Sprint Launches Femtocell

Wow, just several days ago, I wrote that Sprint will launch Femtocells this year. Well, they didn’t wait that long did they?

Sprint Nextel has quietly started selling the AIRRAVE femtocell product in parts of Denver and Indianapolis to provide better cellular coverage and flat-rate calling at home. Sprint Nextel plans to start selling the Airave all across Denver and Indianapolis, as well as in Nashville, Tennessee, by year’s end, and plans to offer it nationwide in 2008. The Airave is made by Samsung Electronics and costs US$49.99. It is designed for plug-and-play so that people can install it themselves by plugging it into a broadband Internet connection (DSL or Cable Internet service required). For a flat monthly rate of $15 for an individual and $30 for a family, one gets unlimited local and nationwide long-distance calls while at home (or whereever the AIRAVE femtocell is).

The Airave works with any Sprint handset, and can support up to 3 handsets simultaneously. When a subscriber leaves home (i.e. goes out of the femtocell coverage area), the handset will automatically shift to the outside Sprint cellular network.

A femtocell is a small cellular base station that provides service specifically inside a building (e.g. a subscriber’s home). Femtocells are seen as competition to WiFi, where some cellular carriers such as T-Mobile use a dual-mode handset that can switch between cellular and WiFi (with WiFi providing the in-building coverage wherever applicable).Femtocells get the name from “femto,” which denotes a small order of size in physics. The idea has been around a long time but until recently was held up by size and cost concerns. While helping subscribers get good service, the devices save carriers from deploying more expensive base stations on towers to get to hard-to-reach pockets.

Sprint is just the first major U.S. carrier to offer femtocells. Expect to hear more about femtocells in the coming future.

Qualcomm gets a breather in patent fight against Broadcomm and stay on Ban on importing 3G cellular handsets

Qualcomm got a breather now, and so did a number of its key customers. The Ban on the importation of new 3G handsets containing Qualcomm chips is stayed while an appeals court reviews the merits of the case. The United States International Trade Commission had imposed the ban in June as a remedy to its finding that Qualcomm infringed on a Broadcom patent for power management. While this may be buying time for Qualcomm, it is buying a very important time, because wireless service providers such as Sprint Nextel and Verizon Wireless typically sell a significant portion of handsets in the holiday season starting October.

Besides Qualcomm, handset manufacturers such as Samsung, Motorola, Sanyo, Kyocera, and LG will benefit by being able to sell 3G new handsets (the ban was limited to new models of 3G handsets). Cellular carriers such as Sprint Nextel and to a lesser extent AT&T will benefit. Verizon Wireless Struck a Deal with Broadcom by paying $6 to Broadcom per handset to avoid the ban, so it’s not bound by the ban on importation of 3G handsets (or the stay of the ban). Sprint Nextel was also relying on handsets that had a “workaround” from Qualcomm that avoided using Broadcom’s patent, although Broadcom was expected to challenge the workaround in court.

The Court of Appeals for the Federal Circuit believes that the ban would unjustly harm  Qualcomm customers. The stay of the ban is a major psychological boost after the company’s recent setbacks on the patent infringement case with Broadcom. This will give Qualcomm a much needed breather before seeking a complete reversal of the original infringement finding and the ban.

Soon you may be able to access an ATM from your cellular phone

Diebold and NCR Corporation, leading players in the automated teller machines market, are developing technologies to enable cell phones or PDA’s/Smartphones to transact with an ATM. NCR has been developing technology for linking hand-held communications devices with ATMs since 2001. NCR already uses such technology in Denmark and Singapore.

Over the past 18 months, Diebold has won five U.S. patents for applications that enable mobile devices to interact directly with bank ATMs. The patents involve allowing banking consumers to use their mobile devices to locate and get directions to the nearest ATM, order cash withdrawals remotely, generate electronic checks, transmit wireless payments, and generate various other transactions by linking to an ATM. Diebold claims the technology underlying these patents exceed current mobile banking practices, namely online transactions.

One patent allows mobile phones to interact directly with ATMs and bank systems for cash withdrawals, with protection against card-skimming or personal identification number surfing at ATMs. Another patent allows mobiles to work at checkouts or banks to pay payments via secure electronic checks. A third patent allows bank networks to receive wireless communications from mobile phones for account information. The fourth allows bank ATMs to communicate with mobile devices through a cellular network or other wireless methods. The fifth patent allows users to interact with ATMs through the wireless device’s display and keypad instead of the display and keypad on the ATM.

For one, those not comfortable with entering a PIN code in a public place (ATM) can use a mobile device to enter the PIN. Here’s how it works: First, the mobile device user would receive a one-time code, which would then be entered when arriving at a specified ATM. The user could insert an ATM card and the one-time code, and the ATM would then know to complete the transaction.

A study last year found that people in the United States conduct about 8 billion ATM transactions annually. The Dove 2006 ATM Deployer Study shows that ATMs dispense about $600 billion in cash each year. With close to 200 million handsets in use in the United States, it’s easy to see that there may be a significant overlap between ATM users and mobile phone users.

Diebold has estimated such applications will be widely available within three to five years. I doubt anything mainstream in terms of accessing ATMs from mobile phones will happen soon. But, look out for banks to start testing some of these services, mainly out of security concerns.

Sprint to Launch Femtocells This Year

sprint_logo.gifSprint is planning to formally announce a femtocell product by the end of the year, according to Manish Mangal, the company’s Director of Signaling and Control Technology Development.

A femtocell is a low-power, low-cost cellular base station that plugs into a broadband connection for backhaul into the cellular network (looks like a WiFi Access Point). Femtocells will allow Service providers to cost-effectively extend cellular coverage into homes and office buildings, where sometimes it has been difficult to get good cellular coverage. Femtocells operate on the cellular frequencies, so only wireless service providers such as Sprint and Verizon Wireless are authorized to operate them (or operate under approval from the wireless service providers).

Femtocells are much like WiFi hotspots and are seen as competing technologies. WiFi for cellular requires a special mobile phone with dual-mode technology (i.e. with both cellular and WiFi transceivers in the handset), but dual-mode devices have failed to catch on in the U.S., in part due to higher price. Furthermore, dual-mode phones have shorter battery time due to operating on two frequencies. Also, Voice over WiFi is still shaky, primarily because 802.11-n technology that provides Quality of Service (QoS) is still not commercial and because WiFi networks haven’t been optimized for voice. Also, because WiFi operates on spectrum used by other device, it is subject to interference.

Femtocells have their own issues as well: because there are different cellular technologies, and each wireless service provider has its own flavor, customers can get locked onto a cellular carrier. Also, large enterprises typically have service from more than one wireless carrier, further complicating the femtocell picture.

Nonetheless, femtocells have a bright future and Sprint seems to be taking the lead on it. In fact, Google recently entered the space by investing into Ubiquisys, a leading femtocell provider.

Acer finds a Gateway to the U.S. PC Market

Acer on recently announced plans to acquire Gateway for $710 million or $1.90 for each Gateway share. The deal has been approved by the boards of both companies and the acquisition is expected to close in December.

The benefits of this acquisition are:

  1. Wider Distribution Channel: With this acquisition, Acer, Taiwanese company, will overtake Lenovo in market share and become the world’s No. 3 PC-maker, and gets a long-desired foothold in the U.S. consumer marker because Gateway is the No. 4 PC maker in the United States, behind Dell, Hewlett-Packard, and Apple. Acer has traditionally been strongest in Asia and has recently made strides in Europe.
  2. Broader Marketing Strategy: Acer will use a multi-tier strategy, much like Hewlett-Packard two-tier strategy of selling PCs under the HP and Compaq brand names. Acer-Gateway will have almost an ideal combination of brands with eMachines for low-cost desktops, Acer for low-cost notebooks, Gateway for midrange desktop and notebooks, and Ferrari for high-end notebooks.
  3. Better Supply-chain leverage: With its bigger size, Acer will be able to get better deals from its suppliers as well as optimize its supply-chain and optimize its product plants.
  4. Keep Lenovo in check: Lenovo has been coveting an entrance into the European PC market. With the entrance into the U.S. market, Acer will be able to keep Lenovo in check in the European market. Gateway has a strange arrangement where Gateway can buy Packard-Bell who is strong in the European market. With the acquisition of Gateway, Acer has the opportunity to acquire Packard-Bell and prevent Lenovo from a entering the European market by acquiring Packard-Bell.

Even as the Acer-Gateway combination creates a more formidable competitor, the reduction of a competitor should be a boon for all the PC makers. Ultimately, this should improve Acer’s profitability, through increased revenues as well as better leveraged costs.

T-Mobile to launch MyFaves in Europe

T-Mobile, the mobile arm of Deutsche Telekom, has announced plans to launch the MyFaves service in Germany this October. Similar launches will happen in the U.K. and Czech Republic some time in the fourth quarter.

MyFaves was developed by T-Mobile’s U.S. subsidiary, where it has attracted more than 2.5 million users.  The U.S. MyFaves service allows customers to make unlimited domestic calls within the U.S. and send text messages to five selected numbers. These numbers can be a mix and match of any landline or mobile numbers. The MyFaves service requires a compatible phone. Numbers in MyFaves can be updated as often as once per calendar month. When two or more people in a family plan sign up, they can have their own Fave 5. Plans start at just $39.99per month.

MyFaves service in Germany will cost a base fee of Euro 15 (approximately US$20) per month and Euro 0.05 per call or SMS (Short Message Service). MyFaves users making or receiving calls outside of Germany must pay roaming fees.

Overall, MyFaves service make senses for a lot of people because more than two-thirds of mobile phone calls are made to the same five people/numbers.

Will Jaxtr upstage Skype?

Jaxtr has raised a $10 million Series A round led by August Capital with Mayfield Fund, Draper Richards, Draper Fisher Jurvetson and Luxemburg-based Mangrove Capital participating. Jaxtr’s registered user base has been doubling every month since its March launch. Most recently, it jumped from 500,000 to 1 million in just 27 days. So, it’s no surprise that Jaxtr needs more money to continue its expansion.

The interesting thing is that three of the investors, Draper Richards, Draper Fisher Jurvetson and Luxemburg-based Mangrove Capital, were early investors in Skype. Overall, there’s a lot of venture capital flowing into voice startups. Rebtel grabbed $20 million, Truphone collected $23.4 million, Jajah hauled $20 million, and last month newcomer Ooma topped the list with $27 million.

Why would the same folks invest in Jaxtr? Does Jaxtr have a better future than Skype? The investments indicate that Venture Capitalists, who have insight into these companies and know the market, feel that the voice market is still up for grabs. Perhaps they feel that Skype can be beaten at its game, especially since Skype is not a great solution for mobile phones and seems to be losing its way at EBay.

Here’s the thing. In the voice world, the mobile phone is king, primarily because of the anywhere, anytime convenience of mobile service. Whoever makes voice easy to use (and cheap-er) on mobile phones will be king.

It’s clear that Skype is not this king. Skype has made little progress with being on mobile devices because Skype requires a special client and it is very difficult to facilitate mobile clients. For one, users don’t know how to and cannot be bothered to download and install a client on their mobile device. Second, a lot of wireless phones are pretty much closed to unsanctioned 3rd party applications. More reasons can be found at 4 Reasons You Won’t Have Skype On Cell Phones Anytime Soon.

On the other hand, Jaxtr gives users a unique phone number and web address, so a mobile user can make and receive calls without any special software on a cellular phone, like Skype, or without having to access a web browser, like Jajah. The numbers show this too – Apparently, between 70 and 80 % Jaxtr calls involve a mobile phone.

Jaxtr will incorporate advertising into its services and may also pursue new services on social networks. Longer term, Jaxtr plans tiered monthly minute plans like that kind available today with cell phones. Jaxtr also plans advertising within user accounts. Jaxtr hopes to get 20 million users in the next twelve months and expects around one percent to purchase for additional minutes.

This indicates that Jaxtr has an uptapped market that Skype cannot easily reach. Especially with EBay fumbling with the Skype acquisition (EBay’s acquisition of Skype never made much sense to me). My bet is that Jaxtr will give Skype a run for its money!