AT&T’s move to reorganize itself into four business units is likely a precursor to layoffs, according to sources within the company who asked not to be named. The reorg comes as AT&T tries to adjust to the realities of the credit crunch, a diminishing access line and DSL business, and increased headcount caused by two large mergers in the last three years.

News of the reorg, which will see the creation of consumer, business, infrastructure and diversified products business units, trickled out yesterday. John Stankey, the former president of AT&T’s telecom operations, will head the infrastructure division; Ray Wilkins will remain CEO of the diversified businesses unit; and Ronald Spears will head the business unit. Ralph de la Vega, currently the CEO of AT&T’s wireless business, will head up the consumer business, which will contain wireless, broadband and video services. AT&T subsequently confirmed the moves, saying it wants to make consumer products work better across its portfolio of devices.

The reorganization will better align the company as it competes against the cable carriers. Just yesterday we noted how the phone companies have a hard time attracting customers to their triple-play bundles because of speed issues on DSL lines. Once those broadband connections are upgraded, the ability to combine data, voice, video and wireless for a quadruple play could put the carriers ahead of cable. But in order for that to work, the old division between wireline services, such as U-verse, and wireless needed to come down.

However, as the company streamlines, it’s also likely to find redundancies. Managers inside AT&T expect that they’ll soon get targets for headcount reductions ranging anywhere from 5 percent all the way to 20 percent in some areas of the company (I bet DSL and wireline will be hardest hit). When asked about layoffs via email, AT&T spokesman Marc Bien said, “Regarding headcount, at this time, we have no specific plans for workforce changes related to this new organizational structure.”

Employees believe it’s only a matter of time. News of rising costs related to AT&T struggling to sell its short-term debt, and the recognition that costs still need to be trimmed in the wake of its acquisition by SBC Communications (which then took the AT&T brand) in 2005 and BellSouth in 2006, have many concerned. Earlier this year the carrier announced a workforce reduction of 1.5 percent (about 4,650 workers) in its local phone business, but it still employed 307,550 people as of June 30. I expect that number will drop again soon.

Cable providers rate poorly on both customer service and pricing, but thanks to their speedy broadband service, they have so far managed to score more customers than the phone companies, according to a survey out today from research firm CFI Group. The survey, which quizzed 1,318 households online at the end of June, measured consumer satisfaction with telecommunications providers.

The research showed that while cable providers were getting more customers for the time being, telecommunications firms have a chance to win subscribers back as they roll out faster broadband services, IPTV and even wireless bundles. The research also underlined the demise of landlines (1.6 million gone for AT&T and Verizon in the last year), and customer dissatisfaction with slower DSL offerings from telecommunications carriers (nearly 70 percent of net broadband additions went to cable in the second quarter of 2008).

The phone guys even lose out on bundled services. Of the 60 percent of users surveyed who had a bundled service plan (usually a combination of voice, video and data), only 31 percent purchased their bundles from a telecommunications firm. The remaining 69 percent bought their bundles from a cable provider, but that doesn’t mean they like it; twice as many consumers would actually prefer to bundle communications services with a phone company as with a cable company.

This could be a case of the grass being greener, but I do think IP services built on faster fiber-to-the-home networks like Verizon’s FiOS service, could beat cable. I’m less convinced that AT&T’s fiber-to-the-node strategy will be as compelling, since the speeds are more comparable to today’s cable speeds.

source: CFI Group

Apple shook up the mobile phone playing field with the introduction of the original iPhone a year ago. Phones with touchscreens were nothing new; most Windows Mobile phones have used them for years. But the older phones used resistive digitizer screens, which were operated by a tiny metal stylus. The iPhone uses a capacitive digitizer that’s operated by touching fingers to the screen — a remarkably convenient option, by comparison. It didn’t take consumers long to figure out this was the way to go with touch and other phone makers quickly followed Apple’s lead.

While making a handset with a touchscreen is no big technical feat, the process quickly makes clear the pivotal role that Apple’s UI plays in producing a good user experience. Indeed, UI often ends up being the crucial factor that separates the good phones from the rest. And while the number of phones competing with the iPhone is growing all the time, most come from three companies:

HTC -- Until the last couple of years, HTC was largely making phones for other companies, such as Palm. But once they introduced their own brand to the market, they quickly established themselves as high-end device makers. HTC was also one of the first to dive headfirst into the touch phone pool, and have since produced model after model.

The first (and still available) was the HTC Touch, a phone based on the Windows Mobile platform. Going with the Windows Mobile OS was an easy decision for HTC since it’s a mature platform with tools to handle both the consumer and enterprise markets. The problem is that it wasn’t designed from the ground up for a touch operation, which can severely limit such a phone’s usability. So HTC designed the TouchFLO interface, which sits on top of the Windows Mobile base and adds touch features.

While the HTC Touch wasn’t a bad first attempt, it fell short of being a solid competitor to the iPhone. It followed up this year with the release of the Touch Diamond. A sleek black phone with an enhanced UI designed for touch, it has been well received. And since Windows Mobile has more features than the iPhone, the Touch Diamond was an instant, solid competitor.

This month HTC extended their touch offering with the Touch Pro, which is very similar to the Diamond but also includes a slide-out QWERTY keypad for business users. The lack of such a feature on the iPhone has been roundly criticized by serious email users.

Currently HTC is creating a lot of buzz in the enthusiast community with its yet-to-be-released handset, the Dream. This touch phone is said to be based on the brand-new Google Android platform that T-Mobile is expected to launch next month. Information is gradually leaking out about the Dream — it looks like a device similar to the Touch Pro, complete with a large touchscreen coupled with a sliding QWERTY keyboard.

LG — Electronics giant LG has been making feature phones for years and have produced some solid touchscreen, non-phone devices. Feature phones have typically been viewed as less capable than their smartphone competition, but that criticism is harder to make these days as feature phones can now handle PIM functions and messaging. LG’s first touchscreen phone was the Voyager, which includes two displays — one big touchscreen on the front of the device, as is common, and a non-touchscreen on the inside. The keyboard flips up like a small laptop to be used with the interior screen, making the Voyager a distinctly different type of phone.

Most recently LG has followed up with the Dare, a phone without a keyboard that is touchscreen only. The UI, however, has been optimized for touch operation.

Samsung — Electronics firm Samsung has jumped into the touch phone game in a big way with the recent release of the Instinct, using a media advertising blitz to make clear how serious they were about this new genre. The Instinct has only been out a short while, but it’s already getting rave reviews, and from experts that are known for being hard on such devices. Its web browsing capabilities, notably, rival that of the iPhone.

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