This week: Skype killing Windows Phone; VZW: don't buy iPhone; Design by lawyer

This week: Skype killing Windows Phone; VZW: don't buy iPhone; Design by lawyer

Summary: Is Skype killing Nokia Lumia sales? Does a drop in device shipments mean anything? Verizon is selling millions of iPhones, does it wish that weren't the case?


The mobile space never stands still, I guess that's why it's mobile. This week had RIM in Orlando trying to ignite the passion of yesteryear for the BlackBerry. Time will tell if they were successful or not.

Bouncing around the mobile web this week uncovered some interesting perspectives on Skype, and the problem it creates for Nokia; tracking shipments and how that differs from tracking device sales; Verizon wishes customers would pass on the iPhone and why; was the much-anticipated Galaxy S III designed by Samsung lawyers?

Carriers shunning Windows Phone due to Skype?

Skype has been trying to crack into mobile for years. In the early days of that endeavor mobile operators fought it tooth and nail, out of fear that cheap Skype calls would start replacing cell calls. The fear seemed to fade of late, until this week when Nokia's Stephen Elop made an interesting and telling comment.

Elop admitted at the Nokia shareholder meeting that Microsoft and Nokia were having to force carriers to accept Windows Phone against their will. This is being done through marketing/pricing/sales gimmicks of phones. Elop's statement, a result of a question about carrier reluctance to accept Skype, implies that carriers are balking at Windows Phone due to the Microsoft Skype connection (Microsoft owns Skype).

As long-time industry watcher Tomi Ahonen states quite firmly:

"Nonetheless, Elop clearly admits that there is a reseller problem relating explicitly to Skype. He furthermore admits, the Skype issue has resulted in some carriers actually refusing to carry Lumia. I was on this blog immediately when news broke that Microsoft had bought Skype, that this would kill all Microsoft ambitions in mobile."

This indicates the old carrier fear of Skype is alive and kicking, and perhaps even worse now that Microsoft owns it. The fact the Nokia CEO mentioned the situation shows how serious it is, and how Nokia is thinking about it given the lackluster sales of the Lumia Windows Phone line.

Shipments do not equal sales

There is no shortage of analysts following every aspect of the hot mobile space, and this week IDC released some statistics that were thrown all around the web. The numbers covered tablet shipments last quarter, and most analysts jumped on the fact that shipments of Amazon's Kindle Fire had dropped significantly from the previous quarter.

These reports caused a VP of the analyst firm NPD Group to jump in and set the record straight. In a blog post titled Shipments are not Sales, Stephen Baker points out that tracking device/platform/company shipments is not the same as tracking actual sales.

While tracking shipments is common due to the availability of those numbers as opposed to sales numbers (Amazon doesn't divulge sales numbers), you have to understand the difference before jumping off the analyst cliff of supposition.

"In the Kindle Fire’s first quarter of availability IDC’s reported shipments of 4.8m most certainly included the normal inventory build-up a new item requires. The Fire was distributed in something around 10 thousand stores in the U.S. at launch and certainly Amazon’s warehouses needed some inventory too. Let’s not forget it was the fourth quarter when sales tend to rise dramatically. So Amazon, rightly, built a lot of Kindle Fires and shipped them out to its warehouses and its retail partners to take advantage of fourth quarter volume. Logically there will be inventory remaining and shipment volumes will decline in the following quarter as the inventory to support Q1 sales is partially satisfied by the remaining inventory from Q4."

This makes perfect sense, as companies launching a new product like the Kindle Fire have to flood the inventory pipeline to cover anticipated sales, especially for the holiday season. Companies like Amazon won't just ship what they can immediately sell, they will ship enough to carry them through expected demand for a while. As Baker points out, it's common for shipments to decline, and why tracking them must be done with understanding the difference between tracking shipments and sales.

Kindle Fire sales are still happening at a brisk pace according to NPD, and they expect that to continue given the cheap $199 price. Baker sums up the Amazon situation nicely:

"No matter how we frame it, or how others may spin it, the Kindle Fire had a pretty good second quarter of sales results.  And as important as shipment tracking is, it is an incomplete number without the power of actual sales behind it."

Verizon selling mostly iPhones, but wish you'd buy something else

The iPhone is the hottest selling smartphone at the three largest carriers in the U. S., AT&T, Verizon, Sprint, based on sales numbers from the three. While it would seem they would be quite happy selling millions of any phone, PC Magazine's Sascha Segan tells us that may not be the case with Verizon.

Only 9.1 percent of Verizon's 93 million customers are on the LTE network according to Verizon's own statement, so that brand new network is relatively unused compared to the crowded 3G pipe. That will only get worse as long as Verizon is selling more iPhones than everything else combined.

"From Verizon's position, the solution looks simple: move heavy data users in crowded urban areas from 3G to 4G as fast as possible. That would help everyone. The new 4G users get much faster connections, and the 3G users would see better speeds and network quality, too, as that network becomes less crowded."

Segan's point is a good one, that Verizon has spent billions rolling out its LTE 4G network, and it needs to cover that massive investment. That can't be done with the 3G-only iPhone, so those millions of customers are stuck on the crowded Verizon 3G network. Those millions cannot be moved up to 4G in the future, either, and that hits Verizon where it hurts.

The next iPhone is thought to have LTE onboard, although Apple of course won't admit that. Verizon will no doubt love it if that is the case, but it won't help them with the millions of iPhone 4/4S it is selling now. The 3G network is going to keep getting taxed, while customers of the LTE network enjoy the relatively untapped fast pipe.

The Samsung Galaxy S III super phone -- designed by lawyers?

Samsung released the Galaxy S III, the latest in its top-selling Android smartphone line. The S III has outstanding components, a new "smart" version of Samsung's TouchWiz UI, and bizarrely is "designed for humans".

Weird advertising slogan aside, the S III looks a little, well, simple for the lack of a better term. The thin phone is nice enough, but it looks rather pedestrian.

Simple might be a kind description of the way the S III looks, as Ron Amadeo of the enthusiast site Android Police is a little more direct in a recent article. He bluntly states the new phone from Samsung is "ugly", and then goes on to explain why he believes it isn't more attractive:

How did something like this ever make it out of Samsung's design studio? I'll tell you how, it was never in the design studio. This phone design was born down the hall, in a room where the door sign reads "Samsung Legal."

Amadeo then proceeds to explain why the design suit from Apple charging Samsung with copying is the basis for the entire design of the Galaxy S III. He makes a good point, several actually, as he notes that feature after feature of the S III design seems to be a direct response to Apple's accusations against earlier handsets.

He backs up his observations with photos that address each claim Apple made against Samsung for earlier phones. Taken one after another his case is a compelling one, as the S III does indeed seem to be designed specifically to avoid riling Apple's lawyers. Amadeo sums it up succinctly:

So Samsung, was it worth it? Your product won't sell as well, but you won't piss off one of your biggest component customers either. I understand the motivation, but I still feel like you've sold your soul.

Image credit: Android Police

See also:

Topics: Nokia, Collaboration, Enterprise Software, Hardware, Mobility, Verizon, Social Enterprise

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  • A couple of points here.

    first, for some companies, shipments are counted as Sales and Apple switched to that approach almost two years ago... I believe some portions of Samsung do the same thing.

    second, Lawyers may have scrutinized the Galaxy S3 but I seriously doubt they designed it...

    third, how is having Skype on the phone any different from having Google Talk? Is it just the SMS capabilities? I mean, I can put skype on my Galaxy Nexus right now and use it all I want yet, they don't have an issue selling these phones or the Apple iPhones.

    Finally, the Lumia isn't selling because, contrary to popular opinion, people compare specs and what they see is hardware that is no better on paper than their 2 year old iPhone 4 or Android Device... everybody talks about a race to the bottom, Nokia started at the bottom with the Lumia line.
    • Apple reports units sold, not shipped.

      You've posted this "misstatement" before; I remember pointing this out before to you.

      Once again, here's Apple's report. Search for 'sold' and search for 'shipped.'

      If you have a point to make, it's usually better to back it up with facts, not lies.
      • I agree

        There is nothing in that statement that says I am wrong... I had posted facts and evidence in the past to such articles that you no doubt failed to check...

        Go find it for yourself... Apple counts shipments to channel partners as sales period and that changed about 2 years ago.

        Samsung does the samething, you know how you know this... Because Samsung literally reimburses the retail chains full price for old stock when a new item is released and the item is then returned to Samsung.

        It is not uncommon and it has benefits for stock price but companies like Amazon will only post shipped and everybody uses that against them.

        Going even further, the iPhone and iPads have some ways of determining if these numbers true up but those aren't always scrutinized. MacBook and iMac lines have no method for distinguishing how these match up.
      • @Peter Perry

        I've not seen anything from you backing up your statement.

        What I've posted is a legally binding document from Apple which note the number of units [b]sold.[/b]

        Please post some proof of your assertion.
      • Yes but

        It does not define what they count as a sale, when you realize that what I am saying is that they count an item shipped to a channel partner as a sale you will understand that your document is not contradictory in any way!
      • @Peter Perry

        Sold means it's no longer the property of Apple. You can keep trying to make up new definitions, or your surrogate can continue to try to make up agonizingly stupid phrases, but Apple's quarterly reports use the word 'sold.' There actually is a legal definition for 'sold,' and Apple has to use the word as defined for legal purposes. Anything other would be against SEC laws.

        'Sold' does not mean shipped to a channel partner. It means sold.
    • Exactly right Peter

      Apple uses the word "sold" to include units sold to resellers like Best Buy and Walmart. Anyone arguing with you is clearly delusional. Apple never says "sold to consumers", only the word "sold". I don't understand how anyone could be so stupid as to not see the difference. I don't understand why they care so much either but then again, some people are in love with Apple. Kind of disturbing if you ask me.
      • Sold means sold. Money in the pocket.

        " I don't understand how anyone could be so stupid as to not see the difference. I don't understand why they care so much either but then again, some people are in love with Apple. Kind of disturbing if you ask me."

        Yes, why Peter continues to post this easily debunked falsehood is something I don't understand. Why you agree with him is even stranger. "Sold to resellers?" Really? That's a mighty long stretch, just to try to get some anti-Apple message out.
      • Okay so...

        @msalzberg So you fail to understand how a company defines a sale so, others are stupid. Sorry man, very seldom is a sale to a channel partner immediate money in the pocket.
      • thanks

        I am glad somebody else actually read the news a few years back instead of just assuming that what they believe is the truth.
      • @Peter Perry

        A company doesn't get to define 'sale,' especially not in a legal document.

        According to Black's Law Dictionary, a sale is "[t]he transfer of property or title for a price." That's settled case law, Business Edge Group v Champion Mortgage Co, Third District US Court of Appeals.

        Once again, if you want to make a valid point, it helps to use facts, not things you wish were facts.
    • RE: A couple of points here.

      You say that "shipments" are counted as sales for some companies - which shipments specifically? In Apple's case would that be shipments to their retain stores - which should count as "stocking" or shipments to authorized resellers such as best Buy or Amazon - which then WOULD be counted as sales as those units were sold to the reseller to - well - resell.

      The "lawyer redesigned" Galaxy S3 - that one I agree with you on. I'm sure the legal eagles has some input to ensure that - at least externally - the S3 isn't going to infringe but saying they designed it is going too far.

      I'm not sold on the idea that the carrier issues with Nokia's WP7 are tied into Skype - I agree with your assessment with that.

      In regards to the Lumina when I buy a phone I do compare specs but while specs are an excellent guideline I think most people would rather go into a store and play with the hardware - this is why the original Nexus was not the huge success Google and Google/Android fanboys thought it would be... it was a decent looking phone, had great specs for the time but no one could take it for a test drive. The last time I bought a phone I looked to what was available, checked out the specs of each device and I chose a device with less impressive specs because I liked the way it felt, the UI, and the company name... both BTW were Android devices. I have a feeling most people are more like me where they will consider specs but choose what feels right.
      • Exactly right

        [i]shipments to authorized resellers such as best Buy or Amazon - which then WOULD be counted as sales as those units were sold to the reseller to - well - resell[/i]

        Bingo. This is so simple, I'm not sure how anyone could be stupid enough to not understand this. iPods that are sitting in Best Buy warehouses are being counted by Apple as sold. And that's fine, they are sold, to the reseller. They haven't been sold to consumers though. When Apple is reporting "sales", they are including sales they've made directly to consumers AND the channels they've "stuffed" through stores like Best Buy. Again, nothing wrong with that. Investors aren't confused. Most ZDNet readers aren't confused. Some particularly stupid ZDNet readers might be confused but that's okay.
  • Carriers

    Can go cry a river. Perhaps you shouldn't be ripping off your customers then.
    The one and only, Cylon Centurion
    • Very True

      And Verizon is one of the biggest offenders!

      Seriously, in the past year, I have had an iPhone 4s, HTC Rezound, Droid X 2, and a Galaxy Nexus... Why? because everyone of these phones has had some issue related to their hotspots except for the Galaxy Nexus (which has other issues)... With the exception of the iPhone 4s, the other two were running the Verizon Hotspot and they didn't care if you needed the feature their only option for you was to shut it off and stop billing you.
    • Or perhaps

      Elop is grasping at straws to justify a Nokia WP FAIL. Why didn't carriers refuse iPhone with FaceTime?
      • Facetime works only with other iPhones

        so it would help sell more iPhones. Skype works with all Skype programs, and would just bypass the need to purchase another phone.

        Skype is a popular program that would bypass the carriers desire to charge additional money for a similar feature in the future.
        Tim Cook
      • hmm

        The only thing I can figure is that Skype offers a replacement for your phone and sms right on the phone... they also give you 1 free country of your choice to make calls to.
  • So let me understand Baker.

    We get paid by all these Android vendors to do research. When they ship tons of product that don't sell, claim shipments are what counts. Then when they have months and months and months of channel inventory sitting in warehouses, stress shipments are not the same as sales and don't pay attention to shipments but trust them that sales are stellar?

    Did I get that right?
  • Carriers? Really? ATT is LOVING having the lumia. Verizon cant wait to get

    their hands on it. Skype doesnt take away crap from the carriers. You have to have pay for their data plan to use skype on a smartphone. If you skype over wifi even better for them. Now youre paying them for their data plan and not crowding thier bandwidth. Any carrier that doesnt want its customers using skype will quicky see its customers moving in droves to other carriers as skyping from smartphones kicks into gear.
    Johnny Vegas