Verizon Hub killed; Is 'fourth-screen' doomed?

Verizon Wireless today confirmed it has halted production and sales of the Verizon Hub, an in-home multimedia and VoIP-capable device it launched to much fanfare earlier this year.

According to reports, the device was pulled from stores several months ago, remained available via online sales for a while before being formally discontinued. A Verizon Wireless spokeswoman confirmed the move. “Verizon Wireless is going to continue to focus on our wireless products and services,” she said, adding in response to a question about future multimedia phone plans, “We’ll stay in touch on ‘four-screen’ options.”

Critics of the device cited its price -- $200 for the phone and $35 per month for service – as well as some of its application limits, such as lack of email service or Web browser, mandatory VoIP and an application approach that remained strictly under Verizon’s control versus a more open app store. Perhaps just as damning was the fact that Verizon Wireless was pitching the device. The mobile operator obviously has bigger fish to fry and it is unlikely consumers went to a Verizon retail location or online looking for an in-home device.

While contending that an in-home device that combined Verizon's wireline and wireless assets "made perfect sense from a corporate standpoint," Current Analysis analyst Avi Greengart nonetheless said the Verizon Hub "ran into a slew of problems." In addition to the relative high-cost, Verizon found it "difficult to explain the value proposition -- it’s a phone, it’s a message center, it runs some apps -- which is it?" Greengart said. "It was [also] sold alongside wireless phones, and there is a completely different sales cycle/replacement cycle for home phones versus wireless ones."

The larger question is: what impact will the death of this much-touted device have on the potential market for so-called fourth-screen devices?
Just last week, ABI Research called for strong growth in the fourth-screen market, predicting it to reach $5 billion on sales of more than 30 million units shipped by 2014, according to ABI analyst Michael Inouye. ABI’s definition of such a device includes not only media phones but Internet applications and even digital photo frames – all of which have the potential to include network services ranging from video playback, Internet connectivity, application or widget support and more.

The challenge for such devices will be competing with new highly-functional wireless devices like the Apple iPhone. “Fourth screen devices in general are competing against more multifunction devices such as smartphones,” Inouye said in his report.

The Verizon Hub was built in partnership with vendor Open Peak, though Verizon did much of the user interface and partnership work itself. The idea, according to company executives at last January’s launch, was to build a unique device that complemented wireless services rather than replace them. But that was before the huge uptake in mobile apps on the iPhone and other platforms took much of the market’s attention.

That’s not to say that telecom service providers are abandoning the multimedia phone -- far from it. Providers such as Orange in the UK and Hong Kong’s PCCW continue to pursue fourth-screen strategies, sources said. PCCW, in fact, is on its second generation of in-home device. Its first generation device, dubbed the “Eye,” looked a bit like a phone with large physical buttons and a screen. Its latest device, “Eye2,” launched this summer, looks and feels more like an Internet tablet than a phone, and includes on-device access to video programming, music and photo services, voice and video calling and a home monitoring service dubbed EasyWatch – as well as the ability to function as a wireless remote control. The device was built by French electronics company Thomson.