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. http://www.theregister.co.uk/2012/07/18/facebook_user_growth_declines_stock_tanks/

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. http://www.bbc.co.uk/news/technology-18822971

I suggest “Facebook isn’t working” for Saatchi’s first campaign as Twitter’s PR agency. http://thenextweb.com/uk/2012/07/18/twitter-signs-mc-saatchi-as-first-uk-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. http://www.telegraph.co.uk/technology/mobile-app-reviews/9394616/Starbucks-Android-app-review.html

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. http://blogs.wsj.com/tech-europe/2012/07/18/europe-leads-in-fixed-broadband-lags-in-mobile/

$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. http://paidcontent.org/2012/07/19/penguin-buys-self-publishing-service-author-solutions-for-116m/

Ouch – an entertaining and scathing attack on Sky’s new Now TV proposition. As with the above, I suspect that this is a hedge. http://decipherconsultancy.wordpress.com/2012/07/19/now-tv-another-ott-service-from-sky/

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. http://www.ft.com/cms/s/0/8ff54c54-d503-11e1-b476-00144feabdc0.html#axzz21XQ19tO6

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. http://techcrunch.com/2012/07/18/dailymotion-cloud/

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... http://www.guardian.co.uk/media/2012/jul/13/bskyb-sun-cover-wrap

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. http://uk.reuters.com/article/2012/07/15/us-nokia-phone-pricecut-idUKBRE86E0D420120715

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. http://www.forbes.com/sites/ericsavitz/2012/07/19/nokia-rallies-on-q2-results-signs-of-hope-for-lumia/

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. http://www.totaltele.com/view.aspx?ID=475003

Next, Ericsson, the world's largest mobile-phone network maker, Ericsson reported Q2 net profits down 64% to $158Mn due to slowing economic growth. http://www.bbc.co.uk/news/business-18882159

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. http://www.msnbc.msn.com/id/48129487/ns/business-us_business/t/zte-shares-more-three-year-low-h-results-concerns-eu-spat/

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. http://www.techmarketview.com/ukhotviews/archive/2012/07/19/ibm-profits-up-despite-headwinds

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. http://www.rethink-wireless.com/2012/07/18/china-mobile-kicks-td-lte-device-tender.htm

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. http://www.theregister.co.uk/2012/07/20/madi_cyberspy_analysis/

Superpower politics

Google continue to grow strongly – quarterly revenue was up 35% to the end of March, generating $2.7Bn of operating income. Nice. http://techcrunch.com/2012/07/19/google-beats-in-q2-2012-revenue-up-35-percent-to-12-21b-2-79b-in-net-income/

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. http://thenextweb.com/microsoft/2012/07/19/microsoft-reports-quarterly-revenues-of-18-06-earnings-per-share-of-0-73/

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. http://www.slashgear.com/why-microsoft-should-acquire-a-major-game-publisher-14238597/

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. http://www.extremetech.com/computing/132999-microsofts-new-prototype-stylus-can-work-on-any-screen

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. http://www.appleinsider.com/articles/12/07/18/apple_buying_land_for_304m_expansion_in_austin_tex.htm

Despite its low pricing, Google will make at least $40 of gross margin on every Nexus 7 tablet produced. http://www.pcmag.com/article2/0,2817,2406989,00.asp

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