Two interesting points: The company reiterated its full-year guidance and it indicated its capex-to-sales ratio was about 12%. This is well below the average of the industry in normal times. We’ve noticed that EU providers are being more sanguine regarding capex than those in many other markets, including the U.S.. We believe this to be in part because recovery there is not likely to come as quickly as in the U.S., and because of the threat of regulatory intervention on things like roaming rates and even access sharing that would likely lower profits.
The pan-EU regulatory program that creates this risk reached a compromise solution on file sharing and will now be sent to the member countries for ratification.]]>
The concern being voiced is that the deal effectively gives Google an exclusive right to index and support searching of millions of books, thus giving it a unique (and some say unfair) market advantage. Google is becoming the “Microsoft of our age” in terms of legal issues and for the same reason; Microsoft and Google both faced a need to extend and exploit a basic brand into adjacent areas for continued revenue growth. While Google CEO Eric Schmidt is an Obama insider, the Administration will have to be very careful not to create appearances of a rigged process.]]>
It’s expected that cable will be pushing speed limits up this year, since DSL services can’t begin to match DOCSIS 3.0 performance, and only Verizon among the U.S. RBOCs has the regional demographics to make FTTH widely suitable. This could be good news for equipment vendors, because nothing other than competition is likely to provoke investment in wireline broadband given the low ROI.]]>
This is a topic that’s going to generate a lot of discussion and interest, but remember that we still haven’t even been able to transition to IPv6 from IPv4 after more than a decade of work.]]>
We define migratory users as those who regularly use a portable device to access the Internet from some number of predictable locations—like hotspots. The migratory user market is the big opportunity for WiMAX, which is ironically a technology being promoted by AT&T’s competitor Sprint/Clearwire. The AT&T experience shows that WiFi might well be an opportunity killer for WiMAX if hotspot growth expands, however. The big question is whether migratory behavior would involve enough different locations that WiFi hotspot deployment would become impractical.]]>
Price commoditization of legacy services and lack of credible monetization strategies overall force telecoms to reduce their costs, which moves them to lower-priced suppliers. We believe Cisco’s emphasis on service/outsource models, consumer electronics, blade servers and new market sectors are all reflections of the fact that even Cisco no longer believes telcos will continue to spend on premium vendors.
Certainly the time available to create alternative monetization models for telcos is coming to a close; a big negative step will be taken in May if no credible strategies are available by the spring planning reprise, and the nail in the coffin could come in October with the fall planning cycles.]]>
Mobile DTV is a significant development for broadcasters because it is based on equipping mobile devices with DTV tuners to receive the broadcast signal rather than delivering content as IP streams. This empowers local stations and also empowers handset providers, but it obviously puts streaming mobile content more at risk.
The exact impact of mobile DTV on streaming mobile content is difficult to judge at this point because the former isn’t available and the latter is lightly consumed, but our modeling suggests that the mobile DTV approach could satisfy more than 70% of mobile content demand, if demand is measured by the spontaneous interest metric and not the “could-be-interested” approach that’s usually taken by researchers. There will be considerable network push behind mobile DTV too, since the networks don’t want to subsidize local channels but don’t want them to fail either.]]>
The high-level song and dance can be attributed to the importance of the so-called “data center virtualization” space, which is the host side of cloud computing. IBM and HP, who are both miffed at Cisco’s blade aspirations and determined to carve out their own niche in the space rather than share one, won’t be a part of the big show.
This space is becoming the tail wagging both the IT and network dogs — a relatively small market segment with great strategic importance. We believe that this space was a major reason for the Oracle/Sun deal, for example; Oracle gets a cloud approach and storage, both critical in this new hot area. HP’s new Matrix announcement is aimed in this space, too. IBM will have to respond to the product flood arising from the face-off between HP and Cisco over the critical binding between networking and the data center. That could induce IBM to move closer to Brocade or Juniper, and the question of which way IBM jumps could be critical for both companies.]]>
All of this proves that the impact of online video on advertising and TV is indirect and not a matter of stealing eyeballs, as some suggest. We believe that the study validates other material we’ve cited here in the past and shows that the notion that online video advertising is the future of online revenue is, at the very least, far from fulfillment.
This is significant first because it means a lot of startups are probably doomed and YouTube will probably not monetize effectively. More significantly, it means that ad revenue can’t be expected to bolster Internet bandwidth growth, even if we figured out how to flow some of it to the ISPs. Ad revenue loss, partly to online, is indeed a problem for TV, but grabbing online video ads won’t be anyone’s solution.]]>