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October 12, 2013

Mobility Techzone Week in Review

There has been a lot of chatter over the last month concerning the possibility of smartphones and smartwatches beginning to sport curved display screens. Dubbed variously as either curved or "flexible", these screens are supposedly durable and hard to break or otherwise crack. Both Samsung and LG are the two best known companies with the manufacturing resources to deliver on the "promise" of a curve, though no doubt Sharp is also somewhere in the process of delivering here as well. In any case, this week Samsung was the very first out the door with an actual curved screen smartphone, dubbed the Samsung Galaxy Round. The new toy is gently curved along its vertical axis, and comes complete with several new Samsung software features we are having a hard time determining a real value for.

This week we also discovered - though not to anyone's surprise, that Samsung is driving new records for AMOLED screen display shipments. No doubt the new curved display devices will add to the shipment counts. We do wonder -- since the Galaxy Round is not a tiny device, sporting as it does a large 5.7 inch display, whether or not that curve makes it all the harder to actually hold in one's pocket. Is a curved display for a smartphone really necessary? There are many other possibilities for a highly flexible display, but we're not convinced a curved screen, gentle or otherwise, is the real application for flexible displays -- that is a story for another day. Samsung, we believe, is simply interested in being able to say, "We're first" more than in anything else. Along with "we're innovators" and "we're pioneers."

T-Mobile this week launched a brand new campaign for itself as it looks to continue to build momentum behind its "Un-carrier" marketing messages. Doing away with two-year contracts, eliminating phone subsidies and allowing a subscriber to buy their phone over an extended period, and introducing the iPhone has already managed to bring over one million new and returning subscribers to the fold. Now T-Mobile has announced (with a little help from international pop star Shakira) that it will deliver a new Un-carrier feature -- it is eliminating international roaming charges for its customers and providing unlimited texting. Subscribers will now be able to make calls when traveling abroad for only 20 cents per minute. This is an aggressive plan with revenue implications for international competitors. The only thing that is now missing is a T-Mobile Samsung Round smartphone!

This latter issue we noted above concerning global carrier revenue is in fact non-trivial. Just this week a new research report appeared that very clearly states that global mobile carrier revenue will in fact begin to decline by 2018. This would be a historic first, and the potential revenue declines are not in the least trivial in nature. T-Mobile's new international calling fee structure and free texting certainly won't help. Nor will OTT players such as WhatsApp (although T-Mobile's new strategy might conceivably weaken WhatsApp's appeal as well).

Carriers also have one other new option -- looking to reduce churn through the use of analytics. This makes sense and some estimates suggest that such analysis could lead to as much as $4 billion in retained revenue through 2018 for those carriers that opt to implement such a strategy.

Continuing the theme of "decline" we come back one more time to BlackBerry and its fate. Earlier this week Blackberry was hit with a class-action lawsuit, one claiming that investors have been deceived by BlackBerry's management team. How so? The lawsuit suggests that investors were misled as to the efficacy of their new products and plans. Perhaps, these investors suggest, BlackBerry wasn't merely overly optimistic but fibbing about future success. Meanwhile BlackBerry itself continues to roll out new features, this week announcing that it is moving its EMM capabilities to the cloud.

Finally on the BlackBerry front, the possible acquisition of the company by Fairfax looks to be in trouble just a few short days after it was announced. Part of the problem looks to be a possible inability for Fairfax to raise the necessary $4.7 billion in fund - even if we include the fact that BlackBerry has $2.6 billion in cash on hand. But the biggest issue appears to be that many investors are coming around to concluding that breaking BlackBerry up into different pieces may actually make it worth more than $4.7 billion. No doubt those investors involved in the lawsuit are keeping an eye on this as well.

The smartest BlackBerry investors where those who knew to get out when the stock hit $149 a share in 2008. Those were the days.

Have a great weekend!

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