I recently went on a tech buying binge which put me squarely at the bleeding edge of mobile technology, albeit for a week or so until the next big thing comes along. I was recently pick-pocketed in February and had to replace my beloved Droid 2 with a new model at full retail price (I just got it in August). When looking at price lists that started at $499 for what seemed to be the equivalent of a refurbished Motorola RAZR from 2003 with the new Android and iOS phones starting around $599, I quickly decided to buy the best phone available. Given that I'm a Verizon user, I decided to pre-order the HTC Thunderbolt, which I picked up (finally) last week (in the meantime, the Droid X served me well). This is the first 4G LTE smartphone on Verizon, and has been a great phone thusfar, with better audio quality for calls and ridiculously fast internet (it's actually just a hair slower than my FIOS connection at home).
Additionally, while I was at SXSW with the StockTwits crew, I caved and picked up two iPads (one for the wife) at the SXSW pop-up store, which made acquiring an iPad on opening weekend a total breeze... When offered the option of getting the 3G model, I declined immediately - whenever I'd use the device, i'll have wifi, particularly thanks to Terminal 5 at JFK's free wifi access (Thanks JetBlue).
The Changing Landscape
As our fearless leader, Howard Lindzon, has stated in his succinct post, the world has changed around the mobile phone carriers. Innovation is no longer expected from these companies. In fact, all we want is enablement of technology coming from elsewhere, with limited hassle from these folk. With my Thunderbolt, all I wanted was the raw device from HTC, none of the preloaded garbage software that Verizon put on the SIM, and the ability to use the 4G network to download useful mobile apps like Skype and others.
I've reviewed my spend per month over the last few, as well as my wife, and i find an interesting pattern. We both spend a very limited amount of time on voice calls each month. Blame it on Skype at the office, which I use for at least 4 hours a day, and you realize just how little the cellphone is needed for phone service. My wife and I are heavy text messagers, but we're both slowly replacing texting with free alternatives like Twitter DM, Facebook messaging and even GChat (to be fair she's still missing BBM, which would incidentally be a great app for Android ;-) ).
On the app side, I prefer Google Maps and their automated free navigation to Verizon's equivalent for $3 a month. I rarely use Voicemail, so I dont see a value in their visual voicemail for additional bucks. I even avoided buying Verizon's sloppy extended warranty, in favor of the no-nonsense Best Buy policy.
Long story short - We use Verizon for as little as possible, despite it being the best carrier in the US by a long shot. I doubt we are the exception...
The Lure of 4G
Over the last few weeks, i've spent a sizable amount of time at Best Buy with their mobile team, and have figured out what's been going on (and frankly, why T-Mobile is still acquiring customers). Despite poor coverage in essential areas (Scoble covers this nicely), T-Mobile's low cost plans and promise of "4G coverage" have made it a hot network, particularly for salespeople at Best Buy. I recall from my time as a consultant looking at the SPIFF business, particularly for the mobile phone industry - salespeople are paid a fortune to promote particular handsets and plans from specific carriers at particular points in time. I've noticed that Best Buy was selling T-Mobile 4G phones like the EVO like hotcakes, to a generally smart and reasonably wealthy community on the Upper West Side of Manhattan.
4G can be appealing, particularly if it is faster than traditional 3G coverage. However, both AT&T and T-Mobile have relatively poor 4G networks, particularly when compared to Verizon's network, in terms of speed and coverage. Given that Verizon has now rolled out 4G phones, I wonder how long those T-Mobile incentives will excite the smartphone user going forward...
The arrival of true 4G also furthers the move away from voice to data plans, where smart carriers actually provide good Skype access for international calls and cheap VOIP alternatives to otherwise expensive landline and cell calls. Much like the development of cheap bandwidth capacity by Global Crossing and MCI on the backs of huge investor losses through bankrupcy, I'd expect the 4G developers to slowly lose their shirts to innovators like Google, Apple, and dare I say it Microsoft, RIM, and HP, as the value shifts from the pipe owners to the intelligent software managing those pipes and the content carried across them most efficiently.
Merging Losers Isn't A Winning Strategy
A quick browse of the library of Harvard Business School case studies will give you a pretty good sense of the odds of success for a merger of two loser companies, attempting to beat a smart market leader. We could point to several attempts in the market, such Sony-Bertelsmann, Kmart-Sears, BA-Iberia, Delta-NWA, etc.
The primary purpose of a merger of losers is to shed dead weight and attempt to better compete with the market leader. Of course, in many cases, the brands themselves struggle to create a compelling reason for ordinary people to give any new credibility to the new combined entity. Additionally, bureaucracy, coupled with slow moving management, entrenched in job security and generally lacking great creativity are hard to move.
In the case of AT&T and T-Mobile, you find a good marketing engine potentially, along with assets in building credibility with both Apple and HTC for some of the most innovative phones. Unfortunately, their infrastructure needs drastic improvement, and the combination may put them farther behind than closer together, as there's a ton of overlap.
In a market where a duopoloy has been created between Verizon and this new AT&T-T-Mobile, I find it difficult to not be bullish on Verizon in gaining further market share. The only question is whether the overall market will grow or stagnate...