ced052013

Android ‘Dominating’

Car Toys Eyeing Expanding Into New Markets, Executive Says

SAN ANTONIO — Car Toys is looking at expanding into new markets, Jim Warren, senior vice president-merchandising, told Consumer Electronics Daily at the PRO Group spring meeting last week. But he declined to identify the markets that the 50-store chain may enter. It has "no firm plans" to open or close any stores in its current markets of Colorado, Oregon, Texas and Washington, he said. The last two stores it opened were in Lewisville, Texas, and Burlington, Wash., both in the past two years, he said.

E-commerce "continues to grow every year" for Car Toys, and it’s seen a "double-digit increase in

visitors" to its website every year, said Warren. Some consumers use the site just for research, while oth-ers buy products from it, he said. E-commerce has also enabled the chain to find new customers outside its four markets, he said.

Products where traditional car electronics intersect with wireless connectivity are among the best-

selling items at Car Toys now, said Warren. Consumers really want to "integrate their portable device into" their cars, he said, pointing to the many products that make it easy to do that now. Smartphone con-

Today’s News: NO STORE OPENINGS PLANNED at Car Toys in its current markets, but new markets being weighed, ex-ecutive says. (P. 1) INTEL COMBINES TECH and recycling in launch of 'Experience' Tour in New York. (P. 4) IDENTIFYING PATENT OWNERS a crucial step to im-proving patent system transparency, industry says in hailing new reform bill. (P. 5) WHEELER INVESTMENT DISCLOSURES show FCC nominee's big personal stakes in media, telecom, tech sectors. (P. 6)

INCENTIVE AUCTION RULES moving as expected, with healthy debate under way, Genachowski says. (P. 8) VIASAT-BOEING SATELLITE will 'substantially' boost ViaSat's broadband hand, company says. (P. 9) COMING WII U GAMES to be spotlighted at 100 Best Buy stores next month, Nintendo says. (P. 11) INDUSTRY NOTES: FCC should relax rules for AM sta-tions to revitalize AM radio, Clear Channel says. (P. 12) COMPUTING: Windows 8 not the catalyst Dell hoped it would be, CEO says. (P. 13)

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MONDAY, MAY 20, 2013 VOL. 13, NO. 97

2—CONSUMER ELECTRONICS DAILY MONDAY, MAY 20, 2013

nectivity options were enhanced and expanded in the new product lines that several 12-volt CE manufac-turers bowed at CES, including Alpine, Kenwood and Pioneer (CED Jan 14 p2).

Wireless accounts for about 40 percent of Car Toys business, while car stereo makes up about 60

percent, said Warren. That mix "really hasn’t changed that much" over the years and Car Toys has been selling wireless products for about 25 years, he said.

"Premium smartphones are selling like crazy," and more than 80 percent of the mobile phones that

Car Toys sells now are smartphones, said Warren. The retail chain sells phones for all mobile platforms, but Android devices are "dominating sales right now in our stores," he said. HTC and Samsung models, in particular, are "selling very well," he said. But Apple customers are "very loyal" and the iPhone 5 has done well also, he said. He declined to say what kind of profit margins he’s seeing on mobile phones, but said they have been a "profit center" for Car Toys for many years and "they continue to be so."

Car Toys hasn’t sold tablets, but is "looking at" that category because sales of those devices are

"skyrocketing," said Warren. Car Toys is trying to figure out how it can "add value" to the devices if it decides to sell them, he said.

The chain saw a "nice, healthy single-digit increase" in total Car Toys sales in 2012 from 2011 and

"we expect that again this year," said Warren. Wireless and car electronics are both "solid" categories right now, he said, unlike certain other categories that other CE dealers, including Car Toys’ fellow PRO Group members carry. Most PRO retailers we interviewed at the group’s spring meeting stressed how weak video has been. In traditional car electronics, subwoofers, amps and bass boxes all had "double-digit" sales increases for Car Toys in 2012 from 2011, said Warren.

A growing business for Car Toys is "auto salon" services that include detailing and interior treat-

ments, said Warren. It never did auto tinting, but is "looking at that" now, he said. Car Toys also has had a Wireless Advocates subsidiary since 2004 that operates wireless kiosks at

retailers including Costco and the military exchange channel, and that business is doing "really well" also, said Warren. The kiosks are in all Costco U.S. locations, he said. Other customers include Staples. Costco declined to comment and Staples didn’t immediately respond to a request for comment.

PRO Group Meeting Notebook

ListenUp has "seen a nice increase in business this past year," helped by a "pretty strong" real estate market in Colorado, said Phil Murray, manager of e-commerce and marketing. The company is "very happy" with business so far this year, in profit and gross sales, he said. Real estate prices in Colorado are getting close to what they were in 2006 and unemployment is "not quite as bad" in that market as elsewhere, he said. What’s also helped business is that the retailer has gone back to focusing on its "core strengths" of audio and custom installation, he said. Audio is a growing part of its business, while video is "becoming a smaller per-centage," he said. ListenUp is also getting a "good response" in its commercial business, which has strength-ened behind moves that included adding a new manager, he said. Digital signage has "driven business in the

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MONDAY, MAY 20, 2013 CONSUMER ELECTRONICS DAILY—3

commercial space," and ListenUp is getting ready to install a big digital signage display at the Boulder, Colo., office of RealD, he said. The University of Denver is a large ListenUp client in the commercial space also, he said. The retailer has three ListenUp locations in Colorado, one each in Denver, Boulder and Colorado Springs, as well as a separate facility in Denver that houses its Custom Home Systems business, commercial and e-commerce divisions, and service center. It also expanded into Albuquerque, N.M., about a year and a half ago, said Murray. It has no current plans to open or close any stores, he said.

—— Modia Home Theater will soon open two more stores — one each in Houston and the Dallas/Fort

Worth area, said CEO Mihir Mody. It also opened a relocated Dallas store last week and is opening an-other relocated store there in a little more than a month, he said. The company bought the new properties and didn’t own the old locations, he said, pointing to real estate as another successful part of his business. He owns more than 23 properties with multiple national tenants, he said. Modia has three stores each in the Dallas and Houston markets, and another in Austin, Texas. Modia’s 2012 sales were about flat with 2011, but he’s "optimistic" about 2013, he said. Audio was up about 2 percent in 2012, but video was down about 10-15 percent, he said. The custom business "looks pretty healthy" and was up about 3 per-cent in 2012, he said. He predicted that business will grow even further, helped by a stronger housing market in Houston. "Nobody was buying anything" for about four years in the real estate sector, but that business is now the strongest it’s been in 30 years, he said.

—— Gross revenue is "down hugely" in TVs, but gross profits are up on them at World Wide Stereo in

Pennsylvania because it’s "focusing on profitable" models, said its president, Bob Cole. He had to make layoffs for the first time in 2008 and sales tumbled about 40 percent from 2007, but "things started to turn around" late that year and have been growing since then, he said. Helping that turnaround has been the decision to stop competing on price and focusing on selling better products, he said. Home automation is growing "significantly," he said. While he’s open to additional stores, there are no current plans to expand beyond its two locations, in Montgomeryville and Ardmore, he said. The Ardmore store is moving to a better location in the same municipality in less than a month, he said.

—— Electronics Expo is in "reorganization mode right now" and working with vendors after filing for

bankruptcy in late March (CED April 2 p4), said CEO Leon Temiz. It’s down to only two stores now, in Union and Wayne, N.J., but is hoping to survive, he said. "Business has changed dramatically" in the CE sector and "we need to be" more focused on the "audio side" of the business," he said. Electronics Expo, which once had plans for opening 12-15 stores in New Jersey (CED April 6/07 p5), closed four of its seven outlets during the last year as it shifted strategy to operating smaller, 6,000- to 7,000-square-foot locations that were about half the size of its standard stores. It’s apparently carrying a vastly scaled-back number of products since filing for bankruptcy, and very few TV SKUs were being sold at its e-commerce website last week (CED May 17 p3).

—— Bjorn’s has seen a "couple of decent months" of sales this year, helped by its first tent sale a few

weeks ago, said its president, Bjorn Dybdahl. The event attracted consumers who wouldn’t normally come to the company’s San Antonio store, he said. The strong response to a two-week March contest pro-motion with the local ABC-TV affiliate were a "total shock" in which 8,900 people registered for a chance to win one of 100 free antennas, he said. There is "so much confusion" among consumers, many of whom don’t realize they can get HD TV channels off an antenna, he said. He hoped that many of the consumers who registered for the contest would come in and update their TVs for a newer model, but "that didn’t happen" yet, he said. He’s looking to hire an additional one or two custom salespeople to give that part of his business a lift, he said. Custom accounts for 30 percent of his business now, he said. But he’s "very concerned" about the economy still and doesn’t expect it to improve much any time soon. — Jeff Berman


Data Wiping a 'Gray Area'

Intel World Tour Promoting Benefits of Ultrabooks and Convertibles

Intel launched an eight-city global tour Friday called "Experience Intel. Look Inside.,” aimed at introducing consumers to Intel-loaded devices including Ultrabooks, convertible laptops, tablets, all-in-one PCs and smartphones. In our tour of the New York pop-up booth, a 40-by-40-foot balloon tent, Intel staffers walked consumers through two interactive sections and a “Clinique” case where products were shown under glass. The tent was erected in the trendy Meatpacking District on the west side of lower Manhattan, a few short blocks from an Apple store.

At the first stop, visitors used convertible PCs to develop a game, supplied by Hide & Seek, in tab-

let mode and then play the game in laptop mode, said Trent Nate, a marketing representative. In the other interactive section, visitors made drawings on Ultrabooks using a program designed by Matt Pyke of Uni-versal Everything, which transforms drawings into what Intel called “a digital flock of wings” projected on a large video wall. Users "threw" their drawings to the display via Bluetooth, Nate said. Typical user time for the events is about five minutes, he said.

Products will differ according to the venue, an Intel spokeswoman told us. At the New York event,

we saw products from Samsung, Lenovo, Asus, HP, Dell, Acer, Sony and Toshiba. Vizio and Fujitsu chose not to participate in the New York event, but Fujitsu products will be featured when the road show hits Tokyo June 20-23, the spokeswoman said.

Customers who completed the auditions at the two interactive sessions were given a coupon worth

up to $100 off select Ultrabooks at local retailers J&R and B&H. J&R required consumers to redeem cou-pons in store from May 16-22, and B&H’s $100 rebate can be applied at www.BandH.com/Intel, it said, from May 17-31.

The event also included laptop recycling spearheaded by local e-Stewards recycler 4th Bin. We

took advantage of the recycling opportunity and handed over a bulky, heavy laptop from the Windows XP era. Mike McHale, a salesman for electronics dismantler EcoTech, told us older laptops brought in more coveted precious metals than more recent lightweight laptop designs. He estimated the recycle value of our generations-old Dell laptop at $6. EcoTech is 4th Bin’s “downstream vendor” that disassembles prod-ucts, looking primarily for precious metals and then separating gear into plastics, batteries, memory, proc-essors and motherboards before sending them to smelters in Sweden and Belgium. “We’re second to end of life,” McHale said, adding that the company takes apart a product “as far as we can” before sending the rest of the parts further downstream. “Everything has a value,” McHale said.

We asked what would happen to the data on our hard drive, and John Kirsch, senior vice president

of business development for 4th Bin, told us 4th Bin will erase the data and then send a certificate by email telling us the data has been expunged. “We take on legal liability,” Kirsch said. “Once I touch your computer, it’s up to us to erase the data.” McHale of EcoTech was surprised to learn 4th Bin handled data erasure since hard drive destruction is performed by his company. EcoTech’s process uses manual separa-tion and once the hard drive is pulled, “it’s stored in a locked cage until we’re shredding,” he said. After a drive is shredded for the fourth time, "you really can’t tell it was a hard drive anymore,” he said. Data wiping gets into a “gray area,” he said, where it could be refurbished or reused “and there could still be some data on there.” EcoTech is a member of the Institute of Scrap Recycling Industries and is awaiting R2 certification as a responsible recycler, McHale said.


The juxtaposition of including a recycler at an event that promotes cutting-edge technology isn’t always a smooth fit, Kirsch said. CEA hire 4th Bin to participate at CES in January, but “no one wanted to talk to us,” Kirsch said of large electronics companies. “They’re very careful about highlighting the latest and greatest part of the business,” he said. He applauded Intel for taking the initiative, “especially in New York City,” where he believes 80 percent of end-of-life electronics aren’t recycled. Discarded elec-tronics are collected and then “scrapped” for whatever value can be pulled from them and then “who knows what happens to them,” Kirsch said.

4th Bin doesn’t do many events for consumers anymore because of the expense involved, which

can be in the “thousands of dollars” for large events for staffing, labor and truck costs, he said. A house call to pick up our laptop would have been $25, he said, including the data wipe. Intel paid 4th Bin for its participation, he said, declining to specify the fee. Most of 4th Bin’s work comes from business clients, he said, because they're required by law to recycle.

Kirsch estimated the Intel event would snare 50-100 laptops. When 4th Bin launched, it did more

consumer pickups but now that there are more options through Staples and Best Buy, “there are legitimate outlets for people” to recycle, he said. But, he added, “Most people just throw it away.” Since, by law, businesses have to recycle, they’re more serious about doing it, he said.

Additional cities on the Intel tour include Chicago, June 6-9; Beijing, July 11-14; London, July 11-

14; Sao Paulo, Aug. 29-Sept. 1; Moscow, Sept. 6-8 and Sydney, Oct. 10-13. — Rebecca Day 'Much-Needed Transparency'

'End Anonymous Patents Act' Introduced to Industry Praise

Patent owners should have to identify themselves and any parties with material interest in the pat-ents, Rep. Ted Deutch, D-Fla., said Friday, when he announced that he was introducing the "End Anony-mous Patents Act," HR-2024 (http://1.usa.gov/112hFnn). “The process of uncovering the ultimate owner of a patent can be truly burdensome,” Deutch said in a statement. “Patent trolls go to great lengths to con-ceal the relevant ownership and interests involved. This total lack of transparency by people seeking to game the system unfairly disadvantages businesses honestly seeking to license patents and those targeted in frivolous lawsuits brought by trolls.”

The bill would require patent owners to identify themselves and “any real party in interest in the

patent” to the U.S. Patent and Trademark Office when they register the patent, pay the patent’s mainte-nance fees and transfer ownership of the patent. According to the bill, the real parties in interest include “any entity that has the legal right to enforce the patent through an infringement action,” the parent entity of any such party and “any entity that has a controlling interest in the enforcement of the patent.”

The bill would also place limitations on damages sought by patent enforcement entities. If a patent

owner fails to identify himself as the owner or party in interest and brings an infringement action, the en-tity may “only collect damages from the date on which” the identification requirements established by the bill are met.

The bill would result in “much-needed transparency through the disclosure of patent sales and

clarification of ‘real-party-in-interest,’” Michael Petricone, CEA senior vice president-government and


regulatory affairs, said in a statement applauding Deutch and the bill. “Patent trolls take advantage of the fact that it is often very difficult to determine who actually owns a patent,” Petricone said. “They engage in shell games, hide resources and assets and obscure who actually benefits from settlements and judg-ments,” which is detrimental to the innovative entities that are on the receiving end of the infringement suits, he continued; Deutch’s bill “will better inform parties subject to lawsuits by patent trolls.”

Deutch’s bill would increase transparency and “help improve the operation of the patent system,

facilitate licensing and thus reduce litigation,” Microsoft Deputy General Counsel Horacio Gutierrez wrote in a blog post (http://bit.ly/18QiyHr), applauding the legislation. “Policymakers increasingly recog-nize that knowing who owns what patents is critical to a well-functioning patent system,” he said. The bill “will make the patent system more transparent and the marketplace more fluid and dynamic,” said Tim Molino, BSA/The Software Alliance’s director of government relations, in a statement. Molino called the bill’s ownership identification requirements a “simple step” that “will improve technology adoption and licensing by making it easier for potential users of patented inventions to identify and connect with patent holders so they can agree on terms.” — Kate Tummarello 'Myriad Concerns,' Critic Says

Wheeler to Divest Big Telecom Investments if Confirmed as FCC Chairman

President Barack Obama's nominee for FCC chairman, Tom Wheeler, said last week he plans to sell his shares in AT&T and Verizon valued in the hundreds of thousands of dollars if he is confirmed, ac-cording to documents filed with the U.S. Office of Government Ethics (OGE). Wheeler said he also plans to divest his interests in nearly 80 technology, media and telecom companies within 90 days of his confir-mation and recuse himself from any matters that may pose a potential conflict of interest if informed by FCC ethics officials. Wheeler, who was formerly president of CTIA and NCTA, has been attacked by some lawmakers and public interest groups for his extensive relationships and investments in companies he would likely regulate if confirmed as FCC chair. The Senate Commerce Committee has not yet sched-uled a confirmation hearing for Wheeler and a committee spokesman had no comment Friday as to when the hearing would take place.

Wheeler said he would resign as partner and managing director of Core Capital Partners, a D.C.-

based private equity firm, and agree to receive no further contributions from the company if he is con-firmed as FCC chairman, according to the ethics disclosures. His ownership stake in Core Capital Part-ners is valued at between $500,001 and $1,000,000, the filing said. Wheeler received an annual salary from the company of more than $400,000 in 2012 and a $50,000 bonus in 2013, it said. His 401(k) plan with Core Capital Partners is valued between $100,001 and $250,000, the filing said.

Wheeler said he plans to divest his interests and not participate in any FCC matters related to two funds

affiliated with Core Capital Partners: the Core Capital Fund II and III, according to the ethics filings. His in-vestments in the two funds are each valued at between $250,001 and $500,000, the documents show. Wheeler said that for a period of one year after his resignation from the company he will not participate in any commis-sion matters involving parties which are represented by Core Capital Partners. Core Capital Partners manages $350 million in assets and has invested in more than 40 small to mid-sized technology companies.

If confirmed as FCC chairman, Wheeler said he would cease operations and receive no further con-

tributions from his consulting fund, the Shiloh Group, which he has owned since 2004. Last year he re-


ceived a $100,000 annual salary from the Shiloh Group and received consulting fees from Rutberg & Co., a client of the Shiloh Group, according to the disclosures. Wheeler said he would not participate in any FCC matters that have a "direct and predictable effect" on the financial interests of the firm nor any mat-ters that involve his former clients for one year, if confirmed as FCC chair.

Wheeler said he would resign as board member of EarthLink, an IT services and communications

provider, if confirmed as FCC chairman. He said he would also divest all common stock, restricted stock units, and incentive stock options in the company within 90 days of his confirmation, the filings said. He has EarthLink stock valued between $250,001 and $500,000 for which he received dividends between $5,001 and $15,000, the OGE documents said. Wheeler also receives $70,000 in fees for his membership on the EarthLink board of directors, has 37,500 shares in EarthLink incentive stock options and has re-stricted stock units worth more than $10,000, the documents show. Wheeler said that until he forfeits all his financial interests in the company he would not participate in any agency matter that has a "direct and predictable effect" on the company.

Wheeler resigned from the board of directors at Transaction Network Services (TNS), a communi-

cations provider, when the company was sold to Siris Capital in February of this year, the OGE filings said. Wheeler said he no longer has any equity in the company and will not participate in any matters in-volving TNS parties, if confirmed as FCC chairman. The OGE documents said Wheeler had previously owned TNS restricted stock options worth $63,000, incentive stock options worth $126,000 and received $163,835 for sitting on the board of directors of the company.

Wheeler plans to resign as chairman of the board at SmartBrief, an electronic information service

for vertical markets he co-founded. Wheeler's ownership portion of SmartBrief is valued at between $5 million and $25 million and he received a $35,000 fee for his role as chairman of the board, the OGE documents revealed. He also plans to resign his board membership at a handful of other companies he has worked with including: the Shiloh Foundation, GSMA, Roundbox, MoBo Systems and Twisted Pair So-lutions. He received $50,000 in director's fees as a board member at GSMA, and $50,000 for his chair-manship of the advisory board at NTT DoCoMo. Wheeler said he would also resign from his positions at the Foundation for the National Archives, the mHealth Alliance, and the John Glenn School of Public Af-fairs at his alma mater, Ohio State University.

Wheeler holds stock in AT&T and Verizon valued between $500,001 and $1 million, according to

the OGE report. Wheeler has stock in Frontier Communications valued between $50,001 and $100,000 for which he received dividends between $1,001 and $2,500. Wheeler has stock investments valued at less than $15,000 in 76 other technology and media companies including Intel, Amazon, AMC Networks, Apple, Broadcom, Cablevision, Cisco, Comcast, DirecTV, Dish Network, eBay, Google, IBM, L-3 Com-munications, Liberty Media, Microsoft, Motorola Solutions, News Corp., Qualcomm, SAP, Time Warner Cable, Vodafone, Disney, Deutsche Telekom, Sprint Nextel, Harris Corp., and Clearwire, among others. He receives a dividend from his shares in Atlantic Wireless/Aloha Partners valued at between $250,001 and $500,000. He also has investments in Hoak Media, the Tennis Channel, Overture Networks, SiTV Media, and Seven Networks of undisclosed value.

"Tom Wheeler has a fortune invested in the very companies he would be overseeing as FCC chair-

man," said Sascha Meinrath, director of the New America Foundation's Open Technology Institute. "This revelation underscores the inappropriateness of having the former chief lobbyist for two industry trade groups now overseeing these same corporations. The fact that he continues to enrich himself by investing in these companies only adds to the myriad concerns that have already been raised," he said.


"It's hard not to be more skeptical that Tom Wheeler was the right choice for this job," said Craig Aaron, president of Free Press, after he reviewed the disclosures. "It certainly raises some eyebrows" that Wheeler has invested in "78 companies that will have business before the FCC including some that he holds more than half a million dollars in investments," he said. Aaron said he has no doubt that Wheeler will "do everything by the book" when it comes to ethical disclosures but "if he is going to be a public in-terest warrior I hope he will prove it quickly."

"This is a probably another opportunity for people to take a shot at Wheeler," said Guggenheim

Securities analyst Paul Gallant. "But it's not like he's going to hold these stocks once he's chairman. So other than showing that he's optimistic about the future of this sector, it really tells you nothing about what his policies will be," he said.

The disclosures reveal that Wheeler's interests include all sectors of the industry, "so there is no

sense he'd be more favorably inclined towards one or another sector," said public interest lawyer Andrew Schwartzman. "The list also highlights one of Mr. Wheeler's strengths, which is that he's already made his money. He's 67 years old and wealthy, so he isn't going to be worried about his next job. That gives him a lot of independence to do what he thinks is best." Schwartzman previously signed an April letter en-dorsing Wheeler as chairman at a time when lawmakers and public interest groups were calling on the president to nominate other candidates (CED April 15 p3). — Bryce Baschuk Departure Called 'Bittersweet'

Genachowski Leaving FCC Confident Incentive Auction Will Be a Success

FCC Chairman Julius Genachowski said work on the incentive auction of broadcast TV spectrum is moving forward as well as could be expected. Genachowski is pleased the agency has launched a criti-cal debate headed into an auction that could start as early as next year, he said in an interview Friday as he prepared to leave the commission. Genachowski, a friend of President Barack Obama, chaired the Tech-nology, Media and Telecommunications Policy Working Group during the 2008 Obama presidential cam-paign, and has been on the job since June 2009.

“This discussion and debate is important — it’s exactly what should be happening,” Genachowski

said. “I see it as constructive and a sign that the community is focused on making the incentive auction work and making sure that we adopt here in the U.S. the smartest policies in the world.” He announced his plans to leave the FCC on March 22.

The Wireless Bureau was expected to circulate late Friday a public notice asking about the 600 MHz

band plan following the auction. Industry and FCC officials said Thursday they are concerned about whether the auction will be a success. “I think the fact that the community is debating a 600 MHz band plan and exactly what it should look like is a great thing for the United States,” Genachowski said. “We’ll be the first country in the world to conduct an incentive auction, to free up all the spectrum. The community, stakeholders, are doing exactly what they should be doing, which is rolling up their sleeves and discussing and debating exactly what the band plan should look like. It’s an important decision because this is an op-portunity ... to be a global leader in developing a band plan that’s optimized for a broadband, data world.”

Genachowski has been labeled the “spectrum chairman” by CEA President Gary Shapiro and oth-

ers, but the FCC has not held a single major auction since the 700 MHz auction under his predecessor


Kevin Martin. “When we got here, the cupboard was bare, but the airplanes are stacked up and we’ll see a healthy number of auctions and a very healthy amount of spectrum coming to the market in the next few years,” Genachowski said.

Genachowski also said media ownership reform is moving forward. In a recent interview, depart-

ing Republican Commissioner Robert McDowell expressed concerns the process had moved too slowly (CED May 15 p1). Genachowski said he was pleased that the Minority Media and Telecommunications Council is wrapping up its media ownership study, which it plans to submit to the FCC in late May. That study “is designed to address some of the questions and issues that came up over the course of the pro-ceeding,” Genachowski said. “It’s my understand that that study is nearing its completion and that will help put the commission in a position to act.” When the FCC does more “will be up to the commission,” he said.

Genachowski acknowledged that the commission is a different place than it was when he

served as an aide to then-Chairman Reed Hundt in the early 1990s. “The pace of technological change has increased,” said Genachowski. “The global competitiveness issues have increased. In some ways the complexities of the issues has increased. But there have been constants too. The po-tential of the FCC staff to meet the moment and do great work, that’s something that I bet on and I wasn’t surprised to see the great work that was done. The core objectives in this space I think remain constant. Promoting private investment and innovation, fostering competition, empowering consum-ers, those have remained constant.”

Leaving the FCC is “bittersweet,” Genachowski said. “It’s been a special thing to have had the

chance to lead this incredible agency and to have had that role during the presidency of someone I have long admired, and to have wrestle with big and exciting issues that matter to the future of our economy,” he said. “I’ll certainly miss that. But I’m also looking forward to new challenges on the digital frontier, to returning to the private sector eventually.”

Meanwhile, McDowell's FCC commissionership was to have officially ended as of 11:59 p.m. Fri-

day. McDowell sent a letter to Obama Friday resigning and thanking him for reappointing him to the commission in 2009. "It has been the highest of honors to have served in this position for the past seven years," the letter said. — Howard Buskirk 'First of Its Kind'

Benefits to Abound From ViaSat's New Boeing-Built Satellite, CEO Says

ViaSat’s new $625 million ViaSat-2 satellite will “substantially" strengthen its broadband hand in competing against DSL and cable by more than doubling throughput capacity for its Exede service, CEO Mark Dankberg said on an earnings call.

The satellite, which will be based on Boeing's 702HP platform, will have a capacity 2.5 times

greater than the 140 Gbps ViaSat-1, which provides the company's Exede broadband service. ViaSat-1 ended fiscal Q4 with about 295,000-297,000 subscribers or 58 percent of the services total of 512,000. Other ViaSat customers get service from WildBlue-1 and Anik F2 satellites. The new satellite, expected to launch by mid-2016, also will enable a much broader coverage area including the Atlantic Ocean be-tween North America and Europe as well as parts of the Caribbean, Gulf of Mexico and northern South


America, company officials said. It also will cover commercial routes along the East Coast of the U.S., Dankberg said.

ViaSat-2 is “the first of its kind in terms of capacity and geographic coverage” and will boost Vi-

aSat’s position in residential, in-flight, maritime, LAN mobile, enterprise and government markets, Dank-berg said. ViaSat didn’t release details of ViaSat-1 including power and orbital, but it apparently does away with the Ka-band spot beam design, company officials said.

“This is not a steerable-beam, spot-beam satellite that offers service anywhere” in its coverage

area, Dankberg said. “Ours is an everywhere satellite that offers an orders-of-magnitude improvement.” Boeing and ViaSat will partner in versions of ViaSat-2 in other markets using technology developed by the two companies, Dankberg said.

ViaSat-2 system costs, including the satellite, launch, launch insurance and ground network,

will be 25 percent higher than for ViaSat-1. But the launch cost itself is expected to be similar to that of ViaSat-1 and the new satellite will weigh only a little more than the 6,740-kilogram ViaSat-1, company officials said. The satellite itself will cost about 40 percent more than ViaSat-1, Dank-berg said. The increased throughput capacity will mean ViaSat-2 can serve 2.5 million customers at ViaSat Exede 12 service against the one million that can be handled by ViaSat-1, Dankberg said. Exede 12 supplies a 12 Mbps/3 Mbps downlink/uplink and has a usage cap between 5 a.m. and midnight of 12, 15 or 25 GB per month at $49, $79 and $129 monthly fees. ViaSat-2 will enable ViaSat to increase broadband transmission speeds by "multiples" of those provided by Exede 12, Dankberg said.

The new satellite will have a “very significant impact on our ability to address increasingly larger

markets and offer great value to potential distribution partners,” Dankberg said. ViaSat-2 will help ViaSat “better manage” monthly churn, which ran 2.9 percent in Q4 driven largely by the loss of wholesale cus-tomers, many of whom got service through Dish Network. Dish’s wholesale agreement originally was for customers getting service from WildBlue-1 and Anik F2 satellites. Dish has since launched its own dish-Net broadband service that partly uses ViaSat-1.

ViaSat also plans to launch an in-flight broadband service with JetBlue by mid-summer with reve-

nue stemming from bandwidth consumption. The companies will seek to drive high penetration of the service with airline passengers by essentially offering a free service that will be enabled by lower costs driven by “bandwidth effectiveness,” Dankberg said. ViaSat also has a similar agreement with United Airlines, which inherited it in merging with Continental Airlines.

ViaSat’s ongoing patent infringement suit against Space Systems/Loral also is expected to come to

trial in February 2014, analysts said. Loral has countersued ViaSat for patent infringement and ViaSat is seeking a court injunction barring further violations of its patents.

ViaSat swung to a $1.9 million Q4 profit from a $7.4 million loss a year earlier despite a sharp

rise of revenue costs and selling, general and administrative expenses to $232 million and $68.1 mil-lion from $185 million and $50 million, the company said. ViaSat’s Q4 sales rose to $309 million from $241 million as product and service revenues grew to $103.6 million and $42.8 million from $75.8 million and $28.9 million a year earlier. ViaSat completed 98,000 Exede installations in the quarter and added a net 46,000 subscribers as its average revenue per user for WildBlue and Exede service increased to about $49 from $47. Per-subscriber acquisition costs were around $700 in Q4.


ViaSat also is preparing for added competition from EchoStar’s Hughes Communications, which of-fers a competing HughesNet Gen4 broadband service. DirecTV, which signed on as a Exede partner last fall to bundle its video service with broadband, also will start selling HughesNet Gen4 by mid-summer, a DirecTV spokesman said. — Mark Seavy Xbox 360 Sales Decline

Best Buy to Team With Nintendo on E3 Week Wii U Promotion

Nintendo of America will partner with Best Buy next month to enable U.S. and Canadian consum-ers to "experience select unreleased Wii U games at more than 100 retail locations" the week of E3, NOA's Reggie Fils-Aime said Friday in the latest Nintendo Direct webcast. E3 is set for June 11-13 in Los Angeles.

More details on the game titles that will be featured and what stores will offer them will be an-

nounced "in the coming weeks," said Fils-Aime. Best Buy is "not releasing store locations" yet, but the Wii U games featured "will be playable," said spokeswoman Lisa Hawks.

Nintendo introduced new game systems at prior E3s, including the 3DS and Wii U, said Fils-

Aime. But "this year, it’s all about the games," he said. Nintendo decided to hold two smaller presenta-tions at E3 this year instead of the one large news briefing it usually has each year there (CED May 6 p11). At least part of the reason for the change was apparently the company’s decision to provide much of the news about games and services that would normally be given at E3 in the Nintendo Direct web-casts that it has periodically held over the past few months. NOA didn’t say if there were other reasons for the shift in strategy, which comes as Wii U sales are struggling. Nintendo will host two smaller events — one for select members of the media and another for analysts, publishers and retailers — June 11, said NOA. Another Nintendo Direct webcast, focusing on future Wii U content, will "air around the time of E3," said NOA.

NOA was mum on how the Wii U sold in April after NPD released its latest report on U.S. video-

game sector sales that showed the Xbox 360 remained the top-selling videogame system in the U.S. for the 21st straight month, including handheld systems. NOA didn’t immediately respond to a Friday re-quest for comment on April Wii U, Wii or 3DS hardware sales.

NOA instead stressed, in a prepared statement, that more than 2.1 million copies of Nintendo-

published 3DS games were sold in the first four months of this year in the U.S., a 52 percent year-over-year increase. The Nintendo-published 3DS game City Undercover: The Chase Begins sold almost 94,000 combined physical and digital copies after its April 24 release, while its Luigi’s Mansion: Dark Moon for the 3DS sold more than 140,000 combined physical and digital units in April and has sold more than 530,000 units to date, said NOA. In its sixth month on the market, Nintendo’s New Super Mario Bros. U for the Wii U grew its cumulative sales total to almost 770,000 combined physical and digital units, said NOA.

The next videogame in the Sega videogame franchise Sonic the Hedgehog will be released exclu-

sively for the Wii U and 3DS, Nintendo Global President Satoru Iwata said Friday in the Nintendo Direct webcast. More details about the game will be announced before E3 starts next month, he said.


It was the 28th straight month in which the Xbox 360 was the No. 1 game console in the U.S., not including handheld systems, Microsoft said in a prepared statement late Thursday. About 130,000 Xbox 360s were sold in the U.S. last month, said Microsoft, citing NPD data for April 7-May 4. The 360 had a 42 percent share of current-generation console sales and $208 million was spent on the 360 platform in April, including hardware, software and accessories, and that was the most for any console in the U.S., said Microsoft, again citing NPD’s data. Most of the month’s top 10-selling games were released for the 360, it said. Injustice: Gods Among Us from Warner Bros. Interactive Entertainment was No. 1, Deep Silver’s Dead Island: Riptide was No. 2, Take-Two Interactive’s BioShock Infinite was No. 3 and its NBA 2K13 was No. 7, Activision’s Call of Duty: Black Ops II was No. 4 and its Skylanders Giants was No. 8, and Defiance from Trion Worlds was No. 5, NPD said. But none of those titles is a 360 exclusive.

Microsoft was again the only one of the three console makers to say how many game systems it

sold and NPD stopped providing that data to reporters a while ago. Despite maintaining its lead over rival systems, 360 sales were down from the 236,000 sold in April 2012 (CED May 14/12 p7) and 261,000 sold in March this year (CED April 22 p12).

Total U.S. videogame hardware sales tumbled 42 percent year-over-year in April to $109.5

million, NPD said. "We have seen declines hover" at about 30 percent, month-over-month, in the past few years, but the March to April decline this year was "slightly higher," at 38 percent, said NPD analyst Liam Callahan.

Total U.S. videogame industry sales of new products at retail dropped 25 percent from April 2012

to $495.2 million, said NPD. Videogame software sales fell 17 percent to $254.3 million, and were down the same percentage, to $267.8 million, when factoring in PC games, it said. Accessory sales fell 19 per-cent to $131.4 million. Although every accessory type saw year-over-year declines in April, sales are up more than 20 percent for the year through April on point cards, headsets/headphones, accessories for Acti-vision’s Skylanders franchise and all other game accessories combined, said Callahan.

The game sector faced a tough comparison to a year ago because Easter "typically accounts for" a

10 percent sales "boost" in the month in which it occurs, said Callahan. Easter was in April last year but in March this year. Taking into account NPD’s preliminary estimate for other physical format sales in April, including used and rented game products at $76 million, and its estimate for digital format sales at $267 million, U.S. consumers spent $802 million on game products in April, said Callahan. Digital sales are made up of full game and add-on content downloads including microtransactions, subscriptions, mo-bile apps and social network games. — Jeff Berman

Industry Notes

The FCC should relax rules for AM stations to revitalize AM radio, several Clear Channel offi-cials told Commissioner Ajit Pai, said an ex parte filing (http://bit.ly/10WtaTc). Clear Channel asked Pai to repeal the “Ratchet Rule,” which limits AM stations to prevent interference. Clear Channel said the rule did little to stop interference but impeded improvements to AM stations. Requirements for license coverage hinder AM relocation, and the commission should relax those rules, said the filing posted Thurs-day to docket 09-182. The company said the commission should increase opportunities for AM stations to use FM translators to rebroadcast AM stations, which it said “have served to encourage listeners usually accustomed to the FM band, including young adults and females, to tune directly to the AM band.” Clear


Channel said it would be difficult to set a date for AM stations to convert to all-digital, but that FM trans-lators could serve “as a bridge” until that transition — or a move to new spectrum, such as the Channel 5 and 6 bands — could be accomplished.

Computing

Dell expects PC sales to continue to decline, Chief Financial Officer Brian Gladden said on the company’s earnings call. Dell’s End-User Computing business (EUC) — including desktops, thin clients, notebooks, tablets, third-party software and client related peripherals — posted revenue of $8.9 billion, a 9 percent falloff, said Corporate Controller Tom Sweet. Operating income fell 65 percent to $224 million, representing 2.5 percent of revenue, he said. Dell expects weak demand in the PC business and continued competitiveness, he said. Gladden said Windows 8 is “not necessarily the catalyst to drive accelerated growth that we hoped it would be.” Dell’s Mobility products had revenue of $3.6 billion in the quarter, a 16 percent drop from fiscal Q1 2013, he said, due to continued pressure from “customers diverting spend-ing to alternative mobile solutions.” The company is “encouraged by the industry-based enhancements coming to the notebook touch ecosystem,” he said. The desktop and thin-client business revenue at Dell fell 2 percent to $3.3 billion, but the “trajectory of the desktop business continues to improve.” The com-pany is seeing “good traction” from new form factors such as all-in-one PCs, Gladden said. Overall at Dell, net income plummeted 79 percent over the year-ago quarter to $130 million, with revenue dipping 2 percent to $14 billion, the company said.

Consumer Electronics People

Mindspeed Technologies adds Fared Adib, Sprint Nextel, to its board.

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