non-existent, while in the US, 90% of the population is now covered by 4G. She said this was down to countries trying to over-squeeze bidders in auctions and to regulators being too slow to release spectrum. Spectrum prices can be 50 times higher in one EU country compared to another and on average, spectrum rights in the EU are almost four times more expensive than in the US.
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The EU is teetering on the edge of network collapse, Kroes said last week. Global mobile traffic is predicted to grow 66% a year, smart devices are everywhere and people want to watch video on those devices. Without more spectrum being made available the whole thing falls apart. The Commission has granted a postponement to nine states (Lithuania, Spain, Austria, Finland, Hungary, which have all promised to free up the spectrum by the end of this year; and Poland, Romania, Malta, and Cyprus, which will make it available for reuse during 2014). Slovakia and Slovenia asked for a postponement but were refused, with the former hoping to clear the 800MHz band this year, and the latter next year. Belgium and Estonia were also late with their spectrum clearing, but did not ask for a postponement, and will have the band freed during 2013. Latvia expects the process to be completed during 2015. Bulgaria currently uses 800MHz for military purposes and may take until 2017 to reuse it for LTE. The countries which met the deadline are Denmark, Germany, Ireland, France, Italy, The Netherlands, Sweden, Luxembourg, Portugal, the UK, and Croatia.
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Clearwire in, iDEN out the new Sprint emerges at last

Sprint at turnaround point as it puts Clearwire at heart of its LTE challenge Buoyed by Softbank funds, still has uphill battle without content or fiber But iDEN shut-off symbolizes new attempt to be the disruptive third force in US
Once, Sprint set itself up to be the first true mobile broadband provider in the US and one of the first in the world delivering a high speed network and new services that would severely disrupt the established telco order. However, its good intentions came to little, as it battled with the legacy of its Nextel merger, with choosing the wrong technology (WiMAX) for its new network, and with a string of poor decisions (notably sidelining Clearwire while trying to form an alliance with LightSquared). However, in reporting its second quarter results, Sprint was clear it now has its second chance to become a major 4G force and narrow the gap with Verizon and AT&T. It has finally switched off the legacy iDEN network, it will have new funding and creative input from Softbank to accelerate its LTE efforts, and it has a very credible Network Vision architecture, which could support a range of new business models including wholesale. Best of all, it has full control of Clearwire, and at Softbanks behest it seems has put the mobile broadband venture with its plentiful spectrum back at the heart of the strategy. Clearwire spectrum appreciated at last: Having sidelined Clearwire and its spectrum ever since the WiMAX dream went sour, Sprint is now placing the company at the center of its bid to outdo Verizon and AT&T in terms of services and user experience. CEO Dan Hesse said adding 2.5GHz to the LTE roll-out would give the firm "competitive parity" with its rivals, telling shareholders: The important thing in terms of what we believe will be a better, a superior network experience will depend upon how quickly we roll out the 2.5GHz, because that will give us extraordinary capacity and some speed and performance advantages in the market. Clearwires spectrum has often been seen as problematic because it is unpaired (TDD) and in a high frequency band (2.5GHz) which requires large numbers of base stations to achieve wide coverage. However, carriers are increasingly harnessing almost any frequenCopyright Rethink Technology Research 2013
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cies they can access to chase the moving target of mobile broadband capacity needs, and they are pressurizing the vendor ecosystem to support enabling technologies like carrier aggregation and supplemental downlink, and to develop multiband, multimode devices. Such advances, together with carrier Wi-Fi integration (see separate item) will help carriers to use their various frequencies as a single seamless pool of capacity. And for capacity purposes, high bands like 2.5GHz are ideal, especially when they can be paired with a low frequency coverage band, and turned over to small cells in many areas. By bringing Clearwire into the Network Vision framework rather than treating its spectrum and network in isolation, Sprint has enhanced the value of this asset considerably. It will be able to drive far greater efficiency and service quality out of a multiband network, balancing high and low frequencies and different layers of cells, than it could from an isolated Clearwire network with only superficial links into the main Sprint system. Sprint formally took control of Clearwire earlier this month and Steve Elfman, president of network operations at the carrier, said during the second quarter earnings call that it now plans to deploy the 2.5GHz spectrum on all 38,000 of its planned Network Vision cell sites, as well as other additional sites (required to achieve full coverage in such a high band). This is a significant boost to Clearwires strategic role in the network, driven by full control and by Softbanks cash and high rating of the spectrum (the Japanese firm, which now owns 78% of Sprint, uses the same TDD band at home, also in combination with FDD LTE). Previously Sprint had said Clearwires upcoming TD-LTE network would merely provide offload services for its main FD-LTE services in PCS and 800MHz bands, and it had planned to deploy the 2.5GHz spectrum on only 5,000 urban cell sites. "Now that we own 100% of Clearwire, with the help of SoftBank, we said how do we take full advantage of the 2.5 GHz spectrum?" CFO Joe Euteneuer said on the earnings call. "The best way to do that is to have it fully integrated with the rest of your spectrum capabilities. And to do that you really need to put it on every tower." Timescale remain rather vague though Sprint executives have previously said they would get the initial 5,000 Clearwire sites live by the end of this year, and complete most of the TD-LTE deployment
Now that we own 100% of Clearwire, with the help of SoftBank, we said how do we take full advantage of the 2.5 GHz spectrum? The best way to do that is to have it fully integrated with the rest of your spectrum capabilities. And to do that you really need to put it on every tower Joe Euteneuer, Sprint
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by the end of 2014. Elfman pointed out the efficiencies of the multiband, multi-technology Network Vision, a flexible platform which can support several Sprint or third party networks on a single infrastructure. So the Clearwire build-out will be quite a bit easier than the current Network Vision plan because we will already have backhaul," he said. "We will already have done most of the leasing and it will be more of an overlay effect the way you're seeing our competitors do overlay LTE network. So it will move much faster than the current Network Vision plan." And the project will fall within Sprints existing $8bn per year capex budget for 2013 and 2014. Huawei loses out: The loser in all this will be Huawei, which was a major supplier to Clearwire. Sprint, which says the expanded Clearwire plan will entail adding antennas to cell sites, not just replacing line cards, will also use this as an opportunity to avoid the wrath of security agencies and eliminate the Chinese vendor from the mix. Euteneuer said: "We made a commitment that we will take Huawei out of the Clearwire network. Huawei was shortlisted for Network Vision itself but Sprint pulled back at the last minute, reportedly under pressure from government security groups which claim the vendor could use critical telecoms equipment for espionage. Huawei vehemently denies this, but has been steadily pushed out of most major US infrastructure bids. In Sprints case, this should boost the existing Network Vision vendors Alcatel-Lucent, Ericsson and, in particular, Samsung, which is also a Clearwire supplier and has expertise in integrating TDD and FDD, and in handling legacy WiMAX systems. According to Elfman, Sprint has been refarming the 800MHz iDEN spectrum for CDMA voice service and capacity, and from September will begin deploying LTE service on that band too as well as launching multiband smartphones with support for Clearwires network in the fall. He added that, by year end, Sprint aimed to cover 200m POPs and will then have critical mass" of coverage in most key markets, enabling it to market the network as having the density to compete effectively. Verizon Wireless currently covers 301m POPs with LTE while AT&T plans to cover 270m by year end, and T-Mobile 200m. TMo
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is making its own changes to maximize its 4G capacity and user experience and will expand its spectrum channels to 2x10MHz, to support faster downloads, in 90% of the top 25 markets by year end. Sprint also has only 10MHz in many of its LTE roll-outs, hence the welcome boost from iDEN and Clearwire, while Verizon and AT&T use the full 2x20MHz in most areas. Low amounts of LTE spectrum, combined with complex negotiations for some of the Clearwire licences (many of which are leased), and backhaul challenges, have all slowed Sprints progress, but it will embark on small cells in mid-2014 and is likely to finish its first wave roll-out, including Clearwire, around mid-2015, a year after AT&Ts LTE network will be substantially finished. The timelag, for a company which once boasted of its headstart in 4G, is problematic given the strength of the big two, and their ability to combine LTE with wireline and TV content offerings in quad play bundles. Sprint has none of that, though a partnership with failed suitor Dish could still address some of the issues, mirroring Verizons important alliance with four cablecos. At least, though, Sprint is getting a high capacity network, one capable of supporting innovation on the business model side, particularly in the operators traditional stronghold of wholesale and MVNO deals (also a focus for Clearwire) and in enterprise or M2M services. Last quarter as old Sprint? This, then, could be seen as Sprints last financial quarter as the old Sprint, even though the real returns from its LTE roll-out will come in 12-24 months from now, as the network achieves scale, the 2.5GHz services are added, and the costs start to reduce. However, AT&T expands LTE: This week, AT&T added 10 more markets to its LTE footprint, and now covers 346 markets. And the firm continues to snap up small regional carriers or their spectrum as the big US cellcos fill their armories a process which some fear could kill off the rural operators altogether, reducing consumer choice. The latest deal is for Long Lines, which serves the Siouxland region of Minnesota, South Dakota, Iowa and Nebraska, to sell its network assets and subscribers to AT&T. The cellco will also purchase transport services from Long Lines via its fibre network.
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some of the rewards of its strategy are starting to filter through, notably in finally achieving growth in the high value postpaid market, where customers have been fleeing the Sprint networks for so long. Wireless service revenue was up 8% year-on-year to $7.2bn; the operators highest ever quarterly revenue, and postpaid ARPU was also best ever at $64.20. The carrier saw contract user additions for the thirteenth quarter in a row, though it lost prepaid users because of regulatory changes affecting its low cost Assurance brand. It also lost 1.06m contract and 255,000 prepaid users through the Nextel switch-off, and ended the period with 30.45m contract subscribers and 15.22m prepaid users, plus 7.7m wholesale customers, for a total base of 53.38m. Reversing the loss of postpaid customers has been the key short term goal of the 3G upgrade and the LTE program which can now be accelerated thanks to Softbank. But it comes at a high price in terms of capex and shutting down iDEN has also been an expensive undertaking. In Q213, Sprint reported an operating loss of $874m (including non-cash charges of $623m related to the shutdown of the Nextel network, plus accelerated depreciation of assets). Its net loss was $1.6bn, up from $1.37bn a year earlier, while total revenue was slightly up at $8.88bn. The wireless divisions operating loss was $864m, up from $681m a year earlier. In 2014, Sprint shareholders will be insisting that red ink is replaced with black, and the involvement and deep pockets of Softbank are giving hope that this could materialize, and that Sprints worst instincts highlighted by the dithering over Clearwire might be tempered by its Japanese controllers proven cunning in closing gaps with incumbent cellcos by harnessing innovation. There was a real sense of a turning point in the results call. Hesse summed it up, saying: This is a historic time for Sprint. We recently shut down the Nextel platform and completed the Clearwire, SoftBank and US Cellular transactions. He added in a comment to CNet: Our real focus on the second half is putting the pedal to the metal on Network Vision. We're making sure we finish 2013 with a phenomenal network." That finally sounds like more than bluster. The next step will be to work out how to turn that great network into profits.
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Comment: Moto X and Sony Xperia raise hopes of credible challenge to the big two
There may be dark clouds hanging over the share price and future prospects of Apple and Samsung, but they certainly still dominate the smartphone landscape for now, in terms of market share and the profits they take home. While they may be unseated in future by a whole new approach to mobile activity, already being dubbed the post-mobile age (see separate item), for the next few years they have the power to continue to starve the next tier of handset makers of oxygen with their economies of scale, distribution reach, marketing budgets and supply chain control. That would reduce innovation and consumer choice, so many are eagerly eyeing signs of a comeback at some of the other handset makers, including Sony and LG, plus the rise of the Chinese vendors, ZTE, Huawei and Lenovo. Nokia and RIM look more problematic, with their non -mainstream operating systems, and serious question marks remain over HTC too. But the most closely watched vendor right now is Motorola Mobility, long consigned to the lower ranks of the industry it pioneered and once dominated but now, armed with Googles cash, marketing power and design shake-up, possibly poised for a comeback. We usually focus on the conflicts of interest and margin challenges which the move into hardware has inflicted on Google, but from the point of view of Motorola, the acquisition was a master stroke, especially as contrary to many expectations the search giant is keeping the venerable Motorola brand and handset operations alive. The shift to the midrange: The launch of the Moto X on Thursday (see overleaf) sees Google attempting a double whammy a high impact flagship which will also be suited to its primary goal of getting web access, via Android, to the masses. The product will aim for broader reach than the rather exclusive Nexus models but, like them, will place the Android experience firmly under Googles control rather than that of its sometimes wayward licensees. It will not compete head-to-head on feature sets with the top end Galaxy, Optimus or Xperia Android models, but will aim to bring a friendly, somewhat aspirational experience to the mass user base, and so remain clearly differentiated from Nexus though not from important Google partners like ZTE, which is aiming for the same sweet spot. Indeed, most of the vendors are placing more emphasis on lower end smartphones, since that is where growth will lie as the high end saturates and succumbs to price competition, and really high value users spend their dollars on tablets or Chromebooks. Two years ago, the plans Motorolas included were all about sacrificing volume for profit by narrowing down product ranges to concentrate on the high end. Now most companies are chasing the midrange, because there are new users to be had many in emerging markets where Apple is less of a competitive
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force and because they have realized that being too exclusive robs vendors of the economies of scale, and supply chain impact, which is essential to compete in a commoditizing segment. This was the thinking at HTC, which published yet another profit warning and admitted its declining scale had helped cause delays to its all-important new flagship, the HTC One. The Taiwanese vendor warned it would make its first third quarter operating loss as the success of the One is offset by supply chain problems and a lack of range compared to Samsung. HTC issues another warning: The company is forecasting revenue between NT$50bn and NT$60bn ($1.7bn to $2bn) in Q3, well short of consensus analyst expectations of NT$66.7bn. HTCs guidance would mean a fall of between 15% and 29% on the year-ago quarters revenues, despite the impact of the One. The firm also forecast Q3 gross margin of 18% to 21%, down from 25% a year earlier and 23.2% in Q213. The Taiwanese firm said that, having launched an effective high end handset with the One which, though hardly in the league of the Galaxy S4, has outsold its predecessors it will now focus on expanding its midrange portfolio. Smartphone growth is shifting to emerging markets and lower cost models, and HTC has previously pinpointed China and India as key targets for expansion. However, moving downmarket in specifications terms will put further pressure on the companys already superthin margins. It expects operating margin to fall to between zero and minus 8% in Q3, which would be the lowest since HTC started reporting results in 2001. Operating margin was 1.5% in the second quarter this year, and 7% in Q312. Nonetheless, it will be essential to chase the midmarket if HTC is to reverse falling market share and gain greater economies of scale, and influence with the supply chain. The high end segment is saturating and increasingly in the hands of Samsung and Apple and HTCs global share has fallen to 5.3% from 9.3% a year earlier, as of April, according to Gartner figures. . Scale is one of our challenges and we recognize that...we have more mid-tier products coming later this year, and this product portfolio will help us return to momentum," CEO Peter Chou said on a conference call with investors. There are already concerns that, despite a relatively strong impact for the One, that its first weeks were marred by component shortages, reflecting HTCs weaker ability to access scarce parts when it is competing with Samsung for them. Shipment delays were the major factor in HTCs first quarter profit figure, which hit a record low. And there are further fears that the One may have peaked already, since sales have dropped off since a high point in May. Chou said sales of the One remain "strong, but some analysts think they could fall by 40% to 50% in Q3, compared to Q2. This, combined with rising costs and clear-out of inventory of older products, is likely to be the most significant factor pushing HTC into the red in the current quarter.
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Google goes for mass market magic with Moto X: Motorola Mobility unveiled its first handset created purely under Googles auspices, the longawaited Moto X. A series of leaks had crushed earlier speculation about a high end superphone, and the X is not designed to take on the Galaxy S4 head-to-head. Instead, it aims t o carve out a mass market for Googles own implementation of the Android user experience, and maintain distance from the Nexus range. The search giant may have protested about keeping its hardware unit at arms length, but the launch of the new smartphone shows that Motorola now has a clearly defined place in the overall Android strategy. Google is attempting a double whammy a high impact flagship for the brand, but with the accessible price and feature set to suit its primary goal, of getting web access, via Android, to the masses. The product will aim for broader reach than the rather exclusive Nexus models but, like them, will place the Android experience firmly under Googles control rather than that of its sometimes wayward licensees. It will not compete directly on feature sets with the top end Galaxy, Optimus or Xperia Android models, but will aim to bring a friendly, somewhat aspirational experience to the mass user base, and so remain clearly differentiated from Nexus. However, Google is, of course, going after the same sweet spot first or second time smartphone users who are still open to influence over their mobile web experience as most of the Android vendors, notably ZTE, HTC and the lower end Galaxy variants from Samsung. The Moto Xs differentiation attempts revolve around fashion and design, more than raw features. It is firmly aimed at people with no interest in the specs, but who want a simple, fun mobile experience something Apple could deliver too, if it decides to bring out a lower priced iPhone. This is clearly Googles attempt to replicate the emotional relationship that Apple creates with its fans, and which has generally eluded Android vendors. And while Apple dithers about a cheaper handset, Google insists there will be a lower cost X coming along soon. The X will launch with all the major US carriers for $199 with two-year contract and will then roll out in other markets. One of its key features is Moto Maker, an application which allows users to customize the color and other attributes of their handsets when they order. This app will be available first at AT&T and Best Buy in the US and offers choices between two front colors, 18 back colors and seven accents. The supply chain challenges of customization will help Motorola to stand out from the crowd in a design sense, for the first time since RAZR, and if it can deliver, it will go some way to justify its much-touted decision to make the X in the US rather than ship them in from Asia. Perhaps the oddest feature of the X is that it does not run the latest release of Android (it has Jelly Bean 4.2.2, while Samsung and Nexus are already offering 4.3). This seems to deny Motorola the key benefit of being part of Google, early access to the latest software. Perhaps this is
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a way to reduce conflicts of interest with other close Android partners, particularly those in the Nexus program, which does involve early releases of new OS updates. But again, Google is probably gambling that the non-teccie users it is targeting will be less interested in the most upto-date OS than in usability features like extensive touchless and voice-activated controls. A key element of the X strategy is to push Motorola out to broad markets once again. Its Droid range, especially the RAZR Maxx, have become too heavily focused on a single carrier, Verizon, and outside that operator, the vendor has failed to make their undoubtedly solid specs shine against the S4s marketing machine, while its own brand has been effectively subsumed into Verizons Droid label. That was the old Motorola strong on engineering, poor on consumer marketing and the one Google believes it can change. The Moto X is all about ease of use. It features a rounded back with a soft-touch finish, somewhat like the Galaxy S4, and is designed to fit easily into the hand. Its 4.7-inch OLED screen has resolution of 1280x720 rather than full HD but increases its impact by sporting a very thin bezel. The handset runs on the same electronics as the latest Droid models, Motorolas X8 Mobile Computing System, which is based on a Qualcomm 1.7GHz dual-core Snapdragon S4 Pro processor with quad-core Adreno 320 GPU. Motorola also adds two additional low power cores to offload two key repetitive tasks - one for contextual computing and the other for analyzing spoken language. It comes with 2Gbytes of RAM. One area where the X does far better than the Droids is in imaging. The new handset sports Motorolas first serious camera, a 10-megapixel Clear Pixel device with LED flash. This claims to capture 75% more light than competing smartphone cameras. There is also an upgraded camera app, Quick Capture. We still see overall margin challenges," said Chou."We had expected the cost structure [for the HTC One] to be improving. However, the improvement is not where we want it to be because of the lack of the overall economic scale." Meanwhile, the stock price is at an eight-year low, and CFO Chang Chia-Lin said repurchasing shares may be an option to boost the value. However, the company insists the current third quarter will be the bottom in terms of profits, seeking to soften the shock of the operating loss forecast. A supplier showing the reverse pattern to HTCs is Sony, which is growing share somewhat and remains firmly focused on the premium sector. Of course, the Japanese company gains its scale and influence over suppliers in other ways, since handsets are only one element of a broad electronics empire. However, it is an empire in deep trouble, and smartphones are carrying a heavy burden of injecting growth and offsetting problems in TVs and cameras before the companys PlayStation 4 mega-launch can kick in.
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Smartphones propel Sonys quarter: Investors were cheered by clear signs of a smartphone turnaround during Sonys fiscal first quarter. The company, which has injected new life into its mobile devices since gaining full control of its former joint venture with Ericsson, was boosted by handset sales and a weaker yen. It reported a 13% year-on-year leap in revenues for the quarter ended June 30, reaching 1.71 trillion ($17.3bn), though without currency fluctuations, the figure would have been down 3%. Operating profit was up to 36.4bn from 6.3bn a year ago, driven by the mobile communications and financial services divisions, while net profit was 3.5bn, reversing a year-ago loss of 24.6bn. The mobile division, which includes handsets, PCs and tablets, saw its sales grow by 36.2% year-on-year to 389bn, on the back of some successful high end device launches in the Android-based Xperia range and better leverage of Sonys gaming and content brands, as it pursues a vision of a common media experience across multiple screens. Operating profit in the unit was 5.9bn, reversing last years loss of 28.1bn. The result included a gain of US$7bn from patent royalties, highlighting the competitive advantage which large IPR holders like Sony, Nokia and Samsung have in the mobile market. Smartphone sales were 9.6m units, up from 8.1m in the March quarter and 7.4m a year earlier, and despite the intense competition in the smartphone sector, as growth shifts to the midmarket, Sony managed to increase average selling prices. It maintained its full year outlook for unit sales of 42m smartphones, but cut its forecast for cameras, TVs and PCs. Its tough for the company because it has products cannibalizing each others demand, such as cameras, camcorders, smartphones, games, TVs, Yasuo Nakane, an analyst at Deutsche Bank in Tokyo, told Bloomberg. Sony is improving operations but the speed of migration of consumers to mobile products is faster. It also raised its full year guidance for total sales by 5.3% to 7.9 trillion from a May prediction of 7.5 trillion, but left its outlook unchanged. Sony is considering an activist investor proposal that it should mount an IPO of its entertainment units and also preparing to ship the PlayStation 4, to try to regain share in this sector. Despite progress in smartphones, Sony remained outside the top five in the second quarter of this year, according to IDC figures, which gave it market share of 3.8%, only slightly up from the year-ago figure of 3.6%. The top five in Q213 were Samsung, Apple, LG, Lenovo and ZTE, said IDC. And amid the tough conditions in the TV and camera market, Sony knows handsets alone cannot deliver the electronics business recovery CEO Kazuo Hirai has pledged to investors. Samsung has some of the same balancing acts between the depressed TV market and a perhaps concerning over-reliance on smartphones to make up the difference. The Korean firm increased
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its advantage over Apple by almost every metric in the second quarter market share, share of profits, customer satisfaction in the US but despite a strong second quarter, there were still signs of the dreaded slowdown in handset sales ahead. Samsungstrong profit but threats ahead: The Korean firm nonetheless recorded a sharp increase in profits, mainly led by mobile expansion, and shipped one in three units in the total global market. Net profit leapt 50% year-on-year to KRW7.77 trillion while sales were KRW57.5 trillion, up from KRW47.6 trillion in Q212. Although smartphones were credited with the profit increase, and the mobile division improved its revenues to KRW35.54 trillion from KRW23.36 trillion a year ago this figure was still below analyst expectations and the unit saw its operating profit down 3% from Q113 at KRW6.28 trillion. That lackluster figure, and sales growth only in low single digits compared to the first quarter of 2013, was partly down to the seasonal weakness of the Q2 handset space, but also high marketing costs a persistent concern as Samsung fights to maintain its share amid rising competition and the threat of a new iPhone. As well as the expensive launch of the Galaxy S4, other major costs included R&D and retail channel investments. Also, tablet demand was lower in developed economies, though it was still up in emerging markets, and the vendor said it expected demand to continue to grow strongly in all countries. Apples iPad was a weak spot in that firms quarterly results too. Going forward Samsung expects mobile phone growth to be more balanced between developed countries, where LTE will be a key driver, and emerging markets demanding competitively priced models. The strongest geographies in the quarter, one from each category, where the US and China. Samsungs shares have been under pressure recently amid fears that its smartphone performance has peaked, and that the mobile division will be less effective, as the year unfolds, in offsetting problems in its other core business, televisions. Like LG, the company has increasingly relied on mobile growth to make up for the major problems in that business as it invests in high end OLED products and multiscreen platforms. The mobile business, the companys biggest bread earner, has already peaked out in the first quarter, Lee Jae Yun, an analyst at Kiwoom Securities, told Bloomberg. That is increasing uncertainty over the companys overall profit growth next year. Samsung itself said in a statement: The strong growth streak for the smartphone market is expected to continue in the third quarter albeit at a slower pace. Doh Hyun Woo, an analyst at Mirae Asset Securities, added: The growth momentum, as seen in the past, is unlikely to be sustained. But since global smartphone penetration currently reCopyright Rethink Technology Research 2013
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mains at 49%, the volume shipment will continue to increase until it reaches a level of about 70%. Analysts expect Samsung to ship about 27m Galaxy S4 units during the current quarter, up from 22m in Q213, and also believe mobile-driven earnings growth will rise on the back of new releases such as the upcoming Galaxy Note 3 and S4 Mini. Operating profit at the semiconductor division was up sharply, from KRW1.03 trillion in the year-ago quarter to KRW1.76 trillion, but still slightly behind analyst expectations; while the figure at the display division rose form KRW710bn last year to KRW1.12 trillion, driven in particular by smartphone screens. Both these divisions benefit from being premier suppliers to Samsung Mobile itself but this also indicates how many of the companys important businesses are now tied up with continuing smartphone growth. Memory chips and TV panels are also significant categories. The consumer electronics unit, which includes TVs and home appliances, saw its operating profit slide from KRW730bn a year ago to KRW430bn as vendors slashed TV prices amid slowing demand. The analyst calculations of quarterly smartphone shipments and share are starting to come in and the first of these, from Strategy Analytics, indicates that the segment was up 47% year-onyear in unit terms, with Samsung taking one-third of the global market and Apples share falling to its lowest level for three years, to less than14%. The market totalled 230m units in the quarter, and smartphones accounted for 59% of all cellphone shipments. Samsung shipped an estimated 76m smartphones, up from 48.7m in the year-ago period, pushing its share from 31.1% to 33.1%. Apple also increased its shipments, but its growth rate was slower than that of the overall sector, pushing its share down to 13.6% from 16.6% a year ago. The gap between the two leaders and the rest of the pack remains huge, but is narrowing. Third and fourth placed LG and ZTE also posted strong growth and increased market share, to 5.3% and 5% respectively and they were followed by Huawei, with 4.8%. Meanwhile, according to Strategy Analytics, for the first time in four years Apple is not the most profitable handset maker in the world. Samsung's global handset operating profits hit $5.2bn, while Apples were $4.6bn.
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MediaTek targets tablets with firsts in security and multiprocessing

MediaTek is breaking out of its traditional heartland in low end phone chips and modems and has been building its bid for a role in tablets, working closely with ARM to adopt the latest technologies in its latest system-on-chip. The Taiwanese company has unleashed a quad-core system-on-chip with heterogeneous multiprocessing (HMP) capability, targeted at the tablet space where it has so far failed to play. With the Chinese market for these gadgets set to explode, MediaTek will be able to take advantage of its well established customer relationships in the huge country. The new SoC, the MT8135, integrates two ARM CortexA15 and two CortexA7 processors in a Big:little formation ARMs design for saving power by placing low level tasks on lower end chips plus Imaginations latest GPU design, PowerVR 6. MediaTek is the second vendor, after Samsung in its Exynos Octa SoC, to implement Big:little in a mobile processor, though Qualcomm has its own approach to power saving in multicore platforms. MediaTek claims its HMP functionality is a worlds first, leapfrogging Samsung to a technology which will be important to extend battery life. Mike Demler, senior analyst at the Linley Group, told EETimes: The Samsung Octa architecture looks like one quad to the OS. When a high performance operating point exceeds the capabilities of the quad A7s, the scheduler shuts them down and moves everything to the A15s. With MediaTeks HMP the OS still sees a quad, but can assign (or shift) a task to any CPU independently. The A15s can run at the same time as the A7s for power:performance optimization. Other chip vendors are likely to be working on HMP support to improve the ability to match individual tasks to the right core in the processor, and have access to the same ARM software for this purpose, but MediaTek has broken cover first, defying its usual reputation for being a low cost technology follower, not an innovator. MediaTek is sampling MT8135 to its lead customers now and expects it to appear in tablets around the turn of the year. This could be quite worrying to more established mobile app processor and integrated SoC vendors. Although the Taiwanese firm has only a tiny share of the tablet processor market currently (1% according to Forward Concepts), its power in the high growth Chinese base, and its newly proven ability to adopt cutting edge technology, could boost that figure rapidly. In smartphone processors, it has 38% of the Chinese market, not far behind Qualcomms 43%. In 2012, the tablet app processor space was dominated by Apple, which designs its own CPU for the iPad, while the non-iOS, mainly Android, tablet segment was led by Texas Instruments with 11% (but with a product which TI is to close down). It was followed by Nvidia on 9%, Qualcomm on 8%, Samsung on 7% (which will grow in line with the Korean firms own tablet sales this year), and a host of small players such as Intel, Marvell and HiSilicon./ Companies
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like TI, Renesas and ST-Ericsson are exiting the mobile processor space, leaving more room for MediaTek to expand. As well as power:performance balancing, another key innovation area in mobile SoCs is security, and here MediaTek has scored another first, licensing the <t-base Trusted Execution Environment (TEE) from Trustonic. This is the first public support for the new TEE, which took just over a year to create and provides a hardware/software solution to protect content, payment systems and enterprise applications. Trustonic is a joint venture formed in May 2012 between ARM and security and smartcard specialists Gemalto and Giesecke & Devrient (G&D). As with Big:little, this is an attempt by ARM to guide and control its entire platform, not just the basic processor IP, and MediaTek with more limited resource to develop its own solutions for everything, as Qualcomm does is proving an important ally. The TEE will also be important in MediaTeks quest for a role in the tablet. For the largescreened gadgets really to take off as TV screens one of their most compelling uses - and to be given the full run of high quality content, they will need a TEE built into the processor chip, effectively a smartcard inside the device where all decryption occurs, and where secrets can be stored. There are similar needs where tablets are being used for financial transactions, and for Bring Your Own Device initiatives in enterprises. Apple will certainly believe that it needs no further help from ARM than the core of its CPU designs, and will probably work on its own system, while Qualcomm always looks for an edge itself, over and above ARM designs, plowing its own furrow on power saving and on graphics cores. But most other licensees are likely to follow ARM. Ben Cade, CEO of Trustonic said, With MediaTek on-board, we speak for our ecosystem in saying that we're excited to see a path to broad deployment in mass market consumer electronic devices. Trustonic lists among its supporters 20th Century Fox Home Entertainment, Cisco, Discretix, Good Technology, Inside Secure, Irdeto, MasterCard, Nvidia, Samsung, Sprint, Symantec, and Wave Systems, and it has since been accredited as a trusted execution environment and compliance testing set up with Trusted Labs.
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Microsoft and Google: different end games for universal access projects
While Apple dithers over whether to release a cheap iPhone, and regulators argue about LTE spectrum band plans, the web majors are leaping ahead, to ensure they are in the drivers seat when it comes to the next wave of broadband expansion. When wireline broadband, and then 3G, rolled out, the web players largely had to ride on the coat-tails of operators, complaining about, rather than bypassing, traditional regulatory and commercial structures. But with the new generation of wireless technologies, which will be just as important for bringing fixed access to underserved communities as for mobility, they have the chance to set the rules themselves. Helped by the fact that most regulators are moving no more quickly in the 4G world than they were in 2G, Google, Microsoft, Facebook and others are harnessing a range of tools which will dilute the importance of the traditional carrier unlicensed spectrum for Wi-Fi or other standards; networks which support shared, and even on-demand, networks, whether wholesale or community based; physical technologies geared to rural areas such as satellite, solar and even balloons. Of course, the objectives of the prime movers, Microsoft and Google are different. Both are interested in getting web access and simple devices to the entire world, in order to drive their services. But aside from any philanthropic urges, the former is mainly interested in pushing its cloud offerings, while the latter wants to get web services and adverts in front of everybody, and is also prepared to invest in infrastructure to achieve that. Microsoft steers clear of becoming a service provider in its own right, but both companies are highly active in lobbying for new spectrum to become available preferably under the open access conditions that favour their ubiquitous web goals to support their ambitions. They have been particularly vocal in the campaign to get regulators round the world to allow commercial, licence-free wireless services in the TV white spaces (TVWS) spectrum the underused gaps in the broadcast band to support various applications such as rural access, Super Wi-Fi and machine-to-machine offerings. The US was first to sanction the use of the spectrum, and there are several small commercial activities, but the main interest has focused on emerging economies. Microsoft has been involved in pilots in Kenya, Tanzania and the Philippines, as well as projects in developed markets, such as Singapore and the UK, often more concentrated on M2M. It is also a member of the new Dynamic Spectrum Alliance, and uses such vehicles, and its own massive lobbying power, to advocate new and more flexible spectrum laws to ease the launch of wireless broadband. White spaces in South Africa: Last week saw Microsoft initiate its third venture in Africa using the TVWS spectrum to extend broadband at low cost to ultra-rural communities. This one is in the Limpopo province of South Africa a country where Google is also active in rural broadband trials following similar Microsoft projects in Tanzania and Kenya.
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The giant has launched a year-long pilot in rural areas of Limpopo province. The test aims to prove that this spectrum plentiful in some areas, especially where there are few TV channels in operation, but often fragmented would be suitable to meet government goals for getting low cost broadband access to the majority of the population by 2020. Microsoft is working with the University of Limpopo, CSIR (the Council for Scientific and Industrial Research), and a local integrator, Multisource, which will build the network. As well as the white spaces spectrum, which is not yet officially open for commercial use in South Africa, the project will use another important and rapidly developing technology for rural wireless, solar-powered base stations. These will support low power signals over distances of up to 5.4 kilometers, achieving download speeds of around 4Mbps. The university will act as the hub for the network, which will reach out to local schools, initially five in number. Microsoft will provide each of the participating schools with Windows tablets, projectors, teacher laptops and training, as well as solar panels for device charging, funding the activity from its 4Afrika CSR fund. "Technology holds enormous potential for many aspects of development, but is particularly key to areas like education and healthcare. Broadband internet access is therefore crucial to giving learners the twenty-first century skills they need to find jobs and participate in the economy," said Microsoft South Africas managing director, Mteto Nyati, in a statement. "However, affordability remains a formidable barrier to broadband access in many parts of South Africa. Reducing the cost of broadband access will mean millions more South Africans will get online." Microsofts aim is to expand its brand and its cloud services in markets which promise high growth in future. Nyati told ZDnet: "Devices on their own mean very little, it's about the services that people consume on those devices. We have decided to make it our job, our mission, to drive low cost connectivity and drive down the price of connectivity which has been a problem in Africa and especially in South Africa." He believes white space broadband should be commercially viable at an uncapped monthly rate of R20-R50 ($2-$5.15), in contrast to current 1Mbps ADSL fees of about R339 ($35). Google expands as an operator, Microsoft steers clear: After the Limpopo trial, Microsoft aims to run a follow-up project with a commercial ISP to reach out to broader underserved areas such as Soweto in Gauteng. It does not plan to run networks itself, unlike Google (which also has a South African white spaces trial, in the Western Cape, and is also looking to bring broadband to rural areas directly via its Google Loon program). "We see ourselves as an enabler, not a provider," says Nyati. "We are not in the telecoms space. I don't think you'll see us becoming a network provider." Since ill-fated experiments with supporting broadband wireless providers at the turn of the century, Microsoft has been far less interested in becoming an operator in its own right, whereas its
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rival has built out its own Wi-Fi and fiber in the US, and has two major satellite projects geared to rural and emerging market access and backhaul O3b and Project Loon, the latter using Space Datas stratellite or balloon technology. In Wi-Fi, it has been less active in emerging economies and more interested in looking at ways to shift the telecoms balance of power at home in the US, by increasing the use of licenceexempt spectrum. Its latest action to discomfort a major operator is a deal with coffee chain Starbucks forever associated with its very early adoption of Wi-Fi hotspots, initially with TMobile. In this new agreement, Google is ousting AT&T, which replaced TMo when Starbucks moved from a paid to a free Wi-Fi model. The search giant has scored the victory because it is promising free access that is up to 10 times faster than the incumbent service, in all 7,000 Starbucks outlets in the US. Rolling out over the next 18 months, the new network will support even faster speeds in areas where Google has its fiber installed currently Kansas City and soon Austin, Texas and Provo, Utah. Here, the service could be up to 100 times faster than AT&Ts WLan. In other areas, the web giant will work with fiber provider Level 3 to replace the T1-based backhaul currently in place behind the Starbucks hotspots.
AT&T continues to squeeze out DSL with fixed LTE services

AT&T has made it fairly clear in recent times that the days of DSL are numbered, and in future all its broadband connections will rely on fiber or LTE. It is taking steps towards making that goal a reality, the latest being a home phone and internet service for selected markets, which runs over LTE or HSPA. This aims to blur the distinction between wired and wireline, delivering a full suite of services over the cellular connection, especially in areas where AT&T has no wired lines, or only DSL. Such services will help AT&T phase out DSL, or penetrate further into markets where it does not have fixed coverage, on the back of its cellular systems. The latest offering is being sold initially in Baltimore, Eastern Pennsylvania, Southern New Jersey, Virginia, Washington DC and other east coast locations (mainly Verizon wireline territories), which will be the proving grounds for a nationwide launch. The service works through a modem (free with two-year contract) which backhauls up to 10 WiFi devices, and requires only a power outlet and AT&T 3G or 4G signal. It then offers unlimited national calls for $20 a month and internet service starting at 10Gbytes for $60 a month, up to 30Gbytes for $120 a month, with overage charges of $10 per Gbyte. More interestingly, users can include the service in existing Mobile Share data plans, with the home modem counting as one of the devices which can tap into a pooled data allowance. The product can be added to a Mobile Share contract for $30 a month.
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This sees AT&T countering Verizon Wireless's HomeFusion Broadband product, which it launched last year. This only works on LTE and does not support voice, though the pricing is identical. AT&Ts product also has the advantage of being portable, so it can provide a hotspot wherever the user has HSPA or LTE coverage. Along with femtocells, and home phone services that work over wireless connections (like AT&Ts Wireless Home Phone offering) the new service is a way for the carrier to increase its share of a customers telecoms spend, and boost the ARPU on a mobile line, by penetrating the home without the need for DSL or fiber (or even the ability to turn DSL off). AT&T Mobility CEO Ralph de la Vega said on the companys earnings call last week: "In the next few days, you will see us announce that we will be adding data capability which will add substantial ARPU to wireless home phones and we think that's going to drive significant ARPU growth to the phone-only category in the future. AT&T is not the only one seeking to eliminate the distinction between residential and mobile service in order to increase its addressable market. While governments are embracing LTE as a flexible and relatively economic solution to providing broadband to rural areas unserved by copper, many operators are going a step further and see LTE as a way to replace DSL with a more modern and profitable infrastructure. Vodafone is defocusing on previous efforts to buy or partner with DSL networks and says it will use LTE as a common fixed/mobile platform in Germany, India and elsewhere, while concentrating on fiber for its wireline partnerships (as with its planned acquisition of Kabel Deutschland). In other words, LTE increasingly looks capable of being a DSL substitute, but it will never match fiber, which will remain at the heart of any quad play strategy. This was clearly seen in AT&Ts Project VIP network plan, unveiled last fall. This represents massive investment in accelerating 4G and fiber-to-the-node roll-out, but the carrier also said it planned to use LTE to compete in areas where it does not have fixed lines, and to save on the cost of continued investment in DSL. Project VIP effectively means the end of real investment in DSL and indeed, where users still have copper lines, AT&T increasingly recommends the use of LTE for fixed access if fiber is not available. (It does use DSL for the last mile for its U-verse fiber system in most areas, but is defocusing on standalone copper lines). It says wireless, fiber-to-the-node and business networks deliver 81% of its revenue and are collectively growing at 6% a year, so it is clear where the investment priority must lie. AT&T last month petitioned the FCC to update its rules so that wired or wireless IP systems can be considered as a replacement for the traditional copper phone -line system. But at the start of 2015, one-quarter of AT&Ts wireline base will still not have U-verse, which points to another strategic significance for LTE investment, to stop defection ofDSL customers.
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While it may be efficient for AT&T to move to an IP-only system, critics say it will be a blow to rural users and to local CLECs which rely on the larger firms network factors which may attract FCC scrutiny or even encourage AT&T to sell off its DSL business as Verizon did. Verizons balance is a different one, thanks to its far-reaching cross-marketing deal with a group of cablecos. However, it is starting to market LTE as a fixed broadband option under its FusionHome brand, designed for homes where the cablecos DOCSIS and the telcos VDSL or fiber are not available. This is in direct competition with the two satellite broadband providers, ViaSat and EchoStars Hughes Networks.
Microsoft joins growing band of tablet failures

Microsoft has already taken a $900m charge against inventory and pricing adjustments for its Surface tablet, and has now revealed that its revenue so far from the struggling product has been less than that at $853m. Tablets, while appearing to offer the growth potential of a fairly virgin market, have actually proved a minefield for firms that dont get the design and user experience just right. RIM, which recently admitted it would not run BlackBerry 10 on its PlayBook, effectively orphaning the device, bears witness to this, as do Hewlett-Packard (several times over) and Dell. Even Samsung took a while to get it right, and to come up with something really distinctive in the Note, while Nokia hasnt played at all. Even some tablet makers with fairly popular products, like Barnes & Noble, have foundered on the rocks of a poor business model. For such a new sector, consolidation has come very quickly, partly because the devices are strictly luxuries, not must-haves like phones, so consumers will wait for the right experience to come along. For many, of course, this has been the iPad, while the Galaxies Tab and Note, the Google Nexus family and the Amazon Kindle Fire are the other success stories, along with a host of low cost, white label products. It seems that Microsoft is falling on RIMs, rather than Apples, side of the fence, especially with the ARM-based Windows RT offering that was meant to kickstart a new life for Windows outside of x86. But consumers remain unconvinced, and PC partners like Acer have been angry at the new competition from the OS vendor. Acer has been very negative about Windows RT and this week said it would not produce another tablet for the OS, focusing its efforts on the Intel-powered Windows 8 Pro. Such decisions, mirrored by others like Samsung and HP, will please Intel, of course, keeping the old Wintel double act alive, but also Google, which sees little threat to Android on the ARM platform. Although Microsoft has not disclosed sales unit figures for Surface, the revenue level suggests it has sold about 1.7m units, which is in line with various analyst calculations. The $853m of revenue equates to less than 5% of the total takings of the Windows division last year, despite the
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huge marketing budget put behind making the Surface RT a breakthrough launch. In its SEC filing, Microsoft said Windows sales and marketing expenses rose by $1bn in its latest fiscal year, up 34%, reflecting an $898m increase in advertising costs associated primarily with Windows 8 and Surface an advertising outlay that is larger than the sales it sparked. While the Surface RT is targeted at the premium end of the market, up with the iPad, there is rising growth in low end Android tablets, mainly for emerging markets. However, these low end offerings worry Google, which has always been particularly protective of the Android user experience on the large screen. Its own Nexus 7 is designed to showcase this UE at its best, and VP of Android product management, Hugo Barra, implies the company had to design Nexus because the wider device ecosystem was failing to step up to the mark. He told TheVerge: "I really do think that the Android ecosystem hasn't yet put its best foot forward, when it comes to tablets." One tablet, of course, which has combined affordability with a strong business model is the Kindle Fire, which the Nexus 7 largely emulated both in specs and in its reliance on content sales, not device revenues, to drive the business. Amazon sells the Fire almost at cost, because it knows from its Kindle ereader experience that an optimized user experience, tailored to content, ensures that users will buy and consume more media, which in the Amazon model, has to come from the etailers own stores (Kindle, LoveFilm, AppStore and others. The smooth purchasing process on a touch-enabled tablet even drives increased transactions in its physical shopfronts). Amazon is now readying its next wave of Kindle and Kindle Fire models for the holiday buying season. According to various leaks, the 7-inch Fire HD will run on a top end Qualcomm Snapdragon 800 chip, trebling performance without a price increase (and further smoothing that experience for watching, listening to, reading and buying content, whether downloaded or in the cloud). There will also be increased RAM and storage options while the larger 8.9-inch tablet will have a 2560x1600 HD display and two cameras.
Telco groups vye for new assets in high growth markets

The M&A merry-go-round continues to spin as mobile groups seek footholds in markets that promise future growth, especially the Middle East, Pakistan and Africa. Russias VimpelCom is looking to sell two African units for about $100m in total, and joining the race for Pakistans Warid Telecom. Reuters says the firm is to offload Telecel Global, which includes units in Burundi and the Central African Republic, to Neil Telecom, a venture focused on telecoms in emerging markets. The two businesses were inherited by VimpelCom with the acquisition of Orascom in 2011 but the Russian operator wants to focus its attentions on larger markets, and has earmarked five former Orascom entities as non-core. A third African asset in Zimbabwe is being sold to a separate buyer, said a source.
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All three have fairly small user bases and addressable markets, while Pakistan has the promise of a huge population and high growth potential for 3G and beyond. VimpelCom is already the countrys largest cellco via Orascoms Mobilink division and acquiring Warid, the fifth largest operator, would consolidate its position. The combined firm would have 49m subscribers, or 39% market share, according to the GSM Association. However, Etisalat of the UAE is also interested, and would combine Warid with its existing Pakistani company, PTCL, the countrys third largest. Like Etisalat, another Middle Eastern group, Ooredoo of Qatar, is looking to Africa for new growth. Of its foreign operators, its Wataniya business was the biggest contributor to revenue in its second quarter, and was particularly strong in Algeria. Other strong markets for the increasingly international Ooredoo were Indonesia, where it operates Indosat, and Iraq, where it controls Asiacell. Wataniya also operates in Kuwait, Tunisia, Saudi Arabia, the Maldives and Palestine. Ooredoo also recently acquired one of two mobile licences offered in Myanmar, but has pulled out of the race to buy a 53% stake in Maroc Telecom of Morocco from French media group Vivendi. Vivendi is now in exclusive talks with Etisalat for that holding and the UAE carrier would add it to a growing footprint in French-speaking west Africa, which already includes a presence in Benin, Cote d'Ivoire, Gabon, Niger, Central African Republic and Togo via the Alantique (Moov) subsidiary. Maroc Telecom brings activities not just in Morocco but also Mauritania, Burkina Faso, Mali and expanded share in Gabon. The deal will see Etisalats share of the African mobile base rise from 7%, or about 50.8m subscribers, to become the continents third largest carrier. Orange has also been steadily amassing assets in Africa, and its latest move may be to exit the Dominican Republic and use the proceeds to increase its stake in Telkom Kenya. The former move could bring in 900m and would fit with a wider strategy to shed non-core assets and reduce debt.
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Start-Up Watch:
Quip brings word processing to post-mobile era No sooner have we got used to the term post-PC, as PC functions migrate to various mobile form factors, than theres a new phrase in town, post-mobile. Not that everyone is reverting to fixed devices, but that the new wave of gadgets and applications are not specifically for mobile use, but have to deliver a strong experience in any location or mode. So just as Microsoft hedges its bets against the slow progress of Windows Phone and Windows 8, by announcing Mobile Office for Android, it is looking hopelessly out of date. The really fashionable software houses are, instead, designing for a post-social, post-mobile generation of devices and behavior. This is the line taken by former Facebook CTO Bret Taylor, who has co-founded a firm called Quip together with ex-Googler Kevin Gibbs. Quip has developed a word processing platform which works on the web, a huge range of devices and the PC. The notion of creating applications which are seamlessly usable across many screens thanks to a common cloud/browser foundation is nothing new, indeed it is the heart of the next wave of user experience as seen in innovations like Firefox Mobile. But the most difficult apps to make the leap have been the most traditional, including boring old word processing, since user behaviors are so rooted in the PC norms on which products like Word are built. Taylor, who helped create Google Maps before co-founding FriendFeed and moving to Facebook, is working with Gibbs, who worked on Googles data center technology and on the autocomplete functionality for Google Search. Their start-up has raised $15m in first round funding, mainly from Benchmark Capital. The two men wrote in a blog post: Despite the magnitude of this shift, the software that we use to get work done has not evolved over the past 30 years. With the exception of some additional color and a stack of toolbars at the top of the screen, it doesnt look different from the software that probably came bundled with your current laptop. We still use the same metaphors and the same workflow that we used when shoulder pads and leg warmers were cool. The features these products have accrued over 30 years have made it difficult for most of us to switch to new products, but they have also made it almost impossible for the products to truly change. Quip, then, starts from scratch, with the touchscreen interface at its heart but aiming to include the best features of the old desktop experience too. It combines documents and messages into a single thread including all the activity in the document such as edits and viewings, living in the cloud and supporting mobility and collaboration. The app is available for iOS now and an Android version is on its way, and it can be trialled for free. The GigaOm blog describes it as Evernote plus Google Docs plus SocialCast/Yammer.
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M&A Watch:
Samsung reported to have acquired Novaled Samsung has made several strategic purchases in recent years to bolster its important display business, which services its own smartphone and TV activities as well as the open market. Its latest acquisition is reported to be German OLED materials specialist Novaled, which targets both the handset and TV segments. Two years ago, Samsung lent support to Novaled with an undisclosed amount of financial backing via its Ventures Investment arm. The firm specialist has developed OLED materials for display and lighting applications and its PIN OLED and other technologies are based on more than 400 patents granted or pending. Analysts estimate that the Korean giant would pay at least $200m for the smaller firm, which focuses on flat panel displays, solid state lighting and thin-film photovoltaic technologies. This means that it could bring its new parent specialized expertise in screens that can work in all lighting conditions. That was the main activity of Liquavista, a Dutch company that Samsung acquired in early 2011 but then sold on to Amazon in May. Liquavista was a spin-off from Philips, and uses electrowetting technology for displays for ereaders, handsets and other mobile gadgets. Its system is distinguished by its low power consumption, about 10% of usual displays even with bright color, and by its ability to operate in different modes (transmissive, reflective, transparent and transflective). Electrowetting is considered especially suitable for power efficient, high performance video display. Samsung has reportedly helped it to adopt a simpler, more standard LCD-like manufacturing process to reduce cost. Alvarion may find buyer for remaining businesses Former WiMAX vendor Alvarion last week placed itself into receivership and laid off most of its workforce, but its remaining businesses may find a buyer in fellow Israeli firm Sigma Wave. Alvarion had already offloaded its WiMAX business to Telrad, but retains its carrier Wi-Fi (formerly Wavion) technology as well as DAS and some legacy BWA offerings. It would also come with $24m in debt to any purchaser. According to Israeli newspaper Globes, Sigma Wave is the largest shareholder in SuperCom, a developer of electronic ID and RFID devices with a market cap of $28m. Sigma could acquire Alvarion directly out of receivership, or via SuperCom, which expects to conduct a secondary issue of stock to raise $20m after August, and has said it would use part of the proceeds for acquisitions.
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Alvarion has also received notification that its shares are to be delisted on the US Nasdaq exchange, although that remains subject to a review hearing. The firms receiver, Yoav Kfir, has submitted a 30-day operating plan to Tel Aviv District Court. Alvarions debt is mainly to suppliers, as well as Silicon Valley Bank, which initiated receivership proceedings, and Telrad, which acquired the WiMAX business in May for up to $12m. Telrad alleges Alvarion held back money it received from third parties that was connected to assets sold to the US firm, and now owes it $5m. Alvarion once employed 1,100 people but now only has 98 employees after the receivership. The operating plan calls for the employment of 55 people until August 23.
4G Watch:
LTE spectrum consolidating in hands of Russias big four More change in the Russian LTE market as the former WiMAX operators give way to LTE. Scartel, owner of the Yota brand and services, is to be acquired by Megafon, the countrys second largest cellco, raising question marks over the future of Yotas plan to support a wholesale 4G network for use by all the main operators. And enterprise focused 4G Enforta is to relinquish spectrum in 102 cities. Yota was the centrepiece of a government backed scheme to accelerate LTE roll-out in Russia by creating a wholesale network, in the firms former WiMAX spectrum, which would be shared by the top three cellcos VimpelCom, Megafon and MTS and the wireline incumbent Rostelecom. However, there have been many disputes and delays over the actual contracts, and Megafon is the main user of the service, while in the meantime, the operators have acquired 4G spectrum of their own and have started build-outs. Megafon has always been close to Scartel because they share the same controlling investor, Alisher Usmanov, who owns 50% of the former and 82% of the latter. Now, regulatory approval for their merger has been granted by Russia's anti-monopoly service, FAS, but with conditions to preserve competition, probably including divestment of licences in some markets. It is now likely that Megafon will merge its own LTE network with Yotas to reduce cost, but ending the wholesale dream. Meanwhile, Prestige Internet, which offers its WiMAX services under the Enforta brand, is to give up frequencies in the 2530MHz-2570MHz and 2650MHz-2690MHz bands in 102 cities, with a view to the spectrum being refarmed for LTE use by the big four operators. All cities affected by the switch-off have a population of between 50,000 and 100,000 people. It currently remains unclear whether or not Enforta will be issued replacement spectrum, and in which band.
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The big four have been campaigning for a more rational allocation of LTE-suitable spectrum, as most frequencies in the key European 4G bands 2.6GHz and 800MHz are already allocated in Russia. In the case of 2.6GHz, the spectrum is held by a number of WiMAX operators covering 390 regions, and to 38 providers of legacy wireless cable and TV services based on MMDS. The Enforta move suggests that many of these fragmented holders will have to give up their licences to help the main cellcos achieve national coverage and full broadband capacity, in line with government national high speed access goals. The 800MHz band is mainly occupied by the military though it will be freed up for LTE over time. SK Telecom reaps rewards of LTE-A SK Telecom, the first carrier to claim a commercial LTE-Advanced service, is already reaping rewards from its cutting edge investments. The Korean market leader says the number of subscribers on its new LTE-A network has topped 300,000, a month after launch. The carrier has deployed a key feature of the long menu of enhancements supported in the LTEA standards (3GPP Releases 10 and 11), carrier aggregation. In doing so, it doubled its 4G speeds to a peak download rate of 150Mbps. This is a feat which is being emulated by some other LTE operators its own compatriot LG U+ and NTT Docomo are among those using LTE-A carrier aggregation for this purpose, while the UKs EE has made the same speed ramp, though without moving to the new standards. Instead, it has freed up a single 2x20MHz carrier in its 1.8GHz spectrum to enable the 150Mbps headline figure, a technique which does not require Release 10. SK Telecom now covers the whole of the capital Seoul and the central areas of 84 cities nationwide, a target it has reached a month ahead of schedule. It plans to continue the expansion and will deploy 32,000 base stations to do so. In its second quarter results, SK Telecom saw sales up 3.9% year-on-year, to KRW4.164 trillion ($3.74bn). Growth in its very competitive and near-saturated market mainly came from LTE subscriber growth as well as enterprise solutions. As of June 20, SK said it had over 11m LTE customers, or 40% of its total mobile base. It also saw a strong rise in consolidated net income, driven by lower marketing costs, higher operating income and a strong contribution from chip affiliate SK Hynix. Meanwhile, Japans NTT Docomo is to deliver 150Mbps speeds in its first market, Kawasaki, which will act as a testbed for launches in larger cities, including Tokyo, Osaka and Nagoya, on October 1. Kawasaki is Japans ninth largest city. Docomo now covers 130 cities with its Xi LTE service and expects its 4G base to total 25m by the end of 2013, after three years of LTE operation.
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Mobile Apps and Content:

Facebook offers alternative to iOS for small games publishers As Facebook finds its feet in the mobile market, it is moving into the gaming space, taking on Apple in yet another sector. The social networking firm has announced a pilot program, Mobile Games Publishing, to help independent developers push their games to wider audiences via Facebooks mobile base. "With more than 800m monthly users of our mobile apps and more than 260m people playing games on Facebook, we are using our unique reach and targeting capabilities to help games in our program find and engage a valuable audience of the right users," wrote Victor Medeiros, a software engineer at Facebook, in a corporate blog post. "This program is designed to reach people who already play games on Facebook with new games that may interest them. Facebook will also let developers use its analytics tools.. This sees Facebook returning to its former plans to create a full content and developer platform around its social base plans which have been somewhat sidelined recently as it has struggled to work out how to monetize its mobile base, and concentrated on new advertising formats to help achieve that. It is clear that the social giants attention is back on developers, but this is not a matter simply of extending its reach indiscriminately. Instead, the new initiative will be confined to a select group of partners, and they will be expected to surrender a share of their revenue in return for access to Facebooks user base and analytics, and the feedback and suggestions of those users. Facebook gave no details on how many would be in the select group, or how much revenue would be shared, but the firm is on a roll in terms of exploring new revenue streams and mobile usage patterns. It knows compelling games are an important way to attract users, and encourage casual social networkers to spend more time on its platform, viewing more ads in the process. This will create further dilemmas for Apple, whose iOS leads mobile gaming in terms of download numbers and monetization. However, the iDevices are an increasingly crowded market for app providers to get noticed, and Apples terms and conditions can be onerous, so the prospect of riding on Facebooks coat-tails, on a platform which is not yet overcrowded, should be appealing for small and medium-sized publishers. Recent figures show that, while Apple paid out $5bn to mobile developers last year (of a total of $11bn in the five years of the App Stores life), this has to be shared among a growing number of developers, since there are now over 900,000 titles in the store.
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Android fragmentation continues to plague the OS The challenges of Android fragmentation, for developers and users, are hardly improving, with one-third of devices still running a version of the OS which is at least two years old. According to new analysis by OpenSignal, fragmentation has tripled since the same report a year ago. Out of 682,000 devices surveyed, 34.1% were running Android 2.3.3-2.3.7 (Gingerbread), which is well over two years old. By contrast, Apple has 95% of its device base updated to the latest version of its OS, iOS 6. Of course, Apple has a far simpler task only two new devices per year (one iPhone and one iPad) and tight control over its ecosystem, while Google has to deal with huge numbers of products made by scores of vendors, not to mention varying upgrade policies implemented by operators. However, actions like Samsungs shipping of its Galaxy S4 powerhouse with the latest Android release are helping to accelerate and streamline the process of getting new OS releases out there. Indeed, 37.9% of the devices studied by Open Signal were running the latest version, Jelly Bean, and that accounts for the highest percentage of the total base. Most of them (32.3%) are, however, still running Android 4.1, rather than the newer update, 4.2.
Devices and Components:

Samsung trebles smartphone memory speed Samsungs latest mobile memory technology is now in mass production, trebling the speed of its current chips and pointing the way to new applications on smartphones and tablets. The Korean giant is pushing forward the eMMC (embedded MultiMedia Card) technology and is offering cards in 16GB, 32GB and 64GB densities for next generation mobile gadgets. The eMMC Pro memory runs at an interface speed of 400Mbps, almost three times faster than its current product. The new chips support version 5.0 of the eMMC standard, which is close to completion at the JEDEC body. Key improvements for end users will include faster downloads, browsing and file transfers as well as better support for HD video, large-file games and complex multitasking. "With timely mass production of our ultrafast eMMC Pro line-up offering a more than tenfold performance increase over external memory cards, Samsung will accelerate the spread of high end mobile devices as the market for devices with larger screens and more multimedia functionality expands even further," said KyongMoo Mang, VP of memory marketing, in a statement.
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The eMMC Pro cards are based on 64Gbit, 10nm to 19nm NAND flash. In 32GB and 64GB densities, the eMMC 5.0 chip has a random read speed of 7,000 IOPS (inputs/outputs per second), and a random write speed of 7,000 IOPS, plus sequential read/write speeds of 250Mbps and 90Mbps respectively. Smartphones with 64Gbytes of integrated memory are still a fairly a small percentage of the market and this capability can still be presented as a premium feature by vendors, and one that can boost margins. Most models still have external slots to allow users to add more capacity, though another rising option is to store a great deal of apps and content in the cloud. Samsungs handset unit, of course, gets immediate access to its sister companys innovations and it recently released a Galaxy S III model with 64Gbytes of on-board memory. Samsung is looking well beyond 64Gbytes for future mobile device memories. Last September, it previewed a 128Gbytes eMMC part which should appear in handsets and other gadgets next year. Smartphone growth boosts MEMS sensor vendors The market for MEMS sensors in handsets and tablets was worth $2.2bn in 2012 and is set to be worth about $2.7bn in 2013, according to Laurent Robin, an analyst with specialist research firm Yole Dveloppement. The firm forecasts a CAGR of 18.5% for MEMS sensors between 2012 and 2018, which would create a market value of about $6.4bn. Average prices will fall, however the market may be set to treble in value, but volumes will quadruple in the same period. Growth will be driven by the inclusion of a growing variety of sensors in smartphones to support different types of context awareness. In the short term, the key components will be pressure sensors for vertical positioning; inertial measurement units, which combine accelerometers and gyroscope in one package; and RF MEMS for improved multiband, multiprotocol support. Established leaders include STMicroelectronics and Knowles Acoustics but there is a growing number of start-up and major players. STMicro has 30.3% share in the mobile space, says the report, followed by Knowles with 12.7%, Avago with 11.5% and AKM with 11.4%. After them come Bosch Sensortec, InvenSense, TriQuint, AAC Acoustics, Freescale and many others.
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Volume 11, issue 16: August 1 2013

LTE/Wi-Fi integration becomes real in major operator deals this fall

1. ALU enlists Qualcomm in battle for AT&Ts small cell contracts

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2. O2 UK highlights complex networks that will add up to 4G

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Clearwire in, iDEN out the new Sprint emerges at last

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MediaTek targets tablets with firsts in security and multiprocessing

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AT&T continues to squeeze out DSL with fixed LTE services

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Microsoft joins growing band of tablet failures

Telco groups vye for new assets in high growth markets

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Mobile Apps and Content:

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Devices and Components:

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