The News – 07/09/01

Disposable Tech

You know something has really entered the mainstream of American life when folks don’t feel bad about throwing it away. It happened to pocket handkerchiefs (Kleenex®); it happened to lighters (Cricket , 1961); it happened to cameras (Fuji, 1986). And now it’s happened to cell phones. Soon it’ll be laptops.

There are several companies making disposable or recyclable phones today. Dieceland Technologies has designed an extremely simple, call-only phone made of coated paper. Most of its circuitry is printed on the paper surface, with the exception of a few circuit chips and a battery source. The phones range from $10 for 60 minutes to $30 models with more features. Each can be thrown away, replenished with airtime or maybe even recycled. The company has more than 100 million units on order. That’s right, 100 million cheap, disposable phones hitting the streets soon from just one vendor. A paper laptop is on the drawing board.

Telespree’s phones are a bit more durable, and are made to be recycled. The AirClip portion holds the battery and number of minutes purchased. Consumers can purchase more air and battery time in stores that carry the phone. The phone is also call-only, but Telespree is working on one that can also receive calls. Telespree’s big innovation is the lack of a dialing pad; their phone is voice activated, employing technology from Nuance Communications .

A third company, Hop-On.com , recently inked a deal with fiber backbone provider Williams Communications that has Williams carrying all Hop-On’s long distance traffic for the next three years. Hop-On’s phone is also extremely simple – only two buttons – and comes with 60 minutes of talk time. The consumer uses a hands-free earpiece and dials via voice. The phone supports the GSM, CDMA, and TDMA protocols, but it’s not clear if that’s all in one phone or not. The company is developing a biodegradable plastic it will soon use to fabricate its cases. Hop-On is also working on call receiving services as well as a package of informational services featuring sports, weather, stocks and entertainment. Hop-On’s parent company is involved in Internet casino gaming, so we can imagine what the entertainment might involve. Despite the Williams deal, the future is uncertain for Hop-On. The publicly traded company has a market cap of $376,000 and shares traded on the pink sheets at $0.18.

Wireless carriers spend roughly $150 in cell phone subsidies for each new subscriber, according to Current Analysis . Prepaid plans are intended primarily for those who fail a credit check and are typically much more expensive on a per-minute basis than monthly plans. Prepaid users typically are not loyal to a carrier and don’t commit to buying a regular amount of minutes. Analysts figure teens and seniors are two groups ripe for cheap phone sales.

So what can we learn from the disposable phone trend? Well, basically that services are more important than ever. Assuming the phones will remain feature lite – no Internet, no WAP, no J2ME, no buttons to push – obviously the strategy is increased wireless penetration. Yet no one is going to get rich on $10 phones, although if Dieceland sells 100 million of them, well, that ain’t hay. The real revenue stream is in serving the users of those phones. But, wait. If the future trend for wireless phones is going to be stripped down phones with extremely simple user interfaces (UIs), what’s that mean for all the wonderful applications people are hoping to build?

A certain percentage of people who would otherwise buy the latest phone as their first phone will gravitate toward the simplicity and perceived cost savings of the disposable, especially once the phones can receive calls as well as place them. This means the penetration of the full-featured phones – the kind that need consultants to write apps for them – will necessarily suffer. Certainly, not everyone who would buy a disposable is a potential geek phone buyer. However, with handset sales no longer growing robustly, Nokia and others are counting on increasing penetration to maintain revenue.

On the other hand, let’s face it, the typical geek phone UI sucks. Converged PDA/phone combinations are only a little better. The simplicity angle of disposables just means more work programming the backend and some sort of voice interface like Nuance’s or TellMe’s . In some ways, this simplicity is more consistent with the usual function of a phone, to receive and give audio information. You also don’t have to be adept at doing two things at once: looking at and using a visual display while talking on the phone.

So who will benefit, no matter whether the trend is to geek phones or disposables? Voice interface vendors and consultants. That’s the service component this particular disposable enables.

Next time: other disposable tech.

SiliconValley.com

Thanks to John Skach and especially Alert SNS Reader David Dabbs for research.

Briefly Noted

• Shameless Self-Promotion Department: The latest issue of the Geneer Business Report, written by your humble servant, has hit the Net. It’s entitled Peer-To-Peer Computing and Your Business. And don’t miss the white paper, The Buzz About Hive Computing: Putting Peer-to-Peer Computing to Work , also recently available.
  Geneer

• Acme Rental Fines Follow Up – Alert SNS Reader Andrew Hargreave passed along this update from Slashdot regarding an earlier news item reported in SNS. The Connecticut Department of Consumer Protection has ruled against Acme Rent-A-Car in their practice of fining car renters $150 per speeding infraction. The decision was based on the fact that Acme failed to properly word their contracts when they indicated that fines would be imposed for speeding. Dept. Commissioner Jim Fleming also stated that the practice of renters being fined is illegal. However, the practice of tracking vehicles with GPS is still a legal practice. So the Roadrunner wins the round . . . again.
  Slashdot

• 3G Problems in Japan: NTT DoCoMo will replace all 1,400 of its 3G wireless handsets (model N2001, made by NEC). The company claims this is not a recall. Company spokesman Takumi Suzuki said, "We are replacing handsets to improve their function, not because of technical problems." Right. DoCoMo has recalled more than 400,000 non-3G handsets over the last year or so due to quality problems.
  BBC
• Broadband Density: America is not the most wired country in the world, at least as far as broadband is concerned, according to the Organization for Economic Co-operation and Development. South Korea leads with 9.2 broadband connections per 100 inhabitants, compared with 2.25 in America and a measly 0.08 in Britain. Canada even beats the US, while Austria is the most connected country in Europe. Bad execution is blamed for lack of penetration in many countries. Germany’s Deutche Telekom signed up 630,000 broadband subscribers last year, but only managed to hook up 135,000 of them.
  The Economist
• Hosting in Trouble? Once upon a bubble, Web hosting companies were the darlings of Wall Street. They were the “picks and shovels” guys providing the infrastructure for the Internet gold rush. Now one of the biggest of them all, Exodus, is in trouble and may not make it. Their stock plunged 65 percent recently, and they’re obviously taking on water. So much for picks and shovels. Businesses should ask a lot of questions about their hosting company in this difficult environment.
  Internet World
• One Fish, Two Fish: OK, I had to headline this item about Bluefish with a reference to the Dr. Seuss classic. Bluefish Wireless recently launched infrared access points for Palm PDA owners in Laptop Lane outlets in Chicago’s O’Hare and Atlanta’s Hartsfield International airports. During a three-month trial, users can download news from Reuters via AvantGo and purchase books, CDs, flowers, and wine. As if that’s not enough, users can earn United, American, or Delta frequent-flier miles from their purchases.
  Internet World
• What a Difference a Letter Makes: You may be familiar with the wireless LAN standard 802.11b, otherwise known as WiFi. It’s the de facto home wireless LAN standard backed by 3Com, Apple, Cisco, Intel, and Nortel. You may have wondered, “What’s up with the ‘b’? Is there an ‘a’?” Yes, there’s an ‘a’ and also several other alphabetic variations. A current problem with 802.11b is its use of the unlicensed 2.4GHz frequency, the same frequency occupied by Bluetooth, digital cordless phones, and even your microwave oven. The 802.11a standard moves to the relatively empty 5Ghz band and promises more than five times the 11Mbps throughput of WiFi. But that’s not all. The other variations of 802.11 also could be important, especially to business, in the next few years. See the article for a roundup.
  The Standard
• The Drive to Improve: Next month Maxtor will begin shipping a 100-gigabyte PC drive, the industry’s biggest to date. Costing $300, the drive will hold one hundred billion bytes of data, enough to store, for example, more than 25,000 MP3 music files or a hundred million memos you can’t remember where you filed.
  Wall Street Journal (subscription required)
• Microsoft to Drop SmartTags: Everyone’s favorite monopoly has decided to leave out a controversial feature from the upcoming release of Microsoft XP, their next operating system. SmartTags work in Internet Explorer and allow the software giant to link any word on any Web page to a site of their choosing. Despite being pretty annoying, this technique, which Microsoft is not abandoning forever, obviously would give it tremendous marketing power. Just what they need: more power.
  C|Net

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