Ever since the phenomenal popularity of the iPhone propelled the company to new heights, people have been searching for signs that Apple’s star might be on the wane. The death of Steve Jobs was the firm’s most high profile blow and, should things start to crumble, this will be identified as the turning point by official and unofficial historians alike. Since then Apple’s execution has wobbled once or twice, fuelling speculation that it might be on the slide.

It is neither foolish nor unreasonable to look for these signs, because there is no such thing as permanence. When Nokia’s handset market share dropped from just above 40 per cent to just below it didn’t seem like the beginning of a dizzying spiral of descent—but’s that what it was.

So while Apple still managed to turn in profits of $9.5bn for the quarter—pleasingly plump by anyone’s standards—it is possible that the company is in the early stages of some kind of decline.

It’s possible but it’s not probable and, in any case, the turning circle of a P&L like Apple’s is pretty wide. I doubt if anyone really believes that Apple is about to drop off a financial cliff but,  nonetheless, change of a sort is becoming apparent.

Financial indicators may be the most popular with observers but they’re not the most interesting and, for me, Apple’s greatest achievements have always been psychological. There’s no doubting the front to back technical prowess behind their products, of course, but that prowess simply does not warrant the fervour with which Apple is loved by some and loathed by others.

Nor does it alone explain just how, under Steve Jobs—arguably the world’s greatest modern salesman—Apple managed to exert such influence over the world’s mobile operators. I can think of no other issue on which mobile operators have, for years on end, been so consistently unwilling to offer comment. If they ranged the iPhone they were terrified of revealing the terms for fear of queering the deal. If they didn’t they were terrified of talking hypothetically for fear of losing the opportunity for ever.

It was the industry’s great, unspoken truth: Everyone knew the operators weren’t happy but none of them dared say so.

In light of this it was fascinating to see reports in the Swedish press at the end of last week that Tele2 CEO Mats Granryd had broken step and voiced his frustrations at Apple in the frankest terms. “It would be best if people stopped buying Apple,” Granryd said. “I hope that Apple gets bad. It’s very difficult to do business with Apple.

His words had the intensity of a long-supressed emotion finally given vent and you can be sure that many other operator executives will have read of his outburst with silent approval. We reported the story and drew comment from another (former) senior operator executive who said:

“The not so hidden part is the subsidising of the handsets that Apple requires, which in fact makes the operator look at the business case of iPhone as a loss leader. The more hidden costs are associated with the mandatory marketing and QoS requirements that Apple demands. When you add up the whole cost, any business manager worth an MBA will tell you, it is not a business you want to be in.”

Earlier this year, meanwhile, the CEO of Telenor Norway complained to Telecoms.com of her struggles in getting Apple to enable the iPhone 5 for use on her network.

As operators start to speak out It feels like Apple’s hold over them may be weakening, especially as they begin to move away from device subsidy. Could the operators, like Dorothy and pals at the end of the Wizard of Oz, be peeking behind the curtain and seeing the reality behind the thundering voice of authority?

Apple is a firm that makes great mobile phones but in that it is not alone. Maybe a more equitable relationship between the vendor and the operators is now emerging.

Mats Granryd president and CEO of Tele2

The CEO of Swedish mobile operator Tele2 has been quoted by a Swedish business newspaper voicing frustration at his company’s dealings with Apple.

The website for Dagens Industri quotes Tele2 CEO Mats Granryd complaining that it is difficult for operators to do business with Apple and also difficult for them to make money on Apple’s products. Granryd was apparently speaking at a capital markets event hosted by Swedish investment firm Kinnevik.

“It would be best if people stopped buying Apple,” Granryd is quoted as saying. “I hope that Apple gets bad. It’s very difficult to do business with Apple.”

Ever since Apple launched its first iPhone in 2007, its dealings with operators have been shrouded in secrecy. While many in the industry have speculated that operators get the raw end of the deal, they have been universally unwilling to offer any kind of criticism of the Californian device vendor.

Last year Telecoms.com revealed that Apple was vetting operators’ LTE networks for quality of performance before allowing them to offer the iPhone 5 as an LTE device.

In March this year Berit Svensen, CEO of Telenor’s domestic operation complained to Telecoms.com that she was struggling to get Apple to enable the iPhone 5 for use on the Telenor network.

But over the course of Apple’s six year involvement in the mobile device business there have been no comments from operators of the same intensity of those attributed to Granryd.

The LTE World Summit, the premier 4G event for the telecoms industry, is taking place on the 24^th-26^th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a brochure for the event.

That said, it was the first drop in a decade, the latest bump in the road for CEO Tim Cook, who was never going to have an easy time picking where Steve Jobs left off. Revenue was up, on the other hand, to $43.6bn, although the margin was down from 47.4 per cent to a wafer thin 37.5 per cent.

In a bid to keep the shareholders happy Apple announced plans to return $100bn to them by the end of 2015, by which time the firm will have repurchased $60bn of its own shares. It also increased its quarterly dividend by 15 per cent. The firm ended Q1 this year with $145bn in cash.

For the next quarter Apple expects revenues to slacken to somewhere between $33.5bn and $35.5bn with a margin between 36 and 37 per cent.

Meanwhile Apple’s biggest rival in the device space, Korea’s Samsung, grew profits by 42 per cent for the quarter, to $6.4bn, on revenues of $47.5bn. The firm’s IT and Mobile Communications business was the heavy hitter, contributing 62 per cent of revenues, with Samsung remaining coy on device shipments, saying only that sales of the SIII and Galaxy Note II were “sound”.  It warned that growth might weaken as the year unfolds.

“Although market uncertainties from the European crisis and the slow global economic recovery are still lingering, we expect to increase R&D spending for strengthening our competitiveness ahead of planned new product launches,” said Robert Yi, senior VP and head of investor relations.

“We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market while TV growth will continue to wane in developed markets.”

Samsung added that smartphone sales are expected to stay flat in the second quarter but will pick up again in the second half of the year.

Fortunately research outfit IDC was on hand to fill in some of the blanks. Samsung’s concerns over the creep of low-end smartphones seem well justified, with IDC reporting this week that smartphones out-shipped feature phones for the first time in the industry’s history during Q1 this year.

418.6 million devices were shipped in the quarter, of which 216.2 million were smartphones. That is a 41.6 per cent increase on the same period last year.

“In addition to smartphones displacing feature phones, the other major trend in the industry is the emergence of Chinese companies among the leading smartphone vendors,” said Ramon Llamas, research manager with IDC’s Mobile Phone team. “A year ago, it was common to see previous market leaders Nokia, BlackBerry (then Research In Motion), and HTC among the top five. While those companies have been in various stages of transformation since, Chinese vendors, including Huawei and ZTE as well as Coolpad and Lenovo, have made significant strides to capture new users with their respective Android smartphones.”

IDC put Samsung’s smartphone shipments at 70.7 million for the quarter, more than the combined totals of Apple, LG, Huawei and ZTE, which occupy the rest of the top five rankings.

Samsung wasn’t the only Korean going great guns this week (that’s not a reference to Kim Jung Un, by the way)  as SK Telecom announced that, just 21 months after launching its LTE service, it has passed the ten million subscriber mark. SKT took 37 months, by comparison, to hit the same milestone on its WCMDA network, it said, and LTE now accounts for 37 per cent of its total mobile subscriber base.

South Korea and Japan are about a year ahead of their nearest rivals in terms of LTE progression, according to Thorsten Robrecht, head of portfolio management at NSN, which is one of SKT’s network suppliers. The operator said that it will be introducing some LTE-Advanced features from September this year to improve the service and aims to sign up a further five million LTE subs by the end of this year. It’s ranging 25 LTE-capable smartphones, five tablets, two USB modems and an LTE-enabled camera.

Here in the UK we’re a smidgen off that pace. EE, the first and so far the only UK LTE operator, announced this week that it has 318,000 LTE subscribers. The operator, which reported quarterly revenues of £1.4bn, 5.4 per cent down on the same period last year, said that it signed up 166,000 new postpaid subs during the three month period and is on track to hit one million LTE subs by year’s end.

US operator Verizon is the subject of much speculation at the moment, with many in the industry clearly expecting it to make a muscular bid for the 45 per cent of Verizon Wireless that is currently held by the UK’s Vodafone. Reuters cited people “familiar with the matter” as revealing the US carrier’s intention to offer Vodafone $100bn for its stake.

Only time will tell us whether  this is indeed true, or whether the matter these people are familiar with is actually bovine and faecal in nature.

$100bn is big money and this week Verizon reported quartlery net profit of $1.95bn for 1Q13, a 16 per cent year on year increase on the $1.69bn generated in 1Q12. The firm’s first-quarter revenues hit $29.4bn, a 4.2 per cent increase on 1Q12.

The operator said earlier this year that following the introduction of its shared data plans it would switch from using average revenue per user (ARPU) to average revenue per account (ARPA) as an indicator. This increased by 6.9 per cent year on year to $150.27 per month, the firm said.

At the end of the first quarter, smartphones accounted for more than 61 per cent of the Verizon Wireless retail postpaid customer phone base, up from 58 per cent and Verizon Wireless saw total revenues rise 6.8 per cent year on year to $19.5bn.

The news was less rosy at TeliaSonera, which saw revenue fall by 4.5 per cent year on year to SEK24.5bn ($3.75bn) for 1Q13. Net profit dropped more modestly, by 0.3 per cent to SEK4.1bn. Over the period, the Swedish operator group also saw its customer base shrink by 800,000 customers.

“Our industry continues to go through a period of change where traditional business models are being challenged by new customer behaviour,” said acting president and CEO Per-Arne Blomquist.

Blomquist also warned that the group would have to take cost-cutting measures to get it back on track.

“In order to maintain our ability to invest in future growth, it is essential to manage our cost base in a prudent way. We have continued to put significant emphasis on implementing the efficiency measures initiated at the end of last year. There were effects within Mobility Services already in the quarter, while within Broadband Services they will come in the latter part of the year. We remain determined to bring total costs down by SEK2bn net over a two year period.”

And Mexico-headquartered América Móvil saw its net income fall by 17.4 per cent year on year to 26.87bn pesos ($2.34bn). First quarter revenues stood at 193bn pesos, which were up just 0.2 per cent higher than those of the prior year in Mexican peso terms, and 6.1 per cent up at constant exchange rates, according to the firm.

The group finished March with 328.2 million customers, a 7.4 per cent year on year increase. Of that number, 262.9 million customers were wireless subscribers, 30.3 million landline customers, 17.8 million broadband users and 17.2 million PayTV subscribers.

The firm’s mobile subscriber base rose 6.9 per cent year-on-year, most notably in Brazil, where 1.1 million subscribers got on board and in Mexico where it won 854,000 new subscribers. In the US, its Tracfone MVNO also gained 839,000 users, twice as many as the firm gained last year in the country.

Over on the infrastructure supply side, Ericsson’s first quarter profits fell year on year to SEK1.2bn $182m) from SEK8.8bn for the same period in 2012, largely due to the boost given to 1Q12 numbers by the firm’s exit from the Sony Ericsson device JV. While the vendor recorded a two per cent uptick in sales to SEK52bn it was hit by currency fluctuations and a disappointing performance from its network rollout business.

Sales in the Networks and Global Services units were up three and four per cent respectively, hitting SEK28.1bn and SEK 21.5bn. But Support Solutions, behind which Ericsson has been putting considerable weight in the last year, saw sales drop by 19 per cent to SEK2.4bn.

Managed and Professional Services held steady but the Global Services unit was pulled down by  the Network Rollout unit, which saw operating income drop by 73 per cent to a loss of SEK1.1bn. Ericsson CFO Jan Fryhammar described this as “nothing dramatic” and due to unforseen delays in LTE deployments, particularly in Latin America where Ericsson had “some idling resources,” he said.

Frykhammar said that, while there were positives in the top line, and in the profitability of the Networks division, he was concerned by Ericsson’s cashflow. “I will never be happy when the cashflow is negative,” he told Telecoms.com. “We have a tendency towards a strong finish on our operating cashflow but this time it was negative SEK3bn. That’s something we will work hard to improve going forward.”

North America and North East Asia remain the most important regions for Ericsson, given the advanced state of LTE deployments. Frykhammar said that one of its key North American LTE projects (presumably Verizon) had now “peaked” but that he expected high activity levels in the market to continue, shifting to capacity rather than coverage as the year goes on.

In North East Asia Ericsson’s most important upcoming project is the deployment of TD-LTE by China Mobile, although that operator’s retreat from GSM investment impacted on Ericsson’s first quarter, Frykhammar said.

While Ericsson’s core business will remain the provision of equipment and services to the world’s telecoms operators long into the future, the firm is looking to other sectors as operators endure turbulent times. Frykahmmar pointed towards contracts with shipping giant Maersk and energy supplier Eon as examples of important diversification, as well as its growing business in the media segment.

But the firm wants direct relationships with customers and, in pursuing them, could find itself at times in competition with its core customers. “We will expand into other customer bases,” said Fryhammar. “We want to do direct business, though; we don’t do indirect sales.”

Finally this week NASA sent three Android smartphones into space. The idea under investigation is that smartphones could be used as “the main flight avionics of a capable, yet very inexpensive, satellite,” NASA said. Given that the Informer’s G-Nex can be brought more or less to its knees by ten minutes’ of Solitaire, this seems something of a gamble.

Anyway, those Android devices are up there, watching you.

Take care

The Informer

Apple has posted its first quarterly drop in profit in ten years

Device giant Apple has posted its first quarterly drop in profit in ten years, with  $9.5bn 2Q13 (January to March) net profit marking a more than 18 per cent decline on the $11.6bn generated in 2Q12. Quarterly revenue grew year on year however, to $43.6bn from $39.2bn a year ago. Gross margin was 37.5 per cent compared to 47.4 per cent in 2Q12.

The firm sold 37.4 million iPhones in the quarter, 2.3 million more than it sold in the same quarter last year, while iPads sales reached 19.5 million, compared to 11.8 million in 2Q12. Apple also sold just under the four million Macs it sold in the same quarter last year.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” said Tim Cook, Apple’s CEO. “Our teams are hard at work on some amazing new hardware, software, and services and we are very excited about the products in our pipeline.”

Vanessa Barnett, technology and media specialist at law firm Charles Russell LLP, said that Apple’s previous dominance over competitors has given way over the last couple of years to the rise of  the Android OS and Samsung devices. However, she claimed it is only “fashionable” right now to say Apple’s on the slide, and maintained that the company is well placed to make a resurgence.

“At the end of the day, they have good people, good ideas and there’s still a big bit of Steve Jobs in the company’s DNA,” she said. “ I’d call this a blip not the beginning of the end.  The patent wars will settle down, new products will be launched and the rise of Apple will begin again. It may not be as overpowering as at the time of Steve Job’s but anyone who’s thinking about writing them off is probably engaging in wishful thinking.”

Victor Basta, managing director of consultancy firm Magister Advisors, believes that Apple is going through a necessary transition from hardware as the dominant revenue stream and should be eyeing opportunities in the mobile money space.

“The right thing for Apple to do is to broaden themselves out, serve their huge community of credit card enabled customers, and focus on micropayments and software,” said Basta.

“If you see Apple as an ecosystem of credit card-enabled customers making micropayments, they only have one really significant competitor, Amazon, a business that begins to look more and more like Apple every day. We will hear more from Amazon later in the week and that will give us a much clearer picture of shifting industry dynamics,” he added.

Apple’s CFO Peter Oppenheimer was keen to stress that Apple’s cash generation remains very strong, with $12.5bn in cash flow from operations during the quarter, and an ending cash balance of $145bn. Professor Loizos Heracleous of Warwick Business School, who has carried out extensive research on Apple, pointed out that this cash position is more important than most industry observers realise.

“Apple could easily buy any new technologies that appear to pose a threat to it, that offer synergies to its own offerings, or that can open up new markets for it,” said Heracleous. “Lower margins would be expected given Apple’s rising sales in emerging economies, introduction of iPad mini and appearance of more competing products that are much cheaper. Apple revealed in its last update a 38.6 per cent margin in the markets where it operates, which are still extraordinary.”

He added that the main issue for the medium and long term is whether Apple has sustained its innovation, which he claims seems likely given that it’s part of the company’s DNA.

“But the proof will be in the pudding, and we’ll know over the next 12 to 18 months.”

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EE’s CEO Olaf Swantee believes that Apple’s policy is good for the industry

UK operator EE has defended Apple’s policy of preventing mobile operators from offering the iPhone 5 as an LTE device until it has tested the performance of their LTE networks, claiming it is good for the industry. The operator launched its 4G network in September 2012, with the iPhone available at launch as an LTE-capable device.

Apple’s policy, which was first reported by Telecoms.com last year, has been criticised in some quarters as another worrying power shift towards device and OS players and away from operators. However, EE’s CEO Olaf Swantee believes that it is good for the industry and good for consumers.

“We work very closely with Apple and other manufacturers to ensure the device experience is right, because we agree with Apple,” he said. “You really need to make sure, as we move away from pure voice and text, that the mobile internet experience is good and solid.”

“We have seen many 4G operators that are not announcing the leading 4G handsets on their network because their 4G network does not support a good customer experience, so we absolutely support [Apple's policy],” he added.

When Telecoms.com asked Swantee whether EE would welcome other handset manufacturers, such as Samsung and HTC, taking a similarly aggressively approach to testing networks, he maintained that they must do so.

“Samsung and HTC are key partners of ours but you can’t just get a device that the manufacturer says is 4G ready and offer it as a 4G handset on your network. That’s why we are so surprised when we see some of our competitors claiming they have a 4G-ready device when they don’t even have a 4G network,” he said.

“It’s quite hard work – I have seen how many hours and how many engineers are required to make a 4G device work properly on a 4G network. This is not easy stuff.”

Swantee’s sentiments were echoed by Mansoor Hanif, director of network integration and LTE at EE.

“We find that a very positive step, because there are networks, and there are good networks,” he said. “So our hope is about differentiating our network on quality. Device manufacturers absolutely understand that now.”

The LTE World Summit, the premier 4G event for the telecoms industry, is taking place on the 24^th-26^th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a flyer for the event.

Worldwide devices are on pace to total 2.4 billion units in 2013

The number of tablets sold globally will surpass the number of PCs sold by 2017, according to analyst firm Gartner. Sales of Android smartphones are also expected to triple between 2012 and 2017, the firm forecast.

More than 2.9 billion mobile or desk-based devices will be shipped in 2017, up from 2.4 billion today, according to Gartner. However, the mix of these devices will significantly change over the forecast period, the firm warned, as tablet devices become cheaper and more powerful. In fact, PC and laptop shipments are set to fall around 20 per cent, from 341 million shipped in 2012 to 271 million in 2017.

“While there will be some individuals who retain both a personal PC and a tablet, especially those who use either or both for work and play, most will be satisfied with the experience they get from a tablet as their main computing device,” said Carolina Milanesi, research vice president at Gartner.

“As consumers shift their time away from their PC to tablets and smartphones, they will no longer see their PC as a device that they need to replace on a regular basis.”

Ranjit Atwal, research director at Gartner, added that growth in the tablet segment will not be limited to mature markets alone.

“Users in emerging markets who are looking for a companion to their mobile phone will increasingly choose a tablet as their first computing device and not a PC.”

Tablets are not the only device type that is seeing aggressive price erosion; smartphones are also becoming more affordable,

Of the 1.875 billion mobile phones to be sold in 2013, Gartner predicts that one billion units will be smartphones, compared with 675 million units in 2012.

As a result of the changing buyer behaviour, Google and Apple will profit at the expense of smaller players. Google, which shipped 497 million Android devices in 2012, is expected to almost triple that figure over the following five years, to sell 1,47 billion devices in 2017. Apple will also thrive; the firm sold 213 million iOS and Mac OS devices in 2012, and is expected to more than double that to 504 million in 2017. Even Microsoft is set to prosper over the coming four years; the firm will see shipments rise from 346 million in 2012 to 570 million in 2017, according to Gartner’s forecasts.

Guy Kawasaki signs for Motorola

In a bid to revitalise its recently acquired handset business, Google has called on Apple’s former chief evangelist Guy Kawasaki to act as an advisor at Motorola Mobility. Kawasaki’s role at the firm will be focused on product design, user interface, marketing and social media.

Kawasaki first joined Apple in 1983, where he held the role of chief evangelist for four years. He then became a venture capitalist and public speaker, before rejoining the firm in 1995 as an Apple Fellow. He said that he accepted the position at Motorola due to his love of mobile devices, Android and Google.

“Motorola reminds me of the Apple of 1998: a pioneer in its market segment, engineering-driven, and ripe for innovation,” said Kawasaki. “I believe that great products can change everything. For example, the creation of the iMac G3 – the Macs that came in colours such as Bondi, Strawberry, Blueberry, Lime, and Grape – was a pivotal event for Apple”

One of his first actions is to create a Google+ community about mobile devices, he explained. The community is for mobile devices from any manufacturer running any operating system on any carrier’s network.

“As part of Google, the sky is the limit for Motorola, and I’m excited to be advising this team,” Kawasaki added.

Motorola Mobility has not had an easy time of late. In August 2012, the firm announced it will axe around 4,000 staff, representing 20 per cent of the handset business’s total headcount. Two-thirds of the redundancies will take place outside of the US.

In addition, 94 facilities – which represent around a third of the handset firm’s worldwide offices – will be shut down as Google continues to overhaul its $12.5bn acquisition.

Then, in December 2012, Google offloaded the Motorola Home business, which primarily makes set top boxes (STBs), to US firm Arris, in which it will also take an ownership stake.

Apple, meanwhile, announced an executive reshuffle of its own in October 2012, which saw Scott Forstall, one of the original architects of the Mac OS X operating system and head of the team responsible for the software platform at the heart of the iconic iPhone device.

Famed designer, Jony Ive, who was responsible for everything from the iMac to the iPhone and iPad design is now providing “leadership and direction for Human Interface (HI) across the company in addition to his role as the leader of Industrial Design.”

Samsung is the retailers choice

According to the latest research from Informa Telecoms & Media, sales staff at leading UK retailers are more likely to recommend a Samsung device ahead of an Apple one despite Apple’s widespread marketing and advertising campaigns.

A “mystery shopper” survey conducted over the Christmas period across eight of the UK’s the leading retail stores revealed that Apple and Samsung were the most promoted brands while key smartphone makers like ZTE, Huawei, Motorola, LG and RIM had little or no presence on the high street.

The mystery shop showed that the most recommended Samsung handsets were the Galaxy SIII and the Galaxy Note II, despite having been on the market longer than the latest handsets from Apple, Nokia and HTC. However, most surprising was the way that, despite an in-store advertising campaign and recent product launch, Apple was recommended in only two stores, 3 and Phones 4 U, with both recommending the iPhone 5.

A key aim of the survey was to gauge whether displays and posters promoting vendor brands increased the likelihood of sales assistants recommending devices from the brands being advertised. Also assessed was the level of technical expertise and ability to communicate key features of the devices as demonstrated by the sale assistants in each store.

The sales assistants in most stores recommended one of Samsung’s handsets, showing the fruits of the vendors’ increased focus on its “hero” devices, such as the Galaxy Note II and the Galaxy SIII, though it is also likely that sales assistants see the Samsung devices as a safe bet to earn greater commissions.

These results echo a mystery shopper survey which was conducted last summer across five sales outlets located in the Silicon Valley, California area. The results from that survey revealed that the best-represented brands, in terms of prominent displays, were Samsung and HTC. When it came to mobile phones recommended by the sales assistants in the various stores, Samsung was by far the best-represented vendor, having recently released the much-anticipated Galaxy SIII. The UK mystery shopper survey shows that this device is still going strong. The iPhone, possibly the most well-known smartphone, was only promoted by a single sales assistant.

It’s a testament to the job Apple has done in the smartphone market in recent years that a company that has managed to make $13.1bn in just three months could draw the criticism it has. $13.1 bn – that’s over a billion dollars each week for the quarter; more than enough to buy 13 Instagrams.

Nonetheless, the performance missed analysts’ expectations and wiped $50bn off the company’s valuation – the firm’s share price dropped to$450.66; it peaked in 2012 at $702.10.

Sure enough, the naysaying began. “Apple’s products have begun to lose their “innovative” top luster,” said Andy Castonguay, principal analyst at Informa Telecoms and Media.

“The market has disconnected itself with Apple,” Jack de Gan, chief investment officer at Harbor Advisory Corp told news agency Reuters.

“It’s going to call into question Apple’s dominance in the space,” added Sterne Agee analyst Shaw Wu.

But Apple has plans to bounce back from this tragic news. Again, this is the news that it made £13.1bn in 13 weeks.

The firm will add another 36 networks to the selection of carriers that are permitted to offer the iPhone 5 with LTE support enabled, next week. CEO Tim Cook made the revelation as part of the company’s earnings call earlier this week. However, the expanded list does not extend to carriers in parts of Asia and Russia.

“Next week, we’re adding 36 more carriers for LTE support. These carriers will be in countries that we are not currently supporting LTE. So the LTE coverage now, as of next week is in Italy, Denmark, Finland, Switzerland, Philippines, also several Middle Eastern countries.” The Informer still can’t get his head round the idea of a handset vendor talking about “LTE coverage”. The LTE coverage was already there!

These networks have a total of 300 million subscribers combined, noted Cook. But that’s not the only way Apple is looking to push forward. On the same call, chief financial officer Peter Oppenheimer added that Apple expects to spend “about $10bn” in capex this year, just under $2bn more than the firm reinvested  last year. The firm appears keen to preserve its culture of innovation and push the boundaries further than just ensuring the next iPhones and iPads are just taller, slimmer and faster.

Meanwhile, one could be forgiven for seeing the headline “Nokia records quarterly profit” and assuming it is an article from the archives, circa 1990. But no, this week, Nokia recorded an actual profit for 4Q12. An actual €439m profit in fact, up from a loss of €954m recorded in the same quarter of 2011.

Unfortunately for Stephen Elop and co, this doesn’t necessarily mean that Nokia is making a comeback to compete in the same league as big boys like Apple. Despite the turnaround, the Finnish firm saw quarterly sales drop year-on-year from €10bn to €8.04bn, while net sales for the year stood at €30.2bn, down from the €38.7bn recorded in 2011. The operating loss made by the firm in 2012 was more than twice as deep as that recorded a year earlier; down to €2.3bn from €1.1bn.

Victor Basta, managing director of M&A advisors to the technology industry Magister Advisors, dismissed Nokia’s result as “irrelevant” in the long term.

“Margins and prices for devices are eroding for all players. Unfortunately for Nokia the potential software value is now Microsoft’s, which has gained a key channel for Windows into the mobile channel without having to buy Nokia and its problems,” he said.

Still, given the troubles the company has had in recent years, it should serve as encouragement for Nokia.

Much of Apple and Nokia’s worries come in the form of a robust South Korean juggernaut, seemingly going from strength to strength.

Samsung announced net profits of 7.04tn won ($6.5bn) for the fourth quarter of 2012, with strong sales from its mobile division making a significant contribution. The firm’s profit was up 76 per cent on the same period in 2011, when the firm netted 4.01tn won.

Mobile sales for the three-month period reaped 27.3tn won, almost half of the firm’s overall revenue for the quarter of 56tn won. Operating profit for the IT and mobile division, which includes handsets and tablets, was 5.4tn won, up from 2.56tn won in 2011.

Samsung said sales of its SIII and Galaxy Note II devices had been particularly strong. These devices were more popular than their predecessors, Samsung said, setting new records for the speed and volume of sales. But smartphone demand in developed markets is likely slow in the first quarter of 2013, the firm acknowledged – and this is largely due to the threat from manufacturers of lower-cost devices.

“The furious growth spurt seen in the global smartphone market last year is expected to be pacified by intensifying price competition compounded by a slew of new products,” said Samsung. “In the first quarter, demand for smartphones in developed countries is expected to decelerate, while their emerging counterparts will see their markets escalate with the introduction of more affordable smartphones and a bigger appetite for tablet PCs throughout the year.”

Meanwhile, UK regulator Ofcom has announced that bidding for the 4G spectrum is underway. Seven firms have qualified to bid for spectrum auction and they will be competing for 28 lots of spectrum in two separate bands – 800MHz and 2.6GHz.

The regulator said that bids are being placed online over secure connections, using software that has been developed specifically for the auction.

The bidding will continue over several rounds and it is expected to be a number of weeks until the final winners are known. No updates on bidding activity will be provided until the conclusion of the auction. According to Ofcom, 4G services will be launched by a range of providers from late spring/summer 2013.

Efficient use of spectrum is becoming increasingly important in the UK – the country’s Ministry of Defence announced late last year that it will auction off around 200MHz of the radio spectrum it owns and now a research centre focused on developing white space technology has been opened at Strathclyde University in Glasgow, Scotland. The centre aims to work with players in the industry such as Microsoft, BT, the BBC and the UK government to develop technology that will tap into the unused white space spectrum.

Elsewhere, Swedish equipment manufacturer Ericsson has announced its intention to acquire the IT services capabilities of the Devoteam Telecom & Media operation in France. The deal will see 400 France-based IT services professionals join Ericsson, including the company’s TV SmartVision operations, which is in line with Ericsson’s strategy of being a ‘one stop’ shop.

Devoteam’s main competences are in the areas of consulting and systems integration for operations and business support systems, service delivery platforms and applications, IP Multimedia Subsystems, IP and radio networks and TV.

Also in the news this week, we’re all getting slower – at least in terms of broadband speeds. Despite the continuing roll-out of high-speed networks around the world, average and peak connection speeds actually declined by seven per cent between the second and third quarters of 2012 to 2.8Mbps, according to Akamai’s latest State of the Internet report. Despite the slight quarter-over-quarter decline, global average connection speed enjoyed healthy 11 per cent growth year over year.

The report, based on data from the Akamai Intelligent Platform, found that South Korea remains top of the pile for speed, with an average connection of 14.7Mbps, followed by Japan with 10.7Mbps and Hong Kong with 8.9Mbps.

Over in the Middle East, Saudi operator Mobily inked a partnership with enterprise cloud software and Infrastructure-as-a-Service (IaaS) provider Virtustream to offer cloud services to enterprises and small-to-medium businesses. Under the terms of the deal, Mobily will use Virtustream’s xStream cloud management software to run its public and hybrid clouds.

The deal means that businesses in Saudi will be able to move mission-critical applications, including legacy software, to the cloud, according to Virtustream. This would include applications such as those provided by SAP, Microsoft and Oracle, without needing to rewrite the software, the firm added.

Spanish operator group Telefónica has been particularly busy this week – the firm revealed plans to invest more in its fibre broadband networks in major cities such as Madrid and Barcelona this year, and also increase its fibre footprint in smaller cities like Bilbao and Seville.

In Madrid, the telco plans to extend its fibre-to-the-home (FTTH) network to new areas of the city like Alcorcón, Las Rozas, Boadilla del Monte, Villaviciosa de Odón, Torrelodones, Galapagar, Algete, Coslada, Valdemoro and Torrejón de Ardoz

Furthermore, El Tel announced it is looking to facilitate direct operator billing for customers in mobile app stores. The firm’s Telefónica Digital unit, which is tasked with “seizing opportunities in the digital world” and delivering new growth for the operator, has signed a global framework agreement with mobile payments and analytics company Bango. The two companies will partner globally to create an enhanced operator payment experience for app stores.

Seizing further opportunities in the digital world, Telefónica Digital also unveiled a web-based platform for the connectivity, management and control of M2M communications.

Smart M2M features real time monitoring of traffic type, volume and current consumption, technical supervision of lines including maps of connected devices, diagnostics and localisation. It also offers fraud detection functionalities, including the ability to restrict communications between a list of given devices or the possibility to establish traffic caps.

At the end of last year, Telecoms.com invited readers to complete its inaugural Telecoms.com Intelligence Industry Survey. Almost 2,000 of you did so, including 600 operator employees from 260 different operators worldwide. The Informer has had a sneak peek at the results of the survey and they provide very interesting reading indeed.

One of the interesting points the research discovered is that almost two thirds of the industry believes that greater consolidation is needed among mobile operators, with support emerging for the concept of single network markets.

64.6 per cent of respondents believe that further consolidation is needed in the mobile operator community. In line with this, when asked to rate a number of priorities for national telecoms regulators, respondents marked maintaining the number of mobile networks in the market as the least important. Less than ten per cent of respondents felt that this should be regualtors’ highest priority.

The survey also found that price remains by far the biggest influencer on operators’ selection of network vendors, more important even than technical performance of the equipment purchased. While technical performance was a close second to price, vendor attributes such as market share and legacy relationship were rated by respondents from across the telecoms industry as significantly less important to operators.

Price was ranked as very important by 43 per cent of respondents and as important by a further 41.8 per cent. Technical performance was a long way behind in terms of the number of respondents who felt it very important (24.6 per cent) although it was ranked as important by a larger number (47.7 per cent).

Despite the efforts being made in the automotive market towards enabling connectivity in vehicles, connected cars currently present the least potential service revenue opportunities for mobile operators, according to data from the Telecoms.com Intelligence Industry Survey 2013.

When asked to rate non-telco sectors on the potential service revenue opportunities they offer to mobile operators, 63.3 per cent of respondents rated the automotive sector as offering very low to average opportunity.

Conversely, 76.1 per cent of respondents saw high to very high opportunity in the payment/banking sector, and 71.7 per cent did so in the media content space.

The full results of the Telecoms.com Intelligence Industry Survey 2013 will be published on February 18th.

That’s about all for this week – take care.

The Informer

There are still networks out there waiting for LTE approval from Apple

Apple will next week add another 36 networks to the selection of carriers that are permitted to offer the iPhone 5 with LTE support enabled. Tim Cook, CEO of the handset vendor, made the revelation as part of the company’s earnings call earlier this week. However, the expanded list does not extend to carriers in parts of Asia and Russia.

“Today we have 24 carriers around the world that provide LTE support for iPhone 5. Those are in countries like the US, Korea, the UK, Germany, Canada Japan, Australia and a few others,” Cook said.

“Next week,” he added, “we’re adding 36 more carriers for LTE support. These carriers will be in countries that we are not currently supporting LTE. So the LTE coverage now, as of next week is in Italy, Denmark, Finland, Switzerland, Philippines, also several Middle Eastern countries.”

Cook observed that these networks have a total of 300 million subscribers combined, making it clear that Apple was very aware of the potential for growth in these markets.

In November last year Telecoms.com exclusively revealed that Apple held the keys to enabling LTE support on the iPhone, by required that carriers pass the handset vendor’s own, independent tests for LTE performance. Backing this up, in December 2012, Tajikistani operator Babilon-Mobile told Telecoms.com that despite its best efforts to get in touch with Apple the iPhone 5 would not support LTE on its network.

Regardless of Apple’s announcement this situation has not changed for Babilon-Mobile. “Unfortunately we still didn’t get any response from Apple on our requests to enable LTE support,” Babilon-Mobile’s head of the automation Jafar Asimov told Telecoms.com.

It’s not just smaller carriers such as Babilon-Mobile that are still omitted, Asimov said – the larger Russian operators have also been left of the list of those invited to the LTE party.

“As far as I know, Apple is not speeding up cooperation on LTE with the largest Russian operators, such as MTS, Megafon and Beeline”, Asimov said. “It’s a strange policy. Instead of enabling LTE support for all carriers, which would bring benefit not only to operators, but also to Apple customers as well, Apple is limiting its customers [ability] to use the functionality of the phones fully. So, customers are paying for a feature that they can’t use.”

Telecoms.com has requested comment from Apple but had not received a response at time of publication.

Industry commentators such as Bengt Nordstrom, founder and CEO at industry consultancy NorthStream told Telecoms.com that he was “shocked” when told about the policy. It proved, he said, “who is running the industry”, adding: “Apple have put themselves in the driving seat; it’s really changing the game.”

The LTE Asia conference is taking place on the 18^th-19^th September 2013 at the Suntec, Singapore. Click here to download a brochure for the event.