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Cell Phone Industry's Six Biggest Failed Schemes
adeelarshad82 writes "The tech world is for dreamers, schemers, and sometimes, scammers. Which is why it's no surprise that the cell phone industry isn't any different. In wake of the recent news about the Israeli mobile-phone firm Modu shutting its doors, mobile analyst Sascha Segan revisits six major failures in the cell phone industry, from using phones to create a peer-to-peer that would eliminate the need for wireless carriers to a company with a $225,000 phone."
Is it really too much to ask the /. editors to quickly look around the page for the crud-free one-page "print" version link and post that for us all instead...
http://www.pcmag.com/print_article2/0,1217,a=259387,00.asp?hidPrint=true
For one thing, the outrageous charges for text messages. Or making sure that every aspect of you using your phone gets the last little second out of you so that it takes away from your total minutes. Or not having phones that function as answering machines simultaneously as voice mail....the list goes on. They are really taking consumers for a ride.
What it really comes down to is that most of the good ideas in cell phones (a) have been done already or (b) are waiting for technologies in other areas to advance first. All those other not-so-good ideas have extremely limited appeal to the masses. Yet people and smaller companies continue their attempts to "innovate" in this marketplace, primarily because there appears at first glance to be such a huge amount of cash sloshing around in the cell phone arena. As it turns out, though, that money is pretty much locked up by the major players, so your Popeil-esque Great Idea But On A Cell Phone This Time is going nowhere.
You'd think when they charge you 10c per text message, that'd be something people reject. Especially when any random stranger can send you spam which you have to pay for.
God spoke to me.
Reportedly MS has spent about a billion dollars on the Kin only to kill it after very poor sales. Part of the costs was the Danger acquisition (reportedly about $500 million), the engineering and R&D for 2 years. Then the marketing and launch costs. Numbers vary on actual sales but the highest estimate was about 10,000 units sold. In my book, that spells FAIL.
Well, there's spam egg sausage and spam, that's not got much spam in it.
P2P would(barring some very clever design or a focus more or less exclusively on walkie-talkie use cases) likely be a poor candidate for cell phone use(lousy latency, uncertain availability, battery life of nodes...) P2P works pretty well for cheap transfers of big files; but somewhat less well for low-bandwidth, but latency sensitive, stuff.
The system that I would like to see would be a radically free market(and thus, likely never to be seen in the cellular arena) system of phones that electronically bid for resources in real time, from carriers within range who dynamically compete for customers in real time.
Consider a basic example: I have a cellphone with a GSM module that can see two or three carriers' towers, and a wifi module that can detect a number of access points. I open my address book, or start typing in a number. Detecting that I am going to be making a call, my phone checks the rate information being broadcast from the wireless links visible to it: it then silently routes the call out through whichever offers the lowest rate. In order to prevent surprises, the user could, of course, set "absolute ceiling", "manual verify", and "warn but continue" price thresholds within their phone's bidding engine. Towers, for their part, could dynamically adjust prices, down to the operator's set floor, in order to keep themselves busy but not over-saturated.
Data would be handled in a similar manner: cell towers and wifi access points could broadcast their willingness to provide, and rate(at home, of course, your router would treat you as a special case of free access, to ensure that you always used the bandwidth you had already paid for, and applications requiring data could choose based on price.
Since most people would not want to trouble themselves with the details, phones would, ideally, ship with some sensible defaults and a few heuristic rules(ie. if I almost always make long calls to contact X, and very short ones to contact Y, select a carrier for contact X based on lowest expected price for a long call, and select a carrier for contact Y based on lowest expected price for a short call). For those who did wish to dig deep and twiddle all the knobs, the tools for expressing and solving optimization problems in multiple constraints to computer systems are not exactly terra incognita. The real propellerheads could have their handsets algorithmically trading off between lower and higher power-requirement connections based on batterly life and location/time based estimates of next charge, and whatever other variables they felt like including...
Iridium was a total clusterfuck for Motorola, who basically ended up paying many of the capital costs and then having to write off the whole thing.
On the other hand, the (definitely in no way whatsoever US clandestine services connected, just like everybody else in McLean, Virginia...) group of private investors who snapped up a fully functional constellation for $25 million have been doing just fine with it.
The moral of the story seems to be that there is absolutely no way that satellite phones can(in the face of cheap terrestrial calls) justify their startup costs; but if some sucker eats those for you in bankruptcy, it is a perfectly viable business....
The Outcome: zzzPhone took some orders and shipped a small number of very low-quality phones. I heard crazier and crazier stories about Horowitz, all second-hand. For instance, he apparently hired a carver to make him a cell phone out of wood that he tried to insert working phone components into.
I found that a bit funny because making one is a course at a Finnish university. More pictures here, but with finnish text only.
I originally read about this in a magazine; apparently they solder the sim-card connecting leads so swapping operators requires some work.
I'm guessing that it would go over about as well as poor old "cablecard", which was largely murdered in the cradle despite being far less radical.(Or, for that matter, if SIM unlocking is too scary for them, this idea would have them shitting bricks, since it amounts to phones that automatically swap SIMs every second or so, depending on price...)
In theory, though, there would be nothing preventing "traditional" style cellphone contracts(other than cheaper competition potentially making them foolish).
I deliberately modeled the notion on that of electronic market trading, in which context a traditional cell contract would be, in essence, a "minutes/SMS/data option contract". Instead of buying my minutes at the market price where and when I need them, I purchase an "option" on X minutes, Y SMSes and Z megabytes to be delivered in the following month, at a set rate(presumably for a discount over the expected spot prices).
Again, having to have a finance degree just to make a phone call won't really appeal to most people, so I would invoke the "sane defaults" notion and hope for the best; but the explicit parallels to common financial instruments, along with automated transaction engines, open up some fascinating possibilities for enthusiasts(as well as, in theory, helping networks cope with congestion: heavily congested regions would be more expensive for spot-price users, encouraging them to moderate usage; but they would also be most profitable for local wifi operators, temporary telco cell trucks, etc. to set up shop...)
Iridium was one of those projects that was a good idea in the beginning; however, by the time it came to launching it, nobody at the top had noticed that circumstances had changed. The idea was begun way back in the 1970s when a vacationing Motorola engineer wanted to make a call from the beach in the Caribbean. The thought occurred to him that he could use satellites to do it. The technology wasn't really ready but over the next few decades, Motorola worked on it in tandem with other technologies.
By the time, the technology was ready, Motorola had worked hard on getting the necessary logistics of launching a satellite network. However, since the original idea, cellular phones were beginning to partially fulfill the need for communications. Now a cell phone can't go everywhere like the sat phone was intended, but it can be used in places most people will be, like in cities. In its estimation, Motorola (whose products helped launched the cell phone industry) badly miscalculated the numbers of customers that would have need for a sat phone compared to a cell phone. I think one place that they expected higher demand was Africa. However, in Africa, cell phones actually outnumber landlines because they are in fact cheaper than landlines to operate and build. The local populations buy mostly prepaid phones but only in the remotest parts would they need a sat phone. However, few can afford the nearly $1000 USD just for the phone itself.
The problem wasn't that someone at the top should have recognized the situation had changed and that spending a few billion dollars or so when there were going to be few customers was foolhardy. I think part of it was that Motorola didn't know when to cut losses but went ahead anyway.
Well, there's spam egg sausage and spam, that's not got much spam in it.
I was a Motorola engineer for 10 years (and a consultant for things related to them and Freescale ever since) and got to enjoy some involvement in Iridium. Hopefully I am remembering this ancient history correctly.
It did not cost Motorola $5B USD. One of the things the Wikipedia article leaves out was all the foreign investment involved (Saudi Arabia had almost as much money invested into Iridium, IIR the Powerpoint presentation correctly) leaving Motorola's contribution/investment at about $400K USD with a total exposure of probably $1B, but they got most (if not all) of that back by paying themselves the other investors money for the design work. No-lose contracts are a nice way to do business if you can get someone to sign from the other side. The .pdf you linked to has some good historical information, but also some glaring errors which I am not in the mood to fisk.
That said, Iridium SSC was a SNAFU from the start, as anyone looking at the map of world wide cellular coverage in 1997/98 should have been able to see. Since there are no records of the skepticism I put forth much earlier than that, I won't bring it up further. Of course, Motorola in 1994 still thought that analog cellular was the only way forward and was in the process of completely mismanaging the conversion to digital, so it isn't that surprising that the higher up execs missed it. The phoenix that arose from the ashes to enable the South Pole to get 28.8 kbaud and US DOD operators to be able to phone home without having to lug around 3-4 kg of satellite equipment is something I applaud the US bankruptcy laws for. Stupid money and big dreams can have good endings for someone. I will forever wonder how the US automotive industry would have fared if those same laws had not been interfered with.
I was invited to sit in on one of the early presentations right when they made the decision to reduce from 77 satellites to 66. The presenter's manager didn't much care for my smart ass suggestion they rename the project Dysprosium (I doubt he ever had the geek cred to read /., but if he is reading this- HI!). I was also the guy who previously explained to them why the PowerPC 603 was a horrible CPU to use for a satellite and the guy who helped them redesign around the PPC604 after the managers woke up to just how important it is to have at least SOME level of cache checksums in hardware (a pretty reasonable requirement for anything floating around the earth, and which was why my coworkers and I were invited to the presentation). But it was a great joy to spend time at their design facilities right next to a dairy farm south of Phoenix. Fragrant.