Uncommon Wisdom

August 13, 2008  8:40 PM

Yahoo announces Fire Eagle developer platform

Tom Nolle Tom Nolle Profile: Tom Nolle

Yahoo is making its Fire Eagle geo-platform available to all developers today. The new platform is an example of the work that Yahoo in particular, but also other web giants, are doing to facilitate the development of applications through the release of useful tools that reduce developer effort.

Fire Eagle allows developers to build applications that can determine a user’s location, and also support the registration of location information in a secure way to other applications. This area will be closely watched by many because it presents some risk of being exploited by stalkers or online predators.

We note here that CIMI Corporation is working with Yahoo in the integration of Yahoo APIs with our ExperiaSphere effort. See our progress on the ExperiaSphere website (http://www.experiasphere.wikispaces.com).

August 12, 2008  7:36 PM

P2P/BitTorrent fall on hard times

Tom Nolle Tom Nolle Profile: Tom Nolle

P2P may be falling on hard times in at least one sense; BitTorrent confirmed a 20% layoff but said the move had nothing to do with the Comcast throttling issue. In some ways it would have been better for the company had Comcast been the culprit, since the FCC has ruled that Comcast can’t strangle a particular type of traffic.

We believe that the real problem is that there is little BitTorrent can do to rehab the image of P2P, which our research and modeling shows is used for illegal file sharing in more than 90% of cases. It’s ironic the giant of P2P is now suffering, given that the telcos are at the same time looking at P2P signaling architectures as an alternative to centralized signaling systems like IMS. Recent rumors say that operators are researching the use of a P2P architecture for delivering “rich service signaling” without the need for a central signaling system and without the limitations of SIP/SDP/IMS.

August 11, 2008  1:45 PM

IBM focuses on enterprise mobile applications

Tom Nolle Tom Nolle Profile: Tom Nolle

The boom in enterprise use of smartphones and the fact that carriers are anxious to promote business customers’ use of data services combines to make the space an attractive target for IBM, not as a provider of equipment but as a facilitator of mobile enterprise applications.

The latest offerings from IBM include tools to let mobile users get easy access to applications from the road, a Citrix-like capability. We believe that mobile enterprise application opportunity will be a major driver behind U.S. operators’ FMC plans as well.

August 7, 2008  2:47 PM

AOL profits way down; Time to sell

Tom Nolle Tom Nolle Profile: Tom Nolle

Time-Warner’s AOL unit saw profits fall by 26%, and has been in talks to split and sell off AOL to boost the parent company’s financials. The drop in AOL’s fortunes came not because of a shift from an access model to an ad model per se, but because of the shift to broadband Internet.

Broadband is not an ISP business; it’s an access carrier business. However, the fate of AOL as a portal is linked to broader problems on the Internet, which include an increased polarization of sites as search, entertainment or social networks. There are strong incumbents in the first space. The second is yet to be proved as a source of financial gain, and entertainment is where everyone who isn’t a search player wants to be. Crowded markets don’t make money for anyone, and the faddish nature of Internet viewing won’t help. T-W should sell AOL off now while it can.

August 6, 2008  4:41 PM

Cisco beats numbers, but issues remain

Tom Nolle Tom Nolle Profile: Tom Nolle

Cisco reported numbers that beat estimates by a penny but still showed some signs of difficulties in the markets. Switches and routers grew in the mid-to-high single digits, 5-to-6 percent lower than usual but better than the last quarter.

The Cisco numbers are consistent with our view of the current state of enterprise tech spending, which is that the investment in the current SOA-driven cycle is still carrying momentum and that budgets have not been curtailed in this area.

With software spending strong, we would expect to see hardware and networking pulled along the track. If the current quarter shows strength, it will be an indication that budgets for the year are being released more in the second half, which would be positive for the entire industry in 2009.

August 4, 2008  1:26 PM

Open handsets: It’s about the apps

Tom Nolle Tom Nolle Profile: Tom Nolle

While the number of iPhones sold is a popular metric of mobile change, the more significant metric may be the number of applications sold for iPhones. The iPhone phenomena, more than Google’s Android, is responsible for the open handset movement that is reducing the barriers to application innovation in the wireless service space.

Operators looking for IP transformation strategies have latched onto partnership relationships both with handset developers and with developers who use network APIs. The handset opportunity for operators comes because applications promote smartphones that are more expensive but also promote data service usage, a major goal.

Some research has shown that specialty applications have been responsible for the growth in data usage outside the traditional “corporate male” segment of the market. The question now is what platform will win, or how developers will split their resources across the multiple phone operating systems that are available.

August 1, 2008  1:24 PM

Siemens telecom purchase: Signal of strength?

Tom Nolle Tom Nolle Profile: Tom Nolle

The decision by billionaire Alec Gores to buy the Siemens telecom business may be a signal that the longer-term fundamentals of telecom are stronger than many expect, or it may be an indication that Gores has taken one gamble to many. We have reservations about the space for the next two to three years, the period in which the sorting out of the new revenue paradigm will be essential for carriers to continue their equipment spending on players like Siemens.

There are favorable signs and challenges. Verizon’s report showed that data revenues were up, but the company conceded that most were linked to Blackberry-type phones and laptop access, not to mobile phone data applications, which means they were business related and not consumer. We believe that Siemens was later than most in recognizing the shift to the consumer, and that makes it a harder property to rehab.

July 31, 2008  12:46 PM

Comcast financials improve – in some ways

Tom Nolle Tom Nolle Profile: Tom Nolle

Comcast turned in a better-than-expected quarter (at least better in some ways), showing good growth in its triple-play and Internet offerings, but a decline in growth for digital cable. ARPU increased slightly, also a good sign. The success appears linked to the fact that AT&T and Verizon have not been able to roll out their services as fast as analysts had feared, giving Comcast more time.

We have noted that our own experience with FiOS shows the service to be excellent, but the time required to get it deployed in homes, measuring from when the fiber run begins, is as much as six months. Shortages of critical STBs have also hampered sales.

One interesting note from the Comcast report was that capex declined, which helped the bottom line. This decline, we believe, is a spending timing factor to improve this quarter’s numbers. We believe that Comcast will have to increase capex in 2009. The question now is whether Comcast and the cable companies can outspend the telcos given the pressure on telco voice revenue and the likely “digital pop” cable companies will secure in 2009.

July 29, 2008  2:02 PM

Alcatel-Lucent CEO and chairman say goodbye after more losses

Tom Nolle Tom Nolle Profile: Tom Nolle

Alcatel-Lucent’s Russo and Tchuruk, the CEO and Chairman respectively, are resigning after the company posted yet another loss in the quarterly earnings announcement. The move was applauded by many (most) financial analysts, who believe the team has not been able to sustain the momentum of the companies individually, taking essentially the worst of both.

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.

July 28, 2008  5:45 PM

New search targets quantity, not relevance

Tom Nolle Tom Nolle Profile: Tom Nolle

Cuil, a startup search company, plans to go after Google on its own prime turf, the volume of pages indexed and available, and also present results in a magazine-like form that is more attractive to users.

This will be the first new search effort that is aimed at quantity rather than relevance, showing that the relevance differentiator has been difficult to validate in the minds of users. The project will launch this week (they say today) and is expected to draw a lot of early interest. The question will be how long that interest lasts and what paths Cuil has for monetization.

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