By Greg Mills
The US Government has the authority to prevent mergers when anti-trust laws kick in. There is a lot of discretion at the Justice Department, and sometimes the government could step in but does not do so. Other times, they stop mergers as being “anti-competitive.” The AT&T merger with T-Mobile may be a situation where they think competition is best served by not allowing the biggest network to absorb the fourth largest network. The third largest network, Sprint, has been loudly screaming “monopoly” and working the political system to stop the merger.
The motivation behind the proposed merger is largely the cost of going national with a 4G LTE network would be reduced for AT&T if they could count T-Mobile’s customers and network as theirs. AT&T is spending a lot of money building out a 4G network and having the advantage of combining the existing network of T-Mobile would give them an edge against Verizon.
The T-Mobile network is sort of a 3.5G network as the particular flavor of LTE that they use isn’t quite up to full 4G specs. The customer base of T-Mobile in addition to the network makes it an attractive addition to the AT&T system. Some overlapping capacity would be excess and could be sold off. The customers of T-Mobile would be absorbed by AT&T until their contracts expire. AT&T would likely keep the majority of those customers and that worries Sprint.
The looming release of another iPhone on the industry is certainly on the minds of the players. If the coming release of iPhone 4s, or iPhone 5 isn’t 4G, there will likely be a further release soon as Apple would miss a lot of business if they don’t match Samsung and the other players who are already selling 4G handsets. The delay in the release of Apple’s latest iPhone is most likely due to them waiting for the next generation of 4G chips that are inexpensive enough to allow Apple to add them to the 4G iPhone and still have backwards compatibility with G3 networks.
The HP TouchPad disaster has another chapter it seems. When TouchPad flopped at prices above the break even point, HP decided to sell the existing stock off at US$99. This amounts to a loss of up to $250 per tablet figuring the stores are going to want something for selling them, and iFixit figures it costs HP around $300 to build a TouchPad. Well, the $99 TouchPad sold quickly despite the Palm OS and the HP TouchPad being orphaned technology. If cow poop is cheap enough you can sell it. Some insiders think HP is simply building out the remaining parts they have on hand to reduce their losses. That sounds questionable to me.
The second question is why anyone would pay $99 for an orphaned device? I guess you can still sell a Kin Microsoft phone. There is some hope Palm may rise again from the ashes. ometimes when things die, they are really dead. Personally, I would rather save my $99 towards an iPad 3 whenever they come out.
Further confounding the situation is the rumor that Samsung may buy the HP TouchPad and Palm business from HP. Samsung has voiced serious concerns about Google buying Motorola and has already suffered from the Android bag of hurt enough to dust off other OS platforms. This is music to Apple’s ears as a further fragmented Android platform will leave them the likely winner as the main competition to the Apple iOS fades away.
That is Greg’s Bite for today.