Smartphone maker HTC Corp. has reported that fourth quarter net profit more than doubled from the same period a year ago, to $499 million. The Taiwanese manufacturer makes more handsets that use Windows operating systems from Microsoft Corp. (NASDAQ: MSFT) than any other company in the world, and is quickly boosting sales of phones using the Android operating system from Google Inc. (NASDAQ: GOOG). Android continues its race to the leading position in smartphone operating systems, and HTC should continue to benefit from Android sales.
Not to be left out of the latest smartphone news cycle, AT&T (NYSE: T) has said that it will lower the price of the iPhone 3GS from Apple Inc. (NASDAQ: AAPL) from $99 to $49 with a two-year contract of at least $39.99/month and a $15/month data plan. The move is no doubt directed at the expected release of Apple’s iPhone to Verizon Wireless, a joint venture of Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD). AT&T sells the iPhone 4, Apple’s latest model, for $299 with a contract. The company pays an enormous subsidy to Apple for each iPhone it sells, but expects to lock in customers and longer term profits with the two-year contracts.
AT&T has also announced that the availability of its fourth generation, or 4G, network. Well, sort of. The company did nothing more than turn on its marketing machine. From the company’s web site: “With HSPA+ now and LTE on the way, we’ll have the only network with two layers of network technology to deliver 4G speeds.” AT&T had previously referred to its HPSA+ network as a third generation, or 3G, network.
The company probably decided to join other carriers in creating a unique definition of a 4G network. Every definition equates more speed with 4G, so why shouldn’t AT&T join the party? Competitive carrier T-Mobile, owned by Deutsche Telekom AG, has been promoting its 4G network for some time, though it uses the same technology as AT&T. Only Sprint Nextel Corp. (NYSE: S) offers a true 4G network, with its WiMax technology. But, hey, it’s only marketing.
And another company that doesn’t want to be left behind in the announcement parade is Research in Motion Ltd. (NASDAQ: RIMM), which has shown its PlayBook tablet at the Consumer Electronics Show in Las Vegas. The company plans to release the device on Sprint’s 4G network in the summer of 2010. According to Reuters, a company official said, “In large companies, they’re talking deployment in the tens of thousands, right off the bat.” RIM’s decision to go with Sprint could come back to haunt it, because Sprint’s network is not compatible with the LTE network being built by Verizon and AT&T, the two largest mobile carriers in the US.
Tablets are all the rage at the Consumer Electronics Show this year, and there should be a flood of new devices hitting the market in the first half of the year. Apple has a big, perhaps insurmountable, lead, but the race is wide open for number two. RIM, which has seen its share of the smartphone market fall as Android’s fortunes rise, needs to push out a winner here to get some of its cred back. The tablet field will be crowded though, and the new Motorola Mobility Holdings Inc. (NYSE: MMI) has shown a strong competitor to RIM with its Xoom tablet that will be available on Verizon’s network.
Tablets have been predicted to cannibalize sales in the PC desktop and laptop markets, but as devices are rolled out for 4G networks, it’s not unthinkable that tablets could also cannibalize some smartphone sales, especially if video calling can be improved.
The mobile device business is about to get even more interesting.