Friday, November 6, 2009
Is Verizon’s New Early-Termination Fee Anti-Consumer?
Beginning Nov. 15, Verizon subscribers looking to get out of their smart-phone contracts early will pay $350 for the privilege. That early-termination fee is double the current one, but Verizon insists it’s justified because of the higher prices of today’s phones. An interesting move for a carrier that just last year agreed to pay $21 million to settle a class-action lawsuit filed by California consumers over the very early-termination fees it is now increasing.
Droid, Motorola’s most anticipated cellphone since the launch of the Razr in 2004, arrived at market today, to a warm reception by most accounts. Some 2,000 Verizon Wireless stores opened early this morning, many to lines–though admittedly, the lines are far shorter than those that accompanied the launch of certain rival devices.
With a handful of new Android handsets arriving at market in the coming weeks, including Motorola’s much anticipated Droid, Palm’s prospects for blowout winter holiday sales are dimming. Earlier this week, analysts at Citigroup and CL King voiced their concerns about the company in the wake of another ugly quarter from carrier partner Sprint. Now, Standard & Poor’s is doing so as well.
With Palm’s shares up more than 900 percent since January, they were destined to suffer a correction someday. And now it seems that day has finally come. Shares in the handset maker fell some 23 percent last week amid concerns about increased competition from Google’s Android operating system, which is being rolled out on a number of devices at a variety of carriers, including Palm partner Sprint.
The Palm Pre may have been the most successful handset rollout in Sprint’s history, but it hasn’t stopped the carrier from hemorrhaging customers in the months following its launch. 
It has been about two years since Apple last released a major firmware update for its Apple TV platform, so the release of Apple TV 3.0 today will come as welcome news to those who own the device. 3.0 is largely as rumored: Adding support for both iTunes LP and iTunes Extras.
According to comScore, Web traffic to Amazon in the U.S. rose 14.8 percent, far outstripping that of overall U.S. Internet traffic, which grew just 3.5 percent. “It appears that Amazon is gaining share the old-fashioned way,” ThinkEquity analyst Ed Weller noted last week, “by acquiring more and more customers…and selling more to each of them.” Judging from the nice gain in third-quarter earnings the company posted after Thursday’s closing bell, that would seem to be the case. 
“It’s clear that the quality of iPhone games is eclipsing its console counterparts, and that’s even more acute when you compare it against the prior generation.” That’s what ngmoco co-founder and Electronic Arts alum Neil Young said of Apple’s iconic handset at the Game Developers Conference in San Francisco earlier this year, and it’s worth reflecting on a bit in light of a new report from Bernstein Research analyst Toni Sacconaghi that claims the iPhone OS will soon create pricing and customer migration pressure for traditional gaming platforms.
There’s not much of a business yet in Apple TV, as Apple’s leadership often notes. But there may be soon, with the market for connected TVs evolving as it has been. In a research note issued this morning, Piper Jaffray analyst Gene Munster says the time is right for Apple to release the next iteration of Apple TV and to begin work on a full-fledged Internet-connected television set.
Now this is just getting silly. Pali Research says sales of the Palm Pre are slowing. RBC’s Mike Abramsky says they aren’t and claims 325,000 to 375,000 have been sold to date, ahead of his expectations. Jesup and Lamont analyst Kevin Dede says the device is plagued by high exchange/return rates of potentially 40 percent. Abramsky says it’s more likely between two and three percent. Who’s right? Who cares?
Earlier this year Motorola said it would sack 1,500 employees during the fourth quarter of 2008. Apparently, that was a mistake. What it meant to say was that it planned to sack 1,900 employees during the fourth quarter of 2008, as evidenced today by the company’s announcement that it will lay off 400 more employees than originally expected this year.
Though Wal-Mart has made no official announcement regarding the reportedly imminent arrival of Apple’s iPhone on its shelves, it would seem that the big-box retailer will begin peddling the device before the year is out. If that’s the case, how many iPhones is Wal-Mart capable of selling?
