-----Original Message----- From: mark r. anderson [mailto:sns@tapsns.com] Sent: Friday, July 26, 2002 9:30 AM Subject: ***SNS*** Special Letter: The PDA+Phone Dilemma To SUBSCRIBE, JUST CLICK ON OUR WEBSITE at http://www.stratnews.com/ , then click on the To Subscribe button on the left of the home page. Companies wanting a volume license should email us direct, at sns@tapsns.com, with the names and email addresses of their subscribers. RE-SENDING OF THIS NEWSLETTER TO ANY NUMBER OF COLLEAGUES IS ENCOURAGED ON A ONCE-PER-USER BASIS, PROVIDED YOU ALSO CC:SNS@TAPSNS.COM; IN RETURN, WE WILL PROVIDE RECIPIENTS WITH A ONE-MONTH FREE TRIAL SUBSCRIPTION. ANY OTHER UNAUTHORIZED REDISTRIBUTION IS A VIOLATION OF COPYRIGHT LAW. SUBSCRIBER EDITION STRATEGIC NEWS SERVICE ''Next Year's News This Week''(sm) The most accurate predictive letter in computing and telecommunications Read by industry leaders worldwide. Provided by: Technology Alliance Partners On the Web: http://www.stratnews.com This July 26th, 2002 Issue: ***SNS*** Special Letter: THE PDA+PHONE DILEMMA How Lineage Influences Outcome by Geoffrey S. Goodfellow IN THIS ISSUE: What's On Today What's Likely Tomorrow What To Do Insites Members' Corner How to Subscribe, Including Corporate Volume Licenses Publisher's Note: This week, I spent an hour or so talking with Microsoft CEO Steve Ballmer. One of the more interesting moments of this conversation came when I asked him what he thought the most successful phone platform would be for the company in the next year. Without hesitating, he pointed to a prototype HPQ device running the PocketPCPhone OS. I was a bit surprised; I thought he would have mentioned one of his pure cellphone partners. ''We'll sell more of these than of any cellphone,'' he said. This issue is the epitome of what our Special Letters have come to represent: a pioneer in a key global market, writing with technical savvy about something that will involve billions of dollars in money invested and spent in the next few years. (If you have not done so before, you are encouraged to forward this to any colleague, once per person, with a cc: to us, at sns@tapsns.com; we'll give them a month free trial, and never share their data.) Geoff invented wireless email in the early 80's while at SRI (the late Internet protocol czar Jon Postel assigned him ''port 99'' for his tinkering). In the late 80's he founded the second commercial Internet company, Anterior Technology, as well as RadioMail, the first wireless Internet business in the early 90's. After you read this, I think you'll agree that Geoff has written a landmark piece about the status of wireless voice and data, worldwide, today. And, finally, we have had a strong response to our somewhat inadvertent Early Bird opening of slots for the SNS FIRe 2003 (Future In Review) Conference last week. If you would also like to reserve a spot to this limited, invitation-only gathering, joining us May 19-22 in San Diego with Michael Dell and many other interesting folks, please email susan@tapsns.com, and get your place nailed down. Maybe you'll see SteveB there as well -- mra SNS SPECIAL LETTER: THE PDA+PHONE DILEMMA How Lineage Influences Outcome, by Geoffrey S. Goodfellow The PDA+Phone Situation: As Viewed from Prague Let me start by saying I have been a Nokia Communicator 9110 addict since it was first available in the later part of 1999 here in Central Europe (http://www.nokia.com/phones/9110/index.html). The joy of a single device that does The PDA+Phone Thing ''all-in-one'' is just plain nifty, especially when it seamlessly synchronizes with your Outlook contact & calendar databases. The 9110 without a doubt is The ''pocketable'' Dream Machine I've always wanted to have ever since I first experienced wireless network access on the ARPANET via the University of Hawaii's AlohaNet, the first wireless packet radio data network, in the 70's during a summer vacation there. (Pop Quiz: Did you know that the Ethernet `wired' LAN concept was inspired by the AlohaNet `wireless' data network? Yup, that's right, wireless begats wired!) That all said, I have been following the PDA+Phone sphere with an eye to upgrade to the new Nokia 9210 or possibly Something Else, like the Handspring Treo. I have held off from the new 9200 series Nokia Communicator for the following reasons: 1. The only difference between the new 9210 (Symbian OS) and the old 9110 (Geoworks OS) ''appears,'' on the surface, to be a snazzy color screen and dual-band GSM 900/1800 (both Europe, Africa, Asia) radio frequencies. I would have jumped into the 9210 straight away had it also included: 2. GPRS capability. The 9210 does not have GPRS capability (or a GPRS ''upgradeable'' capability like the Treo purports), 3. Present Day ''Full World'' GSM frequencies (900/1800/1900 MHz). Even more disappointing, the 9210i, the ''improved(?)'' 9210 version that is now starting to be distributed over here in Europe, does not have GPRS or the Present Day Full World GSM frequencies. It seems you folks in the U.S. are ''lucky'' to now get a GSM 1900 MHz (only) version of ''yesterday's technology'' of our former 9210 (non-'i' ''improved'') model called the 9290. What's Really Needed: I believe for Nokia's 9200 series of Communicators to be successful, future iterations will need to (now) add: 1. QUAD-band radios -- i.e. the 900/1800 MHz GSM frequencies used in the Rest Of World (outside of the U.S., except Japan) + 850/1900 MHz GSM frequencies used in the Americas. At the end of the day these High-End PDA+Phone devices absolutely, positively need to have Maximal Capability (along with their sure to be Maximal Price) to be Maximally Used anywhere a GSM network could possibly exist on the planet (except Japan). [Note: the ''ante'' here was recently raised for all manufactures of Higher End Devices from TRI-band to QUAD-band radios because of AT&T and Cingular's decision to retrofit their legacy analog AMPS and digital TDMA 850 MHz frequency networks in the U.S. with GSM network technology. More about all these different ''flavors'' of networks in the U.S. in a moment.] 2. GPRS -- General Packet Radio Service capability GRPS gives you the ability to send and receive small, individual bursts of data, in packets as opposed to setting up and maintaining a full-blown circuit switched call. Circuit switched calls have inherent setup and tear down overhead/delays. Think of ''Always On GPRS'' as a ''take it with you AORTA'' it's like being on your Ethernet LAN in the office or DSL/Cable at home vs. dialing-up through the analog or digital Public Switched Telephone Network with ISDN. [Caveat: the GSM network providers have, so far, for the most part, priced GPRS into the stratosphere. Example: here in the Czech Republic the price is about U.S. $1 per MB, so the subscriber uptake has been somewhere between slim-to-none. I have hope for future price reductions once the carriers want to try to make a bit of ROI on the substantial outlay in deploying GPRS on their networks. Counter example of somewhere that Gets It Right: Croatia's GSM networks GPRS price is 5 or 6 cents U.S. per MB.] 3. USB Currently you can only connect to your PC for communication and synchronizing via slow serial port technology. Most annoying is that new laptops don't even have serial ports anymore thereby requiring you to lug around a USB to serial converter frob. 4. Jenny Craig visit -- just a little lighter as well as thinner (but not necessarily smaller) in the weightyness/love handle thickness department, please. I'm a believer that there are real and practical limitations on the size you can make a Real Keyboard for Serious Typing as well as a ''mock 24x80 PC style'' display size for Real Viewing. I often sit in a cafe and let my thoughts flow into my Nokia 9110. I couldn't imagine doing this on a Treo style keyboard. 5. MMS capability Multi Media Messaging -- MMS works much the same way as SMS, but allows users to combine audio-, graphic-, text- and imaging content in one message. To date, Nokia has announced six MMS-capable phones, but the 9200 Communicator series at present is not one of those six capable MMS phones. The DNA Conundrum: The Biggest Dilemma of how Really Good the PDA+Phone combo devices ''are'' and which one to go for always seems to derive from their progenitors lineage: Are you from the Dessert Topping or the Floor Wax Family when you are trying to pass yourself off as the master of both? I.e. is Your DNA from The Phone Industry family or The Computer Industry/PDA Family and, how successful is Your Genetic Engineering Team at splicing the genes from The Other Family into The Mutation you engender? Your Genetic Disposition/Programming *is* what determines if you have a PDA First to which a phone capability is added in, or whether you have a Phone First with some PDA functionally grafted on. What generally happens during the slicing, dicing and splicing process is that you end up with a Frankenstein kind of device that no one really likes or wants. I am very gratified that Nokia has continued to invest through the still-born, abortive, teething and ''deformative'' Suffering Years of what was just miserable, embarrassingly low (and I mean Really Really low) uptake during the evolution from the brick 9000, 9000i, 9110, 9110i to the 9210/9290 and now 9210i. I anxiously await their next iteration, hopefully with the additions outlined above. Special U.S. Considerations: Buy The Network, Not The Phone: In the U.S. The Most Important Detail to carefully consider is actually not The Phone you want to buy, but The Network it will live/operate on. In the Rest Of World (except Japan) The Flavor of the network is not really important because you have just One Choice: GSM. In the U.S. The Flavor of the network *is* everything because you have [too] many of them, all different. Let's get under the network covers a little more: The U.S. has quite the alphabet soup collection of incompatible cellular network flavors deployed today [with more coming tomorrow], such as AMPS, CDMA, GSM, iDEN and TDMA. Within this group of network flavors you'll find the likes of 2G, 2.5G, 3G, CDMA IS-95, CDMA2000 1XRTT, CDMA EV-DO, WCDMA, GPRS, EDGE and UMTS. This U.S.-specific multi-, incompatible network situation is actually nothing new, believe it or not. The historical pre-cellular mobile telephone network palette included the likes of IMTS, SMART, Rydax, AutoTel, MTS, 600/1500, 2805 and Reach, among others. (In the pre-cellular days I had the ''pleasure'' of having 4 (yes, four!) different mobile phones on different frequency bands and signaling methods in my car. Maybe you can imagine the curious looks I got as I drove around with That Antenna Farm sprouting on the trunk lid but I was connected! ) Breadth and Depth Coverage: Each of the present-day U.S. cellular network flavors have been deployed for a varying amount of time, and, thus have various degrees of ubiquity/coverage. AMPS is the oldest and most ubiquitously deployed . With AMPS, which is analog, you will find the Widest Coverage (most available) in the U.S. and therefore, Best Breadth. AMPS will also likely provide you with the best Depth of Coverage, meaning reaching inside for good ''in building penetration'' (of the radio signal). The newer networks in the U.S. are the 1900 MHz GSM (primarily Cingular & VoiceStream) as well as 1900 MHz CDMA2000 (SprintPCS) flavors. These 1900 MHz networks are likely to offer the least breadth and depth of coverage because: 1. They have not been around as long as the 850 MHz AMPS, TDMA & CDMA based networks and thus their coverage is not as wide spread (breadth) and good inside buildings (depth). 2. The 1900 MHz networks require 4x or greater the number of base stations for equivalent ''breadth and depth'' of coverage of 850 MHz networks and thus more capital outlay and engineering. [A historical aside: when the cellular network concept for mobile telephony was invented by Bell Labs in 1947, it was envisioned as a Car Phone Only service, not the Portable hand-phone system that (heretic of the day) Marty Cooper at Motorola imagined. So, when the first cellular networks were constructed, the AT&T AMPS networks were designed and engineered like the AT&T trial system in Chicago: for Car Coverage. This meant, for example, that when NYNEX turned on the New York City system they did not bother to put base stations in and around Manhattan, instead choosing to surround the city with cell sites. This led to the ''Canyon Effect'', where calls would drop as you rounded a street corner. Depth of coverage was nil, so in-building use was non-existent. In Washington DC, where Motorola and American TeleServices had their trial system, supporting the DynaTAC portable hand-held phone, base stations were located in and around the heart of the down town area. This provid ed Really Good in-building depth of coverage from the first day of service. I had access to the Motorola DC test system and sat on the FCC and EIA cellular standard committees. We had no end of fun chiding our AT&T colleagues that ''if they put base stations in down town areas like New York, they would become overloaded because subscribers would use them which is a nice problem to have, eh?] Which Network's PDA+Phone to Buy: To put it bluntly: what good is *any* phone if you can't reliably place and receive telephone calls? The VoiceStream and Cingular 1900 MHz GSM networks in the U.S., where the Nokia Communicator and Treo currently operate, are not exactly known for their stellar coverage (breadth or depth). VoiceStream's new owner, T-Mobile (a.k.a. Deutsche Telekom) like most telecom players these days, is feeling a bit bruised and poor since it ''over purchased'' VoiceStream for way too many billions during the go-go days in 1999. VoiceStream also just happens to be the smallest ''national'' network player in the U.S. and will require Substantial Follow-on Investments to further build out, congeal and seamlessify its patchy coverage during a time when the market itself is engaged in a price war. Not a pretty picture! We are Very Likely to see some consolidation in the offing with either a Sprint PCS & Verizon [CDMA network technology], Cingular & AT&T or Voicestream with Cingular or AT&T [GSM network technology] marriage sometime in the not-to-distant future. My recommendation: For prospective PDA+Phone purchasers in the U.S. my recommendation is to: wait. I recommend you wait until the PDA+Phone combo device you lust for is available on a widely deployed 850 MHz national network such as Verizon (CDMA). You can also wait until such a time as the SprintPCS, VoiceStream and Cingular 1900 MHz networks have built out their coverage to match that of the 850 MHz operators. That won't be tomorrow, by the way. If you absolutely Must Have it now: There are some half-way, stop-gap measures such as SprintPCS offering ''dual-band, dual protocol'' phones. With a dual-band phone, when coverage of Sprint PCS's all digital CDMA 1900 MHz network blanks out, the phone switches over to an analog 850 MHz AMPS network, thereby allowing you to place and receive telephone calls -- the whole point of buying a mobile phone, right? Sadly, the U.S. 1900 MHz GSM network operators don't seem to have embraced this half-way analog fall-back measure to tide their customers over until such a time as they are as widely deployed with coverage as that of their 850 MHz AMPS/CDMA/TDMA brethren. A Final Heads Up on U.S. PDA+Phone Buying: Unlike in the Rest Of World (except Japan), the mobile phone you purchase in the U.S. will Only Work on the network technology that it was made for. So let's say you buy a 1900 MHz GSM phone such as the Nokia 9290 Communicator or Treo. Later, you discover that the GSM coverage sucks, which it mostly does in the U.S.. Then, not only do you pay The Penalty of breaking the contract with the network provider (VoiceStream or Cingular), but you also end up with a phone that can't be re-used on another network a double loss situation. In the Rest Of World, like here in the Czech Republic, there are (only) multiple GSM network providers. If the network or coverage is lousy on Provider A, you can re-use the same phone on Provider B or C. [In places like Australia they have taken this concept a step further by mandating Number Portability. You're able to take your existing mobile phone number with you when changing from provider to provider, not to mention having the person who is calling you pay for the cost of the incoming call -- but that's surely a discussion for another day....] Best wishes with your PDA+Phone considerations, Geoff Goodfellow [Primarily Retired] Prague, Czech Republic Copyright Geoffrey S. Goodfellow 2002, all rights reserved For SNSers who have been reading for years about the Balkanization of the U.S. wireless and wireless data market, this piece has to come as a combination of balm and aggravant. It is somehow perfect that our own inventor of wireless email now lives in the Balkans (OK, near them), ''primarily retired,'' and so is free to tell us about what our near-term systems will really do, vs. what we are being told they will do. Every U.S. Congressperson should read this -- as should FCC Chair Michael Powell. Those who don't understand these issues will say, ''I already knew that.'' Those who do understand the relation between technology and implementation, will say, ''It's worse than I thought.'' My heartfelt thanks to Geoff for doing a first-rate job of laying out the technical terrain for voice and data over wireless for the years to come and for helping me to pick my next handheld device. Your comments are always welcome. Sincerely, Mark R. Anderson President Strategic News Service LLC Tel. 360-378-3431 P.O. Box 1969 Fax. 360-378-7041 Friday Harbor, WA 98250 USA Email: sns@tapsns.com About the Author Geoff Goodfellow is primarily retired. In his retirement he enjoys being a DJ, aspiring restaurant critic, private investor and occasional entrepreneur. In his ''previous life'' he has been an internationally quoted expert who has been involved in the computer and communications industries for over 30 years. In 1988 out of a spare bedroom in his home Geoff founded RadioMail Corporation, the first wireless Internet-based electronic-mail connectivity and information distribution service for wireless data, cellular and paging networks. His interest in wireless originated from early experimentation with the University of Hawaii's AlohaNet, the first packet radio network (funded by the U.S. Defense Advanced Research Projects Agency), and from a desire to be productive while enjoying a day at the beach. Geoff grew the business to offices in four continents, and in 1993 Motorola made a major investment in RadioMail. Geoff served as the company's chairman and chief visionary until 1996. RadioMail has been the recipient of many awards for its pioneering wireless services. Before founding RadioMail, Geoff spent 12 years with the Stanford Research Institute (now SRI International), starting part-time as a system and network ''janitor'' in 1974 and signing on full time two years later when he dropped out of high school. Over the next decade he moved up the ladder to senior researcher and principal investigator specializing in computer security and networking in SRI's Computer Science Laboratory. At SRI Geoff was involved in the development of the Internet (and its predecessor the ARPANET) as well as mobile communications, packet radio, computer security and networking systems. In 1996 Geoff helped start JFAX (now J2 Global Communications, NASDAQ:JCOM), the first company to provide a service that delivers faxes and voicemails to your Internet email address from a personal telephone number. In 1998, Geoff relocated to the Czech Republic and is an owner of the ALCOHOL BAR in the Old Town section of Prague (http://www.alcoholbar.cz). Geoff has testified twice before U.S. Congressional Subcommittees: the Subcommittee on Telecommunications and Finance, on radio spectrum competitive bidding (April 1993); and the Subcommittee on Transportation, Aviation and Materials, on telecommunications security and privacy (September 1983). He is co-author of ''The Hacker's Dictionary -- A Guide to the World of Computer Wizards,'' published by Harper & Row (1983). Articles about Geoff Goodfellow and quotes from him have appeared in many publications world wide including the Wall Street Journal, the New York Times, Forbes, Fortune, Success, Information Week, the South China Morning Post and assorted Czech periodicals. He can be reached at geoff@iconia.com. ____________ INSITES SNS readers interested in additional predictions and information can turn their browsers to: The SNS website, at http://www.stratnews.com. The Orca Relief Citizens' Alliance, a 501(c)(3) non-profit effort to study and reduce Orca mortality rates, supported largely by technology workers. Please visit our new website, at http://www.orcarelief.org, for more information. Contributions may be sent to: ORCA, Box 1969, Friday Harbor, Washington, 98250. The Hybrid Vigor Institute, at http://hybridvigor.org, focused upon providing tools and environments leading to great new discoveries in interdisciplinary science. 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SMALL COMPANY (10 employees or fewer) SITE LICENSE: $995. TEACHERS' GROUP RATE: (five teachers): $195.00. STUDENT and INDEPENDENT JOURNALIST RATE: $195.00 per year. This service is intended for strategic thinkers who depend upon business technology planning. The SNS charter is to provide information about critical computer and telecommunications issues, trends and events not available to managers through the press. Re-purposing of this material is encouraged, with proper attribution. Email sent to SNS may be reprinted, unless you indicate that it is not to be. If you are aware of others who would like to receive this service, please forward this message to them, with a cc: to Mark Anderson at sns@tapsns.com; they will automatically receive a one-month free pilot subscription. About the Strategic News Service SNS is the most accurate prediction letter covering the computer and telecom industries. It is personally read by the top managers at companies such as Intel, Microsoft, Dell, Compaq, Sun, Netscape, and MCI, as well as by leading financial analysts at the world's top investment banks and venture capital funds, including Goldman Sachs, Merrill Lynch, Hummer Winblad, Venrock and Warburg Pincus. It is regularly quoted in top industry publications such as PCWeek, Infoworld, Institutional Investor, Upside, the Financial Times, the New York Times, and elsewhere. About the Publisher Mark Anderson is president of Technology Alliance Partners, and of the Strategic News Service(tm) LLC. TAP was founded in 1989, and provides trends and marketing alliance assistance to firms leading the convergence of telecom and computing. Mark is a Seybold Fellow. He is the founder of two software companies and of the Washington Software Alliance Investors' Forum, Washington's premier software investment conference; and has participated in the launch of many software startups. A past director of the WSA, Mark chairs the WSA Presidents' Group. He regularly appears on the Wall Street Review/KSDO and National Public Radio/KPLU programs. Mark is a member of the Merrill Lynch Technology Advisory Board, and is an advisor and/or investor in Authora, Ontain Corporation, Ignition Partners, Mohr Davidow Ventures, and others. He is also a principal in the investment advisory firm Resonance Capital Management LLC, which manages the accounts of institutions and high-net-worth invest ors, focused on technology markets. Disclosure: Mark Anderson is a portfolio manager of a hedge fund. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the position that his fund takes may change at any time. Under no circumstances does the information in this newsletter represent a recommendation to buy or sell stocks. On July 29th -31st Mark will be attending the Fortune Magazine ''Brainstorms 2002'' Conference in Aspen. On September 11th, he will be a keynote speaker at Seybold San Francisco, at the Moscone Center. And on September 25th, he will host the annual WSA Presidents' Group Venture Capital Meeting, at the Woodmark Hotel, Kirkland, WA. In between times, he will be looking forward to his first solo-paired days with his oldest godson, now taller than he, and no doubt, quite a bit sharper, here and there. But how many fenceposts can this guy sink in a week? Copyright 2002, Strategic News Service LLC ISSN 1093-8494