Versatile Amphibian

Two meaty telecoms stories circulating at the moment. First, AT&T's reported $39B deal for T-Mobile USA came out of the left field yesterday at a time when many observers (myself included) were wondering whether Sprint/ T-Mobile was a runner. Provided it gets SEC clearance, the deal is dynamite for AT&T, but the really interesting question is "what is DT going to do with $39B?" As with Vodafone's recent strategy of cashing in minority investments, I find myself rather stumped by the strategy in play. Should we expect a massive share buy back or a mad spending spree in emerging markets? Or is this the first move in a strategy of massive consolidation into global super-majors - could Teliasonera, KPN or Teliasonera find themselves the subject of merger talk? Looks like a fascinating year is in store for the mobile industry. Nowhere more so than in the UK, where Ofcom has unveiled the rules for the forthcoming auction of 800 and 2600 spectrum , suitable for LTE....

Some colleagues asked for my thoughts on innovation strategies for "old media" companies in relation to a paper they're writing. Without stealing their thunder on the central topic, one thing that occured to me was about the potential disadvantages developed world businesses face in driving innovation through their businesses. The core issue is that the pace at which "natural selection" of innovations occurs has accelerated. Increased availability of information for and frequency of communication to consumers (writ large, not just in B2C terms) coupled with much larger markets and therefore greater availability of products mean that successful innovations explode in popularity (iPad) and unsuccessful ones die very fast (Kin). With that in mind, businesses of all kinds need to hedge their bets on innovation, which may mean involving more people in the process. This includes, I might add, innovation in the back office processes to improve efficiency and free resou...

Consolidation in spinning disks continues with Western Digital's $4.3B takeover of Hitachi's storage division . This is hardly surprising news as the industry reals with its loss of share in the consumer market to solid state technologies. While there's currently no substitute for hard disks in large capacity applications, I believe that an increasing proportion of computing devices will be non-PCs going forward, making use of a combination of low power, rapid response solid state memory locally and cloud-based disk or streamed content. The disk isn't dead - for enterprises, infrastructure and for consumer "local cloud" devices like set-top boxes, media streamers and NAS its the only game in town. But the explosive growth in handheld and laptop devices seems likely to pass them by, leaving them slaves to the margin-crushing buying power of the big hosting providers and PC manufacturers. Consolidation, therefore, is the only option. An associated point that I d...

Nielsen have just released this piece of analysis of smartphone ownership in the US , which shows Android pulling ahead of iOS and Blackberry. I've heard rumblings amongst commentators that this marks the point at which the open platform that is Android puts the software smackdown on evil closed ecosystems. My view is a bit different. Certainly the PC market was created by multiple software and hardware vendors being able to offer their own distinct take on a universally compatible platform, however in my view times have changed. For starters, globalisation has meant that proprietary platform providers can achieve sufficient volumes to create plenty of opportunity for developers on the platform, even if overall market share is relatively low. Second, the PC has always been and remains a somewhat complex environment for the end user. Multiple combinations of hardware and software create choice, but they make for an inherently buggier experience than that which is available in a clos...

Nice interview with Martin Sorrell in the FT over the weekend where he argues that the valuations of online media companies defy economic sense. I heartily agree - Facebook in particularly seems to have attracted a "bubble mentality" amongst investors who should know better. The $50B valuation is ludicrous - my own estimates, based on past performance of the successful dotcoms, the addressable market for social media and what we know about Facebook's financial performance suggests an upper bound of $13B for the company. Time will tell whether this is bourne out by the market when (or if) Facebook finally IPOs. I personally feel that comparing them to Google is folly because of the position they occupy in the value chain and the proven strength of the Google team both historically and at present. We shall see.