Apple Is More Valuable Than Google

Did you notice that today Apple became more valuable to the stock market than Google? The iPhone maker now has a market capitalization of $183 billion vs. $174.5 billion for Google. What does that mean to me?

For starters, people believe that Apple can continue to defy gravity. Secondly, when it comes to growth, people believe focus is the right approach. What do you guys think?

Organic Motion Gets $7.4M to Go Virtual

Organic Motion, a startup that makes software that will help enable a new generation of simulation products and even gesture-based computer controls, has raised $7.4 million from the Foundry Group, bringing its total funding to somewhere in the range of $10 million. The startup’s software could usher in the reality of room-sized applications as well as allow people to visually navigate and manipulate huge amounts of data. And Organic Motion is the second gesture-based startup to get VC money this week — Canesta raised $16 million on Tuesday.

Organic Motion’s software allows commodity x86 chips and a few basic cameras to generate a 3-D avatar that can follow a person’s motions and replicate their activity on the screen without using any bulky sensors or a suit. It’s already used to create simulations for the military, and has obvious uses in online worlds such as Second Life where one could direct their avatar merely by moving their body.

The software takes touch controls a step further by alleviating the need for a user to actually touch anything; instead they just face a camera and act out the gesture. As the web graduates to images from text, using gestures and touch may become more useful than a keyboard and less irritating than a mouse.

Gesture controls would allow for a fundamental shift not just in the input device, but the way we experience an application. Some companies and analysts are trying to envision life-size applications in which a projector or multiple screens are used to display applications in a more compelling format, rather than limiting oneself to a monitor (or even three). As we move to a 3-D Internet, enabling an immersive web isn’t so far-fetched, especially with software that can take advantage of the chips and cameras computers already have.

Image courtesy of Organic Motion.

Where Can WiMAX Catch a Break? The Smart Grid

WiMAX might be losing attention and mindshare from telcos in the U.S., but it’s another story entirely when it comes to that oh-so-buzzy sector the smart grid. Utilities across the globe are increasingly starting to test WiMAX-based smart grid networks, and this morning we have news of a major commercial deployment from a utility Down Under. Australian utility SP AusNet says it’s building out its own WiMAX-based network using smart meter software from startup Grid Net, WiMAX-based smart meters from GE (with an Intel chip inside) and WiMAX networking gear from Motorola.

SP AusNet’s John Steel said the utility chose WiMAX in general and Grid Net’s technology in particular because it wanted to build a network based on open standards, one that’s interoperable with a wide range of technologies. And by building the network itself rather than going with a WiMAX service provider, the company would get a more secure network that would be cost-effective in the long run. Building it will cost “hundreds of millions of dollars,” he noted.

Other utilities in the U.S., including CenterPoint, National Grid, San Diego Gas & Electric and Southern California Edison are looking at ways to use WiMAX in smart grid deployments. SDG&E, for example, wants to use WiMAX for 30 percent of the network where higher bandwidth is required for applications like collecting large amounts of data on voltage, current and frequency in real time.

Grid Net’s other partners include Landis+Gyr, Cisco, Clearwire and Unwired Australia. The group is betting that the price point of WiMAX gear will come down dramatically if the technology gains traction. Grid Net CEO Ray Bell told us that WiMAX chipsets currently cost around $36, but predicted that in a year they’ll be closer to $12, and in another six months they could go as low as $8 or even $6.

For AT&T, It’s the iPhone to the Rescue…Again

Oh boy…does AT&T need the iPhone to keep its business going or what? In the third quarter, the company added 2 million new wireless subscribers to reach a total of 81.6 million. Further, some 4.3 million 3G-integrated devices were added to the AT&T network, of which the iPhone accounted for 3.2 million activations. And thanks to that, wireless data revenues jumped 33.6 percent over the previous year, to $3.6 billion, thus helping push the ARPU up by 3.8 percent from the same quarter last year.

The rest of AT&T’s business doesn’t look quite as pretty. Revenues for the quarter were $30.9 billion vs. $31.3 billion in the third quarter of 2008. Net income was flat at $3.2 billion. In other words, apart from the iPhone and U-verse TV, there isn’t much for AT&T to get excited about.

For instance, while the company added 252,000 U-verse connections, it lost enough DSL subscribers that the final tally for new broadband subscribers during the most recent three-month period stood at mere 90,000. AT&T now has 1.8 million U-verse TV customers. Consumer voice connections, meanwhile, fell to 45.7 million from 46.3 million in the second quarter. AT&T had 47.5 million voice connections in the third quarter of 2008.

Why AT&T Is Desperately Addicted to the iPhone

A few weeks ago, AT&T CEO Randall Stephenson told the Wall Street Journalthat his company was interested in extending its exclusive contract with Apple through 2011. It was interesting to see a senior executive at one of world’s largest telecom companies tip his hand publicly. Fast-forward to today, when Ma Bell reported its first-quarter 2009 earnings, and you start to get a handle on why AT&T is hooked on Apple and so desperately needs it to introduce new iPhone models. First a little math from their earnings release: AT&T added 875,000 new postpaid subscribers in the most recent quarter and 1.6 million iPhone activations, “more than 40 percent of them for customers who were new to the company.” That means roughly 640,000, or a whopping 73 percent of their total net new subscribers, came to AT&T because of Apple’s iPhone.

To better illustrate the growing Apple addiction at AT&T, let’s go back to AT&T’s fourth-quarter 2008 results. During that three-month period nearly 1.9 million 3G iPhones were activated, and 40 percent of them, or about 760,000, were new to AT&T. In other words, 36 percent of AT&T’s new customers signed up because of the iPhone.

From a revenue perspective, during the first quarter of 2009, the average iPhone user gave AT&T about $94.74 a month vs. an average postpaid AT&T customer, who spends about $59.21 a month with the company. (Actually if you took all iPhone monthly subscriptions out of the equation, that number would be even lower.) At $94.74 each, the 640,000 net new subscribers bring in about $60 million a month in additional revenues for AT&T. Given how drastically AT&T’s landline and business voice sales are tanking, it makes sense why AT&T is so desperately stuck on the iPhone.

“Those numbers underscore why the exclusivity and the refresh of the (iPhone) product line are pretty important for AT&T,” said John Hodulik, telecom analyst with UBS Research. Like most, he expects Apple to introduce new phones sometime this summer. We’ve heard rumors of both a new higher-end device as well as a lower-priced one. Whatever form they come in, they will be crucial for AT&T, which has even started to spend money on upgrading its pokey 3G networks to meet the data demand.

The AT&T and Apple relationship can be best summed up by the 80s pop band, Huey Lewis & the News:

We’ve had some fun, and yes we’ve had our ups and downs

Been down that rocky road, but here we are, still around

We thought about someone else, but neither one took the bait

We thought about breaking up, but now we know its much too late

We are bound by all the rest
Like the same phone number

All the same friends
And the same address 

Yes, it’s true, (yes it’s true) I am happy to be stuck with you

AT&T Beholden to Steve & the iPhone? Seems like

Updated: AT&T has reported its fourth-quarter 2008 results, and they show how dependent the company is on Apple and the iPhone for its future growth. For instance, AT&T added 2.1 million new wireless subscribers during the quarter. Nearly 1.9 million 3G iPhones were activated during the three-month period, and 40 percent, or about 760,000, were new to AT&T. That works out to a whopping 36 percent of total new customers for the company that has been bleeding landline customers and is facing serious problems because of the economic downturn. AT&T points out in the press release: “iPhone exclusive continues to deliver high-value subscribers with ARPU approximately 1.6 times higher and churn rates significantly lower than the company’s overall postpaid subscriber base.”

Update: However, the iPhone subsidies cost AT&T about $1.3 billion in 2008. AT&T is banking on those subscribers both buying expensive plans and sticking around long enough to make up for the subsidy. A quick look at fourth quarter numbers show that iPhone subsidies cost about $450 million for about 760,000 new subscribers. Those subscribers need to stick around for more than10 six months (given the Q4 average revenue per user of $59.59 $95.34 for iPhone users) to offset the subsidy. Think of it as indentured servitude.

Kill desktop clutter

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