2009 Wireless Predictions: Mid-year checkup

[1]As we approach the dog days of summer, I decided it might be a good time to check and see how FierceWireless is faring with its predictions for 2009.

Every year FierceWireless editors compile a list of the top things we think will happen in the coming year. And just so you know, we like to be bold in our predictions--we'd rather be wrong than be vague when we look into our crystal ball.

To reiterate, these are our predictions and they come from careful analysis of the news. We don't have any inside information nor do we have any knowledge of actual deals that may or may not happen. If you want to check out our original nine predictions for 2009, click here [2].

Here's how we are doing so far:

Prediction No. 1: Motorola's handset division will cease to exist.

Mid-year checkup: Wrong--at least so far. The company's weakened handset division remains in the red, but in the second quarter it managed to cut its operating loss in half. In addition, co-CEO Sanjay Jha said that the company's plans to launch smartphones based on Google's Android platform remain on track, and that Motorola had signed contracts with two major, unnamed U.S. carriers [3] to launch phones in the fourth quarter. He added that Motorola would release more Android phones in the first quarter of 2010.

Prediction No. 2: The end of the clamshell phone's dominance.

Mid-year checkup: Right. The number of clamshell phones launched in 2009 dwindled significantly as manufacturers and carriers look to introduce more touchscreen devices or handsets with Qwerty keyboards. As predicted, we are seeing clamshell phones relegated to the low-end of the market as users demand more functionality from their devices.

Prediction No. 3: Tier 2 and Tier 3 U.S. carriers will become scarce.

Mid-year checkup: Right--sort of. With its 5.2 million subscribers, some classified MVNO Virgin Mobile USA as a Tier 2 carrier. For the purpose of this prediction, we'd like to call it a Tier 2 carrier. Earlier this week, Sprint Nextel announced it would acquire Virgin Mobile USA [4], which currently operates as an MVNO on Sprint's network, for around $483 million. As part of the deal, Virgin's 5.2 million subscribers will fall under Sprint's purview. This deal follows several big acquisitions by Tier 1 carriers in 2008, including Verizon's purchase of Alltel and AT&T's bid for Centennial Communications.

The end result of this trend is that the gap between the Tier 1 and the Tier 2/Tier 3 carriers is growing wider. For vendors it means that there are fewer customers to buy their equipment.

Prediction No. 4: Low-cost carriers will experience a resurgence.

Mid-year checkup: Right. We hit the nail on the head with this prediction. Low-cost operators such as MetroPCS, Leap, Boost Mobile (a branded service that uses Sprint Nextel's network) and TracFone (an MVNO on Verizon Wireless and others) have seen strong growth primarily due to the popularity of their flat-rate pricing plans. In first quarter MetroPCS added 684,000 net new subscribers, bringing its total subscriber base to 1.5 million. This was the biggest quarterly increase in net new subscribers in the company's history.

Prediction No. 5: Palm will not survive the OS wars.

Mid-year checkup: Wrong. We still don't think the mobile world can support so many different operating systems, however, we were wrong to assume that Palm would be the first to fall. Palm introduced its first webOS smartphone, the Pre, in June and so far the OS has received good reviews from users and developers. Pre carrier Sprint Nextel CEO Dan Hesse told FierceWireless earlier this week that Sprint thinks the webOS platform is very strong [5] and that the company will introduce more webOS devices.

Prediction No. 6: Cox will launch wireless, but traction with consumers will be limited.

Mid-year checkup: Too soon to call. Cable company Cox Communications is planning a bold move in wireless. The operator, which has AWS and 700 MHz spectrum, plans to launch wireless service in parts of its cable footprint in the second half of 2009. So we're going to withhold judgement on that.

Prediction No. 7: All-you-can-eat plans will drop in price

Mid-year checkup: Too much of a good thing can become a problem. Currently, low-cost operators are battling over who can go the lowest when it comes to unlimited plans. In early July, America Movil's TracFone stunned rivals [6]when it unveiled a prepaid, nationwide unlimited offering for $45 per month that included unlimited text messaging and 30 MB of data. Yesterday, MetroPCS lowered the threshold to $40 per month [7] for unlimited voice, texting and Web access. Of course, noticeably absent from this price war are the Tier 1 carriers. All the Tier 1s have some type of unlimited, postpaid rate plan, but most are in the $100-per-month range. We thought that the Tier 1s would drop their unlimited price plans to around $80 per month, but so far that has not happened. T-Mobile USA reduced its unlimited rate plan price to $50 per month, but that plan is only for existing T-Mobile USA customers.

Prediction No. 8: Wireless broadband pricing will decline.

Mid-year checkup: Wrong. We haven't seen a decline in the monthly plans that most Tier 1 operators offer customers. Those plans still are in the $60-per-month range. However, we have seen a rise in netbooks bundled with two-year subscriptions for wireless data services. The most recent offering comes from Sprint and Best Buy [8], which are offering a Compaq Mini 110c-1040DX netbook for 99 cents with a two-year Sprint contract for mobile data.

Prediction No. 9: App stores will start to compete with each other for downloads.

Mid-year checkup: Right. We are definitely seeing a surge in app store launches and competition for downloads and applications. Apple, of course, leads the charge. The company announced earlier this month that consumers had downloaded more than 1.5 billion applications [9] from its iPhone app storefront since it debuted on July 11, 2008. With so many app stores launching--Android Market, RIM's BlackBerry App World, Verizon's Vcast Application Store and Palm's App Catalog--competition is getting fierce. That's why many consumers are now urging app stores to start focusing on quality, not just quantity.

By my tally we are correct on about five of our nine predictions. Of course, this is only July 31 so we still have a few months left to see how we do with the rest of our prognostications. --Sue [10]