MediaFile

The high costs of the cloud

How great is it that high-definition video is now portable? Thanks to cloud computing, superfast 4G networks and tablets with high-resolution screens, we can watch thousands of movies and TV shows in lush, beautiful clarity wherever we go.

In a way, that is pretty great, as the millions of people who have bought the new iPad with retina display and LTE connections have already seen. But in another way, it’s going to quickly become not so great: As hi-def video – or rather, the data bandwidth to deliver it – becomes a commodity for more people, that commodity will start to become much more expensive. Not just for consumers, but for the companies that will increasingly need more wireless spectrum and wired infrastructure to handle the surge in data demand.

Call it the curse of the cloud. The proliferation of online video services and portable devices to watch them on have added congestion to data networks even as wireless carriers impose fees on its biggest data users. According to Bytemobile, video accounted for half of all mobile data traffic in February, up from 40 percent only a year earlier.

And that was before the arrival of the new iPad, which has four times as many pixels as the iPad 2. More pixels can enhance hi-def video but requires more data. Demand for wireless data will rise even higher once more LTE smartphones – including, most likely, the iPhone 5 expected this year – start streaming video and other high-bandwidth content on them. If carriers are overwhelmed by the demand, as AT&T was with its notoriously unreliable 3G networks, wireless service will grow more spotty over time. But we’ll be paying more for it.

We’re already seeing some of this happening with the LTE iPads. Just ask the guy who used his brand new iPad to watch NCAA games while attending NCAA games, blowing through his 2GB allotment in less than two days. Or the USA Today columnist who says he did the same just by downloading apps. Meanwhile, complaints were surfacing on message boards that AT&T’s LTE networks were dragging in some urban areas as people played with their new iPads.

Tech wrap: Earnings hit as Apple reigns

Quarterly earnings suffered at major technology and telecoms companies in part because of demand for gadgets made by Apple, one day after core suppliers to Apple savored strong earnings results posted by the iPhone and iPad maker on Tuesday.

AT&T posted a $6.7 billion quarterly loss as it was weighed down by a hefty break-up fee for its failed T-Mobile USA merger and other big charges on top of costly subsidies for smartphones such as Apple’s iPhone. While the wireless provider beat analysts’ expectations for subscriber additions, the growth came at a massive cost as its wireless service margins plummeted. On top of the $4 billion break-up package charge, AT&T also took a big impairment charge for its telephone directory business, which it said it was considering selling.

Nokia reported a 73 percent fall in fourth-quarter earnings as sales of its new Windows Phones failed to dent the dominance of Apple’s iPhone or compensate for diving sales of its own old smartphones. Apple reported earlier this week sales of 37 million iPhones for the December quarter. Nokia has sold over 1 million Windows “Lumia” smartphones since its launch in mid-November. Nokia said it expected its phone business’ underlying earnings to be around breakeven in the first quarter, well below analysts’ forecasts, with sales falling more than usual in the seasonally weaker quarter.

Nokia’s Weber devises U.S. plan of attack

If Nokia’s big challenge this year is getting back in with US consumers and operators, it should be a busy 2012 for Chris Weber.

Weber –  who heads the Finnish company’s business here – took a moment with us at the Consumer Electronics Show in Las Vegas to lay out some of his plans a day after AT&T announced it would sell Nokia’s Lumia 900, and a day before the Lumia 710 goes on sale at T-Mobile USA.

Weber told Reuters that he has to first find a way to convince enough consumers to at least try out Nokia’s Windows Phone-based devices, to at least give them a chance.

Tech wrap: Huawei takes slimmest smartphone crown

Huawei, China’s largest maker of telecommunications gear, unveiled the “Ascend” smartphone, touting it as the slimmest on the market as it moves to boost its share on the global consumer market. Huawei unveiled the Ascend smartphones – available in black, white and pink – at the Consumer Electronics Show in Las Vegas. The 6.68-mm thin phone will be available in April 2012 in markets from North America, Europe to Asia and will cost roughly $400, but the final price has not been set, the company said.

AT&T announced plans to launch seven new smartphones and a tablet computer early this year for a new wireless network it is building. The product line-up will include a phone with a 16 megapixel camera from HTC using Microsoft software along with Microsoft-based smartphone from Nokia. AT&T said it will also sell three new high-speed smartphones from Samsung as well as a high-speed phone from Sony and Pantech. In an unusual pricing move, AT&T also announced that it would sell Pantech Element, a waterproof tablet based on Google Android software with a smartphone, the Pantech Burst, for a combined price of $249.

Olympus sued its current president and three ex-directors for several million dollars in compensation, sources told Reuters, as the company seeks to draw a line under one of the nation’s worst accounting scandals. The company filed suit against its president, Shuichi Takayama, with the Tokyo district court on Sunday, along with three former executives identified by investigators as having engineered or helped cover up a $1.7 billion fraud at the firm, the sources said.

Tech wrap: Nook too costly for Barnes & Noble?

Barnes & Noble cut its Nook sales forecast for this year and shocked investors by saying it was considering a sale of the electronic reader and tablet business, sending its shares down sharply. The bookseller has been banking on the Nook for growth, so news that holiday sales of the basic touchscreen e-reader were disappointing raised investors’ fears that Barnes & Noble was struggling to keep up with Amazon.com’s Kindle.  ”They’re going to have to raise capital for Nook if they want to stay viable,” said Morningstar analyst Pete Wahlstrom.

Michael Woodford, the former CEO of Olympus, is dropping his bid to retake control of the troubled company because of lack of support from Japanese institutional investors, according to a Wall Street Journal report. Woodford will announce his decision to give up a proxy battle with management on Friday, the report said, citing an unidentified aide. Woodford was fired as chief executive in October and blew the whistle on a $1.7 billion accounting scandal at the Japanese maker of medical devices and cameras.

AT&T is on track to finish its wireless network upgrade with faster mobile Web services by the end of 2013, having exceeded its target for 2011 by 4 million people, a top executive said.

Tech wrap: RIM’s “BBM” trademark target of new legal challenge

Research In Motion, still smarting over having to change the name of its yet-to-come operating system, faces a similar trademark challenge to its popular instant-messaging service BlackBerry Messenger. The service, which allows BlackBerry users to send each other text and multimedia files and see when they are delivered and read, is widely known and even promoted by RIM via the shorthand BBM. That has proven an encumbrance to BBM Canada, which measures radio and television audience data and expects its day in a Federal Court against RIM by February.

RIM seems determined to keep using the BBM name and not to pay BBM anything. “We believe that BBM Canada is attempting to obtain trademark protection for the BBM acronym that is well beyond the narrow range of the services it provides and well beyond the scope of rights afforded by Canadian trademark law,” it said in an emailed statement.

Facebook, Google and Yahoo, and other internet firms, have been ordered by two Indian courts to remove material considered religiously offensive, the latest skirmish in a growing battle over website content in the world’s largest democracy. One court in the capital Delhi on Friday issued summons to 19 companies to stand trial for offences relating to distributing obscene material to minors, after being shown images it said were offensive to Hindus, Muslims and Christians, the PTI news agency said.

Tech wrap: D.Telekom may be forced to play with Sprint

Deutsche Telekom may be forced into a tie-up of its sub-scale U.S. wireless unit with Sprint Nextel after a $39 billion deal with AT&T collapsed.

AT&T said on Monday it had dropped its bid for T-Mobile USA, bowing to fierce regulatory opposition and leaving both companies scrambling for alternatives.

The collapse of AT&T’s deal to buy D.Telekom’s U.S. wireless unit may be welcome news for network equipment makers, as money earmarked for the merger will be freed up for investments.

Tech wrap: AT&T, T-Mobile pull plug on mega-merger

AT&T said it had agreed with Deutsche Telekom to drop its $39 billion bid to buy the German company’s U.S. wireless unit amid increasing regulatory obstacles to the planned deal. AT&T said in a statement on Monday that it will enter a roaming agreement with Deutsche Telekom. AT&T’s plan to buy T-Mobile USA, first announced in March, has met with opposition from the U.S. Department of Justice and the Federal Communications Commission.

The upstart wireless company that is being bankrolled by Philip Falcone’s $5 billion Harbinger Capital Partners hedge fund could run out of money during the second quarter of 2012, according to the company’s financial statement. LightSquared, which registered a $427 million net loss during the first nine months of this year, may not be able to “continue as a going concern” unless it can raise additional capital and financing, the statement reviewed by Reuters said.

Prince Alwaleed bin Talal, the Saudi billionaire and an investor in some of the world’s top companies, has bought a stake in microblogging site Twitter for $300 million, gaining another foothold in the global media industry. The Twitter stake, bought jointly by Alwaleed and his Kingdom Holding Co investment firm, was a secondary market transaction, meaning that Alwaleed and Kingdom bought the Twitter shares from existing shareholders, rather than making a direct investment, according to a person familiar with the matter.

Tech wrap: Verizon feeds hunger for cable spectrum

Verizon Wireless plans to pay $3.6 billion for wireless airwaves from a venture of cable companies Comcast, Time Warner Cable and Bright House Networks. Comcast said that the deal represented a 64 percent premium over the $2.2 billion price the cable consortium paid in 2006 for the wireless spectrum being sold to Verizon Wireless.

U.S. Representative Edward Markey asked the Federal Trade Commission to investigate whether software maker Carrier IQ violated millions of mobile phone users’ privacy rights. Carrier IQ makes software that companies including AT&T and Sprint install in mobile devices. It runs in the background, transmitting data that the software maker says its customer companies use to better understand their devices and networks.

Zynga, which plans to go public in two weeks, slashed its value by more than 30 percent to $9 billion, hoping to avoid the fate of other recent Internet IPOs that have disappointed after stock market debuts. Just two weeks ago a filing listed the Facebook game maker’s value, based on a third party assessment, at $14.05 billion. CEO Mark Pincus, a serial entrepreneur before he founded Zynga, will hold a class of shares with 70 times more voting power than the common stock that will be sold in the offering.

Tech wrap: AT&T, Sprint admit using monitoring software

Phone makers RIM and Nokia denied installing on their mobile devices an app which can monitor what users are doing without their knowledge or consent while carriers AT&T and Sprint admitted to using it. The companies responded after a security researcher demonstrated in online videos how the “Carrier IQ” software worked on Google’s Android operating system and said that phones running RIM’s BlackBerry platform and Nokia’s Symbian OS also had the software installed. AT&T and Sprint said they use “Carrier IQ” to monitor network quality.

Blackstone Group and Bain Capital are preparing a bid for all of Yahoo with Asian partners in a deal that could value the Internet company at about $25 billion, a source familiar with the matter said. The potential bid by the consortium, which would include China’s Alibaba and Japan’s Softbank, has not yet been finalized, the source and two other people familiar with the matter said. E-commerce giant Alibaba, whose primary interest is in buying back a 40 percent stake owned by Yahoo, is keeping its options open and said it has not decided whether to participate in a bid for all of Yahoo.

Apple’s iPhone edged past major news events, celebrities and pop stars as the top searched term on the Web in 2011, according to Yahoo. The media company said the smartphone proved more popular than reality television celebrity Kim Kardashian, pop star Katy Perry and singer and actress Jennifer Lopez, who placed in the top five. Casey Anthony, the woman acquitted of the murder of her young daughter after a highly publicized trial, was No. 2.