Monday, 30 July 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: BBC turns to Adobe for Olympian effort, Facebook rapidly turning into disaster, Apple quarterlies, MS avoids $1000 tablet howler

Digital media

A really interesting article on how the BBC is using Adobe Primetime to stream the huge volumes of video generated by the Olympics. Adobe are really on the up. I hear great things about their products in digital video and electronic publishing. Time to buy?

iPhone is the best platform for mobile advertising; rich media is the most effective ad medium on mobile... but it’s expensive to make, Opera... An interesting set of statistics, nonetheless.

Corporates find Twitter more appealing than Facebook for their social media presence.

All bad news for Facebook – profits and revenue plateauing. Time to use that “business genius”, Zuck. Or are you actually Yahoo! in disguise?

One thing they have got right is the use of Facebook profiles as general identification across the web. 48% of web users of social login surveyed had used Facebook thus. Not sure whether there’s money in it, though.

Talking of Yahoo! – a new CEO for them. Welcome to the executive revolving door, Marissa Mayer. Her chances of success outside the cloistered executive suite at Google? Zero. You’ll be needing that maternity leave to recover, Marissa.

Social media is fast becoming an important part of the news story arc. It enables journalists to maintain audience interest in a story without resorting to the saturation bombing tactics of 24 hour news. AP have now issued new guidelines to journalists to cover changes in consumer expectations.

Business models

A paper on how the US is falling behind in provision of the bandwidth that the author believes is the key to 21st Century competitiveness. The UK, on the other hand, is well served by our competitive markets and densely packed population. We’re in a great position.

O2 are the latest operator onto the wifi bandwagon, offering free ad-funded wifi in London ahead of the Olympics.

UK 5th operator, 3, have gone one step further, offering 7Mb of 3G broadband in exchange for watching a minute of adverts. Useful for occasional users, but the “20Mb” daily average that 3 quote is a bit dated.

A week after launching their own OTT TV offering, BSkyB have announced an investment in US video streaming business Roku. For those of you not familiar with it, Roku is very similar in concept to Apple TV. Or YouView, if it had launched in 2007.


I’m not sure whether we’ll be seeing this in devices any time soon, however Apple have patented a “5D” technology that enables users to interact with devices situationally (ie through their relative position to the device) and through the amount of pressure they place on the device’s surface.

It doesn’t surprise me that Apple will have several different versions of the iPhone 5 to cope with different spectrum variations of LTE. It’ll be a good few years before consistency begins to emerge in spectrum assignment for the new standard, so Apple won’t be alone in this.

Superpower politics

Another brilliant quarter for Apple, despite what the “analysts” are saying. In a quarter where it’s biggest line is nearly 2 years old, they still grew 20%, scoring major wins, like doubling Mac sales to education and selling 1Mn iPads to schools. Oh, and smashing the Galaxy S3 in the sales charts.

Here’s a relief for those desperate for Windows 8 – the Surface tablet that uses it won’t cost $1,000, contrary to rumours last week. I still expect it to be more iPad than Nexus 7 in price.$1k-after-all/

More patent conflict – this time Apple vs Google over the Kodak patent estate.

Tuesday, 24 July 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: All bad news for Zuck, Penguin in self publishing hedge, Sky in Sun wrap & network vendors feel pinch

Digital media

The number of Facebook accounts in the US fell 1.1% in the last 6 months. Their share price is commensurately down. Unfortunately, this is likely to put a cloud over tech stocks and IPOs for the foreseeable future. Such a shame, since many of us saw it coming from a mile off. Banks to blame, I’m afraid.

It’s all bad news for Zuck right now – here the BBC demonstrates how worthless “likes” are. Their fake bagel product managed to get 1,600 likes despite representing a totally fictitious brand. How much are those likes worth? Nada.

I suggest “Facebook isn’t working” for Saatchi’s first campaign as Twitter’s PR agency.

An interesting app from Starbucks, in that it allows users to do away with card or cash payments by using an onscreen barcode to authenticate transactions off a credit account. Novel, although I doubt many will use it. Just how much hassle are today’s payment methods? Not very in my opinion.

Europe leads the US (and the rest of the world) in broadband, although mobile data lags a bit. In truth, this is definitional as much as it’s real. The average UK consumer has the same number of mobile devices (6.3) as the average in the US.

$116Mn looks pretty toppy for a self-publishing service. I suspect the value reflects this business’ value as a strategic hedge against a relatively unlikely, but rather terminal decline in the traditional publishing market.

Ouch – an entertaining and scathing attack on Sky’s new Now TV proposition. As with the above, I suspect that this is a hedge.

The opportunity in digital education is (obviously) vast; however many powerful companies want a cut. Two such corporate monsters – AT&T and News Corp have just announced a partnership to create electronic curricula for US schools.

Given Ooyala and Brightcove are two of the worst examples of dotcom hype, “taking them on” seems like a flawed strategy. French Youtube rival Dailymotion plan to do so, however, by launching a cloud-based video streaming service for brands and channels.

Business models

Following on from the brilliant Spiderman textured cover a few weeks back, here’s news of the first full cover wrap for the UK’s tabloid leader, the Sun. Innovative physical ads are still mass market winners – print really isn’t dead...

Lumia prices were slashed by Nokia this week, but it’s probably too little, too late. Apparently, despite massive marketing from AT&T, only 330,000 Lumia 900s sold in the massive US market, vs millions of Apple and Samsung competitors. Nokia are entering a terminal decline.

But wait! Nokia’s results were marginally better than expected this quarter and lo’, globally they’ve sold 4Mn Lumia 610, 700, 800 and 900 devices. A fraction of Apple’s sales, but not to be sniffed at. Looking deeper though shows that the rally is due to the absurdly low price of the Asha range – average selling price is down 30% to EUR48. Something like an 8th of Apple’s. Survival, if it is possible, is in emerging markets.

In a different part of the telecoms market, three network and services businesses reported terrible 2012 results so far. Firstly, Alcatel Lucent registered a profit warning from “lower than expected demand” in Europe.

Next, Ericsson, the world's largest mobile-phone network maker, Ericsson reported Q2 net profits down 64% to $158Mn due to slowing economic growth.

That all follows ZTE’s share price sliding dramatically due to falling demand for low quality reference hardware and services. Looks like years of undercutting for the sake of it are drawing the network industry into a downward spiral.

On a more positive note, the UK business once again shone, amidst another difficult quarter for Europe as a whole. That’s the 11th straight quarter of growth for IBM UK - a feat few of IBM’s developed markets country businesses, or indeed competitors in the UK market, can match.

Emerging markets

TD-LTE is China’s answer to everyone else’s fourth generation mobile standard. In a fit of made up numbers, China Mobile – the state-owned fully independent mobile operator saddled with rolling out the standard has launched a trial where they’ll roll out 200,000 cells by 2014. A good way to spend $30Bn.

I love this. Iran launches (rubbish) cyber attack. It achieves nothing of note. They deny responsibility and claim that they’re as advanced as Israel. It must be great to be an Iranian government PR.

Superpower politics

Google continue to grow strongly – quarterly revenue was up 35% to the end of March, generating $2.7Bn of operating income. Nice.

Microsoft’s quarterly results were remarkable for their ability to limit the impact of the colossal $6Bn+ write down for their failed aQuantive acquisition. Their quarter looked earnings neutral, rather than $6Bn ahead. Poor lambs.

Microsoft is already a major game publisher, so it surprises me that they’re being advised to acquire one. That said, there is some logic in that games could be their major differentiator on Surface.

Speaking of Surface, here’s a great piece of Microsoft technology that enables a stylus to work on any surface by measuring the angle, scale and progression of pixels on an LCD.

Building a massive campus is sometimes regarded as a sign of corporate profligacy that precedes a massive collapse. With that in mind, Apple has just closed a $300Mn land deal in Texas to house expanded care, service and accounting functions. Alternatively, this is just the cost of their massive operational expansion.

Despite its low pricing, Google will make at least $40 of gross margin on every Nexus 7 tablet produced.,2817,2406989,00.asp

Thursday, 19 July 2012

The (brief) tale of Myspace's dog

"1 in 4 Americans is on MySpace, in the UK it’s as common to have a MySpace as it is to own a dog" was the wonderfully obscure quote that accompanied the social network's 2008 annual report. Myspace's subsequent decline is well known, but curiously when I was asked for a summary of social network membership I struggled to find a single source.

To that end, here's my assessment of the current and historic state of three social networks: Facebook, Twitter and Myspace.
This clearly shows how Twitter has accelerated customer acquisition in the last year. Arguably I've been conservative with my 2013 forecast too - growth could well inflect again considering the amount of positive press the service gets and its extreme compatibility with mobile usage.

Part of that popularity is driven by celebrity stalking. The next chart shows the most popular Twitter celebs. Note that Stephen Fry - often cited as the archetypal celebrity tweeter - is in fact a shrinking violet of the scene. Lady Gaga has the followship of 6.3 Fries. A weighty achievement.
Doing the same analysis for Facebook demonstrates the difference in demographics between the two platforms. The number one celebrity fan page on Facebook: Eminem. Rihanna is #2, demonstrating just how much we love the way they lie.

Sorry. I couldn't resist!

Wednesday, 18 July 2012

LTE comes to Russia; but at what price?

We were expecting to wait until September, but late last week Interfax reported that Russian regulators had successfully auctioned off spectrum bands between 2.5 and 2.7 GHz, suitable for the deployment of LTE mobile networks.

All four of the major Russian operators - VimpelCom, Mobile TeleSystems, Rostelecom and MegaFon - have acquired spectrum. But details are typically sketchy, particularly regarding the size of the spectrum lots and the price that was paid.

So I thought I'd do my own estimate as to the spread of prices. Assuming that the lots were the almost standard 2*20MHz and that they were national, I'd expect the spread to be EUR30.5Mn for the lowest successful bidder to EUR42.6Mn for the highest.

I'll keep track of the news on this one and see whether my "fair" price - calculated with reference to other similar spectrum auctioned globally, matches the real result in this notoriously grey market.

Sunday, 15 July 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: Branson asks for more runways, launches satellites, Nokia & RIM get in more trouble, US Army gets Quake gun and EVs get overhyped.

Digital media

I love these reports: [insert tech’ company] is worth $1Tn to the economy even though it only employs 7 people and pays its taxes offshore. Shame on you, Google – you’re better than this.

It’s commonplace in the most developed digital markets to have simultaneous live online streaming of premium content, particularly sports content. This press release shows that the burgeoning Turkish market is getting in on the act. Turkish football will be live streamed from later this year.

18% of UK residents get news off a social media site on a weekly basis. The article makes this sound like the end of news. Me, I think social is a great thing for news broadcasters, papers and agencies as it’s a means to sustain a narrative between major events.

Apparently, a third of American smartphone users have made a mobile payment. Quite surprised by that, I must admit. I’ll look for more data.

Emerging markets

Even though I live on the Heathrow flight path (doesn’t everyone in London) I have to agree with Ricky B’ – the UK needs more international flight connections. That means more runways. Unfortunate, but one of the prices of international competitiveness.

A study of malware attacks in emerging markets by Kapersky Labs shows that Russia and India are the worst places to be a surfer.

Business models

Wes Anderson is an A-List director. So his fees for commercials are probably astronomical. Watching these 10 brilliant spots, I’d suggest it was money well spent.

Sprint have to do something to compete with the classic all-American duopoly of AT&T and Verizon. Unlimited LTE data is a good thought, but a paucity of coverage will probably prevent them making much progress in attracting price insensitive iPhone customers.

Nokia are in dire straights. A second profit warning. 10,000 job cuts. Their “partner”, Microsoft launching their own tablet. Now their share price is down to a 16 year low. Acquisition beckons.

RIM are also in trouble - $147Mn in patent damages now owed, to go with further Blackberry 10 delays. Oh dear.

Kickstarter will open to UK projects later this year. Very exciting as it should capture the growing entrepreneurial momentum in the UK.

Virgin Galactic haven’t carried a passenger yet, but they’re already going into the satellite launch business. Be careful not to get ahead of yourself, Ricky.

New technology

This is a neat technology – use a laser to create a channel for high energy beam transmission. A lightning gun. Turns out that Quake was actually quite prescient.

I’m not convinced by McKinsey’s assessment about the scale of price falls in lithium ion battery prices – the world is hardly replete with lithium. Besides, the issue with LiOn in vehicles is the lack of range they confer. Unfortunately, whether price falls or not, efficiency isn’t improving greatly at the moment. 2020 is too early for EV. Hydrogen is the long term future of vehicle fuel. But it is long term, not 8 years out.

Here’s a review of a Mitsubishi electric car, just to prove the point.

Tuesday, 10 July 2012

H1 2012 African telecoms investment

I've completed my analysis of the trends in African telecoms for the first half of the year and thereby amended my forecast for the remainder of 2012.

Overall, investment was up 54% over the same period last year, however it remains 33% down on H1 2010.

As the table shows, much of this decline is due to the destabilising effects of the Arab Spring, which has almost completely halted investment in North Africa. In 2010 and 2009 countries in this region accounted for a third of all investment in the continent. In 2011 they represented 3% of the total and are on track to be the same this year.
Overall only Central African countries are likely to show an uptick in investment from 2010, driven by the nascent emergence of the continent's third most populous country - the DRC - and coincident investment by telecoms groups who are keen to find a non-Nigerian market to focus on.

The market I'm most worried about is Kenya, so long a leader in digital Africa, but now, thanks to ill judged market interventions by government and regulator an increasingly unattractive destination for inbound investment in vital infrastructure.

Any growth is good growth. That said, there are warning signs about the readiness of African countries to create conditions suitable for large scale infrastructure investments. With more and more bandwidth landing on their shores, barriers to digital economies are falling and opportunities to lead are rife.

The location of the next "silicon savannah" is not predetermined. In my view, countries like Namibia, Tanzania and Rwanda are taking over from Kenya as the likely leaders in the next phase of African tech' emergence.

Nairobi needs to loosen the reins before the horse bolts from under them.

Monday, 9 July 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: too many Cooks could spoil Apple’s broth, augmented reality unpleasant for HP, TF desperately hoping for new phone OS and Youview dinosaur finally squeaks

Digital media

American parents think that it’s best for the kids to be in 2-income family, but regret the impact on family time. It’s important to understand these lifestyle factors, as they will influence the type of technology and media that these parents will offer their kids in recompense. iPads make excellent babysitters.

UK ad spending is expected to show a 3.4% growth this year, easily exceeding flat forecasts for the rest of Europe. I remain very bullish about the UK economy as it’s emergence from the downturn will be fuelled by innovation and aspiration, not massive public sector spending.

I’m not sure this is all that impressive – 4Mn downloads for an augmented reality service offered by one of the world’s largest technology companies. My view is that more specialised apps like Blippar are the paradigm in AR and will remain so once head mounted displays become common place.

Bullish talk from Flipboard in response to Conde Nast pulling their content from the aggregator platform, but this has got to hurt. In my view premium content makers like Conde are much better off developing their own high quality platforms for rich published content.

Cost, not choice is the reason why US consumers cut the cord. Availability of online content is not a significant decision, which flies in the face of the long promised “TV revolution” espoused by Netflix. That said, many consumers seem to be reticent about reconnecting, so there’s probably some more work for the cable companies to do in packaging to convince them.

And, speaking of TV revolutions, here’s 2008’s revolution – Youview – the unneeded, overpriced, obsolete child of a consortium of underachieving Pay TV groupthinkers led by a 1980’s business dinosaur is finally with us. And priced at £299.99, I’m sure they’ll be flying off the shelves.

The ability to add tactility to content is an underused weapon in print’s arsenal. This Spiderman cover is worth checking out for its creativity alone.

Business models

Virgin are very pleased to have signed up 100,000 customers for their tube wifi service. And they’re shouting about it. And they’re deluded if they think that the reason people have signed up for it isn’t that IT’S FREE. Let’s see how many stay on after the Olympics...


Does the world need a new smartphone OS? Yes, according to Telefonica, who’re pushing Mozilla OS as that platform. They haven’t got a hope, as far as I’m concerned because by 2013 there will be a raft of Android and Symbian phones at $50. For their buyers they are one year purchases – such is the aspiration and social improvement in the markets they address – so absolute quality doesn’t matter so much. It’s the look that counts...,2817,2406593,00.asp

Ultrabooks are driving notebook sales – probably because the need for bulky things like optical drives are questionable in today’s world. The utility of the notebook is in its keyboard, universally compatible browsing software (Flash works!) and comparatively low price point. Oh, and portability – hence the article.

Superpower politics

This is one of those stories that now has so much momentum I’m beginning to think it’s true. Apple are apparently prepped to launch a 7” iPad to sit below the current HD one. On one hand, I can see how this would fit with the music player paradigm they’ve already played out successfully. On the other, I thought Steve Jobs hated the little tablet format. This would therefore be the first Cook product. Let’s hope the broth is okay.

Google’s Nexus is getting rave reviews. I can’t wait to get my hands on one!

It doesn’t surprise me that Apple are also involved in the increasingly hyped head mounted display market. This Wired article talks about some recently filed patents.

This is a poor article by the FT. Yes, Samsung’s Galaxy S3 has done well since its launch, shipping 10mn units, but that’s half of the iPhone 4S, which is nearly a year old and based on a 2 year old chassis. I worry about Samsung, tbh, as the S3 shows a remarkable lack of innovation in design or technology. The Android market is crying out for a design leader. I wish Nokia would reconsider their decision to be MS only.

Comscore’s latest US mobile data shows that although Windows has gained a whole 0.1% of market share, it’s Apple that is gaining the most ground in smartphones. Now that’s a real story, FT.

Neither does it surprise me that Amazon are updating the Fire for the Fall. The trouble is that they’ve so far failed to create a global product due to their reliance on content to generate margins. Why they don’t use a different pricing strategy outside the US and launch anyway I don’t know. It’s probably too late now.

Amazon need a smartphone to complete the trilogy of ecosystem, tablet and phone. Here’s more rumours about a forthcoming device.

Wednesday, 4 July 2012

June 2012 Africa Investment Map

Nearly $2.4Bn of new investment in African telecoms infrastructure was announced in June 2012, making this the most lucrative month for the continent. Logically, this investment was concentrated on the most populous parts of the continent, with Nigeria (population c. 155Mn) and Democratic Republic of Congo (66Mn) taking $1.3Bn and $0.6Bn respectively for cellular network upgrades.

Most investments are currently focused on installation of 3G Node-B infrastructure and smaller - yet still meaningful - investments were announced in Liberia, Mozambique, Botswana, Swaziland, Tanzania and Namibia.

But possibly the most significant investment relative to the state of the market was in the world's newest country. ISP iBurst has commited around $1Mn to install fibre and switching in the capital, Juba. All of South Sudan's backbone and much of its access infrastructure was destroyed during the civil war, so this money, however small, is a significant step on the road to recovery.

That's all for June. Later this month I'll look at the first 6 months of the year and see whether the southerly drift of investment in the continent's infrastructure has continued.