Mobile Tech » iPhone Could Bring Agony and Ecstasy to Sprint

A report this week that Sprint will soon offer the Apple iPhone on its network has excited the carrier's investors -- Sprint's stock rose about 10 percent on the news. Offering the phone would allow the carrier to better compete with its rivals' device portfolios; however, questions have arisen regarding network strain and how Sprint will handle factors like the phone's high subsidy cost.

It looks like Sprint (NYSE: S) is about to join Club iPhone.

The wireless network could become the Apple (Nasdaq: AAPL) smartphone's third U.S. wireless carrier in October, just in time for the holiday season, according to a recent Wall Street Journal report. That's also the time frame in which Apple is expected to release the fifth generation of iPhone, though the company has not officially announced a date.

Sprint's stock rose 10 percent on the news Tuesday.

AT&T (NYSE: T) offered the iPhone exclusively in the U.S. from the device's introduction in 2007 until Apple added Verizon earlier this year.

Despite Sprint's stock gain, though, the news has prompted some doubts about the value of the deal for Sprint. The iPhone reportedly comes with a subsidy price tag that is larger than other smartphones. Those subsidies could cut into Sprint's margins.

On the plus side, the addition of the iPhone would put Sprint closer to an equal footing with AT&T and Verizon, much larger competitors. Verizon has roughly 106 million subscribers. AT&T has an estimated 99 million, and Sprint has 52 million. For Apple, the move is an unambiguous plus.

Sprint declined to speak with MacNewsWorld, noting the company does not comment on speculation. Apple did not respond to a MacNewsWorld's request for comments by press time.

Good for Apple - So-So for Sprint

Question have arisen regarding whether the iPhone will put strain on Sprint's network. There has also been speculation that Sprint will have to drop its unlimited data plan to protect its network.

"I don't think it's going to kill the network," Kevin Burden, VP of mobile device research at ABI Research, told MacNewsWorld. "We're at a point now where most mobile operating networks are tuned to handle volume without bringing things down. Maybe four or five years ago it would have been a problem."

The deal will most likely happen, Burden said, and he believes it will be a strong subscriber grab for Apple. "Apple needs to get as many subscribers as it can," said Burden. "They're looking at strong competition from Androids and the upcoming BlackBerry 7. They don't have the commanding lead anymore. The phones are all getting really similar. In the U.S. market, the last big thing they can do is get Sprint."

As for the question about whether the "Apple tax" in high subsidy costs will hurt Sprint, Burden believes Sprint is accustomed to subsidies. "The subsidies won't kill Sprint. It's not like they're not used to subsidies," said Burden. "It's not a new business model."

The timing of the deal is likely scheduled for October, when Apple is widely expected to release its next iPhone version to coincide with the beginning of the holiday season.

"The introduction of iPhone 5 seems like the logical moment for Sprint to launch iPhones," said Burden. "Coming out with the iPhone 4 would be silly. It wouldn't be a big deal. So you can predict when it will have it -- they'll have it with the introduction of the iPhone 5."

The Phone for the Big League

Adding the iPhone clearly ups the ante for Sprint, giving it equal footing with AT&T and Verizon in its line of devices.

"Sprint talks about how important the device portfolio is," William A. Stofega, program director, mobile device technology and trends at IDC, told MacNewsWorld. "Sprint has had some decent devices. They've done well with HTC, which runs on Android. Even so, Sprint would like to have the iPhone. Questions about the iPhone come up on their earnings calls all the time. Having the iPhone shows they're a player. In overall numbers, they may not be in the same league as AT&T and Verizon, but they're sill a player."

On the other hand, after its second-quarter earnings report, Sprint was criticized for the high costs associated with adding and retaining customers. Adding the iPhone ratchets up those expenses. "The iPhone subsidy costs hurt margins even with Verizon," said Stofega. "The iPhone is that special case all by itself. The carrier has to subsidize at a higher rate to drive and retain customers."

A Sprint move would also come at a time when Android devices are getting the cool-factor nod from consumers.

"The world is changing. Droid is getting mindshare. It's a juggernaut," said Stofega. "It can't be slowed down by anything. The Motorola acquisition could help. There has been a need for an Android platform that shows off its full capabilities and is much more integrated between hardware and software. Motorola could make that happen."

IT Management » Federal CIO Prods Agencies to Revamp Websites

The website reform plan is part of a larger federal program to improve customer relations with the public through various means, including the use of innovative technologies. "The federal government has a responsibility to streamline and make more efficient its service delivery to better serve the public," President Barack Obama said in kicking off the customer service initiative earlier this year.

The U.S. government's new chief information officer wasted little time in directing federal agencies to significantly improve the way they manage information technology resources. Steven VanRoekel, who took over the federal CIO post on Aug. 4, quickly issued a directive designed to push agencies to meet an Obama administration goal for operating federal websites more efficiently.

While VanRoekel's directive was actually mandated by an Office of Management and Budget (OMB) memo issued last June, the tight deadline he set for compliance by federal agencies indicates the importance he attaches to the administration's federal online reform initiative.

The goal of the federal website reform program is "to improve online services and eliminate wasteful spending by developing a comprehensive and consistent strategy for efficiently managing web resources and assuring that valuable content is readily accessible and available online," VanRoekel says in the directive.

The first step in the program is an OMB order "freezing" the creation of new federal websites. VanRoekel extended the freeze through Dec. 31 "to reinforce the importance of curtailing the proliferation of stand-alone government web sites and infrastructure."

Targeting 1,000 Domains

The U.S. government maintains 2,000 Web addresses (URLs) that support 24,000 sites. The reform initiative sets a goal of reducing the URLs by half by mid-year 2012.

In his directive, VanRoekel sets some ambitious targets for meeting the website reform goal. Agencies must either reduce or redirect to existing sites the number of federal executive branch domains by 25 percent by the end of September. Also, by Sept. 6, agencies must provide an interim progress report with a list of government website domains that are outdated, redundant or underperforming, as well as a list of "redirects" that no longer provide value, or domains that are nonfunctioning and no longer in use.

By Oct. 11, federal agencies must provide a report with an inventory and analysis of all registered dot-gov domain names and an assessment of "web governance." The report must include a list of candidate sites for merger or elimination, a list of sites that provide high value to the public and can serve as models, and a plan for managing websites more efficiently.

A panel of government IT specialists known as the ".Gov Reform Task Force" has been established to assist agencies in meeting the Wweb improvement program goals.

The website reform plan is part of a larger federal program to improve customer relations with the public through various means, including the use of innovative technologies.

"The federal government has a responsibility to streamline and make more efficient its service delivery to better serve the public," President Barack Obama said in kicking off the customer service initiative earlier this year.

The General Services Administration (GSA), which has taken a lead role in improving the use of information technology at the federal level, is taking an active part in the website reform program, partly through its support of the Federal Web Managers Council.

"The Council is very supportive of the website reform effort. We've been calling for agencies to clean up the clutter for many years now," Rachel Flagg, deputy director of the Center for Excellence in Digital Government at GSA, told CRM Buyer. Flagg also serves as a cochair of the Council.

"Streamlining and consolidating websites ... will help the public to more easily find the information and services they need and enable agencies to more effectively manage their online information. It should also save money, if agencies take advantage of their existing Web infrastructure to host their content instead of creating new, stand-alone sites which often require additional servers, content management systems and design services," Flagg said.

GSA already has adopted some of the reforms on its own Web sites. The agency recently deleted redirects for dot-gov domains that yielded fewer than 300 referrals annually. However, GSA kept redirects such as firstgov.gov, a legacy domain that refers hundreds of thousands of users annually to the current domain, USA.gov.

Public and Private Sector Lessons

"Our definition of transparency is that information should be easy to find, it should be available quickly, and it should be easily accessible," Larry Freed, president and CEO of ForeSee, told CRM Buyer. "If anything, the larger aims of the government reform task force will greatly improve transparency because it will address those three core issues." ForeSee is a customer experience analytics firm that works with more than 200 federal government websites.

"This task force won't get us all of the way there, but it is a definite move in the right direction," Freed said.

While the goal of the reform effort is to improve communication, the initiative does pose some challenges.

"The temporary freeze on the issue of new dot-gov domains is unlikely to have much effect on transparency or public access to information," said Daniel Schuman, director of the Advisory Committee on Transparency for the Sunlight Foundation.

"There's a bigger concern with the consolidation of domains, if the consolidation means that information is taken off the Web or becomes more difficult to find," he told CRM Buyer.

"It's generally not the number of websites, but rather their internal structure and the way information is described that's confusing to the public," Schulman explained. "The government needs to make more use of websites like data.gov to share data sets and other types of information that power private sector innovation. The public needs to be empowered to reuse information gathered by the government. All too often, government information is made publicly available in difficult-to-use formats."

The program will not only improve customer contact mechanisms, but also should provide substantial savings.

"Stand-alone domains can cost hundreds of thousands or millions of dollars to maintain," notes VanRoekel's Aug. 4 reform memo. "Although migrating a stand-alone web site to another domain requires an initial investment, consolidating infrastructure and operations can provide significant long-term cost savings."

The website improvement panel is composed of federal Web managers, but the group is open to help from the private sector.

"The Task Force has, in fact, already consulted with some industry experts," said Flagg, "and there are plans to open a public dialogue on this topic very soon. We welcome input and feedback from both industry experts and the general public."

Internet » New Facebook Privacy Tweaks Have a Googley Aftertaste

Facebook has given its users a new set of privacy controls, allowing them greater powers to select who sees what and approve tagged posts. The new features appear somewhat similar to those found in Google+, the social network that could prove to become a major Facebook rival. Facebook's changes have received a nod of approval from some privacy advocates.

In a nod to users who have complained about Facebook's privacy settings for years, the social network announced new, simplified settings Tuesday that allow users to exercise greater control over what information is shared across the network.

Going forward, users can choose a feature called "Profile Tag Review," which would allow them to approve a photo or post in which they're tagged before it hits their profile, or they could simply remove the tag.

The upgrades also make it easier to share tagged photos or posts with specific individuals or groups, much like the Circles feature in rival network Google+.

Those controls, and other privacy settings such as the option to see how a particular individual views your profile, will now appear in a drop-down menu next to the photos and posts for easier access to the security features.

Although users now have the option to refuse a tag, they may have to do so more often -- Facebook also announced that users can now tag anyone, even non-friends, in photos or posts. Early critics worried that option could be used in unintended ways, such as by advertisers or spammers looking for a new way to recruit customers, but Facebook doesn't think that's a concern.

"Something to note is that whenever you're tagged by a non-friend, it will always go into your Pending Posts section of your profile [regardless of whether you've turned on the Profile Tag Review or not]" Meredith Chin, product communications spokesperson at Facebook, told TechNewsWorld.

Facebook also expanded the location-based technology aspect of the site. Now, users will have the option to tag themselves from anywhere, not just a mobile device.

The changes will begin gradually rolling out on Thursday, and once it hits one's profile, the user can be guided through a tour to get a better feel for the updates.

Privacy Report Card

Due to the number of complaints and public relations headaches Facebook's privacy policies have caused it in the past, the company worked with technology privacy advocates to make sure the new settings would receive a warm welcome, and so far they seem to have made a positive impression.

"On the big picture we think these changes look very good. Facebook has been working to develop these for a while and made a real effort to make sure these are intuitive changes for users, that users understand how they work and don't accidentally overshare," Erica Newland, policy analyst at the Center for Democracy & Technology told TechNewsWorld.

One initial concern was the new ability to tag non-friends in photos. Facebook touted the feature as helpful when tagging a photo of a group of co-workers, for example, or acquaintances who may not necessarily be Facebook friends, though there was concern it would become just another way for spammers to work their way into the ecosystem. Since those photos or posts must be approved, though, the user is given a measure of control.

"I think there is some sense to allowing people to tag non-friends. It's Facebook's decision on how to optimize that experience for users, but it's important they're giving users the option to exercise control. That's something users have asked for a while and it's absolutely a step in the right direction," said Newland.

It's a direction many social networks are taking. Since the lines between what is appropriate to share online blur between generations, professions and lifestyles, networks are leaving it up to users to decide just how much of their info they want out there.

"We're happy Facebook is creating a forced choice. That's a very good model for privacy controls, rather than assuming you know what the user wants," said Newland.

Pressure From Plus?

Facebook's new controls are entering the scene around the same time as Google+, the search engine's attempt at a competitor to challenge Mark Zuckerberg's far-and-away leader in social networking 6 Ways to Use Social Media for Business. Free Guide..

After its debut in July, Google+ saw an unprecedented, almost immediate surge of users, and there was speculation it was because of the network's more personalized, controlled sense of privacy and security. In Google+, contacts are divided more naturally into groups, or what the site calls "Circles." Users choose from the onset who is a friend, family member, or co-worker, for instance, and with each post or photo must decide with which Circle they'll share.

The concept is similar to Facebook's changes, but the social network leader says it wasn't modeled after anything in particular.

"We've been working on these changes for the last several months. We're excited to be introducing a lot of changes that people have been requesting," Chin told TechNewsWorld.

The bigger question is not if this was a competitive response, but if all networks treat user information with the concern it deserves as online sharing becomes an inevitable part of the social scene.

"I can't speculate on how the two may have been connected, but what is really clear is that social networks see that privacy is a value for users. In order to attract and retain users, they have to offer controls. It's kind of a maturing of the social networking ecosystem," said Newland.

Computing » It's a Roll of the Dice for Linux Game Makers

The big problem with Linux users is their aversion to paying for anything, said tech analyst Rob Enderle -- so for Humble Bumble's developers to get customers to voluntarily pay for Linux games is in itself pretty amazing. ... The Linux derivative OS, Android, might well be the platform for change when it comes to Linux gamers parting with their cash.

If you had the option to pick your own price for a computer game that only runs on your Linux rig, would you pay to play? Not if you are a typical Linux gamer. At least, that's the popular perception of fans of free and open source software. Linux is available freely. So why pay for a game -- or any other Linux app -- when the FOSS mantra is based on a no-cost buy-in?

The team behind the Humble Bundle set of computer games is trying to buck the notion that Linux users are cheapskates. That company allowed its customers to name their own prices to purchase and download their software. Then they parsed the results by what OS the downloaders used.

Linux users were the most generous when compared to Windows and Mac game players. In fact, Linux users were often willing to pay more than Mac or Windows users when given the chance to name their own price for the for-purchase game software.

"For each of our Humble Bundle promotions, we have seen that on average Linux users are twice as generous -- if not more -- than Windows users, with Mac users falling in the middle. Linux users have also accounted for nearly a quarter of Humble Bundle's revenue," John Graham, cofounder of Humble Bundle, told LinuxInsider.

Vapor Market or Growing Trend?

Humble Bundle's marketing 6 Ways to Use Social Media for Business. Free Guide. success with its pay-what-you-like pricing strategy may be nothing more than an anomaly. But with the rapidly growing popularity of Android, Linux users looking for a unique gaming challenge might be on the vanguard of a new pay-for-Linux marketing trend.

"Despite traditional arguments to the contrary, it is clear to us that there is a serious Linux gaming market out there, and we will continue to support Linux in the future," said Graham.

Some industry insiders who ponder buying and usage trends do not see Graham's pay-for-Linux games' success as anything but a passing fancy.

"Well, pure FOSS PC Linux on the desktop is a pretty small share of the [U.S.] market as far as I can tell, so I think that limits the upside even if it's possible that users would pay more in some cases," said Lewis Ward, IDC's research manager for consumer markets: gaming.

Want to Share?

In a survey conducted in the third quarter of 2010, Ward found only 1 percent of gamers used the Linux platform. That compared to more than 75 percent for the Windows platform and 4 percent for Apple (Nasdaq: AAPL) machines, he told LinuxInsider.

For a game developer who needs a base of users from which to operate, it does not matter how wonderful the platform is, he concluded. "It is just not a large enough base to say, 'I'm going to devote x amount of budget' to develop for a market that is less than 1 percent of the total."

Linux Players Don't Talk Money

Unlike other marketing strategies such as shareware, Linux users are less accepting of paying for software. Open source programs are expected to be free. Free is part and parcel of using Linux. Paying for technical support for a free operating system, however, is different.

"Right now, it looks like Linux users don't really like to pay for anything, and there isn't a vendor doing a general consumer package, which is significantly the potential market anyway," Rob Enderle, principal analyst for the Enderle Group, told LinuxInsider.

The big problem with Linux users is their aversion to paying for anything, he added -- so for Humble Bumble's developers to get customers to pay for Linux games is in itself pretty amazing.

Android Antithesis

That said, a trend in paying for preferred gaming apps might be more productive on Linux-related portable devices. And the Linux derivative OS, Android, might well be the platform for change when it comes to Linux gamers parting with their cash.

"Gaming is all about numbers, and the developers are already building for Windows, iOS and Android," said Enderle.

Even programmers developing games and other apps for Android devices are not assured of having a large paying market, though. And since Android does not run on Linux desktops and laptops, game players might be willing to pay for an Android game but still be tightwads when it comes to a Linux distro equivalent.

Unfortunately, the Android platform, which is closest to Linux, is only providing a return for those who have figured out how to get advertising revenue. Android users do not appear to want to pay for apps, according to Enderle.

Show Me the Money

Unless they are willing to take a gamble, game developers have little incentive to enter the Linux game market. The market needs a strong scent of money for developers to make significant dollars and cents from Linux gamers.

"Until someone can do a Linux-based product that can demonstrate a sustainable revenue model for a game developer," said Enderle, "it is unlikely that it will get much interest by game developers who are already overcommitted and not that happy with the closest derivative, Android."

Who knows? If Linux players show they are willing to pay for games not available anywhere else, it might take off. So far, however, there is no track record for Linux users being willing to pay for games, he maintained.

A Place to Market

A major complaint about the lack of sales among Android app developers, in general, is volume. They can only make about one tenth of what they draw in the App Store. That should not be a big surprise, however. The Android Market is built around the advertising model, according to Enderle.

Still, despite Android's comparatively better market potential for game developers, a Linux-only outlet might pose an attractive opportunity for the right type of game. That advantage could be for those game developers who target Linux users, suggested IDC's Ward.

Still, it just doesn't have enough volume to warrant the necessary expenditures for most game developers, he said.

Roll the Dice

The Linux game market is not lucrative for a major player like an Atari or Activision, but a smaller game company might stumble on a title that will sell a million more than it would have sold otherwise, Enderle noted.

A company could hit the right combination of game and market to provide enough revenue. You have to pick the target market for what it is you want to do, he said.

"I certainly wouldn't recommend tying the state of your company to pure free and open source software on the Linux desktop," said Ward. "If it's inside a browser, or if it has some Java platform so it's completely agnostic in terms of the operating system, then it doesn't matter."