An Ignoble Experiment

2. Report: Apple to bring sapphire screens to larger iPhone 6, iWatch

Sprint (NYSE: S) CEO Marcelo Claure said the company plans on introducing new, aggressively priced plans next week, according to a Light Reading report.

Claure (Source: Sprint)

The new Sprint chief addressed a town hall meeting of Sprint employees Thursday and reportedly told them that the company will slash prices and continue focusing on improving its network to win back customers.

"We're going to change our plans to make sure they are simple and attractive and make sure every customer in America thinks twice about signing up to a competitor," he said, according to Light Reading, saying that "very disruptive" rate places are coming next week and that Sprint will react faster to competition.

"When you have a great network, you don't have to compete on price," he said. "When your network is behind, unfortunately you have to compete on value and price."

Sprint declined to comment on the report or on any planned pricing changes. Light Reading did not identify its source or sources for Claure's comments at the meeting, which was closed to reporters.

Sprint spokesman Doug Duvall told FierceWireless that the meeting was held "in front of a standing-room-only crowd."

According to Duvall, Claure "shared his passion for his family, work and soccer team and his commitment to leading Sprint. He discussed Sprint's challenges and pledged to get Sprint 'back in the game' by focusing on providing the best value in the market, completing our network build and optimizing Sprint's cost structure."

Former Sprint CEO Dan Hesse confirmed late last month that the carrier was testing new pricing plans, though he did not set any timeline for the changes. He said that Sprint's Framily plan had become less competitive at certain price points and that Sprint "may need to make some adjustments to our pricing levels based on what we learn" in the trials. Hesse also has said unlimited data for smartphones continues to be a key differentiator in the market.

CNET had reported that Sprint is testing a shared data plan in select cities, as well as discounted versions of its Framily and individual plans.

Sprint has struggled with high churn as it has completed its network upgrades, especially for CDMA voice. The carrier has pledged to return to postpaid subscriber growth in the fourth quarter but has been undercut by the more aggressive T-Mobile US (NYSE:TMUS), which has marketed itself as the "uncarrier" with low prices and offers to pay off switching customers' Early Termination Fees among other offers.

In the first two quarters of 2014, T-Mobile added 3.87 million total net wireless customers, including 2.23 million branded postpaid subscribers. Sprint lost 801,000 total net wireless customers in the first two quarters, including Sprint platform postpaid net losses of 412,000 customers.

According to Light Reading, Claure did not describe the pricing changes in detail but said he wants dealers to be aggressive in promoting them once they are announced and vowed they would have the resources to do so, unlike in the past.

Claure also said that while Sprint is facing challenges, especially on its network upgrades and its negative perception on social media, the carrier has a strong spectrum position and can challenge industry leaders Verizon Wireless (NYSE: VZ) and AT&T Mobility (NYSE: T), but that it will take time.

Beyond cutting prices, Sprint aims to use its network to differentiate itself. The key element of Sprint's tri-band LTE Spark network strategy is to use its vast trove of 2.5 GHz spectrum for TD-LTE services to deliver superfast speeds. Sprint aims to have 100 million POPs covered with 2.5 GHz LTE by the end of 2014 and use two-carrier carrier aggregation on its 2.5 GHz spectrum to produce peak downlink speeds of more than 100 Mbps. To access that though, some Sprint customers will need to get new smartphones.

Sprint is also working with Qualcomm (NASDAQ:QCOM) to accelerate the launch of devices that can take advantage of three-carrier carrier aggregation on its 2.5 GHz TD-LTE service. Those devices will start being seeded into the market in the first half of 2015 instead of the second half of next year. Sprint plans to deploy three-carrier carrier aggregation on its network by the end of 2015, producing peak speeds of 150-180 Mbps.

"I want to make sure we're the incumbent challenger," Claure said, according to Light Reading. "We don't want the status quo."

Claure also reportedly acknowledged that some job cuts are inevitable as Sprint reevaluates its priorities and cost structure, but did not say how large any cuts might be.

Referring to Sprint's aborted plans to merger with T-Mobile, Claure said he and SoftBank CEO and Sprint Chairman Masayoshi Son "spent days and nights talking about the merger I'm not supposed to talk about," and ultimately decided it was not the best decision to make while Sprint was making a leadership change. The deal also faced strong--and mounting--opposition from regulators, particularly at the FCC, which many reports have said was the ultimate reason Son pulled the plug on the deal.

For more:
- see this Light Reading article
- see this Kansas City Star article
- see this Kansas City Business Journal article

Read more about: Marcelo Claure, Sprint
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By Phil Goldstein

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3. MVNO Red Pocket challenges market leader TracFone with support for all Tier 1 U.S. wireless carriers

Apple (NASDAQ: AAPL) plans on using sapphire for the screen of its larger iPhone as well as its rumored smart watch, according to a Wall Street Journal article.

The report, citing unnamed sources, said that Apple is having the screens produced at a facility this month in Mesa, Ariz., that Apple opened with materials manufacturer GT Advanced Technologies. Apple is reportedly gearing up for a Sept. 9 event to announce the next iPhone, dubbed the iPhone 6, and likely a wearable device that many believe will be called the iWatch.

The report said Apple is considering using sapphire screens in "more expensive models of the two new, larger iPhones" it plans to release this fall, if it can get enough of the material. It's unclear what that means though. Reports have indicated that Apple plans to announce to new models of the iPhone, one with a 4.7-inch screen and one with a 5.5-inch display. Apple also makes iPhones with more internal memory more expensive. So it's unclear if the sapphire screen is destined for the 5.5-inch iPhone, which presumably will be more expensive, or high-memory variants of both new iPhone models.

Apple and GT declined to comment, the report said.

Rumors that Apple would incorporate sapphire into its device screens have been circulating since Apple last year bought the 1.4-million-square-foot Arizona facility from a solar-panel producer for $113 million and leased it to GT, one of the leading sapphire manufacturers in the world. As the Journal notes, in November, Apple agreed to prepay GT $578 million to update the furnaces in the factory used to make synthetic sapphire, and GT is operating the factory to produce sapphire exclusively for Apple.

Synthetic sapphire is designed to mimic the properties of naturally occurring sapphire, one of the hardest minerals on earth. Sapphire screens do not crack or scratch as easily as glass. Up until now, Apple has used Corning's super-tough Gorilla Glass for its iPhone screens, and Corning has been able to mass-produce millions of screens on short notice.

It's unclear if Apple and GT can mass-produce sapphire screens to meet the expected demand for Apple's new iPhone. Apple has reportedly asked its suppliers to produce between 70 million and 80 million units of the next iPhone by Dec. 30, according to a separate Journal report last month. That volume would represent the largest ever for an iPhone launch.

Further, some financial analysts expect Apple to charge more for the phones than previous new models, perhaps because of higher component costs like sapphire screens. Apple could save money on warranty costs if sapphire screens lead to fewer shattered phones, but Bernstein Research analyst Toni Sacconaghi told the Journal those savings likely wouldn't offset sapphire's higher cost. If Apple maintains its pricing but has higher costs its margins could suffer, but Apple might be willing to deal with that to set its new products apart from the competition, Matt Margolis, an analyst at PTT Research and a GT investor, told the Journal.

As Re/code recently explained, sapphires used in jewelry contain trace elements of other materials like copper, magnesium or iron that are mixed with the mineral corundum, and that produces a blue color or another tiny, like purple or yellow. However, synthetic sapphire comes out clear because there are no impurities introduced in the manufacturing process.

Other device makers have introduced sapphire screens. Verizon Wireless (NYSE: VZ) recently launched the ruggedized Kyocera Brigadier with what Kyocera calls a sapphire shield, rendering the phone nearly scratchproof, according to Kyocera. The Brigadier costs $100 with a two-year contract and after a $50 mail-in rebate. Luxury smartphone maker Vertu also makes smartphones with sapphire displays but those phones cost thousands of dollars, Re/code noted.

For more:
- see this WSJ article (sub. req.)
- see this The Verge article
- see this Re/code article

Related Articles:
Report: Apple to unveil iPhone 6 on Sept. 9
T-Mobile's Legere sees 'huge opportunity' to attract switchers with iPhone 6 launch
Apple iPhone 6 will support VoLTE, says Mavenir's CEO
Report: Apple planning for 70-80M units of larger iPhone 6
As bigger iPhones head to production, survey finds 40% of Americans want a phablet
Apple's iPhone 6: Bigger screen may prompt more data consumption

Read more about: rumors, iWatch
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By Mike Dano

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4. Samsung buys home automation platform SmartThings in Internet of Things push

MVNO Red Pocket now appears to support all of the nation's Tier 1 wireless carriers, including Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE: T), Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS). América Móvil's U.S. TracFone Wireless unit is the only other major MVNO in the United States that supports all of the nation's top carriers.

"We cannot name our underlying network providers," Joshua Gordon, Red Pocket's president, wrote in response to questions from FierceWireless. "Red Pocket Mobile works with ALL the best wireless networks in America."

As noted by Prepaid Phone News, Red Pocket's website now offers service from what appear to be the nation's four top operators. Although the network operators are not named, Red Pocket's website lists:

A blue "GSMA" operator that provides "The Largest GSM Network in the Country" (the A in GSMA likely refers to AT&T, which brands its service in blue colors and operates a GSM network).
A red "CDMAV" operator that provides "Reliable, Incredible Coverage" (the V in CDMAV likely refers to Verizon, which brands its service in red and operates a CDMA network).
A magenta "GSMT" operator that provides "Blazing Speeds" (the T in GSMT likely refers to T-Mobile, which brands its service in magenta colors and operates a GSM network). Red Pocket also notes that it supports 4G LTE services from the GSMT carrier.
A yellow "CDMAS" operator that allows users to "Bring Your Own Sprint Device" (the S in CDMAS likely refers to Sprint, which brands its service in yellow and operates a CDMA network). Red Pocket also notes that it supports 4G LTE services from the CDMAS carrier.

Red Pocket offers four "flagship" prepaid plans that work across all the operators, starting with a $29.99 per month plan that includes unlimited talk and text and 500 MB of high-speed data, and ranging to a $59.99 per month plan that includes unlimited talk and text and 3 GB of high-speed data. The company also offers other, carrier-specific plans, such as the $34.99 per month plan for CDMAV (Verizon) that offers 300 minutes of talk, unlimited text and 2 GB of high-speed data.

"'High Speed' mobile internet denotes up to 4G LTE speeds on GSMT and CDMAS Flagship Plans, and 3G speeds on GSMA and CDMAV Flagship Plans," Red Pocket writes on its site. "Compatible devices required for high speed mobile internet access. 'Reduced Speeds' denote mobile internet speeds slowed to approx. 64-128kbps, which is normally adequate for most mobile internet activities, such as email, social media (eg., Facebook) and maps, but is not suitable for video or audio streaming."

Red Pocket also offers plans for tablets and laptops.

Red Pocket was an AT&T MVNO until August 2013, when it added services from Sprint. In December 2013 it added mobile Internet services from T-Mobile to its lineup. Earlier this year the company confirmed it is evaluating plans to support device financing payment options. Such plans would allow customers to pay for their devices in monthly installments rather than in one lump sum.

The dramatic expansion by Red Pocket puts the company squarely in line to compete with TracFone, which got its start in 1996 as Topp Telecom under the direction of Frederick J. Pollak (who also goes by F.J. Pollak). In 1999 Topp Telecom attracted the attention of billionaire Carlos Slim's Telefonos de Mexico, which purchased a controlling interest in Topp for $57.5 million. The next year Telefonos de Mexico became América Móvil and Topp became TracFone.

TracFone, which today counts fully 25.5 million customers, was able to fortify its business by selling wireless service through all of the nation's top wireless carriers. According to industry observers, TracFone has been able to keep its pricing plans inexpensive by working its MVNO partners against each other, selling services from whichever would give it the best deal.

Now, with similar support from all the major carriers, Red Pocket is now in a position to do something similar. Most of the nation's MVNOs only support services from one major carrier.

Red Pocket's Gordon said the company does not offer MVNE (mobile virtual network enabler) services.

For more:
- see this Prepaid Phone News article

Read more about: MVNO
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By Phil Goldstein

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5. IDC: Android, iOS squeeze almost all breathing room for Windows Phone, BlackBerry in Q2

Samsung Electronics confirmed it purchased home automation platform SmartThings (a 2014 Fierce 15 winner), which Samsung said will enable the startup to expand its platform and work with more partners and devices. The deal represents a significant new investment by Samsung into the Internet of Things market.

Rumors of the deal first stared swirling last month after TechCrunch reported that Samsung was eyeing SmartThings for around $200 million. The companies did not say how much the deal is worth but Re/code reported that it was for around $200 million.

SmartThings will continue to operate independently under founder and CEO Alex Hawkinson, and will operate under the umbrella of Samsung's Open Innovation Center (OIC), which is responsible for bringing software and services innovation to the parent electronics conglomerate. SmartThings will move its headquarters from Washington, D.C., to Palo Alto, Calif.

Founded in 2012, SmartThings lets people monitor, control, and automate their homes from wherever they are through a single mobile app. Currently, the platform supports more than 1,000 devices and 8,000 apps created by its community of device makers and developers. SmartThings has around 60 employees and $15.5 million in venture funding from the likes of Greylock Partners and Highland Capital.

The company has more than 1,000 certified device types in its catalog--ranging from remote door locks to motion sensors--and also hundreds of "use cases" in its app store. SmartThings' platform lets developers create apps, or "uses cases," such as having a connected speaker start playing a user's favorite song when they get home from work or getting a phone an alert when the mail arrives (thanks to a sensor in the mailbox).

SmartThings had made the bulk of its money through the sale of its own home automation products, but was rapidly transitioning to a platform strategy where it takes a cut of the revenues from the connected services and devices that are sold by third parties through its store.

"It has always been our goal to create a totally open smart home platform that brings together third-party developers, device makers and consumers," Hawkinson wrote in a company blog post. "We're thrilled that Samsung fully supports this vision."

Hawkinson wrote that "there is an enormous opportunity to leverage Samsung's global scale to help us realize our long-term vision." He said the purchase means SmartThings will be able to "support all of the leading smartphone vendors, devices, and applications; expand our base of developers and enhance the tools and programs that they rely on; and help many more people around the world easily control and monitor their homes using SmartThings."

David Eun, who runs the OIC for Samsung, told Re/code that Samsung "has been committed to smart homes and connected devices and has tried to paint this vision for a while. But since consumers have lots of different devices, the trend is really toward open, and our approach is to be open and protocol agnostic."

Analysys Mason analyst Cesar Bachelet said Samsung will gain "a smart home ecosystem linking two of its previously separate core businesses, consumer electronics (smartphones, tablets TVs) and domestic appliances (refrigerators, washing machines, cookers, vacuum cleaners, air conditioning units)."

He also said the deal "places Samsung in a strong position within the emerging smart home market: its competitors Apple (NASDAQ: AAPL) and Google lack the appliances in the home that Samsung has, while domestic rival LG, although it also supplies domestic appliances as well as consumer electronics devices, lacks a strong presence in the smartphone and tablet markets." LG was the No. 5 smartphone player in the world in the second quarter, according to research firm IDC; Samsung was No. 1.

Despite the purchase, this isn't Samsung's only foray into the Internet of Things market. The company recently banded together with Intel, Broadcom, Atmel, Dell and Wind to create a new group, the Open Interconnect Consortium (OIC), aimed at coming up with an open-source standard to connect devices to each other across operating systems and wireless protocols.

Samsung also recently teamed with Google's (NASDAQ: GOOG) Nest Labs, ARM Holdings and others to create a new mesh wireless standard for the IoT market called Thread.

For more:
- see this release
- see this SmartThings blog post
- see this Re/code article
- see this GigaOM article

Related Articles:
AT&T exec: IoT standards groups need to work together
Rumor Mill: Samsung eyeing home automation platform SmartThings in $200M deal
SmartThings - Internet of Things - wireless startups - Fierce 15 2014
Intel, Qualcomm execs both say IoT will benefit from one standard
Intel, Samsung and others forge open-source Internet of Things connectivity group
Microsoft joins Qualcomm in AllSeen Alliance's Internet of Things push

Read more about: home automation, Internet of Things
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By Phil Goldstein

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