An Ignoble Experiment

2. T-Mobile debuts data plan specifically for Audi connected cars

Samsung Electronics said it expects its first-quarter operating profit to be around $7.7 billion, up 53 percent from around $5.02 billion in the year-ago period and beating analysts' estimates. The company, even without the soon-to-be-released Galaxy S4, still managed to produce strong smartphone sales in the period, analysts said.

Samsung said total revenue for the firm, which makes everything from handsets to TVs, refrigerators and chipsets, jumped to an estimated $45.8 billion, up from around $40 billion in the year-ago quarter. Samsung will report full quarterly earnings April 26.

Samsung's operating profit guidance was better than an average forecast of $7.32 billion in a poll of 42 analysts by Thomson Reuters I/B/E/S.

Samsung's results do not include sales of the Galaxy S4, which is scheduled to launch by the end of the month. Samsung has said it will roll out the Galaxy S4 through 337 operators in 155 countries. In the United States, the company's overall sales are likely going to be goosed by a new partnership it announced with Best Buy to open 1,400 "Samsung Experience Shops" within Best Buy locations nationwide. Samsung said that by early May, 900 Best Buy and Best Buy Mobile stores will feature the new Samsung mini-stores, with the remainder launching by early summer.

"Second-quarter profit looks even better than the first, as the Galaxy S4 will have a great impact," Chung Chang Won, a Seoul-based analyst at Nomura Holdings, told Bloomberg. "Samsung's shipments of its flagship smartphone will outpace that of the iPhone sometime in the second or third quarter."

The challenge for Samsung at this point is keeping its momentum going as the world's largest smartphone and handset maker. Seo Won-seok, an analyst with Korea Investment & Securities, told the Journal that he estimates Samsung shipped 68 million smartphones in the first quarter and 104 million handsets overall. He said he expects Samsung's smartphone shipments to rise to 75 million units in the second quarter and its total handset shipments to rise to 110 million units.

Samsung is also expected to launch a major marketing blitz for the Galaxy S4, something that has some analysts worried about the company's positioning. Samsung spent a record $11.5 billion on marketing last year, according to Reuters, which was $1.3 billion more than what it poured into research and development. "(Samsung) lagged behind in creating a new category," Canalys analyst Rachel Lashford told Reuters. "Apple created a new category with tablets. We are waiting to see something like that happen from Samsung."

In fact, Samsung confirmed in March it is working on a smart watch which may rival a similar product that is Apple reportedly working on as the race to develop wearable computing devices heats up. "We've been preparing the watch product for so long," Lee Young Hee, executive vice president of Samsung's mobile business, told Bloomberg. "We are working very hard to get ready for it. We are preparing products for the future, and the watch is definitely one of them."

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
- see this separate Reuters article

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Analysts: Apple grabs top U.S. handset spot in Q4
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Read more about: Apple, samsung
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By Sue Marek

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3. Facebook takes over Android with Home, AT&T to offer HTC 'First' Facebook phone

T-Mobile USA announced a new data plan specifically for Audi drivers that use the company's Connect service. The plan, which is offered to new and existing owners of cars equipped with Audi Connect, allows owners to pay $450 for data services for 30 months, which equals $15 per month, or pay $30 per month if they select the month-to-month option.

Audi Connect service lets users access real-time news, weather and fuel prices. In addition, it lets drivers connect to Google Earth and Google Voice. The service also provides Wi-Fi service throughout the vehicle for up to eight devices.

Audi has been aggressive in its connected car efforts. The company was the first to offer in-vehicle Wi-Fi connectivity when it launched Audi Connect in 2011. Audi plans to have 1 million connected Audi vehicles worldwide by 2015.

Further, the overall connected car space is becoming a lot more competitive. In February, General Motors announced it will replace Verizon Wireless' (NYSE:VZ) service with AT&T Mobility's (NYSE:T) service in its OnStar offering beginning in 2014. At that time, GM will incorporate LTE into most of its vehicles.

Mary Chan, vice president of global connected consumer for GM, told FierceWireless that one of the reasons the company selected AT&T was that it wanted a partner that would offer flexibility in terms of pricing models. Although GM has not revealed how it will price its LTE-powered OnStar service, Chan said the company is looking at different pricing structures across several tiers. For example, a driver could pay one price to receive remote diagnostics for their car and then pay a different price if they want additional options.

For more:
- see this release

Read more about: Audi, T-Mobile
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By Jason Ankeny

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4. Report: Falcone could lose LightSquared to hedge fund affiliated with Dish's Ergen

Facebook (NASDAQ:FB) introduced Home, an alternative homescreen for Android smartphones that promises users more immediate and efficient access to applications and social media, deeply integrating the social networking platform into the mobile user experience. HTC announced its "First" phone would have Home preloaded, and the phone will be sold through AT&T.

HTC First phone, with Facebook Home.

"We're going to turn your Android phone into a great, simple, social device," said Facebook co-founder and CEO Mark Zuckerberg, explaining the company set out to flip the script on the traditional mobile user experience paradigm, designing around people first and then focusing on app-enabled interactions, instead of vice versa.

According to Zuckerberg, Facebook Home, available for download April 12, is a "family of apps that becomes the home of your phone." All content and apps within Home are available when users launch their Android device: "There are no swipes or gestures--everything is already loaded on your phone while your device is sleeping," Zuckerberg said. "All the interactions are really smooth and natural. We wanted this to feel like system software, instead of just an app you run."

Key Home features include Cover Feed, essentially a home page presenting apps and media. "As soon as you turn on your phone, you see a visually-rich News Feed that automatically slides from story to story," explained Facebook Product Designer Adam Mosseri. Home also includes Notifications and Chat Heads, which offers similar functionality to the social network's standalone Facebook Messenger app. "Chat Heads work with both your Facebook messages and your SMS," Zuckerberg said.

Users can download Facebook Home by clicking an "Install" button integrated into the latest version of Facebook or Facebook Messenger for Android. Home will not launch on Android tablets, although Facebook promised to expand to those devices in the coming months.

Facebook Home will also arrive preloaded on the new HTC First smartphone, available from carriers including AT&T Mobility (NYSE:T), launching April 12 for $99. Facebook also will support a partner program, confirming commitments from companies including Samsung Electronics, Qualcomm (NASDAQ:QCOM), Sony Mobile Communications, Huawei, Alcatel One Touch and Orange. However, it's unclear exactly what level of support Samsung, Huawei and other smartphone makers will provide to the effort.

Click here to see Facebook Home in action.

While Facebook is first rolling out Home to Android, citing the openness of the Google (NASDAQ:GOOG) platform, the firm did not specify when or if it will extend the concept to rival operating systems like Apple's (NASDAQ:AAPL) iOS. When pressed on the topic by Wired, Zuckerberg said "We have a pretty good partnership with Apple, but they want to own the whole experience themselves," adding that "a lot of people love iPhones--I love mine, and I would like to be able to deliver Facebook Home there as well."

Facebook has no intention of building its own smartphone or operating system. "We don't want to build a phone or operating system that only some people will be able to use," Zuckerberg said. "We want to build the best experience for every person on every phone."

Informa Telecoms and Media Principal Analyst Malik Saadi doubts Facebook will ever go all-in with its own device. "Facebook is not yet ready for the mobile hardware game, but it needs to come up with a reference implementation to show its hardware partners how the next-generation mobile Facebook (which will be equipped with Graph Search Engine capabilities) should be deeply integrated with mobile hardware," Saadi said. "The risks are high for Facebook if it was to launch its own smartphone--and the risks could outweigh any benefits that it would gain."

But Facebook also must establish a stronger foothold within the mobile ecosystem said Analysys Mason Principal Analysts Ronan de Renesse and Stephen Sale, who argue the social network needs to be more "native" to nurture consumer engagement, noting that two-thirds of daily smartphone usage corresponds to pre-installed applications. Home tackles that challenge head-on.

"Although some new smartphone models come preloaded with the Facebook app, it is also important that the Facebook application is tailored for specific popular smartphone models to guarantee a superior quality of experience," de Renesse and Sale state. "Facebook could increase its app engagement (i.e. daily usage per user of the app) six-fold if it were to become the default communication platform for telephony, messaging and email."

For more:
- see this Facebook post
- see this Wired article

Read more about: Mobile Social Networking, Android
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By Phil Goldstein

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5. FCC to hold workshop on incentive auction spectrum band plan

Bankrupt LightSquared and a hedge fund connected to Dish Network (NASDAQ: DISH) Chairman Charlie Ergen could be headed for a showdown in bankruptcy court as the hedge fund has been buying up LightSquared debt, according to a Wall Street Journal report.

The report, which cited unnamed sources familiar with the matter, said that Sound Point Capital Management, a hedge fund firm run by one of Ergen's former bankers, now holds more than $600 million of LightSquared's roughly $1.7 billion bank loan. LightSquared, which has been in Chapter 11 bankruptcy protection for almost a year, has until May 31 to file a plan of reorganization and has sole control over its reorganization plan until July 15.

The Journal report noted that it is unclear whether Ergen or Dish has played any role in Sound Point buying up LightSquared's debt. Ergen hasn't addressed the trades, and Dish declined to comment, the report said.

Sound Point's control over LightSquared's debt gives it more leverage as LightSquared works through its bankruptcy proceedings, and could lead to Sound Point trying to get control of the company from Philip Falcone, the head of the Harbinger Capital Partners hedge fund, LightSquared's principal backer. Sound Point's founder, Stephen Ketchum, is a former banker at Bank of America and UBS and has a long-standing relationship with Ergen, the report said.

Earlier this week Dish itself priced a debt offering of $2.3 billion and said the proceeds could be used for "wireless and spectrum-related strategic transactions." Dish raised $15.5 billion in December for similar reasons. LightSquared's loan agreement prohibits competitors, including Dish, from buying its debt. According to the Journal, Falcone and his advisers argue that LightSquared will be valuable once it gets permission from the FCC to use spectrum to build out its network, though that is a highly uncertain matter at this point.

LightSquared, which had intended to launch a nationwide wholesale LTE network before the FCC nixed that effort over spectrum interference concerns, has filed a new spectrum proposal with the FCC that would combine the 5 MHz it uses for satellite service at 1670-1675 MHz with frequencies in the 1675-1680 MHz band, currently used by National Oceanographic and Atmospheric Administration weather balloons. The company would share the NOAA spectrum rather than gain exclusive rights to it.

Such an arrangement would give the company 10 MHz for downlink LTE traffic. The company would employ another pair of bands totaling 20 MHz--which it uses for satellite services now--for LTE traffic going upstream from users' mobile devices. The total 30 MHz of spectrum would be 10 MHz less than LightSquared had originally intended to use for its LTE network.

In January 2011 the FCC gave LightSquared a conditional waiver to launch terrestrial service on its spectrum, contingent on LightSquared resolving concerns about interference between its spectrum and GPS receivers. In February the FCC revoked the waiver and essentially shut down LightSquared's network plans after tests concluded that there was no practical way to mitigate the GPS interference concerns, a conclusion that LightSquared disputed. LightSquared filed for bankruptcy protection in May 2012.

For more:
- see this WSJ article (sub. req.)

Related Articles:
LightSquared's plan to share spectrum with weather balloons draws cheers, jeers
FCC seeks comment on latest LightSquared spectrum proposal
LightSquared floats plan to use weather-balloon spectrum for LTE
Lawmakers grill FCC officials on LightSquared's fate
FCC defends granting conditional waiver to LightSquared
LightSquared promotes Doug Smith to CEO, chairman slot

Read more about: FCC, wireless spectrum
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By Phil Goldstein

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