Deal-making frenzy dominated mobile in 2011

The mobile market was full of one major deal after another in 2011. CNET takes a look back.

It was an exciting year in the mobile wireless market, one full of deal-making and wonderful drama.

AT&T announced its $39 billion bid for T-Mobile USA. Google said it would by Motorola's wireless division. Nokia ditched Symbian for Microsoft's Windows Phone operating system. Sony took control of Sony Ericsson. And Verizon Wireless announced it would pay $3.6 billion to get its hands on wireless spectrum held by the major cable operators.

Apple, meanwhile, squabbled with everyone in court over patents. Verizon quickly blanketed the country with 4G LTE wireless service. Samsung soared to the top of smartphone market, surpassing Apple as the No. 1 smartphone maker in the world. Sprint and Verizon each got the iPhone. HP dumped WebOS. And poor Research In Motion stumbled and then stumbled some more as its Playbook tablet faltered, its new smartphones were delayed, and its network experienced major outages.

For the blow by blow highlights of the most important news in the mobile for 2011, check out CNET's end of year summary.

AT&T tries to buy T-Mobile USA
AT&T stunned the wireless market in March when it announced it would spend $39 billion to buy wireless competitor T-Mobile USA . The move was a bold one. And right away, critics speculated that AT&T, which is the No. 2 wireless company in the U.S., would have trouble getting the deal done .

And they were right. Despite AT&T's arguments that it needs T-Mobile's spectrum to build its 4G LTE network and that the merger will create new jobs, the U.S. Department of Justice in August sued AT&T in federal court to stop the deal . The Justice Department said that AT&T's acquisition of T-Mobile would eliminate an important competitor. It also didn't buy its arguments about creating jobs or spurring innovation.

The Federal Communications Commission also wasn't buying AT&T's arguments. In November, the agency followed the Justice Department's lead and indicated that it would also oppose the merger . The FCC said that a marriage between AT&T and T-Mobile would harm competition in 99 of the top 100 markets. And the agency said the merger would actually result in massive layoffs as opposed to creating more jobs.

In reaction to the FCC's move, AT&T withdrew its application for the merger . And the company asked the federal court in its antitrust case to delay proceedings until mid-January so it could review its options.

Still, AT&T maintains it's not giving up its fight. (And with good reason. If the deal falls through, AT&T will have to pay Deutsche Telekom, T-Mobile's parent, a break-up fee of more than $3 billion.)

Exactly how this drama will ultimately end is still unknown. So stay tuned for more developments in the ongoing saga next year.

Google buys Motorola
Jaws dropped when Google coughed up $12.5 billion to acquire Motorola Mobility in a deal that simultaneously lends some legal stability to the Android world while shaking up the competitive landscape.

Google said it primarily sought Motorola for its war chest of patents --17,000 registered and 7,500 pending--and not necessarily to get into handset business . That bodes well for other Android partners, many of which mustered up statements of support for the deal, and have been under attack by Apple.

But some fear Motorola, which will run as a separate business owned by Google, will have an unfair advantage and get the latest Android updates and better support . Google, for its part, says it will remain a neutral partner when it comes to Android. Of course, the deal isn't done yet. Last week, European regulators put the transaction on hold for further review .

Nokia and Microsoft jump into bed together
Faced with increasing competition from Google Android and Apple's iPhone, Nokia and Microsoft announced a strategic partnership in March that would help the companies combine forces. Nokia announced it was abandoning its Symbian operating systems for its smartphones and instead will develop all future smartphones using the Windows Phone platform.

The strategy shift stalled Nokia for several months. But the company managed to show off its first Windows Phone devices in October at an event in London . The new Lumia series phones first went on sale in Europe. In December, Nokia announced a U.S. version, the Lumia 710, on T-Mobile . The device will go on sale in January. Other U.S. carriers have supposedly begun testing the Lumia phones. AT&T and Verizon Wireless are supposedly testing a 4G LTE version of the device .

The success of the Nokia/Microsoft partnership is critical for the survival of both companies. And it will be a story worth following in 2012.

Sprint Nextel and Verizon Wireless finally get the iPhone
After three years of anticipation, Apple finally opened the sale of iconic and popular iPhone to multiple carriers in the U.S. AT&T had been the exclusive U.S. carrier for the iPhone since the device first launched in the summer of 2007.

In January, Verizon Wireless was the first U.S. carrier to break AT&T's lock on the iPhone . Verizon's first iPhone was a CDMA version of the iPhone 4, which AT&T had begun selling in its GSM form June 2010. The Verizon iPhone went on sale in February and broke all of Verizon's records up to that date for smartphone launches.

Eight months later, Apple released a new iPhone--the iPhone 4S. And in addition to AT&T and Verizon, it announced yet another U.S. carrier, Sprint Nextel .

Sprint, which is in distant third place in the nationwide wireless market, bet the farm on the new iPhone 4S , agreeing to some stiff sales commitments over the next few years. But the company's CEO Dan Hesse told investors on the company's third-quarter earnings call that the iPhone is worth it. He likened the device to a high-paid baseball player, which he hopes will draw a crowd to the Sprint "stadium."

We shall see.

Verizon's 4G LTE push
Aside from its introduction of the iPhone 4 and the iPhone 4S in October, which do not support LTE, 2011 was all about 4G LTE wireless broadband for Verizon Wireless. The company launched the speedy wireless service at the end of 2010 with 38 markets with a handful of devices .

All year, the company steadily added new markets. And by the end of 2011, it expects to have 4G LTE available in 190 U.S. markets, covering more than 200 million Americans.

The HTC Thunderbolt was the first Verizon 4G LTE smartphone to be introduced for Verizon's network, but since then it has released several more , including the Motorola Droid Bionic, Motorola Droid Razr, LG Revolution, HTC Rezound, and the latest: Samsung Galaxy Nexus. More 4G smartphones are on the way.

The strong performance of the 4G network has set Verizon apart from its competitors, and the company will continue to push customers toward the higher speed and more efficient network in the future. Verizon is expected to test voice over LTE technology next year, which will offer improved voice quality for consumers as well as more efficient use of the network for Verizon.

Verizon Wireless's cable deal
Toward the end of the year, Verizon Wireless went on a spectrum buying spree. In a brilliant move that will likely undercut its chief wireless competitor, AT&T, Verizon struck a deal in early December with the nation's largest cable operators. Verizon said it would buy wireless spectrum licenses , which covers about 259 million potential customers, from the cable consortium SpectrumCo--which consists of Comcast, Time Warner, and Bright House Networks in a deal worth $3.6 billion.

Two weeks later, the company gobbled up another $315 million worth of spectrum from Cox Communications , which had originally been part of the Spectrum Co. cable consortium. In 2006, Spectrum Co. bid on and won wireless spectrum in the Federal Communications Commission's AWS spectrum auction. Cox was the only carrier that had announced plans to use the spectrum. But after a failed attempt at building and then reselling wireless service from Sprint, Cox decided earlier this year to ditch the wireless efforts.

The deals between the cable companies and Verizon will give the carrier access to about 20Mhz of additional wireless spectrum, which the company can use to add capacity to its 4G LTE network. It also means that this spectrum is no longer available for other partnerships , including a potential partnership with T-Mobile, should the deal between AT&T and T-Mobile fall apart. And it also keeps the valuable spectrum out of AT&T's hands.

Meanwhile, the other components of the deal mean that the cable companies will be able to resell Verizon Wireless services as part of their cable bundles. And Verizon will also be able to resell cable services in its retail locations.

While the deal may not get the kind of scrutiny an acquisition would get, Verizon will still need the FCC's approval to get the wireless licenses transferred. Stay tuned next year to see how this plays out in 2012.

Patent wars flare up
Apple set off the recent spate of legal wrangling with its lawsuit against HTC last year, but things really picked up steam when it went after Samsung Electronics . It was an awkward move given the Korean electronics giant also supplies part to the iPhone and iPad, but it underscored the seriousness of Apple's charge against Android.

What followed was a marathon of lawsuits and countersuits between Apple and several Android makers in courts around the world. Most recently, the companies have taken to seeking temporary product bans with mixed success . Apple managed to get a ban placed on Samsung's Galaxy Tab in Australia before it was recently overturned, and Samsung had redesigned the Tab slightly to get around a ban in Germany.

With so many suits, it's sort of amazing that almost no progress was made, except, of course, for driving Google to buy Motorola (see above).

RIM has one miserable year
Research In Motion's public relations team must have been working overtime after the year that the company has had. The list of missteps is too large to fully list, but here are some of the biggies: the failed launch of its PlayBook tablet , which even now cannot access BlackBerry e-mail, calendar and messenger services without a linked up BlackBerry, a global outage that lasted two days , a loss of market share to rivals Android and Apple iOS, and the disappearance of nearly three-quarters of its market value over the past year.

In a rare highlight, RIM did issue a badly needed update to its flagship Bold smartphone, which actually won critical praise. Unfortunately, RIM also released a number of other BlackBerry phones, which didn't fare so well with reviewers or consumers .

HP dumps WebOS
Yes, WebOS lives on in open-source form , and Hewlett-Packard has expressed a willingness to continue supporting it, but let's face it, WebOS is done . The software, critically lauded even back in the Palm days, was already on life support when HP acquired the company last year, but now-former HP CEO Leo Apotheker pulled the plug when he announced a broad shift of the company into a business services provider and away from all things consumer.

Apotheker and his plans were shortly after thrown out of the company, but WebOS was never brought back into the fold and now lives on in the wilds of the open-source world.

HP's poor handling of WebOS did lead to the great TouchPad bonanza , flooding various retailer sites--including HP's own--with a $99 tablet. Just last week, it held its last TouchPad sale, which managed to clog up the traffic on eBay.

Samsung takes the smartphone crown
It's been a quick ascent for Samsung Electronics, a company that was late to the game with smartphones and had a lackluster offering early on. But after steady improvement and a drum beat-like consistent roll-out of products, growing carrier support and an established flagship line in the Galaxy S, Samsung overtook Apple as the top smartphone vendor in the world in the third quarter.

Rather than go after a single carrier with a flagship phone, Samsung has been able to dominate the market by being virtually ubiquitous. In addition to a lineup of more affordable smartphones, its top-tier Galaxy S II was a hit around the world , and customized for AT&T, Sprint Nextel and T-Mobile in the U.S. Verizon Wireless, meanwhile, is getting the Ice Cream Sandwich-powered Galaxy Nexus some time this month.

Sony says enough, takes control of Sony Ericsson
Sony bet that it can make better phones by itself, spending nearly $1.5 billion to take full control of Sony Ericsson from partner Ericsson . Sony Ericsson has had a rough time in the smartphone business. Like Samsung, it was slow in adopting Android. But unlike Samsung, it has failed to make the same kind of progress and improvements in its devices.

In what was supposed to be Sony Ericsson's big return to the U.S., Verizon Wireless, and later AT&T, took a chance on the Xperia Play, a mash-up of an Android phone with a neutered PlayStation controller. But the clunky design and lack of interest ">led to disappointing sales of the device. After Sony announced the move, it promised a tighter integration with its other products, which hopefully means a phone that's more than just PlayStation certified--whatever that means.

 

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