Saturday, 30 June 2012

What I've been reading this week

I’m of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This week: online shoppers hate Mondays, ARM hits the server rack, experts disagree on digital homes, Google makes a brain and no one believes companies look after their data

Business models

It won’t have escaped your attention that many major technology companies are trying to create end-to-end experiences of own-brand devices and technology. Intel underpin rather a lot of that technology. Now they’ve started an “experience lab” to see how people will use it. Makes sense to me.

This is fun – online shoppers spend the most on Mondays and the least on Fridays because they’re trying to cheer themselves up. Basic psychology still applies in this “digital” era!

Digital media

Yahoo! are a shadow of their former selves, but still attract a decent audience in the US. It’s therefore a coup for Spotify that they’ll be going to market through the fallen giant’s portal sites. The revenue share might be useful for Yahoo! as well.

49% of smartphone owners use their devices when shopping in store. So a quarter of consumers are actively using mobile technology as a shopping aid. Personally I think this is great for retailers, who need to be forced to remember what it’s like to be great merchandisers. If they can do that in store and on companion websites then they can win against an increasingly generic set of online options...

...which is exactly what this research on retailers’ attitudes says (registration required).

22% of people have bought from a brand because a friend follows them (page 3 of the link). I can’t get my head around this one. And, to be cynical, it’s LATAM and APAC that are skewing the statistics. I suspect IPSOS used an online survey, so they automatically focussed on the top end and most social network aware parts of the markets. I’d expect the true global average to be less than 10% if I were to correct for that.

There’s a bunch of great data in this research about how teenagers regard social networks and their social lives. My interpretation is that most teens still prefer face-to-face communication. Social networks are an enabler of real interactions, not a replacement. Same is true of their effect on other types of media.

6 technologies transforming the fashion industry.

New technology

Dell and HP’s new range of low energy ARM-based servers are a shot across Intel’s bows. Intel’s 6.5W Centeron processor is designed to stave off this threat, but, at twice the price of the Armada XP ARM chip in the Dell machine Intel may have to think again.

Samsung expect to sell 10Mn Galaxy S3 smartphones this quarter. A drop in the ocean next to 35Mn or so iPhones, but not bad...

...and the Koreans can’t escape Apple’s reach and patent power. Sales of their 10.1” Galaxy Tablet have been suspended because of patent infringement issues. This sort of thing could eventually be the end of Samsung. They’re natural iterators, not innovators, which unfortunately lends itself to persistent infringements. They need to avoid falling into the HTC trap and returning to commodity-dom.

An interesting article about how 3D camera tracking technology is enabling on-court performance in the NBA to be optimised.

Breakthrough technology

Tesla are a fascinating company – what happens when Silicon Valley does cars. Their original Roadster was a very expensive toy. The new “Model S” could go head to head with the upper end of the saloon car market. My view is that electric and hybrid cars have to be designed to look and feel different than conventional ones so that drivers can ignore their range flaws. Tesla have nailed that. Others – GM and Nissan foremost – have not.

If I understand this right, SES are planning to quadruple the earth-to-space data rate by using high powered lasers for point-to-point communications. Implication: nowhere on earth will be outside of broadband coverage.

A great article about Google’s attempt to enable artificial intelligence to develop within an advanced computer network. Fascinating.

Just the mention of a connected fridge is enough to send one of my colleagues mad with rage... and it seems that he’s part of an evenly split group of experts who believe that connected home technology will have no effect on the efficiency of the home by 2020. I’m probably in that camp – frankly most people don’t have the technical nous or geek ethos to make such schemes work. I might try and let you know how it goes.

Scientists have developed a paint-on battery. Amazing technology – their experimental rig is providing about 20% of the capacity of an iPhone battery. Not bad at all.


Only 9% of consumers are convinced that businesses completely protect their data on line. Pretty damning really. I’m of the view that companies and governments need to be much more open about what they are keeping and why.

Friday, 29 June 2012

Surface vs. Nexus: the tablet equivalent of Italy vs. Germany

Last week it was Microsoft, this week Google’s turn to launch an own-brand, own-operating system tablet. Now all of the tech majors have their own platform and the games are well and truly afoot.

Google scored an early hit against Redmond by promising imminent release of their Nexus 7. As I wrote about recently, Microsoft’s marketing strategy seems rather flawed. In my view one of the key pillars of the Apple marketing model is the “here’s something amazing... which you can pre-order now and buy in stores in 2 weeks” promise. Microsoft have shown us something really interesting, but it’ll be months before we can actually buy a Surface Tablet.

And when we can there’s another problem: which one to choose? Another Apple trick is the simplicity of its product range. One tablet (albeit with 6 minor variations), one phone (3 variants), 3 notebooks, 3 desktops. They don’t launch them simultaneously. 2012 was a Macbook Pro refresh year. Next year will be Air and so we go on – it’s always easy for the consumer to select which Apple tax to pay.

Microsoft messed this up by offering Surface in not just two models but two fundamentally different architectures. It’ll be difficult for most consumers to decide what the implications of choosing ARM or x86 will be to their long term happiness with the device. This is particularly acute for Microsoft since Windows 8’s application ecosystem will be very thin at launch in comparison to those of iOS and Android.

Google have avoided this trap. Nexus 7 is available in one model and 2 capacities. Better still, its $199 price point is spot on to capture those consumers who have Android phones and aren’t willing to stump up the $400 needed to get into an iPad.

That price point has led a number of reviewers to label Nexus 7 as a “Fire killer”. I think they’re wrong.

Although Nexus delivers a conclusive smackdown to Kindle on specification and industrial design, I suspect that Amazon has it licked on user experience and – crucially – content ecosystem. Kindle Fire is a remarkable piece of software design in that it renders the complex world of digital content and operating systems simple. For those who haven’t had their hands on one yet, Fire represents all your content, apps and even websites as books on a shelf.

What this means is that – to an even greater extent than on the iPad – consumers can pick one up and instantly know how to get to cool stuff. Oh, and they’re never far from being able to buy it, either. Google haven’t yet figured out how to make their reference Android skin perform the same trick. Android is great if you’re a Linux coder, but simply isn’t logical enough for the tablet market. Tablets are windows onto content. Android is steamed up. And Google keep drawing pictures on the Glass.

Microsoft, like Amazon, will score points against Google with the instant ease of use of the Metro interface. They might be able to hit a knock out if they tap the rich ecosystem that is Xbox Live. Better still – and this would make me consider ditching my iPad – they could provide an On Live-style cloud based console gaming experience on my tablet, with my profile and saved games drawn from Xbox Live. I’d pay decent money for such a service and I suspect a substantial proportion of the 100Mn or so Xbox gamers would too. Consoles are as much of an adult toy as a kid’s one these days. My generation grew up packing light guns.

So where does this rambling get me? If I was placing bets, I’d predict Fire and Nexus 7 doing similar numbers for the rest of the year, mostly by virtue of the fact that Amazon can’t afford to launch the Fire outside of the US. Amazon only make about 20c gross margin on the Fire and they aren’t exactly flush with cash to subsidise the higher total lifetime value of its users.

Microsoft? I reckon if they shift 500,000 this year they’ll be doing well. 1Mn would be a miracle. But they happen. Italy beat Germany after all. New, ascendant, creative, hard charging, new buck beaten by flakey-round-the-edges, but ultimately calculating old master. Sounds spookily familiar. Forza!

Friday, 22 June 2012

What I've been reading this week

I’m of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This week: Comscore disproves Zuck’s business model, Twitter doubles, Pinterest sells, China blocks Japan and Google outs Jelly Bean

Digital Media

Another report suggesting that print magazines can endure in the digital world. I wonder whether consumers only prefer print until the point that they start using tablet magazines. It’s difficult to conceive why you’d prefer digital until you use it in that format.

BSkyB continue to expand the portfolio of movies they can offer on demand via their excellent Sky Go service. This week they’ve added 700 Miramax titles to the bundle. Not many details of the deal have been released, but I’d estimate it to be worth between $75Mn and $100Mn to Miramax over the duration of the contract.

Let me see if I understand this properly. Facebook pays Comscore to write a report saying how good social network advertising is. In one case, there appears to be a statistically significant increase in sales for a brand through earned media... but that’s not how Facebook makes money. It sells display adverts. So, in reality, brands are better off being on Facebook but not paying. Hmmm...

And there’s worse news for Zuck as a pair of studies on the buying behaviour of social network users shows Pinterest members follow 40% more brands than Facebook users, and are nearly twice as likely to make a purchase. In fact, only about 10% of people have bought a product after a recommendation on Facebook. My only caveat to this finding is that I’d expect Pinterest to have a more “early adopter” profile and be more female oriented as a base (although I’m on it too ).

Here’s an awesome start up that’s helping small companies target the right customers on Etsy and Pinterest. Amazing how the price of this kind of complex analysis has plummeted in the last few years.

Daily Twitter users have doubled in the last year – the more data I see on this, the more I’m convinced that familiarity with social and the resultant fragmentation of usage will be the death of Facebook.

A short article about why display advertising isn’t a good brand advertising media. It just isn’t memorable enough...

Bloggers need to update at least 3-5 times a week and promote through social networks to significantly drive traffic. This has worked well for me but I notice a lot of brand blogs are much less frequent – seems like a simple thing to get right.

Business models

Electronic Arts has suffered a dramatic drop in share price in the last 9 months. This article explains why – a combination of an underperforming marquee title and a broader concern in the market over the transition to business models based on micropayment and wide portfolios. I actually think the fall in price is exaggerated versus genuine loss of value. EA still has some mighty brands to fall back on and a prime position to exploit the greatly increasing graphics capabilities of all kinds of consumption device.

Emerging markets

China’s “great firewall” has blocked its first top level domain. sites were out for several days this week, demonstrating the Chinese Communist Party’s desire to continue to restrict free speech. Do business with these people at your peril.

A month ago I posted a link to a story about America’s two-faced attitude to Internet openness. Here’s a similar report about the way that US Government policy helps African autocrats stay in power.


Eat your heart out Retina – the US military now has a gigapixel camera... not sure I’d like my holiday snaps that detailed though...

Superpower politics

Some amazing statistics about the iOS market. Apple makes $4Bn a year from the app store. So much for the idea that it’s a loss leader for them – most companies would kill for that sort of income. Great analysis too...

Ipod/ phone integration is a pretty much standard feature in new cars. This brief article talks about how Apple want to deepen that integration by adding hands free control of other functions, such as the turn-by-turn navigation they announced for iOS 6.

Microsoft is the undisputed market leader in gaming and this leaked documentation about the Xbox 720 shows that they’re serious about holding on to that lead. Think true 1080p gaming, integration with cloud-based GPUs and augmented reality heads-up displays. Amongst other things. I want one!

One thing I think they’ve got wrong, however, is the marketing of their (cool-looking) Surface Tablet. Companies never seem to learn that you need to get products in stores within a couple of weeks of announcing them – the 4 month wait for Surface mean that its chances of success are severely degraded. Why not just go out and buy an iPad?

Amazon announced in April that they’re no longer going to provide affiliate services to independent booksellers. This will drive those booksellers onto another platform, which Amazon probably doesn’t care about – Kindle is fast becoming the industry standard book consumption ecosystem. Now they just need to persuade the publishers to do something about pricing.

Following last week’s iOS 6 and Windows 8 launches, Google this week accidentally outed the launch of Android 4.1 “Jelly Bean”.

Wednesday, 20 June 2012

LTE launches in Africa

LTE launches are coming thick and fast at the moment and with availability of decent handsets growing, consumers are begining to see the benefits of the technology... or rather, they don't mind having it, which represents a win in itself if we recall the trauma of 3G. Although I don't much trust analyst estimates on these things, ABI research reckon there'll be 80 million LTE subscribers by 2013.

Contrary to logic which would suggest new network technology is beyond the means of poorer countries, Africa isn't being left out of LTE. As the picture shows, four cellular networks have launched this year, in Angola, Namibia, Tanzania and Mauritius. There are also advanced trials taking place in a number of countries - the lighter red on the picture.
I'd expect half a dozen major African countries to have a live LTE network by the end of the year. I'm reasonably bullish with respect to service availability because for many operators with reasonablely modern HSPA base stations an upgrade to an LTE RAN is a matter of a software upgrade. In urban areas the backhaul that constrains developed market operators is not a problem for developing operators as they've installed fibre - MTC in Namibia is a great example of this. Their upgrade to LTE in Windhoek took only 45 days to complete.

There are, of course, issues that will constrain demand. On the supply side, spectrum availability will be an issue in many countries. Spectrum regulation is generally weak in Africa and useful bands remain uncleared in most of the market.

On the demand side, cost of service and terminal devices will be a constraint. I've compiled a simple assessment of pricing in the table - the absolute pricing of services seems to be reasonably similar, however affordability in Tanzania is much worse than in richer Angola and Namibia.
So although there could be half a dozen active networks in Africa this year, I'd be surprised if the number of cellular LTE users on the continent crept much over 10,000 this year.

We'll see whether my "analyst-style" prediction is any good in December!

Tuesday, 19 June 2012

African telecoms investment - May 2012

$1.1Bn of new investments in African telecoms infrastructure were announced in May 2012. When summed with the $3.1Bn France Telecom (finally) paid for full control of Egyptian mobile operator Mobinil this makes May the most successful month of 2012 for telecoms investment in the continent.

Significant activity includes the launch of Movitel, Mozambique's third mobile operator, to increase competition in this increasingly vibrant east coast market. Movitel has deployed 1,800 BTS to date and intends to double that number by the end of next year. The former gives them capacity for about 7Mn subscribers - more than enough to cope with likely demand in a country of 20Mn people.

Elsewhere, Airtel have commited $100Mn to rolling out 3G in Rwanda over the next three years. Although on the surface this looks like a small amount of money, it should be remembered that Rwanda has a population of roughly 11.5Mn and Airtel's investment should be sufficient to upgrade 1,000 urban cell sites to HSPA+.

Two interesting smaller investments to report:
  • Madnagascan cellco Telma selected Hughes to provide satellite backhaul for its GSM network, demonstrating the continued usefulness of satellite bandwidth for rural telcos
  • Ghanaian ISP Nita has decided to upgrade its Wimax network to LTE, presumably in response to the rapidly falling cost of end user devices for the latter, while penetration of the former technology stagnates. I expect that they will be the first of many to make this switch
Overall, investment for the first five months of the year is up about 70% YoY. Next month I'll do the compare and contrast for the first 6 months of 2012.

Friday, 15 June 2012

What I've been reading this week

I’m of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

I've been on vacation this week, so the list is a little shorter than usual - normal (verbose!) service will resume next week!

This week: Nokia & booksellers take a battering, Microsoft on buying/ launching spree & Aussies beat Cisco at own game

Digital Media
Amazon has added MGM titles to its Prime video streaming service. They're becoming a real threat to Netflix now...

Tesco makes a lot of money out of selling media in stores, so it makes sense to cover all he bases in digital. This week it acquired We7 - a kind of low rent LastFM. Cheap, though, so worth it as a hedge for Blinkbox, if nothing else.

Digital is having a devastating effect on book selling as well. 65 independent booksellers have gone under in the last year and physical book sales are at a 9 year low.

Business models

As Nokia's share price tumbles again on weaker than expected Q2 results, the company's market capitalisation has now fallen well below its cash reserves and to an all time low against revenues. This article explains the multitude of potential buyers for such a business. Personally, I expect them to stay independent for now - Nokia is too complex for a P-E buyer and there's no obvious trade buyer in the wings.

Even now, the banks think the shares can fall further. Bad times in Espoo, but I can't help wondering whether the company is anything like as badly off as the banks and markets are making out. Lumia demonstrates that they can still make awesome products that people love and the phone market is fickle - look at HTC's fall as an example of that.

This interesting infographic shows how obsessed Amazon is with cost saving. Removing the lightbulbs from 20,000 vending machines to save money? Check.

The is a little bit 'Team America', however it's interesting to see the diversity of tech hubs in the US, compared to other countries.

None of them will be IPO-ing before Labor Day though... even GS thinks the bubble isn't as bubbly as it was pre-Facebook.

Taxi apps are suddenly coming to market all around the world - here's one for New York.


Lytro cameras record light as a vector field so that you can choose the focal point after taking the shot. This Wired article explains how the magic happens.

Microsoft has filed a patent for a dual screen mobile device technology that allows users split their display using magnetic docking... I can't explain it very well: read the link!

Zeptronics - an Australian startup - claims to have launched the world's fastest network switch. Remarkable if they've managed to beat Cisco at their own game...

Emerging markets

The interesting parts of this otherwise rather bland interview with Zain Africa's Head of VAS (Value Added Services) is his extensive experience in global telecoms and the answer to question 3, where he mentions African start up VAS developers. Their emergence is crucial to create a sustainable technology economy on the continent.

Speaking of VAS; Orange has extended its partnership with media streaming service, Deezer, to cover its extensive African operations. This makes a lot of sense as there is a growing middle class with a great appetite for high quality content and a vast swathe of (mainly coastal) bandwidth to get that content into the country.

Superpower politics

Microsoft's acquisition of Yammer will only strengthen its Office product still further. Remember, we're only a year out from the Skype acquisition - Office will soon look very social indeed...

...and could it feature on an upcoming Microsoft Tablet? We shall find out on Monday. If it has good X-Box integration, I'm buying. A week without my console has proved rather harder than I expected!

It seems, though, that Metro - the interface for Windows 8 - could be very unpopular with enterprise customers. It marks a total change of direction and could mean mass retraining for users. Although I feel for enterprise IT departments, the wind is against them. Consumer tech' now drives the market and businesses will have to adapt. Sorry guys.

Apple's latest Retina device is the Macbook Pro, which has double the resolution of your average laptop screen. More importantly, it will also (shortly) feature Mountain Lion, the latest incarnation of Mac OS, which will continue to blur the lines between Mac and i-device operating systems.

Wednesday, 6 June 2012

The emergence of the megacorporation

A quick post from me to share a little piece of analysis I did today about the grow of corporations. I've been interested for a while in the effects of tech' superpowers on the structure of adjacent markets. My thesis is that in response to their influence, companies will consolidate to create superpowers with the buying power to compete on a more even footing.

As part of my test of this thesis I've looked at the growth of the largest corporations over the last 10 years. The results are fascinating.

The schematic shows that the average revenues of a top-10 US corporate more than doubled from 2000 to 2011. Set against this, GDP grew 50% in the same period.

I'd expect a snowball effect to occur in the next decade, where the spending power of these corporations massively outpaces that of smaller companies and thereby leads to huge inorganic global growth.

Set against these US corporate giants will be new emerging players from the East. Globally, six of the top ten corporates by revenue are from outside the US and three are from Asia.

So there we are. The megacorp' is getting more "mega". I await the long-forecast dystopian future.

Friday, 1 June 2012

What I've been reading this week

I’m of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This week: clown predicts Zuck move for Nokia, HD goes super, Dragon splashes down and Metro goes public

Digital media

Samsung have finally launched their own media ecosystem to compete with Play, Market and, of course, iTunes. Coming soon to a fridge near you.

A slightly misleading, but still interesting comparison of the audience for British newspapers. Misleading because the engagement and characteristics of the online reader and the content they consume are very different from print.

It would be remiss of me not to mention Facebook’s share price. It hasn’t been a good week and this valuation at $7.50 a share won’t be helping.

A lot has been written about the potential of social networks to generate targeted ads. This article gets to the crux of the dilemma. People go to social sites to connect, so they ignore most ads. More invasive schemas are creepy. It’s not a clever story!

Business models

Silly season has started early. This total clown of an “analyst” believes that Facebook will/ could acquire Nokia. The basis for his argument – that Facebook needs a mobile device and OS – are correct. His knowledge of the technology marketplace is risible.

Slightly old news, but interesting to see how the UK is leading Europe on venture investments and tech’ start-ups. Despite the naysayers, our economy is in great shape for the future.

The emergence of the “Academic Spring” was as unexpected to me as the Arab Spring. Here, a report by the turkeys... sorry, the publishers, show that they are rather anti-Christmas. In short a 6 month embargo period, followed by open access to journals would bankrupt half of the journal publishers. I still reckon Christmas is coming, fellas.


Dragon is a revolution in spaceflight, the commercialisation of which should massively improve our ability to access our own orbital zone and beyond.

“4K” compatible TVs are already being announced by the major TV manufacturers. Incorporation of a standard for broadcasting and distributing it is a major step forward.

On a smaller scale, Google Glass has the potential to be a revolutionary interface product. Small, wearable computing is immensely exciting and offers incredible creative opportunities.

April UK sales of tablets are up over 200% YoY. Sadly GfK’s press release is all percentages, but the fundamental point is that iPad 3/HD/ iPad is significantly more popular than its predecessor, presumably because people now understand what it offers.

Booming sales of cellular connected devices are causing a global shortage in availability of crucial components. What this shows is that LTE will not be another “3G” – take up has been strong from the word go and I expect LTE devices to be half the device estate in the most developed markets by 2016.

The last two paragraphs of this article on RIM’s fall from grace are the most telling. Even if its best customers still love it, they can’t risk buying from it if its future is unclear. The end may be nigh, I’m afraid.

Superpower politics

Pretty much the only Apple product that hasn’t taken off in the last decade is Apple TV. I remain bearish about media streamers – although their price point means that they’ll sell reasonably well, they’re still in the main too complex for the majority of consumers to take advantage of.

This teardown report shows that their margins on the devices are still great though. 35% gross margin. Nice.

The Nokia/ Microsoft alliance is slowly becoming more potent. This week they announced a much tighter link between Nokia’s Navteq navigation technology and Bing, Microsoft’s search engine, creating a genuine competitor to Google Maps.

Microsoft’s new Windows 8 “Metro” is probably their most crucial launch ever. Here, Wired test out some of its features – theme and scenario based navigation feel like good ideas. Microsoft need to get this one right as Apple are beginning to put them under significant pressure, even in the enterprise arena.