Category Archives: Uncategorized

The App-o-sphere

By Phil Downing

 

                The boom of smartphones, such as the iPhone and Google’s  Android, have lead to the emergence of a new media commodity: the phone app or application. Data by mobile advertising firms Millennial Media and Mobclix say that consumers are now downloading over of 100 million applications from Apple’s App Store each month.

 The downloadable add-ons to your phone can range from business functions to social media products to videogames.  The hundreds of thousands of apps available allow users to turn their phones into a single access point for all of their favorite media by connecting thousands of services and commodities with their cell phone.

Apps, such as Facebook and Twitter provide people mobile access to their social media lives, while apps such as New York Times and Bloomberg connect people to breaking news from around the world. Apps don’t always need to be functional either, they can allow you to play a round of Supermonkeyball or sing like T-Pain if you have a little spare time.

But Apps aren’t all fun and games; there is a lot of money and big business behind them. The business side of apps is found in “the app store”. With smartphone sales growing by the minute, these contact points between app developers and smartphone users have surged into a billion dollar industry.

As always with new and profitable business markets, big corporations are battling it out for power and control of the medium. This has lead to a divided and unorganized app industry. Corporations like Apple and RIM have tried to gain control by only allowing their applications to work with their devices. Every smartphone developer now has its own app store where you can buy apps that work exclusively with their devices.  RIM created App World, Nokia developed Ovi Store, Google made Android Market and Apple made the App store.

Although big businesses sectioning off certain apps has confined customers, it has opened up the door for new businesses. GetJar is a third party app stores that generates 60 million downloads per month and has 350,000 registered developers. Unlike App world and Apple’s App Store, GetJar sells apps for all platforms. GetJar cannot sell apps that can be used by all phones because each phone brand requires different types of programming but it does create an area where all phone users can buy whatever apps they want. Since its creation GetJar has grown into the second largest app seller behind apple.

Independent developers have also capitalized on the new medium. Recently, Apple CEO Steve Jobs reported that Apple’s app store had made over one $1B in revenues for app developers and that many applications in the app store make over $3,500 per day. Developers have earned substantial revenues through other app stores as well.

This is an Apple commercial, so it bias toward the iPhone, but it does show how people are starting new businesses through apps.

I guess all of this comes down to one question: should you buy apps for your smartphone? When all is said and done the app can be seen as just another way to rip people off. But if you’re going to get ripped off you might as well get a fun game or a useful service on your cell phone. Apps generally only cost around $3 a piece and they are stimulating some growth for new competing businesses. So I say have at it. Just make sure to buy your apps from an independent store and not another fat corporation trying to take yet another bite out of the economy.

 Android

 the phone app

Apps

sing like T-Pain

Supermonkeyball

the app store

unorganized app industry

GetJar

60 million downloads per month

$1B in revenues for app developers

Communication Unions

By Phil Downing

AT&T is the largest cell phone service provider in the United States. It has assets worth $268 billion and it had revenues of $123 billion in 2009. AT&T has 70 million subscribers and the largest market share of any phone service company.

All of that cash gives AT&T a lot of power, but so do its employees. AT&T has 282,720 employees, many of which belong to a union. AT&T, the only phone service provider in the United States with a unionized work phone, is unionized through the Communication Workers of America (CWA).

The CWA began as the National Federation of Telephone Workers in 1938 representing 145,000 employees in the telecommunications industry. CWA is currently the largest communication and media union in the world with 700,000 members. The has been battling it out with corporations since WW1 for media workers. AT&T entered its first contract with CWA in 1946.

Ever since their first contract, the CWA has had an important relationship with AT&T. The CWA was involved in multiple strikes against AT&T in the 1940’s through the 1970s. These strikes against AT&T tackled issues over pay increases, healthcare and discrimination. The CWA won a major settlement against AT&T in 1973, in which AT&T paid over $45 million as back wages to women and minority employees.

Recently, over 11,000 AT&T employees threatened to strike due to low wages. Upon threats of a strike, AT&T agreed to a four-year contract with CWA that will give employees a 10 percent increase in wages.

Although the company will always have power over the worker, AT&T employees’ ability to organize themselves in a union has paid off. By unionizing, workers have stopped AT&T from treating workers unfairly and has lead to increased wages and benefits.

power over the worker

11,000 AT&T employees threatened to strike

multiple strikes

700,000 members

National Federation of Telephone Workers

The T-1000 of Corporations

By Phil Downing

In 1974, the United States won one of the largest anti-trust lawsuits in the country’s history when it declared AT&T a monopoly.  The courts found that AT&T’s extreme levels of verticle integration classified them as a monopolistic business and mandated that AT&T divest its assets into smaller independent companies to create more competition in the telephone service market. 

The Majority of AT&T was split up into seven separate companies:  Ameritech, Bell Atlantic, Bell South, NYNEX, Pacific Telesis, Southwestern Bell and US West.  While AT&T was stripped of many of its local service arms, it was able to keep control its long-distance service systems and its manufacturing subsidiary, Western Electric.

Although the government did what they could to divided AT&T, the companies that AT&T was broken up into eventually started to acquire one another.  Southwestern Bell, which renamed itself SBC Communications in 1995, began to diversify horizontally and bought up many companies that used to form AT&T. SBC Communications purchased Pacific Telesis for $16.5 billion in 1996 and Ameritech for $62 billion in 1998. SBC Communications then bought its former owner AT&T for $16 billion in 2005 and absorbed the name AT&T. The new AT&T then purchased Bell South for $86 billion and united the ownership of Cingular, the largest US service provider, under the name AT&T.

Steven Colbert had something to say about the lack of effectiveness of the country’s anti-trust efforts. 

Thanks to its horizontal integration AT&T is once again the largest telephony corporation in the United States. Despite their past anti-trust actions, the FCC and the Department of Justice approved all of the mergers that allowed AT&T to reform the majority of their previous holdings.

Interestingly, a partnership of former AT&T subsidiaries, Bell Atlantic and NYNEX went on to become Verizon, AT&T’s largest competitor.

anti-trust lawsuits

AT&T divest its assets

Western Electric

bought its former owner AT&T

AT&T then purchased Bell South

Steven Colbert had something to say about the lack of effectiveness of the country’s anti-trust efforts. 

Intellectual Property Issues

By Phil Downing

Apple has filed for more than 200 patents to secure the technology of the iPhone. However, they were not able to claim one important piece of intellectual property: the name.

In 1993 a company named Infogear invented a phone that integrated telephony and the Internet then trademarked the term “iPhone” in the US. Years later communications giant Cisco purchased Infogear and its rights to the name “iPhone”. Cisco had held an 8 percent share of Infogear for some time and then purchased all outstanding shares of the company for $301 million dollars in 2000.

On Jan. 10, 2007 Cisco sued Apple for infringing on its copy right to the name “iPhone”. The companies were in negotiations working toward allowing both companies to sell their products under the name iPhone. It seems that talks ended after Cisco proposed the idea of the two companies’ products operating together.

Some experts say that Cisco’s trademark was abandoned in 2006. According to US law, you have to prove that you produced and continually used a trademark in order to hold ownership to the property after six years of filing with the United States Patent and Trademark Office (USPTO). Cisco did not file the Declaration of Use needed to show the trademark was being utilized before the deadline. For a monetary fee Cisco was given a six month extension to produce a label or packaging for their iPhone product to prove they have been utilizing the trademark. This is what they sent in:

Cisco product that they have “been making” for the past six years

The word iPhone is only visible once on the package and it is outside of the lamination on the box. Cisco literally put a sticker that says “iPhone” on one of their other products and is claiming they have been manufacturing iPhones for years. You’d think a corporation with billions of dollars could produce a better fake than that. This picture probably wouldn’t trick a class of sixth graders let alone the USPTO. Good one Cisco. This just shows how media companies can use ownership of intellectual property to control media commodities and the use of ideas.

Months after faking a product for the USPTO, Cisco did rename one of their products the “iPhone”. However, Apple is still using the term iPhone and I don’t see Cisco doing anything about it. Looks like a W for Apple.

trademarked

communications giant Cisco purchased Infogear

Cisco sued Apple

Declaration of Use

Anti-Trust Suit Looming?

By Phil Downing

Rumors are swirling that Apple is soon to be subject to an anti-trust lawsuit.  According to the New York Post, the Department of Justice and the Federal Trade Commission are deciding which of government bodies will begin an official inquiry into the implications of Apple’s new operating system.

With a new set of iPhones and the iPad soon to be released in stores, so is a new operating system for Apple touch screens.   Why is that an issue with the government? The problem lies in section 3.3.1 of Apple’s iPhone 4.0 software developer kit license agreement.

3.3.1 — Applications may only use Documented APIs in the manner prescribed by Apple and must not use or call any private APIs. Applications must be originally written in Objective-C, C, C++, or JavaScript as executed by the iPhone OS WebKit engine, and only code written in C, C++, and Objective-C may compile and directly link against the Documented APIs (e.g., Applications that link to Documented APIs through an intermediary translation or compatibility layer or tool are prohibited).

The recent amendment to the section in question bans programmers from using cross-platform software to produce applications. By limiting iPhone and iPad apps to using Objective –C,C and C++, Apple blocks competing programs, such as Adobe Flash, from developing apps.

According to a lengthy letter written by Apple CEO Steve Jobs, Apple created the amendment to stop third-party companies from controlling the quality of Apple’s applications.

Adobe’s CTO Kevin Lynch disagrees. Lynch states, “The technology issue Apple has with us is not that our tech doesn’t work, it’s that it does work.” Lynch claims that Apple is trying to build a wall blocking other companies from competing in the app market.

While the dispute between Apple and other companies is sure to continue, one aspect of this issue is unique. Apple could be charged with an anti-trust lawsuit for monopolistic practices when they only account for 14 percent of the Smartphone market.

New York Post

a lengthy letter

Apple is trying to build a wall blocking other companies

14 percent

The problem

iPhones Are Really F*cking Expensive

By Phil Downing

Before you go and blow all that hard-earned cash on car and mortgage payments maybe you should use that money as collateral on a new loan for your cell phone.

The Apple iPhone, which combines the technologies of an MP3 player, cell phone and the Internet, was released to the public June 29, 2007 for the whopping price of $599. The device that is widely considered a revolutionary invention, was developed in a deal that was unique and revolutionary in its own right.  Apple approached AT&T with a proposition: Apple creates an advanced smartphone that creates synergy between mp3 players, the Internet and cellular telephony while AT&T pays for the development of the device in return for 5 years of exclusive selling rights. This deal deviated from the classic relationship of cell phone developers and service providers by turning the structure of the industry on its head.  Historically, service providers had controlled what phones and features a developer would create by threatening to withhold access to service. Now, service providers cannot control the market and instead are seeking joint ventures with cell phone developers.

After following through on its deal with Apple, AT&T reportedly invested over $150 million in the development of the first generation iPhone.

Although the iPhone was produced by Apple and AT&T, the phone is manufactured by Foxconn, a contracted manufacturer based in Taiwan. Foxconn also manufactures the iPod and iPad for Apple.

The original generation iPhone cost $599 on its release date. However, to the dismay of many tech-head early purchasers, the price dropped by $200 within two months of the phone’s release to target a bigger audience.

The third generation (3G) iPhone models are sold through AT&T from prices ranging between $199 and $99. At first glance the iPhones prices do not seem extremely high for such an advanced phone because AT&T subsidizes most of its cost, paying Apple around $300 per iPhone. The price reductions for the iPhone 3G and new customers momentarily allowed Apple to become the third largest cell phone company in the world by revenue when it surpassed Research In Motion’s Blackberry in 2009.

However, what many customers fail to see is that the earlier stipulated prices are only available if you ink a new two-year service contract with AT&T and pay an additional $30 per month for data charges (an extra $720 over the two-year contract).

The increased service plans have bolstered major increases in AT&T’s profits.  According to Nielsen ratings 98% of iPhone users have data plans. Nielsen also says that 88% percent of iPhone users operate the Internet on their phones (4x as likely as other phone users), which AT&T collects fees for.

The iPhone can be seen as a high-end commodity, as 40 percent of iPhone users have an annual income of over US$100,000. Apple targets a global consumer base for the iPhone by selling it in over 80 countries. Aside from geography, the iPhone has a widespread audience across all ages.

Despite hefty price tags, there have been 33 million iPhones sold worldwide, 6.4 million of which were bought in the United States. The iPhone 3G and 3GS versions are the highest selling models of the phone worldwide, outselling the first generation iPhone in its first quarter of availability.

Despite a recession people are willing to fork over a lot of money for the new must-have commodity. The iPhone is mainly owned by high income consumers. Even though the price of the iPhone has gone down that is only because AT&T is paying for part of your purchase in order to rope you into paying them even more money over the next two years. No matter how low the initial cost is, the iPhone is still a really expensive cell phone.

June 29, 2007

revolutionary invention

smartphone

deal

Foxconn

the price dropped by $200 within two months

Apple to become the third largest cell phone company in the world by revenue when it surpassed Research In Motion’s Blackberry

increases in AT&T’s profits

Nielsen ratings

80 countries

Meet the Playaz

By Phil Downing

Just as in any media industry, cellular communications is controlled by a small group of huge corporations. There are two areas of the cellular communications industry: the companies that provide cell phone service and the companies that produce cell phone hardware.

In the American service market there are four major competitors: AT&T, Verizon, T-Mobile and Sprint. These four companies control 84.4 percent of the cellular service market, making it nearly impossible for smaller service companies to compete. Two of these companies, AT&T and Verizon, are on the list of the top 100 companies in the world in terms of sales.  AT&T has annual sales of 123 billion dollars and Verizon has annual sales of 107 billion dollars. By these standards AT&T and Verizon dominate the cell phone service market in America.

Overseas in Europe and Asia there are more competitors. China Mobile has the most subscribers of any service company with 463 million (AT&T, the largest provider in the US, has 70 million subscribers). Other notable overseas corporations are Vodafone (UK) and Deutsche Telekom (GER), T Mobile’s parent corporation.

The other side of the cell phone industry is the companies that manufacture cell phones and cell phone accessories. These are the top ten mobile phone companies:

  • Samsung Electronics Co., Ltd.
  • Nokia Corporation
  • LG Electronics, Inc.
  • Motorola, Inc.
  • Apple Inc.
  • Sony Ericsson Mobile Communications AB
  • Research In Motion Limited
  • ZTE Corporation
  • HTC Corporation
  • Palm, Inc.

Nokia holds the biggest market share at 38.6 percent, then Samsung with 19.5 percent, next LG with 10 percent, while Motorola and Sony Ericsson each hold around 4.5 percent of the market.

These cell phone manufactures have exclusive contracts and subsidizing agreements with the major service carriers, bringing the two sides of the industry together.

For example, the iPhone made by Apple is only sold through AT&T. AT&T subsidizes the iPhone paying Apple over $300 per phone in order to sell the phones to customers at lower prices and then makes a killing by locking those customers into long-term service agreements.

This video covers how AT&T and Verizon are dominating the US customer base and how service companies make money off subsidizing phones.

making it nearly impossible for smaller service companies to compete

top 100 companies in the world in terms of sales

China Mobile

463 million

Vodafone

Deutsche Telekom