Cellular Success Stories and Missed Opportunities
The July 2008 release of Apple’s 3G iPhone could be interpreted as a catalyst for satellite industry mobile voice and data investments. Some analysts believe that the data application integration features of Apple’s handset may have had a hand in the acceleration of Sirius XM Radio’s decline in 2008. At the time of iPhone debut, Shaw Wu, an analyst for American Technology Research, called the iPhone an "open-ended growth story," and projected that 14.6 million iPhones would be shipped by the end of 2008 and 31.6 million units by the end of 2009. While the decline of the consumer market, driven by the global recession in the second half of 2008, made Wu’s estimate generous by about 4 million units, iPhone application downloads were extremely successful, specifically ones that provided free services. AOL Radio, provided by the one-time king of Internet software, America Online, was one of the more popular applications. "AOL Radio and Apple brings a great radio platform with a huge amount of content," says Lisa Namerow, managing director of AOL Radio. "We offer over 350 stations for free. That’s a pretty valuable and compelling offer for consumers to take advantage of."
Sirius XM Radio, which was bogged down in a merger battle with the U.S. Federal Communications Commission (FCC), may have been too late to counter the iPhone’s growth as a radio player, but the device also has been transformed into a medium for satellite competitors. A third party software company, Millard Software, created uXM and uSirius, applications for the iPhone G3 which give listeners streaming access to XM and Sirius feeds. Even though a valid subscription to the satellite service is needed to obtain the feeds, it allows customers to skip out on buying new hardware. Another application, Pandora, also swayed a chunk of radio enthusiasts to a free service away from satellite.
Other satellite companies have harnessed the potential of the cellular market by listening to research studies and partnering with terrestrial companies to add global positioning elements to handsets. Right on cue, the names of software giants enter the scene. Google is constructing its own reference databases of cell tower and Wi-Fi hot spot locations through user-generated content and self-learning mechanisms, allowing Google to offer location-based services (LBS) independent of carriers. ABI research analyst Dominique Bonte asserts that Google does not plan on stopping there. "It is likely [Google] will make its location assets available to smaller vendors, further endangering the position of the carriers," she says. Bonte’s research also shows that the handset market, backed by the growth potential of LBS enhancements, is recession proof. In a separate study released in January, "GPS-enabled Handsets," Bonte and ABI claim that shipments of these handsets will climb to 240 million units despite a projected drop of 4 percent to 5 percent in 2009. ABI called the performance of GPS-enabled handsets "surprising" and driven by the ongoing demand for feature-rich smartphones — a group that includes the Apple iPhone 3G, RIM’s BlackBerry devices and Nokia N series phones. "Shipments of the devices will increase at an average annual unit shipment rate of 19 percent through 2014. During the period, GPS chipsets will continue to penetrate this segment with 9 of every 10 smartphones containing GPS chipsets in 2014, compared with one in three in 2008," says Bonte.
These figures, combined with the strategies exhibited by global software giants, are not going unnoticed. Globo Mobile, a division of the European-based satellite and mobile software provider, Globo, says it will create a partnership network of major organizations in the mobile industry to position itself among the mobile divisions of major companies such as Google, Apple, Yahoo and RIM to benefit its new CitronGO platform, which is powered by hybrid satellite systems to provide ubiquitous coverage. Costis Papadimitrakopoulos, CEO and founder of Globo, says there are plenty of customers in the market to go around. "By 2012, over 80 percent of the world’s population will own a mobile phone and 3.8 billion of those will have a mobile Internet connection," he says. "Compare that to only 1.2 billion fixed connections and you can see the difference — the number of mobile connections looks set to rise to 5.6 billion over the next few years. The use of mobile Internet is expected to grow by more than 20 percent in the near future, and we [are] uniquely positioned to help consumers share this growth as it is the first solution to support any handset or service provider."
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