At WiMAX World, panelists sparred with attendees over questions of when WiMAX would become more than another access technology, and this is what we believe the major question is for WiMAX.
If the technology is simply another way to get on the Internet from a phone or PC, it is threatened by competitive notions (3G/LTE, WiFi hotspots) that will attack segments of its potential market.
If the technology is aimed at a lifestyle built around portable devices big enough to entertain but small enough to carry to a café, or to put into a vehicle, it may be a different story.
Intel and others who have encouraged, if not blindly promoted, WiMAX will now have to step up and make this new model of behavior viable, or WiMAX will have little chance.
IBM is expanding its cloud computing offerings, responding in part to the realization that during tough economic times, many companies will trade service expense for capital expense, particularly when credit is difficult.
We believe that SaaS and cloud computing could be a big winner in the IT shift that is likely to occur in 2009, and IBM and others will surely be positioning to take advantage of the shift. For IBM, cloud computing is a critical hedge since it would likely suffer if buyers were to slow capital programs.
Nokia’s launch of its touch-screen high-end smartphone was also a bully pulpit for the company to make it clear that their activities with Symbian and smartphones are not the main event, but a shift into the services market.
Nokia noted that Blackberries were not successful because of the handset or the handset OS but because of the service behind them. This is the first time a major mobile equipment player has articulated what we believe is the central truth of 2009 and beyond. The industry is moving to services as operators move to monetization, and those who can create service ecosystems will be successful.
Nokia is launching “Tube,” its newest smartphone today, and is expected to articulate its mobile strategy in greater detail. The company, like others, is addressing what appears to be a capex shift to wireless for 2009, a shift that would increase sales of RF and handsets and reduce that of traditional data equipment, including routers, switches, and optics.
Mobile broadband has less capacity demand than fixed, and while mobile backhaul will be an important application, our research shows it to be shifting more decisively to Carrier Ethernet and also that the total capacity requirements for mobile backhaul are lower than those of enterprise Ethernet services or consumer wireline broadband and video.
AT&T is reorganizing to eliminate its original service-based management structure in favor of market-target structuring. The move will put the former wireless head, de la Vega, as head of consumer services, and could thus also be interpreted as a shift toward a wireless-centric policy.
We think that a market-based organization is smart given the fact that symbiosis among services seems key to leveraging opportunity and creating new applications and services using componentized service-layer infrastructure, all goals of operators worldwide. It also comes at a time when AT&T and other operators are puzzling out their capex plans for 2009, which will depend on some notion of how to monetize network investment.
We are developing a report on technology spending in the service provider and enterprise space, based on the assessment of the current market crisis, our analysis and modeling of future trends, our past and present surveys of enterprises and operators, and the historical information available from government sources.
The report will cover the market for the period from the present through 2011 and will contain information on overall spending, key areas of spending focus, and how to maximize opportunities in the current market. This report will be available in November 2008, and clients will have an opportunity to have a presentation of the findings at in-person consulting sessions beginning about the second week of November. Purchase of the report will be required for the presentations.
Against all odds and the advice of party leaders on both sides, the House has failed to pass the rescue bill. The problem came as Republicans deserted their leadership en masse and failed to support the bill. Democrats had previously indicated they would not accept responsibility for voting a measure that a Republican administration recommended unless it was supported by Republicans in the House, which failed to happen.
As we have indicated earlier, failure to pass this bill promptly would in our view put the U.S. into recession, and we believe that unless the current situation can somehow be recouped convincingly today, there is little or no chance that recession can now be avoided. We will publish an updated model result in our October Netwatcher newsletter issue, but it now appears to us that the odds of a recession worldwide and a tech spending slump have increased.
Regulators in Europe stepped in to rescue Dexia, a bank that has specialized in loans to state and local governments, offering the bank nearly $10 billion in loans. Dexia was among the EU banks considered to be in trouble, and the U.S. credit crisis is expected to continue to have broader impact in Europe unless a quick solution is found.
Our readers know that we have viewed the 2009 tech market health as depending on the timing of a U.S. recovery versus an EU turndown, and it now appears that the U.S. recovery is delayed and the EU turndown is accelerated. That makes it much more likely that tech spending will be curtailed worldwide in 2009, not only killing growth but actually creating a small decline in constant dollars.
Hope for a new plan that will pass is widely held, and stock futures this morning and the experience of foreign exchanges both suggest that the market is pricing in such a conclusion. The question will be one of timing.
AT&T and Verizon have pledged not to track online users for behavioral targeting unless the user opts in, a move that we believe is being taken to help position both companies for later use of DPI for more direct user surveillance.
In fact, without DPI it is difficult for someone other than a portal player to track users at all. Network operators like AT&T and Verizon, like other operators worldwide, have been either considering or actually trialing technology to sniff packet streams to determine what sites a user is visiting.
Congressional hearings in the U.S., FCC comments, and EU regulatory trends all seem to be favoring DPI regulation of DPI to obtain user data, and in both cases, the “at the minimum, opt-in” position has been proposed by regulators. The current move is thus a step toward linking opt-in with “tracking”, not as much to justify current tracking but to pre-justify a later decision to use DPI. We don’t think it will be that simple. The FCC tells us that without permission of both websites and users it might well be illegal to snoop broadband Internet traffic.
Cisco launched its long-awaited collaboration strategy, a move that is not only a giant step and risk for Ciscom, but an indicator of a major disruption in the networking market. Cisco is telling the world that selling bits is not enough, that margins and growth will have to come increasingly from the applications that ride on top of the network and link those bits to consumer or enterprise value.
By making the connection through others, both the sellers of capacity (the network operators) and the sellers of network equipment like Cisco have faced an increasing risk of commoditization and disintermediation. Others have often profited more from investment in networking than those who made it, and Google is the obvious example.
Cisco is apparently wrapping its launch in the mantle of Unified Communications, and in this particular regard we believe they’ve made a mistake. UC is an old concept, and by casting their offerings in the space they’ve both reduced the news impact and magnified the collision with their partners. There are only small chunks of technology that are critical to the collaborative space Cisco covets, and they should be focusing on them more discretely. We’ll have a full look at their launch when it’s public.
Comcast’s response to the FCC on its traffic management policies seems to promise a future where operators may be moving to metered capacity or to pay-for-excess plans like those already adopted elsewhere. The network operators who provide broadband access to the Internet have, for years, complained that applications were being created that drove their traffic up and generated no compensatory revenue. YouTube is the most popular example. The most immediate problem for cable operators, however, has been the P2P and server activity that congests the narrow, shared, uplink cable provides. The interesting fact is that solving this problem and creating a broader pay-as-you-go strategy for traffic in either direction creates a similar strategy, and we believe access operators are preparing to begin to turn the tap overall unless they can figure out how to monetize.