All Things Digital

iPhone is launching in one carrier in one country. We’re in about 100 countries and 300 carriers. … The momentum we are seeing in terms of product launches, carrier support in terms of product launches of BlackBerries, and subscriber additions is exceptional, and we believe it will continue on into the second half of the year.”

– Research in Motion Co-Chief Executive Officer Jim Balsillie, June 2007

Looks like somebody’s got a case of the Mondays–Research in Motion. Shares in the company slipped more than 6 percent to a new 52-week low today. This after charting a new 52-week low last Friday driven by the 27 percent drop RIM took after it issued a lower-than-expected forecast for the current period. That decline was the company’s steepest in eight years, belying CEO Jim Balsillie’s claims that emerging competition from new handset makers isn’t undermining its competitive position. And though RIM’s product roadmap is relatively strong heading into the fall season, the company still has its work cut out for it scrapping with Apple (AAPL) and its iPhone and now T-Mobile (DT) and the Android-based G1.

“RIM’s business model is starting to show its pressure points. The company has become increasingly dependent on hardware sales. As a result, the timing of new product launches can have a big impact on their results,” wrote Brian Modoff of Deutsche Bank in a report. “We think this trend will only worsen and their numbers are now, more than ever, dependent on a steady stream of hit products.”

Needham and Company analyst Craig Bisagna was even more dubious of prospects for Research in Motion (RIMM), criticizing the company for its foolishly dismissive attitude toward new rivals. Just because Windows Mobile handsets haven’t proven themselves worthy competitors to the Blackberry doesn’t mean the iPhone or the G1 won’t.

“We continue to believe that the company has its head in the sand,” Bisagna said in a note to clients. “It’s delusional to think [Apple and HTC] won’t cut into BlackBerry sales as well, especially in the consumer market.”

T-Mobile has abandoned the 1GB monthly usage cap it originally set for its forthcoming Android G1 phone. Seems the company finally saw the irony of offering subscribers a $25-a-month unlimited data plan and then penalizing them for excessive data usage. T-Mobile distributed a statement Wednesday evening saying it had dropped the 1GB “soft cap” it had planned to impose on G1 owners.

“Our goal, when the T-Mobile G1 becomes available in October, is to provide affordable, high-speed data service allowing customers to experience the full data capabilities of the device and our 3G network,” T-Mobile (DT) explained. “At the same time, we have a responsibility to provide the best network experience for all of our customers so we reserve the right to temporarily reduce data throughput for a small fraction of our customers who have excessive or disproportionate usage that interferes with our network performance or our ability to provide quality service to all of our customers.”

Wait. “We reserve the right to temporarily reduce data throughput.” So T-Mobile’s removed the 1GB “soft cap” from its policy statement, but is still planning other restrictions to manage its network. Consider the two policy statement excerpts below:

If your total data usage in any billing cycle is more than 1GB, your data throughput for the remainder of that cycle may be reduced to 50 kbps or less. Your data session, plan, or service may be suspended, terminated, or restricted for significant roaming or if you use your service in a way that interferes with our network or ability to provide quality service to other users.”

– T-Mobile, “Important Notes About 3G and the T-Mobile G1,” Sept. 23, 2008

To provide the best network experience for all of our customers we may temporarily reduce data throughput for a small fraction of customers who use a disproportionate amount of bandwidth. Your data session, plan, or service may be suspended, terminated, or restricted for significant roaming or if you use your service in a way that interferes with our network or ability to provide quality service to other users.”

– T-Mobile, “Important Notes About 3G and the T-Mobile G1,” Sept. 25, 2008

These two policy excerpts aren’t all that different are they? “1GB” has been changed to “disproportionate amount of bandwidth.” And the reference to a reduction of data throughput to “50 kbps or less” has been rewritten as a general reduction in data throughput. No, they’re not different at all, really. In fact, with no hard number attached to it, “disproportionate amount of bandwidth” could still mean a 1GB cap, couldn’t it? Clearly, that’s how T-Mobile viewed 1GB of data usage in the first place, right? So what’s changed?

Color Piper Jaffray analyst Gene Munster unimpressed by T-mobile’s G1, the first mobile phone to use Google’s (GOOG) Android mobile operating system. Though the device is certain to be a viable competitor in the current mobile market, it’s no iPhone. Apple (AAPL), says Munster, has nothing to worry about. The G1 will have “little or no impact” on near-term iPhone sales. “To use a baseball analogy, when Apple comes out with a product, they try to hit home runs, but Google’s Android strategy is swinging for base hits,” Munster wrote in a research note to clients Tuesday. “Today’s announcement in itself does not change anything; however, if over the next two years Google has many similar small announcements, it will become a greater threat to the iPhone. … While the G1 is a legitimate competitor with the iPhone, we believe it will have little or no impact on near-term iPhone sales.”

The first handset to be powered by Google’s Android OS debuted this morning at a T-Mobile launch event in New York. Manufactured by HTC, the G1 is largely as anticipated. Peter Chou, CEO of HTC describes it as “iconic,” but that’s being a bit generous, I think (“The G1 won’t win any beauty contests with its Apple rival,” writes Walt Mossberg. “It’s stubby and chunky, nearly 30 percent thicker and almost 20 percent heavier than the iPhone.”)

In design, the device seems to borrow quite a bit from T-Mobile’s Sidekick, and its touchscreen GUI owes a thing or two to Apple’s (AAPL) iPhone. Which makes perfect sense, since that’s the device it’s clearly intended to compete with. The G1 will run on both 3G and Wi-Fi and be tethered to the T-Mobile (DT) network. It will come preloaded with a version of Amazon’s MP3 store and Android Market, an application store similar to Apple’s App Store. And it will support and sync with the broad spectrum of Google (GOOG) apps–Google Talk, Google Calendar, etc. Its browser is something the dev team refers to as Chrome-Lite, a mobile version of Google’s new Webkit-based Chrome browser.

Oddly, the G1 has no built-in video player. Odder still, it has just 1GB of memory. T-Mobile has helpfully outfitted it with a 1GB/month bandwidth cap, though.

The G1 supports PDFs and Microsoft Office documents as well. Email will be handled through Gmail; there is no Exchange support, though presumably, engineers developing for Android Market will fill that void in short order.

Oh, the device offers copy-and-paste functionality. Hear that Apple?

It will arrive at market Oct. 22. Price: a highly-subsidized $179.

The bottom line is texting is at least four times more expensive than transmitting data from Hubble, and is likely to be substantially more than that.

– University of Leicester space scientist Nigel Bannister

If wireless providers applied the per-byte pricing scheme they use for SMS texting to other data transmitted over their cellular networks, it would cost nearly $6,000 to download a single 4MB song. Yet the price of text messaging has doubled industrywide in the last three years.

Why?

A good question. And one that’s finally being asked by Congress. On Tuesday, Sen. Herb Kohl (D., Wis.), chairman of the Senate Judiciary Antitrust Subcommittee, sent letters to Verizon Wireless (VZ), Sprint-Nextel (S), AT&T (T), and T-Mobile (DT) asking them to justify their outrageous text messaging prices. “What is particularly alarming about this industrywide rate increase is that it does not appear to be justified by rising costs in delivering text messages,” Kohl wrote. “Text-messaging files are very small, as the size of text messages are generally limited to 160 characters per message, and therefore cost carriers very little to transmit.”

Kohl noted as well that the companies appear to have changed text-messaging rates at nearly the same time, with identical prices. A troubling coincidence, given that together they serve more than 90 percent of U.S. cellphone users. Said Kohl, “This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”

Makes for great profit margins though …

T-Mobile will soon become the first carrier to offer a phone based on Google’s (GOOG) Android mobile platform. Well, that’s the rumor, anyway. Manufactured by HTC (HTC), the handset is said to feature a touchscreen, a three-megapixel camera and a full five-row keyboard just like the one seen in that YouTube video that’s been making the rounds (see below). It supports 3G connectivity, and, according to those who’ve allegedly seen it, the device is clearly intended to compete against Apple’s (AAPL) iPhone, but is “big and bulky” in comparison.

The T-Mobile (DT) handset is expected to price out at $150 and arrive at market in September, as Digital Daily noted in June.

Apple (AAPL) is expanding its iPhone empire with near Alexandrian initiative.

Today, the company struck an extensive deal with France Telecom’s (FTE.PA) Orange wireless carrier to distribute the device in more than 10 markets in Europe, the Middle East, Africa and the Caribbean.

Orange, which became Apple’s exclusive carrier partner in France last year, will soon sell the iPhone in Austria, Belgium, the Dominican Republic, Egypt, Jordan, Poland, Portugal, Romania, Slovakia and Switzerland, as well as the company’s African markets.

Interestingly, a few of these countries already have carriers with iPhone distribution agreements. It would seem then that Apple is indeed moving away from the exclusive iPhone distribution arrangements it’s been inking, as many suggested last week when Vodafone (VOD) and Telecom Italia (TI-A) both announced plans to bring the iPhone to Italy.

In any event, Apple’s deal with Orange will expand the iPhone’s reach to about 40 countries and will effectively quadruple its total addressable market. “Currently Apple’s total addressable market includes 153 million subscribers in six countries with AT&T (T), T-Mobile Germany and Austria, O2, and Orange,” Piper Jaffray’s Gene Munster observed in a research note today. “These announcements increase those numbers to 575 million subscribers in 42 countries, including recent agreements with Vodafone, SingTel, America Movil (AMX), Swisscom and Orange. … To give some context to these numbers, Apple sold 3.7 million iPhones in 2007 into a total addressable market of 148 million subscribers (or 3% penetration). Taking the recent carrier announcements into consideration, we are modeling for Apple’s penetration rate to remain at 3% in 2008 and double to 6% in 2009.”

What do you do when you’ve just posted a $29.5 billion loss and you expect to lose 1.2 million customers this quarter, as many as you lost in all of 2007? Well, if you’re Sprint (S), you announce a $99.99 unlimited calling and data services plan.

This morning the nation’s third-largest wireless carrier recorded a massive fourth-quarter loss, suspended its dividend program for the ”foreseeable future,” borrowed $2.5 billion to improve its “financial flexibility” and announced a shiny, new discount service plan presumably intended to make everyone forget about its deteriorating business. Sprint’s ”Simply Everything” plan offers unlimited “voice, data, text, email, Web surfing, Sprint TV, Sprint Music, GPS navigation, Direct Connect and Group Connect” for $99.99 a month.

Not bad for a package of services for which customers have typically paid a premium. Trouble is, it’s relatively close to the $99 price point plans introduced by Verizon, AT&T and T-Mobile earlier this year. Granted, Sprint’s plan is the only one that includes data right now, but it likely won’t be for long. Certainly, Sprint CEO Dan Hesse doesn’t see it as a cure-all for Sprint’s problems. “I want to make it clear that it’s not a silver bullet,” he said during a conference call with analysts. “But it’s a very important piece. Our business is not performing well right now. We are working aggressively to turn this around, but our financial performance will not improve overnight.”