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The Engadget Mobile Interview: Glenn Lurie, President of Emerging Devices for AT&T Mobility

Chris Ziegler

We had a chance to sit down last week with Glenn Lurie, the man recently selected to head up AT&T's new Emerging Devices group that is responsible for making sure the network's airwaves are supported by as many devices as possible -- laptops, netbooks, MIDs, e-books, you name it. Netbooks are clearly the push right now, but Glenn's eager to talk about e-books in particular, and it sounds like we can expect announcements before the year's out. Follow the break for the full interview!

EM: Okay, so we're here with Glenn Lurie from AT&T. Glenn, thanks for joining us.

Glenn: Yep, appreciate it, thank you very much.

EM: And so I think we want to start by giving our readers a little bit of an understanding of your role within the company, what you're showing at the show this week, and where you're going.

Glenn: That's terrific. So let me start -- Emerging Devices, my role is I'm Preisdent of Emerging Devices, it's a new group within AT&T about five months old. Our single focus is wirelessly enabling everything. So obviously, everybody knows about the smartphones, and the iPhone, and our regular handsets; if you take everything else, my team's role is to go out and find incremental opportunities to grow our revenue stream and grow our customers. So starting with computing devices, whether you're talking about laptops, or... a big one obviously is netbooks, one of the things we are showing here today, and even the MIDs that are coming, which I think will have a nice impact on the business, that's really all in the computing segment. And really, if you go to the right, you're talking about e-books... obviously Kindle gets a lot of the talking about and mentioning right now. There are others coming, as you can probably imagine. Portable navigation and telematics in the car, cameras, gaming, location-based services, dog collars, wherever you want to go, right? All of that is my group's goal in the company, is to go develop relationships in the ecosystems around the devices and launch those devices wirelessly enabled.

EM: Okay. And these devices, are these things that you would consider selling in-store, or are you primarily helping these businesses develop these products on their own and distribute them however they want?

Glenn: It's kinda yes. I mean, it depends on models. So one of the things that's interesting about this space is every one of those products I listed probably comes in a different flavor, right? So if we sell a netbook, it's going to be an AT&T customer, right... right now, in fact, we launched a trial in our stores yesterday that we announced. We're going to be doing some trialling of netbooks in some AT&T stores in Atlanta and in Philadelphia, we're trialling some new rate plans too, and just trying to get a feel for what customers want. But more importantly, the models are going to be very different. So it could be a wholesale model where we just sell a third party the ability to utilize our data network, and they'll go out and market it and decide where it's distributed. It could be a model where it's a retail model, where it's our customer and we'll help them walk into the Wal-marts, Best Buys, Radio Shacks of the world, and help support... obviously we have great relationships in those places, and support help them in getting their products in there. So it's going to be different in every segment, but, you know, one of the things my team does bring is my prior role for the last four years is I ran national distribution for AT&T, so I've got strong relationships with all the four big boxes -- you know, Wal-mart, Radio Shack, Best Buy, Costco, and keep going, and they're calling me looking for opportunities in this space. They're seeing the same vision that we are, that this space is going to grow. We did launch an Acer promotion... it's an Acer 9-inch netbook with Radio Shack and Acer, and we have some other things coming with these guys, so it's really that whole package that we're going to bring to the table, and then depending on the relationship, we'll utilize that to get the product to market.

EM: Sure, so you raise a good point, which is the Aspire One, which launched several months ago. So do you see that as a business model -- a viable business model for the netbooks, is that you're going to sell them strictly through your retail partners and not in store necessarily?

Glenn: No, I think we're going to do both. I think the trial we're doing is us dipping our toe in the water, saying what do customers want? You know, selling a smartphone is a very different level than selling a laptop. Expertise is very different. We have phenomenal reps in our stores, but we decided to start slow. Let's do a trial. But we really do see national retail as being a huge opportunity. A lot of our partners obviously... we had a deal with Dell, we're doing a 9-inch Mini with them, Dell's got a great distribution network, so we used theirs and we used ours. So I think we're going to see each individual deal based upon what the goals of our partners are, what's the best way to get that device out to customers, so you'll see a mixture of things.

EM: Okay. Can you talk a little bit more about the e-books? We heard Verizon mention e-books as well... obviously, this is something that a lot of carriers and manufacturers alike are interested in pursuing right now. The Kindle has generated, like you mentioned, a ton of buzz. Can you talk a little bit more about that?

Glenn: Sure. I think the e-book space is going to really be one of those things that morphs into something a lot more than books. And I think that's why you're hearing the buzz, because many industries will be affected by this. So we really see the e-book becoming an e-newspaper, an e-magazine, could even in the business world for you and I be a document holder, so we really see it expanding. When you think about the technology, you can go ultra-thin, you've got many technologies now for screens that are flexible, and then you throw on top of that getting 8, 16 gig in there isn't real hard, right? So, all of a sudden you've got a pretty powerful device that can do a lot of things. I think what Amazon's done well is the vertical integration. It's very easy to use. You buy your book, in 60 seconds it's on the device. I give them a ton of credit, of really getting out in front of this industry. But when you're a pioneer, we all know what happens -- everybody chases you. And really, I think you're going to see some pretty amazing things coming, and you're going to see different models. Some people will stay book-centric, some may go very newspaper-centric. We know the newspaper industry is having their struggles right now. Think about what's the most expensive thing for that industry -- it's actually making the newspaper and delivering it to your front door, delivering it to the store that sells it. In this environment, you press a button and you would send out that paper every morning, and when I woke up, there'd be my Wall Street Journal or my New York Times waiting for me on my device. That's a pretty phenomenal model. And so we see that as why we think the growth will be really, really exciting in that space.

EM: Okay. And one thing that AT&T definitely as going for it over Whispernet and Sprint is the fact that you have a global roaming model already in place, and that's something where, you know, it doesn't matter where you go, you're going to find GSM. So do you think that applies to this market -- not just e-book specifically, but everything that you're doing?

Glenn: Yeah, yeah, it is a huge advantage. So obviously, you can imagine we're talking to every OEM on the planet, there are a lot of people that build devices. You know, you walk into a Best Buy or a Wal-mart connection center, and you look around and go, "what here should be connected?" And you kinda go, well, everything should be connected at some point whether to each other, device to device, or to the web. And so people... when we're vying for contracts with these guys and they're making a decision about who they want to do business with, obviously GSM, world technology. HSPA is delivering a phenomenal experience in the United States and in many places in the world. Our international roaming for data right now is 170 countries, which is tops of all the carriers. And reality is, we have really great relationships with all the carriers around the world. So some of these folks are even going, look, I want to launch in the US, and then can you help me and introduce me to the right players to go launch in Europe or other places? And we obviously can do that. So I think we really bring a nice value proposition for these OEMs. The other thing is the modules add to the cost to build, right? So when you [calculate the] cost of building the device, well, obviously the modules for GSM are sold worldwide, there's a lot of economies there, so I think they're also seeing that benefit.

EM: Okay. I think there have been some concerns, not with AT&T specifically, but in general with the spectrum marketplace about the supply versus demand issue. Not necessarily right now, but in the course of the next few years, as these kinds of devices ramp up, there's going -- there could potentially be some pressure there. How are you planning on dealing with that? Obviously, you're going to have LTE in the pipeline, but can you talk a little bit about that?

Glenn: Yeah, that's a great question. So a couple things we have to think about. One of the things that AT&T has, is we have a plethora of assets in our networks, and what people don't talk enough about is WiFi, okay? WiFi is... customers love it, we all use it, right? You have it at home, you have it at your office, right? You might even have it at Starbucks, because obviously we have 20,000 hotspots, our closest competitor's got I think five, I mean, so we dominate that space. So we really need to utilize all those assets to be efficient with our networks, and let me give you an example. So if you had an e-book, and at night when you receive all that information and you receive all those subscriptions, you receive those over WiFi, which would reduce the capacity on our network, right? At the same time, when you go out in the world and you're doing your thing, you have our wide-area network supporting you, and when you walk into your office or you go out to get a cup of coffee, or you go to McDonald's or one of our hotspots, you have that. It's really that ubiquitous coverage, but that facts are that we need those devices to be smart enough to find the WiFi first. The customers just don't care what network they're on, as long as they get the throughput they need to do what they want. And so the future really is making sure that we're efficiently using all of our assets, and by the way, I think customers want that. You know, we all know you get a great experience on WiFi, and you get a great experience on our wide-area network. Second point is, we two years ago launched probably the greatest device in the history of our business, which is the iPhone. It's a very data-centric and intensive device. We have had absolutely no issues with capacity. We've planned ahead, we've thought ahead, and I think the same thing goes in this space. Whether it's a netbook, or it's a portable navigation device, we need to make sure we're doing a great job of thinking ahead and keeping our network well ahead of any needs of our customers. And I believe that we've done a great job of that the last four or five years, and we'll continue to.

EM: Right. Now, where do you see connected devices in general in the technology cycle compared to smartphones and feature phones? What I'm getting at specifically, I guess, would be the transition to LTE, the transition to 7.2 megabit and beyond on HSPA. Do you see those closely aligned? Do you think phones are going to take the lead? Are connected devices going to take the lead?

Glenn: You know, it's a really good question. I think it's more around the customer than the segment. You know, I get asked all the time, do I think that if MIDs are successful, will there be less smartphones sold? Yes, there will be, right? You know, because a MID and a smartphone, they're close. But do I think that because we have netbooks and e-books and all those other things that there'll be less people carrying a smartphone or a device for their daily use? I don't, I really don't. I think that when we look at how we're looking at our roadmap from 7.2 trials to HSPA+, which should get us, you know, to 20 megabits, and then to LTE, we need to make sure as we build these devices that they work and that they're also backwards compatible on all those networks. That's critical for our customers' experience that they have. At the same time, we as a carrier want to give customers as much choice as possible. So having all these devices just really gives you choice as a customer, and you may say, you know what? Since I have my new e-book, I really don't need a netbook, I'm just gonna have a desktop at home and my flip phone in my pocket. Other people who are technoids like me, you know, I'll probably still want my smartphone, I'll probably still gonna want to have a MID, so I don't have to take my laptop when I travel all the time. And we'll all pick and choose. The fun part will be to watch what wins. The other fun part is gonna be, there's so many players that want to get in this market, there's going to be great innovation. I mean, you're going to see some things, you know, just pure and simple in the device itself that are gonna be pretty phenomenal.

EM: So ultimately, the question of what kinds of devices make it to those new networks first is going to depend more on how they succeed relative to one another than...

Glenn: Customer demand, it's that simple. I mean, you know, I don't think there's any notion in AT&T that we're gonna hold back any devices. We're going full bore, and we're gonna bring them out, we're gonna see how customers like them. We're going to see how customers... I always said they vote with their wallets, right? And we'll watch how they do, but we are going, in my space, very fast forward. David Christopher, our CMO, is going very fast forward as far as our text-centric devices and all the things he's bringing out. So we really believe our device portfolio today completely differentiates us from the other carriers, and as we get into this merged device space it's just going to give us a further lead.

EM: Sure. And how closely to you work with module manufacturers to provide those... do you sorta serve as a middleman in connecting manufacturers with module manufacturers?

Glenn: It seems to be happening that way, yeah. We seem to kinda be coming [to] the center of that ecosystem. We have very good relationships with Qualcomm, with Ericsson. In fact, I was just meeting with Ericsson before I was here. With Intel, et cetera. And without question, we need to be in sync, because what's happening is a lot of the folks I'm dealing with have never built a wireless device before. So they're saying, okay, I need your help, and my group will help them build it, help them certify that, all that happens in my organization, but at the same time, we want them to have choices of these individuals that are building the modules. So we also pre-certify modules. So we work with them hand-in-hand so that when you come in and say I'm ready to take this, I want to make it wireless, we'll say, well, here's four modules we already pre-certify, which makes that OEM's job a lot easier. So we're very much in sync with them. We're also in sync with the software guys. We're talking to all the different OS guys, and all the different software folks, because again, those are all parts of that ecosystem that we have to have in sync to make this thing go.

EM: And do you have any preconceived notions of what you'll subsidize and what you won't? Because I'm sure that some of the devices that you're working on are going to be subsidized, right?

Glenn: Yeah, we do. I mean, the subsidy... the key, well, let me make one clarification. We don't necessarily... the only time we subsidize is when it's in our stores. All the other things you see, we pay a commission and they decide what price and how much they want to subsidize.

EM: And that includes the Aspire One?

Glenn: Absolutely. Radio Shack, I pay Radio Shack a commission to bring me a new subscriber, and they do a great job of that. They decide price, subsidy, that's all their decision with Acer. We're not involved in that discussion. But the key to your question is this: you can kinda look at the type of customer and say, are we going to be willing to invest upfront and obviously know that we're going to be able to make money on the back end? And the bottom line is that if someone signs a two-year contract with us at $60 a month, or $40 a month which is a new plan we just launched, yeah, we'll be willing to subsidize. If somebody buys a device that's a pay-as-you-go kind of device, or a pay-when-you-use-it, you won't see subsidies in our industry in those types of devices. And I think all the carriers will be pretty consistent in that. But, you know, we're gonna look for the right opportunities and the right business models, but my group is here for one simple purpose, and that's to grow margin, not just to grow revenue. Growing revenue is easy, right? Give stuff away. We're going to grow margin for the company that's incremental. So we're trying to make sure the deals we do are profitable.

EM: Okay. Can you talk a little bit about plan pricing? You mentioned that your trialling some new pricing in Atlanta and Philadelphia. Where are you going with that? Because, obviously, all of these devices are very data-centric, so that's really core to this. How do you tie that in with existing subscribers, voice plans, et cetera?

Glenn: Yeah, good, good. So the thing that I've said a lot and been quoted a lot, we have to be more flexible with pricing. The thing that's interesting about data pricing is it was always very much focused, especially in the laptop space, on businesses. So, as a business, what am I willing to pay to make sure you're connected so you can do your job? Just like smartphones two years ago were business devices and today are consumer devices, that's what's happening with these netbooks. They're taking the computing really into the consumer space. So we have to get and have more flexible plans. So we're trialling a $40 plan, which I think will be great. I think it's going to be very centric to that person who's using a lot of their usage on WiFi at home, but then needs that connectivity when they go out a smaller amount than someone who has the $60 plan. We're building, and we're going to trial some day passes, kind of a WiFi thought process. Where maybe for my 15 year old son doesn't need a plan, but when he does need it, he needs to have the availability to get it on a daily basis, or maybe buying it in what we call a pick-your-plan or pay-in-advance kind of methodology. So we're looking at everything, and we're gonna ask customers what they want, and we're gonna really make sure that we deliver some flexibility along that so we can get these devices to proliferate at the level we want.

EM: Sure. And I know this is kind of a hot-button topic, but I need to bring it up anyway. The 5GB cap -- as we get to more... the iPhone obviously is very data centric, and laptop cards are very data centric. But as you see more customers adopt netbooks and MIDs, you're going to see a greater variety of customers adopt those devices -- some are going to be very heavy users. Do you see some flexibility there for making that not necessarily as affordable as a 5GB cap plan, but not ten thousand dollars?

Glenn: Yeah, yeah we do. And like I said, I think they key is making sure we're more efficient with our connection managers in these devices, right? So if a connection manager's really efficient and really sniffs out that WiFi first and really gives us that offload, I think people will be very surprised how usage may end up being reasonable even for someone that's doing a lot. Obviously, we're going to be very, very cautious with this, right? Usually what you have in our business is whenever you have a 5 gig plan, or an unlimited type plan, you know, you've got your ten deciles, and really, all your issues are really in the tenth decile. You've got some people out there that are really going crazy. That is really kinda the billion-dollar question is how you make sure you're fair and you do the right things for customers, and you give customers those choices, but also for those individuals we have to make sure that they understand what they're doing, and we have to give them options as well. I'm not worried about... I think data pricing has to get... that's why I call it flexible, but has to be more reasonable based on the device. I think our 5 gig plan is a great plan, people love it, we have a lot of consumers using it. I think this $40 plan that has 200 meg in it, we're going to learn from that. People are going to say it's too much, it's too little, we're going to see the usage. Do I think we need a $20 plan? Probably do. So I think we're going to have to live and learn and watch and ask a lot of questions. Our CMO David Christopher, we talk to customers all the time and we ask lots of questions, because our goal is to satisfy them all -- obviously hard to do, but to make sure that for the mass, we give them a fair and flexible opportunity. And so that's kinda our next step in this. Obviously there'll be devices that go crazy, and we'll have to deal with that when the time comes.

EM: Sure. And just to tie things up, where is your group going in 2009? I know that you're making some netbook announcements here at the show; what else can we expect this year and beyond?

Glenn: You will see in the fourth quarter some other devices come out. We'll announce some of our partnerships. You will also start to see... I think once you start seeing announcements from my group, you'll see a consistent set of announcements going forward. You know, the long pull and the intent of our partners is that they're still building their device. And that's, you know, they still have to get certified and go do all that, but our goal really is in each one of these verticals, to develop great relationships with our OEM partners. Our number one goal is to make sure... it's kind of a three-way win I call it. You know, obviously we're here to make profitable business for AT&T. We also want our partners to feel very good about their relationship with us and how they grow. So many of them want to sell boxes, great, how do we do that? Then the third one is the customer. We have to make sure that what we deliver is a fair and a good value for the customer, and that they see the overall value proposition for them, and especially in the environment today with the economy the way it is. So that's where our focus is. And, you know, I'm a hard-driving guy and I really want to be successful in this, and, you know, Randall and Ralph and the senior team have given me this opportunity to really kinda be a start-up within AT&T, and so our goal is to just to continue to drive through this year, build the platforms, continue to look at the rate plan options, all those things combined, and continue to grow the business.

EM: And so you bring up a good point there at the end. As we see the device portfolio grow, as we see those start to move to other markets, are we going to see some more plan variety and plan consistency?

Glenn: Yep, you will, absolutely. And that's the fun part of this, you know. I've been in the wireless business for 19 years, and for me, this is such an exciting time in this space because you start to look at what can you wirelessly enable? And then all the smart people out there that build applications will go, "oh, I know!" And you'll just see the value prop around that go up. Kind of like the iPhone did. I think every one of these segments that's going to happen, because all of a sudden it'll be connected and they'll wanna, like, for a portable navigation device it'll deliver real-time traffic. Well, think about all the smart application developers out there that are gonna go, well, wait a second, here's what I can deliver to that device. And all of a sudden it's just going to do this. And to me, that's the fun part about innovation, so it's an exciting space.

EM: Cool, thanks very much for your time.

Glenn: Thanks, I appreciate it.

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