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jones · 12-04-2006, 9:24 PM

http://www.businessweek.com/technolo...gn_id=rss_tech

Motorola, Nokia Set Cell Phones Free
New "unlocked" mobile phones may make it easier to switch carriers, shaking up the $100 billion U.S. wireless industry
by Olga Kharif

Customers—some from as far away as Canada—camped through the night outside the store on Michigan Avenue in Chicago. No, it wasn't the first shipment of Sony's PlayStation 3 or Nintendo's Wii gaming console they awaited—but cell phones. And not just any cell phones. These ones, unveiled at the summer opening of the flagship store owned by mobile-phone giant Nokia, boasted features such as multimegapixel cameras and the ability to surf the Internet over wireless fidelity, or Wi-Fi, connections. Best of all: They were among the first in the U.S. that could be used on any one of several wireless networks.

That's a radical idea in a country where switching among cell-phone providers invariably means changing phones. Say you want to move from Cingular, owned by AT&T (T) and BellSouth (BLS), to Deutsche Telekom's (DT) T-Mobile, your Cingular device won't work on T-Mobile's network. Not so with one of these "unlocked" phones from Nokia. And as the phones gain in popularity, switching may increase, benefiting handset makers and forcing providers to cut prices to foster loyalty.

Unlocked devices have long been a hit in Europe and Asia, where people often switch carriers when traveling from country to country. In fact, most cell phones sold in those regions are unlocked, says Albert Lin, an analyst with American Technology Research. But until Nokia's move, few major cell-phone makers had dared peddle their entire line of unlocked phones in North America, where carriers hold tight reins on subscribers and their phones.

Dawning of the Unlocked Age
That's come about through an arrangement whereby wireless carriers subsidize the price of a new phone in exchange for agreement by the manufacturer to sell only locked versions of phones. A customer who can't use a beloved, feature-packed mobile phone on a competing network is less likely to switch providers.

Not so in the mobile phone's Unlocked Age. Motorola (MOT), the biggest U.S. cell-phone maker, earlier this year quietly began selling unlocked phones through retailer CompUSA, which has also started carrying some unlocked Nokia (NOK) and Sony Ericsson models (see BusinessWeek.com, 7/26/06, "Motorola Shows Its Mojo"). "Never in the history of mobile-phone sales in the USA has such a brash circumvention of the carriers been attempted," says Lin.

Manufacturers and customers may get brasher still. On Nov. 22, the U.S. Copyright Office ruled that consumers can use special software and services to unlock their handsets without infringing on carriers' or handset makers' copyrights. And for subscribers eager to reset phones, dozens of Web sites, including TheTravelInsider.info, are all too happy to guide users through the process for a modest fee.

Market Bombshell
If you use a phone based on the global system for mobile communications (GSM)—think Cingular and T-Mobile—you can unlock your phone by entering a special code that lets you switch networks by replacing your phone's subscriber identification module, or SIM, card, used to authenticate users. In the case of wireless networks based on code-division multiple-access, or CDMA, technology used by Verizon Wireless and much of Sprint Nextel (S), unlocking is more complicated, but doable. A phone designed only for a CDMA network cannot be reused on a GSM network.

The implications for customers, carriers, and handset makers are mammoth. "This will fundamentally change the business," says Andrew Cole, president of management consultancy CSMG. In the next five years, 10% to 15% of U.S. wireless users could move to unlocked phones, figures Andrei Jezierski, partner at venture consultancy i2 Partners in New York. Given more than 227 million wireless users in the U.S. today, that translates to at least 22.7 million people.

Makers of unlocked phones stand to gain, particularly as early adopters spend big on unsubsidized models. A Nokia N80 sells for a hefty $499. And high price tags aren't deterring some buyers. At CompUSA, for example, unlocked phones have been "very successful," says Sammy Saloum, vice-president of merchandising. "It has gone beyond our initial expectations." Analysts believe unlocked phones will eventually grab 25% to 50% of the U.S. wireless market.

Phone Makers Stand to Profit
High price tags notwithstanding, unlocked phones may also bring lower-priced service plans. Up-and-coming carriers, such as Leap Wireless (LEAP) and Metro PCS, are expected to become more aggressive on plan prices for unlocked phones. Established wireless service providers could fight back by lowering service-plan prices for users of unlocked phones, which they didn't have to subsidize, by 12% to 15%, or around $7 a month, estimates Lin.

While customers benefit, carriers may feel the squeeze—in the form of higher subscriber turnover, increased customer acquisition costs, and narrower margins. Even though they'd pay less in handset subsidies, U.S. carriers' profit margins, excluding taxes, depreciation, and other charges, could plummet from as high as 40%-plus to the 30% range more common in Europe, believes Cole.

Some of those profits could end up in the coffers of handset makers, which have already begun treading on carriers' turf. Companies such as Nokia and Motorola have begun offering their own mobile music, radio, and gaming features—services now offered by service providers (see BusinessWeek.com, 8/9/06, "Nokia Goes Ear-to-Ear with Apple"). By unlocking the handset, device makers effectively weaken users' affinity with carriers.

Service Providers Retaliate?
Unlocked phones could also prove crucial for handset makers to fend off competition from iPod maker Apple (AAPL), expected to debut its own cell phone in early 2007. Many analysts predict the iPhone will be unlocked and sold in Apple's own stores. Established handset makers need to start distributing their products in a similar fashion to keep from losing market share.

As advantageous as unlocking phones may be for handset makers, it also carries risks. Carriers could fight back by cutting back on orders and bolstering ties with suppliers that don't sell unlocked versions. They could cut their subsidies of offending handset makers' phones. And they could refuse to sign up users who have unlocked phones. "We do not activate wireless devices that come from other carriers or directly from manufacturers," says a Sprint Nextel spokesperson, "because we can't guarantee the quality of service."

For now, handset makers don't appear worried. "I don't think the carriers will lash back because the volume is so insignificant," says Bruce Brda, a vice-president at Motorola who figures his company will have sold no more than 20,000 unlocked phones in the region this year. "And they don't care about the phone, they care about the service contract. I don't believe there's a huge conflict here."

At least not for now. "This is a long-term trend," Lin says. "Sooner or later, [unlocked phones] will become a more prevalent model here."

scotsboyuk · 12-04-2006, 10:28 PM

Quote:

Originally Posted by jones

Unlocked devices have long been a hit in Europe and Asia, where people often switch carriers when traveling from country to country. In fact, most cell phones sold in those regions are unlocked, says Albert Lin, an analyst with American Technology Research.

I'm not sure how true that is. Certainly in the UK most contract handsets are sold locked to a particular network. Of course it could very well be true of other parts of Europe and Asia.

MOTOhooligan · 12-04-2006, 11:36 PM

This is good news but unlocked, unbranded handsets are available from Europe and have been available directly from Motorola for some time.

In addition, T-Mobile will issue you the subsidy unlock code for their handsets after 90 days of active service.

I saw a MotoStore in Italy but didn't have time to go in. Hope they start popping up in the US.

Fire14 · 12-05-2006, 12:18 AM

I recieved an Email from Motorola today about free shipping for 1 day etc.. and they had a link to Unlocked US phones. They are showing 8 and mostly Razr's for sale.

http://motorola.digitalriver.com/DRH...goryID=3104200

SteveW · 12-13-2006, 12:27 AM

Quote:

Originally Posted by jones

http://www.businessweek.com/technolo...gn_id=rss_tech

Motorola, Nokia Set Cell Phones Free
New "unlocked" mobile phones may make it easier to switch carriers, shaking up the $100 billion U.S. wireless industry
by Olga Kharif

The implications for customers, carriers, and handset makers are mammoth. "This will fundamentally change the business," says Andrew Cole, president of management consultancy CSMG. In the next five years, 10% to 15% of U.S. wireless users could move to unlocked phones...

Makers of unlocked phones stand to gain, particularly as early adopters spend big on unsubsidized models. A Nokia N80 sells for a hefty $499. And high price tags aren't deterring some buyers. At CompUSA, for example, unlocked phones have been "very successful," says Sammy Saloum, vice-president of merchandising. "It has gone beyond our initial expectations." Analysts believe unlocked phones will eventually grab 25% to 50% of the U.S. wireless market.

Phone Makers Stand to Profit
High price tags notwithstanding, unlocked phones may also bring lower-priced service plans. Up-and-coming carriers, such as Leap Wireless (LEAP) and Metro PCS, are expected to become more aggressive on plan prices for unlocked phones. Established wireless service providers could fight back by lowering service-plan prices for users of unlocked phones, which they didn't have to subsidize, by 12% to 15%, or around $7 a month...

While customers benefit, carriers may feel the squeeze—in the form of higher subscriber turnover, increased customer acquisition costs, and narrower margins. Even though they'd pay less in handset subsidies, U.S. carriers' profit margins, excluding taxes, depreciation, and other charges, could plummet from as high as 40%-plus to the 30% range more common in Europe...

Service Providers Retaliate?
Unlocked phones could also prove crucial for handset makers to fend off competition from iPod maker Apple (AAPL), expected to debut its own cell phone in early 2007. Many analysts predict the iPhone will be unlocked and sold in Apple's own stores. Established handset makers need to start distributing their products in a similar fashion to keep from losing market share.

If unlocked phones become more available, and if this in turn forces carriers to lower their service prices for unlocked phones, that will be good for consumers. The real breakthrough could come about if unlocking and portability led to genuine price competition among handset manufacturers. I think you would see handset prices come down a lot. Phones are pretty high tech, but in my mind they are still overpriced. A Nokia N80 is $600 at the Nokia store. For $649 I can get a Dell Inspiron notebok with a 15.4" display, 512MB RAM, 60GB HD, 24X CD burner/DVD combo drive, ATI Radeon Xpress graphics (256MB), wired and wireless Ethernet, Windows XP - you get the picture. Much more technology than is in a phone.

SW

Telekom · 12-13-2006, 6:40 PM

Quote:

Originally Posted by SteveW

If unlocked phones become more available, and if this in turn forces carriers to lower their service prices for unlocked phones, that will be good for consumers. SW

People keep saying this, but the get it free or get it severely discounted model is likely to stay for a long time. People just don't want to pay the full price of a phone. Even a low end phone may cost $60 - $100 and most people are not likely to fork out that kind of money. It's kind of hard to tell your customer base "sorry, we're not going to give you a free or major discount on that phone you wanted." The carriers give away phones or severely discount them to convince you to get service with them. If anything the carriers are getting more greedy. cingular is set to charge 15¢/message for text messages as of some time in January. That's a 50% increase. Carriers can charge as much as 300% over actual costs for such things as international long distance. Why do they do it? To make money! I seriously doubt that carriers even if they didn't have to subsidize the cost of customer equipment would keep any savings acrued and use it for their bottom line.

Fire14 · 12-14-2006, 12:43 AM

I do think if the carriers all stopped subsidizing the phones, that the phone manufactures would end up giving discounts on them & cause competition between the phone manufactures & would drive the prices down.
Now I doubt they would give them away as the carriers do, but it could be interesting to see how much they would discount them if at all.

Again people would probably complain that they had to pay for the phones, but if plan prices either got lowered or a lot more minutes were added, it would offset it somewhat.

jerry 12 · 12-17-2006, 2:17 PM

i would buy unlooked phones.it should be against the law to lock out features that are made into a phone. i am talking about / web browser / email clint / down loads / bluetooth / ect. and so forth you payed for those features when yo bought your phone its call GREED

12-04-2006, 9:24 PM	#1 (permalink)
jones Join Date: Nov 2002 Posts: 3,425 Thanks: 0 Thanked 0 Times in 0 Posts	Motorola, Nokia Unlocks Phones http://www.businessweek.com/technolo...gn_id=rss_tech Motorola, Nokia Set Cell Phones Free New "unlocked" mobile phones may make it easier to switch carriers, shaking up the $100 billion U.S. wireless industry by Olga Kharif Customers—some from as far away as Canada—camped through the night outside the store on Michigan Avenue in Chicago. No, it wasn't the first shipment of Sony's PlayStation 3 or Nintendo's Wii gaming console they awaited—but cell phones. And not just any cell phones. These ones, unveiled at the summer opening of the flagship store owned by mobile-phone giant Nokia, boasted features such as multimegapixel cameras and the ability to surf the Internet over wireless fidelity, or Wi-Fi, connections. Best of all: They were among the first in the U.S. that could be used on any one of several wireless networks. That's a radical idea in a country where switching among cell-phone providers invariably means changing phones. Say you want to move from Cingular, owned by AT&T (T) and BellSouth (BLS), to Deutsche Telekom's (DT) T-Mobile, your Cingular device won't work on T-Mobile's network. Not so with one of these "unlocked" phones from Nokia. And as the phones gain in popularity, switching may increase, benefiting handset makers and forcing providers to cut prices to foster loyalty. Unlocked devices have long been a hit in Europe and Asia, where people often switch carriers when traveling from country to country. In fact, most cell phones sold in those regions are unlocked, says Albert Lin, an analyst with American Technology Research. But until Nokia's move, few major cell-phone makers had dared peddle their entire line of unlocked phones in North America, where carriers hold tight reins on subscribers and their phones. Dawning of the Unlocked Age That's come about through an arrangement whereby wireless carriers subsidize the price of a new phone in exchange for agreement by the manufacturer to sell only locked versions of phones. A customer who can't use a beloved, feature-packed mobile phone on a competing network is less likely to switch providers. Not so in the mobile phone's Unlocked Age. Motorola (MOT), the biggest U.S. cell-phone maker, earlier this year quietly began selling unlocked phones through retailer CompUSA, which has also started carrying some unlocked Nokia (NOK) and Sony Ericsson models (see BusinessWeek.com, 7/26/06, "Motorola Shows Its Mojo"). "Never in the history of mobile-phone sales in the USA has such a brash circumvention of the carriers been attempted," says Lin. Manufacturers and customers may get brasher still. On Nov. 22, the U.S. Copyright Office ruled that consumers can use special software and services to unlock their handsets without infringing on carriers' or handset makers' copyrights. And for subscribers eager to reset phones, dozens of Web sites, including TheTravelInsider.info, are all too happy to guide users through the process for a modest fee. Market Bombshell If you use a phone based on the global system for mobile communications (GSM)—think Cingular and T-Mobile—you can unlock your phone by entering a special code that lets you switch networks by replacing your phone's subscriber identification module, or SIM, card, used to authenticate users. In the case of wireless networks based on code-division multiple-access, or CDMA, technology used by Verizon Wireless and much of Sprint Nextel (S), unlocking is more complicated, but doable. A phone designed only for a CDMA network cannot be reused on a GSM network. The implications for customers, carriers, and handset makers are mammoth. "This will fundamentally change the business," says Andrew Cole, president of management consultancy CSMG. In the next five years, 10% to 15% of U.S. wireless users could move to unlocked phones, figures Andrei Jezierski, partner at venture consultancy i2 Partners in New York. Given more than 227 million wireless users in the U.S. today, that translates to at least 22.7 million people. Makers of unlocked phones stand to gain, particularly as early adopters spend big on unsubsidized models. A Nokia N80 sells for a hefty $499. And high price tags aren't deterring some buyers. At CompUSA, for example, unlocked phones have been "very successful," says Sammy Saloum, vice-president of merchandising. "It has gone beyond our initial expectations." Analysts believe unlocked phones will eventually grab 25% to 50% of the U.S. wireless market. Phone Makers Stand to Profit High price tags notwithstanding, unlocked phones may also bring lower-priced service plans. Up-and-coming carriers, such as Leap Wireless (LEAP) and Metro PCS, are expected to become more aggressive on plan prices for unlocked phones. Established wireless service providers could fight back by lowering service-plan prices for users of unlocked phones, which they didn't have to subsidize, by 12% to 15%, or around $7 a month, estimates Lin. While customers benefit, carriers may feel the squeeze—in the form of higher subscriber turnover, increased customer acquisition costs, and narrower margins. Even though they'd pay less in handset subsidies, U.S. carriers' profit margins, excluding taxes, depreciation, and other charges, could plummet from as high as 40%-plus to the 30% range more common in Europe, believes Cole. Some of those profits could end up in the coffers of handset makers, which have already begun treading on carriers' turf. Companies such as Nokia and Motorola have begun offering their own mobile music, radio, and gaming features—services now offered by service providers (see BusinessWeek.com, 8/9/06, "Nokia Goes Ear-to-Ear with Apple"). By unlocking the handset, device makers effectively weaken users' affinity with carriers. Service Providers Retaliate? Unlocked phones could also prove crucial for handset makers to fend off competition from iPod maker Apple (AAPL), expected to debut its own cell phone in early 2007. Many analysts predict the iPhone will be unlocked and sold in Apple's own stores. Established handset makers need to start distributing their products in a similar fashion to keep from losing market share. As advantageous as unlocking phones may be for handset makers, it also carries risks. Carriers could fight back by cutting back on orders and bolstering ties with suppliers that don't sell unlocked versions. They could cut their subsidies of offending handset makers' phones. And they could refuse to sign up users who have unlocked phones. "We do not activate wireless devices that come from other carriers or directly from manufacturers," says a Sprint Nextel spokesperson, "because we can't guarantee the quality of service." For now, handset makers don't appear worried. "I don't think the carriers will lash back because the volume is so insignificant," says Bruce Brda, a vice-president at Motorola who figures his company will have sold no more than 20,000 unlocked phones in the region this year. "And they don't care about the phone, they care about the service contract. I don't believe there's a huge conflict here." At least not for now. "This is a long-term trend," Lin says. "Sooner or later, [unlocked phones] will become a more prevalent model here." __________________ - 3 Billion GSM Users by 2009. - 700 GSM Carriers in 220 Countries - 82% of the Global Market 45,000 Cell Sites and Adding.

12-04-2006, 11:36 PM	#3 (permalink)
MOTOhooligan Why So Serious? Join Date: Oct 2003 Location: Gotham City Posts: 6,688 Phone(s): w490, V3t, v620, Q, K1m Provider(s): Voicestream Wireless, Western Wireless Devices: Motorola S805, Motorola HS350 Thanks: 1 Thanked 11 Times in 8 Posts Images: 21	Re: Motorola, Nokia Unlocks Phones This is good news but unlocked, unbranded handsets are available from Europe and have been available directly from Motorola for some time. In addition, T-Mobile will issue you the subsidy unlock code for their handsets after 90 days of active service. I saw a MotoStore in Italy but didn't have time to go in. Hope they start popping up in the US. __________________ Who needs an iPhone when you've got a 2GB memory card, AD2P Bluetooth support and a wireless stereo headset?

12-05-2006, 12:18 AM	#4 (permalink)
Fire14 Easy,Cheap & Sleazy Join Date: Sep 2002 Location: Union County NJ Posts: 8,331 Phone(s): Razr V3xx, enV, Adventure, 6010 Provider(s): AT&T, Verizon, T-Mobile ToGo Thanks: 0 Thanked 0 Times in 0 Posts Images: 293 My Auctions	Re: Motorola, Nokia Unlocks Phones I recieved an Email from Motorola today about free shipping for 1 day etc.. and they had a link to Unlocked US phones. They are showing 8 and mostly Razr's for sale. http://motorola.digitalriver.com/DRH...goryID=3104200

12-14-2006, 12:43 AM	#7 (permalink)
Fire14 Easy,Cheap & Sleazy Join Date: Sep 2002 Location: Union County NJ Posts: 8,331 Phone(s): Razr V3xx, enV, Adventure, 6010 Provider(s): AT&T, Verizon, T-Mobile ToGo Thanks: 0 Thanked 0 Times in 0 Posts Images: 293 My Auctions	Re: Motorola, Nokia Unlocks Phones I do think if the carriers all stopped subsidizing the phones, that the phone manufactures would end up giving discounts on them & cause competition between the phone manufactures & would drive the prices down. Now I doubt they would give them away as the carriers do, but it could be interesting to see how much they would discount them if at all. Again people would probably complain that they had to pay for the phones, but if plan prices either got lowered or a lot more minutes were added, it would offset it somewhat.

12-17-2006, 2:17 PM	#8 (permalink)
jerry 12 Junior Member Join Date: May 2004 Location: greenville , nc Posts: 171 Phone(s): BB 8330 motorola v3c razr, lg vx 6100 / 3-v3m's, motorola v323, motorola v710 Provider(s): us cellular with five lines Devices: motorola H700-H820-H805 / jawbone bluetooth Thanks: 0 Thanked 0 Times in 0 Posts Images: 4	Re: Motorola, Nokia Unlocks Phones i would buy unlooked phones.it should be against the law to lock out features that are made into a phone. i am talking about / web browser / email clint / down loads / bluetooth / ect. and so forth you payed for those features when yo bought your phone its call GREED __________________ uscc 1000 minutes wide area plan free mobile to mobile to any uscc phone unlimited text message / free night & weekends starting at 7:00

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