Borders to offer five free books with e-book software

Borders Group Inc. said Friday it will offer five free books, including a Dean Koontz novel, to customers who download the bookseller’s free electronic-book reading software.

Through July 14, customers who download the software will receive Frankenstein: Prodigal Son by Dean Koontz; One Shot by Lee Child; The Alchemyst by Michael Scott; Julia Child’s Julia’s Kitchen Wisdom and Master your Metabolism by Jillian Michaels. The books are worth more than $40 collectively, Borders said.

Customers will also get a chapter of Danielle Steel’s forthcoming novel Legacy, which isn’t available anywhere else.

Borders launched its e-bookstore earlier this week, entering the fray along with competitors Amazon.com and Barnes & Noble.

Borders e-book reading software is available across an array of platforms including e-book readers and mobile devices such as the iPhone, Blackberry and Android phones with its partner Kobo.

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Wireless Carriers: Your New PC Retailer?

Consumers on the prowl for new PCs may soon find themselves heading for the local wireless carrier instead of a big-box retailer. In a move that could dramatically change the way people shop and pay for computers, AT&T and other mobile-phone service providers are swooping in on the PC retailing business.

One of the earliest signs of this shift came Apr. 1, when AT&T began selling small laptop computers in Atlanta and Philadelphia for as little as $50 to people who also signed up to get at-home and mobile broadband services for two years. It was no April Fool’s joke. AT&T, the biggest U.S. phone company, is “very pleased with the early results” and is considering introducing the offer nationwide, says David Haight, vice-president of business development for emerging device organization at AT&T. He wouldn’t provide details on the results so far. Rival Verizon Wireless plans to offer small, inexpensive laptops called netbooks to customers this quarter. Other carriers are expected to follow suit.

With the market for cell-phone service saturated, the PC market represents a way for mobile-phone carriers to get more people to buy monthly wireless Internet-access service plans. Consumers who buy wireless Web access can save money on the up-front purchase price of a computer and, in some cases, the price of monthly access to high-speed Internetservices. But the shift in who sells PCs could also mean lower revenue for computer makers if it lures buyers toward lower-priced netbooks and away from big-ticket machines. It could also crimp demand for smartphones.

Bundling Netbooks with Service Plans

Wireless service providers are already emerging as big PC vendors in Western Europe, where companies like Vodafone and Deutsche Telekom’s T-Mobile International began selling netbooks last fall. Carriers already account for 20 percent to 25 percent of all small laptops sold there, estimates Richard Shim, a research manager at consultant IDC. The U.S. may not be far behind. PC maker Dell and retailer RadioShack began selling netbooks for use with AT&T’s wireless network several months ago.

Carriers are willing to absorb $200 or more of a netbook’s cost to get more people to sign up for related wireless data-service plans as well as other offerings. AT&T, for instance, offers discounted netbooks to people who also sign up for a $60-a-month bundle of its at-home Digital Subscriber Line Internet access and its on-the-go broadband service. In one of several deals, AT&T sells the Acer Aspire One netbook, which normally retails for $300, for $100 up front.

The emergence of carriers as computer distributors could spell changes, good and bad, for PC suppliers. On one hand, consumers who may not have bought a $500 PC may be tempted by a $50 one. “It’s about getting the next billion people online,” says Anil Nanduri, director of netbook marketing at chipmaker Intel . “We see this as a definite opportunity for additional volumes,” especially in emerging markets, he says. Researcher IDC expects netbook sales to rise from 19 million units this year to 32.6 million units in 2012.

Mobile-phone service providers and their marketing muscle could also help their computer making partners grab market share quickly. T-Mobile, for instance, has sold 60,000 netbooks since making them available in September. “You could get quick market share, provided you work well with a telco provider,” says Shim. Such companies as Acer, Dell, Samsung, Hewlett-Packard , and LG — which have announced wins with AT&T, T-Mobile, and Vodafone — could end up climbing the market-share charts.

Downward Spiral of Prices and Margins

The deals with carriers could also make it easier later for PC makers to market other electronics, such as smartphones and mobile Internet devices [MIDs, which are slightly smaller than netbooks] through the carriers. Already, Acer and several other PC makers have announced smartphone models, and Dell is rumored to have developed one. “They’ll establish some brand presence and then slowly introduce a smartphone [in the following 12 to 18 months],” says wireless consultant Chetan Sharma. “This gives them expertise in the ecosystem.”

By the same token, faster sales of netbooks could mean diminished demand for more expensive computers. “The [PC] industry overall gets pulled into this downward spiral of [lower average selling prices] and margins,” says Roger Kay, founder of consultant Endpoint Technologies Associates.

And as netbooks take off, what happens to demand for smartphones made by such vendors as Nokia and Research In Motion? Some consumers may opt for a netbook — or its smaller cousin, the MID — instead of high-end smartphones that cost about as much. A netbook offers greater battery time of 10 to 16 hours, while a phone typically conks out after five. MID screens are larger and more conducive to watching video. The category could receive a boost if, as expected, iPhone maker Apple releases a MID-like device with video capabilities.

Why Not Multiple Mobile Devices?

Carriers also may wish to steer consumers away from smartphones and toward netbooks or MIDs. Today a smartphone brings more profit to carriers because it uses data as well as voice services; a netbook merely gobbles data. But this might change: Users of netbooks or MIDs may be willing to pay more for access to additional bandwidth so they can surf the Web and watch movies online. T-Mobile believes consumers may also pay for such extra services as a subscription to Microsoft Office and Norton AntiVirus software or to virtual storage services. Some users may buy display insurance and additional tech support from carriers.

Handset vendors such as HTC don’t foresee danger. “We see netbooks as being a new and emerging segment that’s expanding the pie,” says Steven Seto, executive director of marketing for HTC North America. After all, people buy multiple TVs for their homes. So they may buy multiple mobile devices. “It’s the inspiration for what one day might happen in our industry,” he says.

Carrier-sold netbooks are bad news for traditional electronics retailers such as Best Buy and Wal-Mart. “They are undercutting Best Buy by several hundred dollars [in up-front costs],” says John Spooner, an analyst with Technology Business Research. “Companies like Best Buy and Wal-Mart are under some pressure because now they have a competitor.” Best Buy did not respond to a request for comment.

Cable companies such as Comcast, which did not return a request for comment, could suffer as well. Instead of hooking up to fixed broadband from a cable company, some consumers may opt for wireless or bundled wireless-home offerings from a telecom provider instead. What’s more, some 5 million to 10 million Americans already connect wireless notebooks to the TV and stream movies from Hulu.com and video from Google’s YouTube, says Phil Leigh, president of consultant Inside Digital Media. “The cable TV operators will discover their audience is using mobile video and will, over time, begin to cancel their cable subscriptions,” he says. “Beyond a shadow of a doubt, it’s going to have big impact.”

New BlackBerry storms onto the stage

Blackberry Storm 9530

Blackberry Storm 9530

The BlackBerry has been making its presence felt in the consumer market since the arrival of the Pearl a few years back, but today sees the UK launch of what is likely to be its most popular consumer device to date — the Storm.

It is the first touchscreen BlackBerry and will be exclusive to Vodafone, which has been working with creator RIM for over a year on the handset. (Demo)

Already the mobile phone company — which will be offering the Storm in 10 countries worldwide — has received pre-orders from well over 100,000 British customers who want one when it goes on sale.

The phone is RIM’s response too the growing popularity of touchscreen devices, which was sparked by the arrival of the iPhone a year and a half ago. Vodafone lost out on the iPhone to bitter rival O2 in the UK.

More recently, Nokia has jumped on the touchscreen bandwagon — which has to date been dominated by Asian manufacturers such as LG and Samsung — while T-Mobile made a major splash recently with the G1, the first handset to include Google’s Android operating system.

The G1 is, of course, made by HTC which recently launched its own-brand full touchscreen device — called the HTC Touch HD.

The Storm, meanwhile, is free to anyone willing to sign up to a two year contract at £35 a month, making it cheaper than the G1 and iPhone.

Nokia has yet to sign up an operator for its touchscreen phone in the UK.

The iPhone’s new business model

iPhone“Twice as fast. Half the price.”

That’s the story about the new iPhone 3G that Apple is selling, and it’s a line that was echoed by Apple VPs and industry analysts in the Moscone West spin room after Steve Jobs’ keynote Monday.

“The new price point is a very big deal,” said Tim Bajarin of Creative Strategies. “With that, and the 70 countries, Apple is now a world player on the mobile smartphone stage.”

But it’s not that simple. There were a lot of financial details Jobs left out of his keynote that only emerged later in the day, in a 8-K form Apple (AAPL) filed with the SEC and a long press release issued by AT&T (T).

Apple alerted the SEC that although it had signed deals with 70 countries…

“…Under the vast majority of these agreements, Apple will not receive follow-on revenue generating payments from carriers”

AT&T, for its part, warned investors of…

“…potential dilution to earnings per share (EPS) from this initiative in the $0.10 to $0.12 range this year and next.”

What does it mean?

It means the iPhone has a new business model.

When the device was first introduced, Jobs was able to dictate some rather unusual terms. Customers had to pay full retail price for it (a practice almost unheard of in the mobile phone industry) and carriers had to share a sizable cut of their monthly revenue with the manufacturer (also virtually unprecedented).

Now, the carriers are subsidizing the cost of the phone, making up for it in monthly charges, and they are no longer funneling a share of that monthly revenue to Apple. As Piper Jaffray’s Gene Munster puts it: “Apple is basically playing by the rules that all other cell phone hardware manufacturers play by.”

Pressed for specifics, Munster speculates that AT&T is paying Apple about $400 for the 8GB iPhone and keeping $199 of that. It probably pays Apple about $450 for the 16GB model, he says, and keeps $299. [Update: in a note to clients Tuesday Munster came up with a slightly higher number. He now estimates that Apple is charging carriers, on average, $466 per iPhone. Toni Sacconaghi at Bernstein Research comes in with a range that goes even higher; he believes Apple will sell the new iPhones to carriers for anywhere from $350 to $700 each.]

This is a big change. Gone is that nice revenue sharing deal where Apple socked it away as deferred income over the life of a 24-month contract — a comfortable cushion against lean quarters in the company’s future, should they ever arise.

Gone too is the nice iPhone bonanza AT&T got upfront last summer by selling all those 8GB iPhones for $599 each (minus a small commission, perhaps $80, to Apple).

But don’t cry for AT&T. As its press release made clear, it’s going to make up for that by raising the $20 monthly fee customers pay for unlimited data services to $30. That works out to $240 extra over the life of a two-year contract.

“Half the price,” it turns out, actually costs customers $40 more.

But most people look only at the purchase price when they buy cell phones, and at $199 for the 8GB model, the iPhone is going look a whole lot more affordable to a lot more people. Munster, for one, believes that Apple will more than make up in volume what it’s losing in revenue sharing.

Munster had predicted that Apple would sell 12 million iPhones in 2008, beating its own 10 million target by 20%. With the new price point, he says, 12 million “should be a lay-up.” And what about his famous prediction that Apple will sell 45 million iPhones in 2009 — a number that he acknowledges is “way ahead of the Street”? Munster is not raising that target, but admits he’s “increasingly comfortable” with it.

Vodafone and Airtel to Bring iPhone to India.

No sooner has Steve Jobs unleashed the new 3G iPhone at the Worldwide Developer Conference (WWDC) in San Francisco than back home, not one but two carriers — Bharti Airtel and Vodafone — have announced, in conjunction with Apple, that they will be bringing the iconic device to India later this year. However, neither has specified the launch date or pricing of the 3G iPhone in India.

And now that the wraps are finally off of the much-hyped 3G iPhone, a quick recap of the stuff it’s made of. iPhone II marries all of the features of iPhone with 3G networking to make the device “twice as fast” as the first-generation iPhone. iPhone II features built-in GPS for expanded location-based mobile services and iPhone 2.0 software with support for Microsoft Exchange ActiveSync, and is capable of running hundreds of third-party applications already built with the recently-released iPhone SDK.

Vodafone and Apple will bring iPhone 3G first to Australia, Italy, New Zealand, and Portugal on July 11. In these markets, Vodafone will make available iPhone 3G on both prepaid and contract price plans that will include value data bundles. Vodafone will then, later this year, make iPhone 3G available in other markets including the Czech Republic, Egypt, Greece, South Africa, Turkey, and most importantly — India. Details of specific launch dates and price plans will be made available in the respective countries by individual Vodafone operating companies. Vodafone customers in all of these markets including India can pre-register online and in retail stores in the next few days.

Meanwhile, Airtel customers who wish to receive more information on the Apple iPhone can send an SMS with keyword “iPhone” to 54321 (toll-free number). Airtel will announce details regarding pricing and availability at a later date, the company said.

Announcing the Apple-Vodafone partnership, Frank H R Vekamp, global CMO of Vodafone Group, said, “We are very excited to bring iPhone 3G to many of our customers across Europe and emerging markets this summer. Vodafone’s extensive, high-speed, and reliable networks mean customers can enjoy a great Internet and communications experience on their iPhone 3G.”

On a similar note, Manoj Kohli, president and chief executive officer of Bharti Airtel, said, “We are delighted with the opportunity to bring the innovative iPhone 3G to India. As India’s leading telecom operator, Bharti Airtel has always stood for innovation and customer delight. With our reach across the country and iPhone’s revolutionary features, we have a valuable proposition for our customers in India.”

Meanwhile, Tim Cook, chief operating officer of Apple said in separate announcements that they are thrilled to work with both Vodafone and Bharti Airtel and can’t wait to get this revolutionary product in the hands of even more people around the world.

Techtree had previously reported about the possibility of Apple going multi-carrier in India. Now that it’s indeed official, we asked some people for their views on the same. “Vodaphone has an international tie-up with Apple for the iPhone in a lot of countries, so it is little wonder that they got roped in for India as well. This seems to be purely from a goodwill point of view. Bharti Airtel on the other hand has a huge reach in India, and they’ve been roped in as well by Apple. This is purely from the business point of view,” said a hard-core techie we know. A Vodafone customer said, “I’m rather more interested in knowing when they are launching the iPhone in India and what will it cost”. Meanwhile, an Airtel subscriber had this to say, “I’d like to see attractive schemes like special tariffs on voice-GPRS services along with better network services and support.”

All said, both Bharti Airtel and Vodafone are established names in telecom; Bharti Airtel is known as India’s leading integrated telecom services provider while Vodafone is known as the world’s leading international mobile communications group. It will be interesting to see how the carriers’ respective associations with Apple play out, to say the least.

BBC iPlayer comes to the iPhone

The BBC has launched a version of its iPlayer video on demand service for the Apple iPhone and iPod touch.
It is the first time the service has been available on portable devices.

The iPhone and iPod touch are able to stream shows from the iPlayer website over wi-fi networks. The iPhone cannot stream BBC video over the cell network. A BBC developer said that the corporation was currently working on other versions of the iPlayer for “many more” devices.

Anthony Rose, writing on the BBC internet blog, said: “We started with iPhone because it is the device most optimised for high quality video currently available.

“It displays the BBCiPlayer site and BBC programmes nicely.”

The software currently comes in two versions – a program which allows users to download programmes to their Windows PC and a streaming version on the web available to all users.

The version for iPhone and iPod touch users will allow streaming over a wi-fi connection. However, the EDGE mobile network used by the iPhone is too slow for streaming video.

The corporation has agreed a deal with wi-fi firm The Cloud to provide all BBC online services for free at its 7,500 hotspots.

A version of iPlayer for Virgin Media customers is expected later this month.

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