Motorola and Verizon invited comparisons, and that's what they got

Photos: Motorola, Apple

The Droid lands in stores Friday, and on Thursday the heavyweight reviewers — which is to say the Wall Street Journal's Walt Mossberg and the New York Times' David Pogue — weighed in.

Given that Motorola (MOT) and Verizon (VZ) pitched the Droid in its first TV ad as everything Apple's (AAPL) and AT&T's (T) iPhone was not, it was perhaps inevitable that every reviewer so far, including these two, treated its arrival as a grudge match.

Mossberg's review is positive but tepid — especially the video version. He plods through the comparisons item by item like a slightly boring homework assignment. His top-line summary:

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The largest smartphone maker you've never heard of wants to capture the hearts – and dollars – of the U.S. consumer.

Motorola's (MOT) Droid phone is getting a ton of buzz, and that’s by design. Verizon Wireless (VZ) chief Marketing Officer John Stratton has said the marketing campaign behind its iPhone competitor will be the largest in its history.

But the Google (GOOG)-powered device isn't the only smartphone the company is likely to begin selling at the start of November. Though no one has officially confirmed, the carrier is expected to announce a second device that will also run on Google's  Android operating system at half the price: the HTC Droid Eris.

Haven’t heard of HTC? You aren't alone. More

Those Get-a-Mac spots aren't cheap, but they deliver a lot of bang for the buck

Photo: Apple Inc..

Apple (AAPL) shells out a ton of money for advertising. In fiscal 2009 it spent $501 million, according to the 10-K form filed Tuesday. That's up from $486 million in 2008 and $467 million in 2007.

But half a billion doesn't seem like so much when it's compared with the $1.4 billion Microsoft (MSFT) spent in fiscal 2009, or the $811 million Dell (DELL) spent on ads I can't remember ever seeing.

In fact, as a percentage of revenue, Apple has actually been decreasing its ad spending every year for the past eight, from nearly 5% in 2001 to 1.37%  today (1.17% if you use non-GAAP revenue). That's less than half the 3.6% of revenue Research in Motion (RIMM) spends advertising BlackBerries. (See chart below.)

Most recent fiscal year. Source: Company reports

Yet even if you despise Apple and never use their products, you tend to remember their ads. How does Apple get so much bang from its marketing buck?

I can think of five reasons: More

Verizon Wireless' subscriber rolls are growing, but not as fast as AT&T's

Source: Company reports

In the quarterly report that Verizon (VZ) issued Monday, the number that's getting the most attention is 1.2 million.

That's how many new wireless subscribers Verizon added over the past three months. And it's being compared unfavorably with the 2 million that AT&T Mobility (T) gained in the same period.

Verizon, with a new total of 88.8 million subscribers, still has the largest wireless network — something its ads never tire of reminding us. But AT&T, with 81.6 million, is catching up, and there's no mystery why. AT&T activated a record 3.2 million iPhones in the third quarter, nearly 40% of which belonged to customers new to AT&T.

Meanwhile, Verizon's total churn rate is going up (from 1.33% last year to 1.49% this year) while AT&T's is going down (from 1.69% to 1.43%).

But AT&T's momentum may be short lived. More

The trouble with being number one in any industry is that you have nowhere to move but down. Few companies know this better than Nokia (NOK), the Finnish telecommunications giant that has dominated cell phones for so long that in some parts of the globe the brand itself has become synonymous with the device. More

Sales are up. Churn is down. Wireless data revenue is pouring in.

In the flat but better-than-expected third quarter earnings report AT&T (T) issued Thursday, most of the good news came from its wireless division via the iPhone.

True its margins got squeezed — as they do every quarter — by heavy iPhone discounts and the bounty the carrier pays Apple (AAPL) for each device it sells. And its reputation continues to suffer under the strain of delivering broadband to millions of data-gobbling iPhones.

But on the plus side:

• AT&T activated a record 3.2 million iPhones last quarter, 40% to new customers.
• Wireless data revenue was $3.6 billion, up 33.6% from a year ago.
• Total subscriber churn for the quarter was 1.43%, down from 1.69% a year ago.

As ZDNet's Larry Dignan put it: "You may gripe about AT&T, but you don’t leave."

Even AT&T's famously spotty cellular service is getting better — or so the company claims. Dropped calls on its 3G network fell 12% over the past year, to something approaching 1%. Your mileage may vary, especially in city driving.

For the company's earnings statement, press release and slide presentation, click here.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Motorola's Droid. Source: BGR

Just in time to rain on Apple's (AAPL) 2009 earnings report, a prime-time TV ad and a series of well-timed leaks have put the spotlight on Motorola's (MOT) Droid — a yet-unreleased smartphone that is being described by sources who have played with a prototype as the iPhone's first serious competitor.

The ad, which premiered Saturday during the Yankees-Angels pennant game, is pasted below the fold. The challenge to Apple couldn't be less subtle; it's a series of "iDon't" screens listing key features the iPhone doesn't have — from a physical keyboard to interchangeable batteries — that the Droid does.

The leaks are being funneled primarily through the Boy Genius Report, a blog with unusually good sources in the telecommunications industry. On Friday the site published an illustrated walk-through of Google's (GOOG) Android 2.0 — the new and reportedly much improved version of the open-source operating system that powers the Droid. Then, overnight Monday, Boy Genius posted a hands-on review — complete with photo gallery — that describes it as "the Android device to beat, and easily the most impressive."

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Why is the carrier trying to downplay the effect of Apple's bandwidth-hogging smartphone?

Source: Rysavy Research

In his keynote address at the CTIA's (Cellular Telephone Industries Association) big fall meeting in San Diego Thursday, AT&T's (T) chief technology officer John Donovan denied that Apple's (AAPL) iPhone is the reason so many of customers are complaining about his networks sluggish performance.

"I'm well aware of what's being said in the press, in blogs, and on Twitter," he said. "The iPhone has certainly played a role. But it's not the only device driving growth. We have a lot of people going from basic feature phones to quick-messaging devices and other smartphones, which is driving data usage." (link)

But his words were belied by a graphic he flashed briefly on the screen. We've dug up the source — a white paper published by Rysavy Research in September — and annotated it with a couple iPhone release dates.

The chart (displayed full-size below the fold) shows an 18-fold increase in data traffic during a 28-month period when voice traffic grew only two-fold.

If there were feature phones and quick-messaging devices released at the inflection points corresponding to the arrival of the original iPhone (June 29, 2007) and iPhone 3G (July 11, 2008), we must have missed them.

Below: The large chart. More

Imagining life at Bizarro Google.

Schmidt says consumers would revolt if Google started acting evil. Photo: Google

On Wednesday morning Google (GOOG) CEO Eric Schmidt and co-founder Sergey Brin met with a group of reporters and talked about a number of issues, from the outages its Gmail service has experienced to its efforts to digitize books to the company's culture.

Schmidt repeatedly deflected questions about the competition, saying Google prefers to focus on, well, Google. (In response to a question about Microsoft (MSFT) CEO Steve Ballmer's assertion that adoption of Google's Chrome operating system amounts to little more than a "rounding error," Schmidt quipped: "I don't respond to Steve Ballmer questions.")

But Schmidt did offer a long explanation of why Google isn't Microsoft — like when it comes to hemming customers in to its technologies and systems. More

Skype on the iPhone. Photo: iTunes

AT&T's (T) surprise decision Tuesday to reverse course and permit low-cost Internet calls over its cellular network is good news for iPhone owners, but it leaves Apple (AAPL) with some explaining to do.

Apple was quick to welcome AT&T's change of heart. "We are very happy that AT&T is now supporting VoIP [Voice over Internet Protocol] applications," said Apple spokeswoman Natalie Kerris. She promised that the company would get updated versions of Internet-calling apps — such as those made by Vonage (VG) and eBay's (EBAY) Skype — up on the iPhone App Store soon as possible.

But Apple had nothing new to say about Google (GOOG) Voice, the high-profile telephone management application that Apple declined to approve last August — triggering a government inquiry that revealed that it was Apple, not AT&T, that blocked it.

So why is Apple OK with Skype and Vonage, but not with Google Voice?

Many observers have commented on the inconsistency, but none more bluntly than TechCrunch's Michael Arrington.

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