Tech Untangled

Verizon Wireless is now the first U.S. Wireless Service Provider (WSP) to enable YouTube Video. Now you can record videos on your mobile phone and upload the videos directly to YouTube using the shortcode YTUBE (98823) using MMS. This is a pretty easy to remember shortcode, but UTUBE would’ve been easier to remember (perhaps that was already assigned). In order to upload videos, subscribers need to first update their YouTube accounts with their wireless phone numbers at www.youtube.com/mobile.

For the most part, videos should be of good quality but wont be able to match the quality of a good video camera (of course!). How long a video you can record depends on the memory size of your mobile (which usually isn’t much) and the size of the memory card in your wireless device. Verizon Wireless currently has more than two dozen video messaging-capable phones.

Other than uploading videos, subscribers with V CAST-enabled phones can also access selected YouTube videos through the YouTube channel on V CAST. V CAST subscribers can also access Veoh videos through V CAST. V CAST costs $3.00 for 24-hour use or $15.00 monthly subscription (no airtime charges).

Just yesterday, I wrote about the rising number of mobile video subscriptions. Well, these events will only further increase mobile video subscriptions.

AT&T/Cingular started with a limited commercial rollout of the Video Share service in June 2007. Now, AT&T Video Share goes “nationwide” in nearly 160 Markets. While Europe has seen video calling services earlier (albeit with limited success), this is the first-ever service in the U.S. that enables mobile subscribers to share live video over their wireless phones while on a voice call.

This is still one-way live streaming-video feeds where one has to manually switch streaming direction (making it half-duplex video calling). There is still a laundry list of drawbacks with this service. I’m still skeptical that this service will catchup anytime soon.

Video Share works exclusively over the AT&T 3G wireless network. So the real good news here is that AT&T has expanded its 3G footprint, which was earlier limited to a few select cities. With 3G, users will get faster data download speeds using a technology called HSDPA. Another technology called HSUPA will increase upload speeds, but this will come much later.

It’s been almost 2 months since Amp’d Mobile went bankrupt (Amp’d is a mobile virtual network operator (MVNO) that runs on the Verizon Wireless network). Since then, it has been slowly but surely limping into the deathbed. Amp’d Mobile has sent a text message to customers announcing it will shut down today (Tuesday, 24 July). I guess it’s a nicer way to stop service, rather than hang up on callers like Sunrocket did.

The final nail in the coffin was when Amp’d Mobile struggled to meet the terms under which it was to pay US$2.5 million to retain its connection with wholesale network partner Verizon Wireless. Verizon has lost patience with Amp’d, saying in a statement:

‘While it is not the court’s responsibility to second-guess the debtor’s business decisions, it is the court’s responsibility to protect creditors’ interests from the actions of inexperienced, incapable or foolhardy management.’

Apparently, it costs Verizon Wireless $370,000 a day to maintain service to Amp’d customers. Amp’d has been encouraging subscribers to port their services to another operator. I always thought that Amp’d was a cool concept, including having mobile money/mobile wallet/m-commerce services with Obopay, but one that never got off the ground.

I hope that Verizon Wireless will take back the 200,000 customers that Amp’d had (perhaps less because some customers would’ve left soon after the bankruptcy). Their phones and service will definitely work on the Verizon Wireless Network (with a new PRL).

I haven’t tried Ooma yet, but it sure feels like the greatest thing since sliced bread, given all the hype and buzz surrounding it. And it’s just started private beta. You can find some of the greatest reviews at GigaOm, Crunch, Engadget, Mossberg, - some of the writing are pretty clear indications that Ooma reached out to these folks to publicize the private beta launch. So I thought I’d do a quick analysis to see if there are any drawbacks.

In any case, here are some of my concerns:

• Ooma routes calls via another Ooma box’s POTS telephone connection to terminate calls. This also means that you could hook up a recording device or an IP-PBX like Asterisk between Ooma and your phone jack on the wall and record conversations. You might not know the people in the conversation, but the receiver of the call is in your area code. The called number should be trackable, and then you could easily get the name and address associated with that number online.
• If some else’s call is terminated through the telephone connection hooked to your Ooma box, the caller ID seen by the called party would be your number, even though you wouldn’t even know that a call is routed through your Ooma box.
• If some else’s call is terminated through the telephone connection hooked to your Ooma box, your local calls (for many people most calls are local) will be routed via the Internet and then via someone else’s Ooma box. Despite having local phone service, you will now get lower quality service. Might as well not get rid of local service and get vonage.
• If you are making a call that goes through someone’s Ooma box and that person dials 911, then your call will be automatically and immediately get disconnected. This has low probability of happening, but a valid concern nonetheless.

Ooma is still in private beta. By the time Ooma goes “public beta”, hopefully these concerns will have been alleviated!

The unending patent saga between Broadcom and Qualcomm takes yet another twist as Verizon Wireless has agreed to pay Broadcom $6 per handset, up to a maximum $40 million per quarter and a lifetime maximum of $200 million in order to be able to import EV-DO handsets into the USA.

Verizon Wireless had previously supported Qualcomm in seeking a reversal of the ban, arguing it would prevent the latest handsets from getting to U.S. consumers. Qualcomm is pursuing a stay of the import ban and if that doesn’t work, a Presidential veto. As part of the deal, Verizon also will drop this effort to overturn the ruling.

I did a quick back of the envelope calculation: at $6 per device, $40 million covers 6.6 million mobile phones. That’s 27 million mobile phones for the year. Verizon Wireless has about 60 million subscribers, and lets say that a typical subscriber changes phones every 2 years. Thus Verizon sells about 30 million mobile devices per year.

The move is a blow to Qualcomm, but it looks like a pretty even deal for both Verizon and Broadcom, with some upside protection for Verizon Wireless. The $200 million maximum should be covered in 5-6 quarters, long enough time for Qualcomm to develop a workaround.

You probably remember or heard about failing non-replaceable batteries in iPods. It was sorted out only after much bad press and a lawsuit, so this time Apple is being more proactive in announcing an out-of-warranty battery replacement program for the iPhone. This is sorely needed, because unlike an ipod, the iPhone is a communication device, and these days, who can live without a mobile phone!Apple will replace a bad battery for free in the first year of ownership (warranty period). After that, battery replacements will cost $79 plus $6.95 shipping plus applicable taxes. You have to send in the iPhone or return it to an Apple store. The catch is that the battery replacement will wipe out all the data, so you have to sync your iPhone with iTunes to back up your contacts, photos, email account settings, and text messages.

The repair process normally takes three business days, so you could be without the dear iPhone for as much as 6 days on a long weekend. Fortunately, apple will loan you an iPhone to use in the meantime (just remember to swap the SIM card).

Apple has a FAQ on how to get the most out of your iPod’s battery, which would be helpful for the iPhone too.

Overall, Apple has done the right thing, especially since users cannot change the battery themselves. It would be much easier if the battery can be replaced at any Apple store while-you-wait, which Apple could also use as a way to market other Apple products to the user. However, for those used to the ease of swapping batteries on most cellular phones, this is a going to be a painful process.

Some of the popular blogs (see Crunch and TechStartups3.0) and those who link to them are going crazy over the miscalculated profits reaped by Apple’s iPhone. I hope the financial markets don’t use the same logic when buying/selling Apple Stock! Otherwise, someone’s investment could be in jeopardy. The source of this is a product teardown by Portelligent. According to BusinessWeek:

Portelligent estimates that the cost of the materials used in the iPhone add up to about $200 for the 4-gigabyte version, which sells for $499 and about $220 for the 8-gigabyte version, which sells for $599.

From this number, it would be easy but foolish to presume that profit per device is $299 (4GB version) and $379 (8GB version), and at 700,000 units sold in 3 days, that would be a massive haul for iPhone.

The Portelligent report focuses only on the bill of materials (that is the individual components that make up the iPhone), and doesn’t look at any of the other costs associated with launching a product. The picture is far from clear. To get the full picture one would have to consider the following as well:

1. R&D costs - this would be years and years of Research & Development costs
2. Software development costs (let’s keep this separate from R&D)
3. Cost of integration all components into a single device.
4. User Interface and Customer Research costs - I doubt Apple would’ve launched this without seeking user feedback on some form or the other.
5. Testing Costs - the additional cost of testing on the AT&T network. Let’s say that Apple pays at least a part of this.
6. Packaging costs
7. Distribution costs
8. Marketing costs and other overhead.

There are other costs to consider, but I don’t want to bore you with all the details. The other thing to consider is that Apple may receive volume-discounts from the Bill of Materials.

To fully understand the profit picture one has to consider additional revenue sources too. There are rumors that Apple gets a revenue share of monthly subscriptions from AT&T.

It is indeed a nice picture for Apple - I’m confident the iPhone will be huge profitable. We don’t know how much it is just yet!

I was looking forward to a 3G-capable iPhone first launching in Europe (AT&T in the U.S.A. has little 3G coverage), but FT reports that iPhones in Europe will run on the slower 2.5G mobile networks, rather than on the faster 3rd generation (3G) networks. Why was I looking forward to that? because it means that a 3G capable iPhone will be out soon.

One way or the other, it makes sense from Apple’s perspective to release the same phone that was launched in the U.S.A on June 29th:

1. Apple would have negotiated volume pricing for iPhone components that are geared to run on 2.5G networks, and there’s likely plenty of 1st generation iPhones (2.5G) yet to be sold.
2. 3G circuitry will be costlier than 2.5G electronics. After all, 2.5G has been around for a long time and there are many manufacturers. 3G is the domain of Qualcomm and Qualcomm usually charges a significant premium for 3G chips and 3G Patent licensing and reaps gazillions in Intellectual Property. So why increase prices and lose some customers or keep the same price on more expensive phones and lose margin.
3. Why not release a first generation iPhone first, then create some more awe for the 2nd generation iPhone.

Obopay is a mobile payment service in the U.S. that allows users to receive, send and spend money instantly and effortlessly via their mobile phones, whether shopping at their favorite store, going to the movies, or dining with friends. Users can immediately access their mobile money using an Obopay prepaid MasterCard®, which can be used at any ATM or retail outlet that accepts credit cards. Users can also check their account balances, collect money owed from other mobile users, view transaction histories, and invite friends to use the service.

Obopay became the first Mobile Payments Service to be offered by a major U.S. wireless operator when Verizon Wireless announced plans to make Obopay available to Verizon Wireless customers in the near future. As with the case with most applications on Verizon Wireless, Obopay will as a downloadable BREW application.

Obopay, much like its better-known cousin PayPal is a money payment service, but is focused on mobile phones. Obopay is also available on AIM, where a user can send money and make payments from the AIM Buddy List. Obopay works with Verizon Wireless, youth focused MVNO’s Amp’d and Helio, and Cellular South. Obopay is funded by ONSET Ventures, Qualcomm, Redpoint Ventures, and Richmond Management.

The strategy to win in this business is simple - get moving fast, sign up as many wireless service providers as possible (including International), and market the service to users. The technology is straightforward and is easily copied, so that’s not the strategy. This business has a first-mover advantage because wireless service providers and users are unlikely to sign up with multiple payment providers - low entry barriers and high switching costs. Obopay must move fast to establish that advantage

LG Electronics, the 5th largest manufacturer of mobile handsets by volume, is developing a mobile phone that allows users to view and share YouTube video clips. Most importantly, users will be able to shoot video from the handset and upload it to YouTube. The handset will be launched in Europe in the second half of this year.

LG is also stepping up its partnership with Google. LG also has launched 3G handsets called “Google phones” with one-click access to Google search, Google maps, and Gmail, in Europe last month. The first Google phone, LG-KS10, was launched in Italy in April. LG also has a similar agreement to put Yahoo Go for Mobile 2.0, Yahoo Mail, and Yahoo Messenger on some handsets.

Given that the Apple iPhone already YouTube and given Youtube’s premier status as a online video site, it’s no surprise that handset vendors are clamoring to add YouTube to handsets, although the ultimate decision as to which software gets included in a handset lies with the wireless service provider.