Droid Bionic a 4G Win for Verizon, Motorola — If 4G Mattered

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Motorola Mobility (NYSE:MMI) released the Droid Bionic on Sept. 8. The latest and purportedly greatest in the company’s successful line of Google (NASDAQ:GOOG) Android phones has been receiving no small amount of praise — good news for both Google’s latest acquisition and Verizon (NYSE:VZ), the exclusive carrier of the phone in the U.S.

Technology website Engadget said the Bionic is “the best combination of wireless and device speed that we’ve yet seen on Verizon.” CNN Money said, “Verizon wireless has launched several 4G phones now, but they’ve all had shortcomings … The Droid Bionic finally gets it right.” Naturally, this is precisely the sort of hype Verizon needs just ahead of Apple‘s (NASDAQ:AAPL) iPhone 5 release, an exclusive phone that gives it a supreme leg up in the growing 4G war.

It would, of course, if 4G actually meant anything to the average consumer.

Verizon, AT&T (NYSE:T), Sprint (NYSE:S) and T-Mobile USA have all spent millions on television and print advertising campaigns pumping up their respective 4G networks. But “4G network” means different things for different telecoms. T-Mobile has been touting its HSPA+ standard network as “the country’s largest 4G network” since 2010. AT&T and Verizon both use the LTE standard for their growing 4G networks, but the merits of that network — even simple perks like faster web and data transfers — mean little to consumers who barely understood what 3G meant in the previous round of advertising.

Here are some important facts to consider when weighing whether a tent pole 4G phone will make or break a telecom’s business in the final quarter of the year. In November 2010, research firm Yankee Group published a report that found, out of 1,200 consumers, 68% had either never heard the term 4G before or didn’t understand what it meant. As for 3G technology, 57% of respondents didn’t know what it was and weren’t aware it was a marquee sales feature for AT&T, Verizon and others since 2008.

What with the tremendous advertising push from all of the previously mentioned telecoms, consumer awareness is bound to have changed in the past 12 months, right? Wrong. A survey conducted by Morspace this past June found that only 18% of smartphone users in the U.S. carry phones that can utilize 4G technology. Perception has improved, but not much — 48% “can’t identify the main benefits of 4G networks.” Worse still, 34% of those consumers that were aware of what 4G networks are said they have no plans on upgrading to a new device.

It’s bad enough that consumers either don’t know what 4G is or aren’t interested, but some consumers already think they have a 4G-capable phone even when they don’t. A survey conducted by Retrevo in July found that 34% of iPhone users already think their smartphone is a 4G device. Apple, meanwhile, is preparing to release the fifth generation of its mobile technology and still has no concrete plans to support the 4G standards used by AT&T or Verizon — even if China Mobile (NYSE:CHL) says otherwise.

One last factor: No network standard used by any telecom in the U.S. is 4G yet. The International Telecommunications Union — a United Nations-run agency in charge of setting global communications standards — says a network must support an average data transfer speed of 100 megabits per second to be considered fourth generation, or “4G.” According to tests conducted by PCMag, Verizon’s LTE network averages just above 9 Mbps with a maximum of 34 while AT&T’s network manages an average of 24 Mbps with a maximum of just below 43.

The short version: 4G means little to consumers, and investors should not be swayed one way or another as to how a publicly traded telecom will fare based on its “4G” technology. The Droid Bionic might be a fine phone for Verizon, but its 4G perks won’t help it win against Apple’s iPhone 5.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, https://investorplace.com/2011/09/droid-bionic-motorola-verizon-4g-apple-iphone/.

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