The goal, in a business sense, is to build what’s equivalent to an over-the-top (OTT) framework that lets applications and developers span the crazy quilt of mobile operators and roaming agreements that form the current global mobile network.

Absent so far from the play are any of the network equipment vendors, and we’re not able at this point to get any information on just why that’s the case. It’s possible that there will be announcements at Mobile World Congress to position the network vendors. We believe that Alcatel-Lucent is already committed to embracing the GSMA APIs in its Open API program. The really interesting question will be what players like Oracle and Microsoft decide to do. Handset players are doing more to avoid fragmenting developer programs; Intel and Nokia have just announced they’ve merged their Linux mobile platforms.

In past declines, companies have not switched technologies as fast as in good times, even to apply cost savings. The reason is that they’re afraid of disrupting operations when they need all the sales and profit they can get. We expect that cloud computing might do extremely well in 2009 relative to current levels, but not explode as some expect.

In 2010, we could see a considerable ramp in cloud computing use. Software as a service (SaaS), on the other hand, appears likely to have a noticeable surge in sales in 2009 as companies turn to the model to avoid short-term application investments and expansions in IT due to new software needs.

The U.S. decision to aid the auto industry would be regarded by some as a subsidy, again showing that countries will tread carefully to avoid poisoning the free trade atmosphere but at the same time support their own manufacturing sector as a necessary part of economic recovery.

Questions on whether Huawei has ties to the Chinese government and the military (particularly the PLA) have swirled for some time and have now been raised again in financial circles, which suggest that the Chinese giant may plan an IPO.

 It would also help in the enterprise to support hosted applications that are tightly coupled with the network, including unified communications (UC). One impact of this step would be to formalize Cisco’s entry into the IT space, something that’s been inevitable anyway as Cisco works to rise up the value chain.

 In all, we believe this rumor is absolutely true and a good thing for Cisco. It will put considerable pressure on Cisco’s competitors, especially Alcatel-Lucent and Juniper, to flesh out their own strategies. Alcatel-Lucent has already announced a strategic shift to the “online ecosystem” that links developers and telcos, but Juniper has not articulated a strategy here yet, though the company has spoken at conferences on the topic of open networks.

The industry is filled with small startups, some of which have good technology and strong roles in the network of the future, but little mindshare or account control. As investor fears mount, the price of these smaller players is dropping, making them a decent buy.

We believe that the deals will have to be made before the end of 1Q09, however, because it’s likely the new administration will be able to move forward enough that a recovery (not a full one, mind you) will be visible in the second half.

We believe the step is a kiss blown at Wall Street, something Cisco knows is likely not to be the right answer but that may be necessary to support the stock price in the near term. Even in that light, we believe the move to be unwise because it tars Cisco with the brush of a firm experiencing problems in the downturn, something competitors might play on directly but that will indirectly challenge the most basic value proposition Cisco presents to buyers—stability.

Metro capacity may be driven by a host of factors in 2009 and 2010 and the operators may be more interested than usual in the optical layer. This has implications on the Carrier Ethernet and IP MPLS wars since optical spending tends to encourage operators to deploy some control plane architecture, and that could then pull through either switches or routers.

There is no question that the merger was among the worst in the market’s history in terms of the strategic loss of momentum. However, it is far from clear what will happen now. First, there is no indication who will take over from Russo; no credible candidates have been leaked. Second, the cultural problems of the two companies remain to be addressed. Third, the layers of middle management that were as much the problem as the senior management remain in place, creating a confused muddle of reporting depth that has made it difficult to make bold decisions.

There is a lot to fix, and yet there is also no question that ALU has the best strategic talent and the strongest position in a technical sense in the market today.

We know of no credible reports of slowing IP traffic growth; in fact, the increased deployment of high-speed broadband seems to promise the opposite. However, beneath its questionable main thesis is an essential truth, which is that while IP traffic growth may not be slowing, the IP revenue ramp is definitely slowing. Service providers, like everyone else, invest for profits, and revenue per bit has been declining.

We have seen pitch after pitch from the service providers talking about their strategies for transformation, but we have also heard these same providers tell us that their barrier today is equipment vendors that have not followed up on operators’ published strategies. The trend toward usage pricing and caps, and traffic metering, are all related to the need to curtail costs to match revenue potential. If equipment vendors want to continue to sell gear, they need to step up in the NGN revenue game, not just push boxes.