Apple Has Done It: 10 Million iPhones Sold

Apple has reached its goal of selling 10 million iPhones by the end of the year, says Seeking Alpha writer Andy Zaky.

Estimates for iPhone sales figures for Apple's fourth quarter (calendar quarter three) were called for sales of four million units. It now appears that Apple has sold at least 7 to 7.5 million iPhones in the quarter, nearly 80 percent above consensus.

Watch for Shift to Social and Digital Media

About 65 percent of chief marketing officers surveyed recently by Epsilon say their ad budgets will decrease because of the troubled economy, but more of their money will go toward digital/interactive marketing than before. About 63 percent of the 175 CMOs and marketing execs surveyed report that their spending on interactive and digital marketing has risen, while 59 percent report a decrease in traditional marketing spending.

Those attitudes typically have been important only for media and content providers in the past. These days, those attitudes are important for telcos and mobile providers as well as potentially millions of smaller content providers as well, since blogs and social marketing are at the top of the list of new media CMOs are shifting attention to. 

At the same time, 94 percent of those surveyed agreed with the statement, “A tough economic period is precisely the time when marketing plays a key role.”

To offset budget cuts, CMOs are shifting to more targeted and measurable marketing strategies. When asked how their firm determines target market for each channel, 50 percent said they use data-driven marketing techniques: 31 percent stated they use modeling tools to analyze existing customer data (behavioral, preference and demographic) and 19 percent said that they analyze past purchase behavior. In contrast, 28 percent said they made “rough estimates based on past experience.”

CMOs have been early adopters of new media with social computing and blogs receiving the most interest, and instant messaging and interactive TV ads least popular.

Social computing (including word of mouth, social networking sites, viral advertising and so forth.) was the most popular emerging channel with 42 percent of marketing executives expressing interest in adding it to their marketing mix.

Blogs were the second-most-popular emerging channel, with 35 percent of marketers expressing desire to use them and 19 percent already using them.

Almost a third of CMOs mentioned podcasting as an area of interest, with 31 percent interested in adding it to their marketing mix and 18 percent already having done so.

Some 29 percent are interested in Mobile Devices (phones/PDAs) and 22 percent have added them to their marketing mix.

About the survey: The survey was conducted in August 2008. Participants included 175 US CMOs and marketing executives of some of the largest brands in the nation. Some 27% of respondents work at companies with $10 billion or more in annual revenues last year.

27% of Wireless Users Say They Have Disconnected Landlines

More than one fourth of wireless phone customers have replaced their traditional landline connections at home and are now using wireless service exclusively to communicate on a daily basis, according to J.D. Power and Associates.

The study finds that among the 27 percent of current wireless customers who report replacing their traditional landline phone with wireless service, 61 percent have completely disconnected their home landline service. Additionally, 29 percent of wireless customers ages 18 to 24 report making this switch, compared with only 9 percent of subscribers 65 years or older. 

Customers who have used wireless longer are also more likely to switch exclusively to wireless service. In particular, customers who have used wireless service for three years or more report higher landline disconnection levels than those who have used wireless for less than 12 months (19 percent vs. 9 percent, respectively). 

“The user experience has steadily improved for wireless customers, and the number of features and applications available for cell phones has increased considerably during the past two years, so it is not unexpected to find that many wireless subscribers are choosing to replace their landline phone entirely with wireless service,” says Kirk Parsons, J.D. Power and Associates senior director. “Wireless service has truly improved to the point where quality and performance are no longer barriers in the decision-making process around switching to exclusive wireless service usage.”

AT&T Creates New Consumer Unit, Featuring "Everything"

AT&T is reorganizing its management, creating separate business units focused on customer segments rather than product lines, further illustrating the seriousness with which AT&T now views creating new kinds of services that transcend networks and devices. Part of the reason for creating a "consumer" services unit is that video, for example, now must be licensed, packaged and delivered across devices (TVs, PCs, mobile devices) and networks (wireless and wired). 

The reorganization should make easier the creation of new products that transcend network and device limitations, something AT&T is deadly serious about.

Wireless division CEO Ralph de la Vega now is in charge of all consumer offerings, including wireless, video in all its forms, broadband access and voice. Business services, infrastructure and diversified business are the other three major units.

The reason all of this ultimately will matter for virtually all contestants in the consumer space is that a company the size of AT&T, if successful, can reshape the consumer market and its expectations about what a "service" should be, how it should be packaged, what features such offers "should" feature, how much these features should cost and what payment methods and plans are part of the "new normal."

Local Loop Not a Natural Monopoly?

Fiber to the customer networks are not a natural monopoly, even though industry participants often think of it in those terms, says Vianney Hennes, permanent representative to European Institutions for Orange France Telecom Group.

So the ideal competitive environment in the age of fiber rollouts should be similar to the way mobile competition now occurs, says Hennes, according to CommsDay reporter Luke Coleman. Presumably that means multiple, facilities-based networks. 

It may not mean a call for complete duplication of all physical infrastructure in the local loop. Hennes probably is referring to shared access to ducts and other rights of way, primarily. It seems unlikely an employee of France Telecom would be calling for construction of multiple fully-duplicative local fiber networks by multiple contestants, if only because the economics are prohibitive on the face of it. 

Since most recent studies of fiber-to-customer infrastructure suggest a provider must get something on the order of 30 percent penetration of every high-penetration service to make a financial return, and if penetration of video, voice and broadband is assumed to be in the range of 60 to 80 percent of every household, it seems fairly clear that three head-to-head contestants will have a tough time getting to break even. If there are more than three contestants, most of the providers might fail. 

He said it was a “self-fulfilling prophecy” when operators say fiber-to-customer upgrades inherently are

monopolistic. “If you think there will be a monopoly somewhere, in the end, you will end up with a

monopoly," he says. 

Hennes said that regulatory conditions should be set to allow maximum infrastructure competition,

such as allowing for duct sharing and taking pains to reduce traditional bottlenecks. The industry can move to something that looks like a mobile model, he argues. 

How does that work to France Telecom's advantage? If duct sharing and rights of way are widely available, competitors must build their own active fiber networks, while France Telecom does not have to share access to its fiber network, it likely gains some strategic leverage. Not many contestants actually will conclude that building their own networks makes sense, of it if makes sense, it will occur only in some regions and locales, not all. 

Oddly enough, opening up more access to rights of way, but requiring contestants to lay their own fiber and active opto-electronics, might create almost as much of an entry barrier as not opening the ducts and rights of way. More openness on the physical layer front seems likely in Europe. But so does mandatory wholesale access to new optical fiber facilities. It is an interesting thought, the local loop not being an actual monopoly.

To some extent, it clearly isn't, as evidenced by the flourishing businesses already run by cable companies and telcos. We know there is room for at least two rival physical networks. What remains unclear is the long-term sustainability of three or more physically-diverse networks. We'll have to watch the overbuilder and municipal networks business to collect more data points. There remain few widescale instances where three broadband networks are widely available to customers. 

Warning: Zone Alarm Pro Not Compatible with Norton Anti-Virus 2009

Other users--and now me--have discovered that Norton AntiVirus 2009 is incompatible with ZoneAlarm Pro. on a Windows XP (SP3) machine. Try to load Norton AntiVirus and it will crash your operating system, requiring you to do a system restore. You also will find that you must remove the power cord and battery (if on a lap top) to shut the system down, as the incompatibility also prevents you from using the power button to shut down. No matter what you do, the Norton software will lock up the machine if you try to install it. 

Apparently these two companies don't like each other very much because it isn't the first time I've had issues with Norton and ZoneAlarm causing me to remove one or both from my machines. It is quite annoying. 

47% of Cable Subs Might Be Willing to Switch

About 47 percent of cable company video subscribers say they are willing to consider switching their video service from cable to an IPTV service, say researchers at CFI Group. That level of interest occurs when customers are presented with a 100-plus channel menu and monthly prices in the $40 to $50 range.

At that level of retail prices, the upside for telcos is not gross revenue nor margin. The upside lies in reducing churn and preserving both unit sales and profit margin for legacy voice and data services. At the moment, bundle customers are about twice as likely to be cable customers as telco customers. One reason for that is the fact that telcos have not had the ability to provide video entertainment services until recently. 

If telecom companies are able to provide fiber services to new access areas quickly, and market them effectively, the split of new bundled customers between telecom and  cable could widen to 63 percent and 29 percent respectively, CFI argues.