Social Networks are "Over-Valued?"

As Facebook prepares for a much-expected initial public offering, it might be worthwhile to review the difference between value and "valuation." If you follow the history of technology innovation, a good general principle is that observers, including market researchers, tend to over-estimate the near term impact and growth, and under-estimate the longer-term growth.

Another way of putting matters is to note that important new technologies take longer to achieve dominance than people expect. Important mass market technologies take longer to hit critical mass than most expect, but then seem to hit an inflection point and accelerate suddenly. It's an "S" curve.

Market valuation, though, also seem to under-estimate value in the early phases, than over-estimate after the inflection point. In other words, sentiment is too frothy, once a new technology has clearly gotten traction, and is on the way to mass adoption. At some point, overly optimistic expectations come back down to align with underlying value.

If it happens on a widespread scale, you get an investment "bubble." So some would say there is a danger now of a valuation overshoot, to be followed by a correction, in the "social" software business.

ESPN Commentator on Why He Believes in Tim Tebow

I believe in Tim Tebow

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By Rick Reilly
ESPN.com
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Tim Tebow FoundationTim Tebow with Jacob Rainey, one of the many people dealing with health problems Tebow hosted at Broncos games this season.

Every week, Tebow picks out someone who is suffering, or who is dying, or who is injured. He flies these people and their families to the Broncos game, rents them a car, puts them up in a nice hotel, buys them dinner (usually at a Dave & Buster's), gets them and their families pregame passes, visits with them just before kickoff (!), gets them 30-yard-line tickets down low, visits with them after the game (sometimes for an hour), has them walk him to his car, and sends them off with a basket of gifts.

Home or road, win or lose, hero or goat.

His story is here.

Broadband, in all Forms, Grows in 2011, Mobile Broadband Grows Fastest

By some estimates, 2011 was the year when mobile broadband subscriptions surpassed fixed broadband connections globally for the first time, according to Ericsson.

Others would say mobile broadband subscribers surpassed wireline broadband subscribers in 2010 (558 million in June 2010, compared to  500 million in 2009).

In 2016, Pyramid Research forecasts there will be 592 million LTE subscriptions in service, equivalent to 7.3 percent of all cellular subscriptions at that time, and almost certainly surpassing the world’s total of fixed-line broadband connections.

The largest LTE device segment will be dongles used to connect PCs, through 2014. But after 2014, the PC segment will be replaced by smart phone connections. LTE forecast

To date, 35 mobile operators have launched commercial LTE networks, a range of 197 devices have become available and the technology is maturing since the first network became live in late 2009.

Still, three out of five device models (60 percent) are discrete modems, either routers or PC add-on devices. 
The initial focus of all operators is mobile broadband access for PCs, Pyramid Research points out, and these subscriptions represent around 80 percent of all mobile data traffic, even though they account for fewer than four percent of mobile subscriptions.

Also, a  total of 17.4 million broadband lines were added globally during the third quarter of  2011.
Fiber to home, building or cabinet connections grew by 19 million lines during the third quarter.

Broadband Forum says that now fiber technologies account for 16 percent of total broadband market share and will soon catch up to cable, which stands at 19.5 percent. Broadband growth

Kindle Dominates E-Reader Category

Some will not consider e-readers "tablets." But there now is little question about which device leads the e-reader category. Over the last two years, Amazon's Kindle has dominated the category. That has implications for e-reader manufacturers, content distributors and publishers. Amazon leads category

From a communications service provider perspective, e-readers and tablets constitute a major new potential market for "connected device" mobile broadband subscriptions, both indirectly, in the case of Wi-Fi devices,  and directly, in the case of devices that can connect directly to either 3G or 4G mobile networks.

Nor is the trend necessarily restricted to e-readers or tablets. Since  Amazon's Kindle reader software can be used on a variety of devices, including smart phones and PCs of various types, the potential change in consumer behavior exceeds what one might assume from sales figures for e-readers.

In fact, the growing base of Wi-Fi-only tablets and e-readers creates a new market for personal hotspot devices and features to support user tablets and e-readers. In that sense, even the adoption of "Wi-Fi-only" devices contributes directly to demand for mobile broadband subscriptions.

When Will Mobile Payments Hype Hit the "Disillusionment" Phase?

For U.S. or other service providers hoping that mobile payments and mobile banking will become lucrative revenue streams, some now argue, and more likely will argue, that the effort is doomed, difficult or destined to failure.

The reasons are numerous, ranging from organizational culture issues to consumer resistance, lack of retailer incentives, insufficient base of end user or retailer terminals, uncertain or insufficient revenue models, lack of end user demand, or technology uncertainty and user interface issues. All of those are valid objections at the moment.

If a report published recently by Lightspeed is indicative of the mood of the American public, the vast majority really don’t care much about mobile payments, some would say.  Too much hype?

Lightspeed foundthat only about a third of bank customers were actually using smart phones, for example.

Of those smart phone users, only eight  percent thought mobile banking was very important and another 13 percent thought it was somewhat important.

When asked about mobile payments less than five percent thought it very important, and 11 percent somewhat important. All of those are typical, at the moment, just as it is conceivable to generate more optimistic expectations in some polls that show much-higher interest.

But it would be helpful to keep in mind that hype cycles are normal for consumer or business technology innovations. Some people would probably say “mobile payments” has not yet reached the peak of its hype cycle. Others might say it already has, but some of us would say the degree of “negativity” isn’t high enough, yet, to warrant that view.

But that will happen.But when it does, you are going to hear quite a lot of negative sentiment. It has happened with virutally every new and important application or technology, and there is no reason to believe mobile payments will escape the cycle of expectations.  Be ready for the skepticism.

But Steve Jobs was able to avoid hype cycles, if you think about it. Not all Apple products have succeeded (Newton and Lisa, for example). But that might be because Apple, virtually alone among successful big consumer products companies, does not “take surveys” to try and figure out what products to create, on the well-founded theory that consumers cannot give you accurate assessments of products they never have seen.

In fact, as some would note, had Apple ever taken a survey on consumer demand for an “easy to use” PC, it would not have built the Apple computer.

Also, the coming value of mobile payments, wallets and mobile commerce will proceed on many different fronts, on a pace that end users will dictate by their behavior, as well as the complexity of the ecosystems that must be created.

Beyond the eventual “trough of disillustionment,” the real business will be built.

Massive Defections from BlackBerry?

Only 25 percent of BlackBerry owners have another BlackBerry on their smart phone wish list, Drippler apparently believes.


The other 75 percent want out of the RIM ecosystem and most of them want either an Android device or iPhone. Massive unhappiness

That might not be especially surprising, given the growth of consumer preferences for either Apple or Android devices. Smart phone forecast

Microsoft devices now are the wild card, though.

How Much Mobile Broadband Substitution Will Long Term Evolution Enable?

Few seem to doubt these days that mobile solutions have become functional substitutes for fixed line network products, with voice service being the obvious example. The new issue, especially as fourth generation networks are deployed and marketed, is the potential amount of potential product substitution for fixed line broadband. 


The key issue, for many fixed network competitors, is how much product substitution will occur, and how fast.
There seems little opposition to the notion that some significant potential for product substitution does exist, and not only in emerging markets where mobile broadband “will be broadband” much as “mobile voice is voice” and as the mobile phone is the primary way people in many markets will use the Internet.

Surveys by U.K. regulator Ofcom might be illustrative. Of all U.K. households in which at least one person is using mobile broadband services, 44 percent do not have a land-line broadband connection.

Since the first quarter of  2009 the number of U.K. households using both fixed and mobile broadband has been stable, at just under one in ten households, while those using solely fixed broadband  increased by two percentage points to 58 percent in the first quarter of  2011

Seven percent of U.K. households have only a mobile connection. Ofcom report

This mobile-only proportion is even larger among younger age groups and those who belong to lower socio-economic groups, the Ofcom report suggests.

Unsurprisingly, customers who rent their properties are also far more likely to use only a mobile broadband connection compared with those who own their own property.

This data demonstrates that substitution is a reality. There is no doubt that for a significant share of the U.K. population, mobile broadband  takes the place of a land-line connection to the Internet.

“We expect this group to grow steadily over the next four years as mobile network performance improves and prices remain competitive with land-line services,” says Declan Lonergan, Yankee Group analyst.

That doesn’t mean “most” consumers will do so; only that for many customer segments, this does make sense.

Sign of the Times at Best Buy

Best Buy, the U.S. electronics retailer, is reorganizing its retail sales groups into one "connectivity business group" that will focus on sales of mobile phones, computers, tablets, e-readers and the appropriate service plans at Best Buy and Best Buy Mobile stores.

The products inside the CBG group make up more than half of Best Buy's in-store sales as well as representing the fastest growing sectors for the company, outside of computers. That tells you quite a lot about what "consumer electronics" means these days, as well as where the sales volume is generated. 

Mobile phones and service plans are the largest generator of revenue at Best Buy.

The group will be comprised of 35,000 employees. Best Buy reorganizes around connected devices

LTE Will Mean Higher Mobile Broadband Substitution

Few seem to doubt these days that mobile solutions have become functional substitutes for fixed line network products, with voice service being the obvious example. The new issue, especially as fourth generation networks are deployed and marketed, is the potential amount of potential product substitution for fixed line broadband.

There seems little opposition to the notion that some significant potential for product substitution does exist, and not only in emerging markets where mobile broadband “will be broadband” much as “mobile voice is voice” and as the mobile phone is the primary way people in many markets will use the Internet.

Some would say the emergence of the mobile personal hotspot is a major enabler, as well, allowing a single mobile connection to serve multiple devices, instead of “one PC.”

Surveys by U.K. regulator Ofcom might be illustrative. Of all U.K. households in which at least one person is using mobile broadband services, 44 percent do not have a land-line broadband connection.

Since the first quarter of  2009 the number of U.K. households using both fixed and mobile broadband has been stable, at just under one in ten households, while those using solely fixed broadband  increased by two percentage points to 58 percent in the first quarter of  2011

Seven percent of U.K. households have only a mobile connection. Ofcom report

This mobile-only proportion is even larger among younger age groups and those who belong to lower socio-economic groups, the Ofcom report suggests.

Unsurprisingly, customers who rent their properties are also far more likely to use only a mobile broadband connection compared with those who own their own property.

This data demonstrates that substitution is a reality. There is no doubt that for a significant share of the U.K. population, mobile broadband  takes the place of a land-line connection to the Internet.

“We expect this group to grow steadily over the next four years as mobile network performance improves and prices remain competitive with land-line services,” says Declan Lonergan, Yankee Group analyst.

That doesn’t mean “most” consumers will do so; only that for many customer segments, this does make sense.

Screen Size Matters, But Mobiles are About Content Consumption

Mobile device screen size should make a difference in user behavior, one reasonably would expect, with lead applications varying with size of screen and input method. "Specifically, larger screen devices seem to fulfill productive needs while smaller screen devices tend to satisfy communication or entertainment needs," say researchers at In-Stat.

That should make sense. But the reported behavior might not always match actual behavior, particularly for tablets. PCs of all types remain a virtual requirement for content creation, while a variety of appliances can be used for content consumption.

Tablets and smaller-screen devices arguably represent a different lead experience, even though PCs, tablets and smart phones all are multi-purpose devices. That is to say, PCs (desktops and notebooks) can be used to consume or create content, but are virtually a requirement for creating content more complex than email or text messages.

Smart phones arguably still are balanced "communication" and "content consumption" devices. And though in surveys people tend to suggest they "work" on tablets, much of that "work" is one form or another of content consumption.

“The majority of tablet owners have a screen size between 9 and 11 inches, a size optimized for sophisticated uses that require a lot of interaction,” says Stephanie Ethier, In-Stat senior analyst. “The top uses for tablets are web browsing, email, and downloading and using applications, which are productivity-based uses. "

Portable media players, which can be virtually identical to tablets except for the smaller-than-5-inch screen, are used primarily to support entertainment-focused uses, like listening to music and watching video,” she says.

My own non-scientific observation is that tablets get used more often for "entertainment" than for work, though the "productivity" argument is used to justify buying them.

Apps differ by screen size?

Google Social Search Will Change SEO, Again

Not everybody will care, but Google's new "social" and "location" and "personal" approach to search is going to have some implications for the way search engine optimization gets done, not least of all because Google+ entries now apparently become part of the ranking algorithm. Google search gets more social

Instead of trying to figure out how to get sites to appear high up in organic search results, businesses will have to figure out how to attract real people to post information about them on Google. Google Search 

Google Wants to Buy T-Mobile USA?

You can expect to hear lots of rumors about "who wants to buy T-Mobile USA" in the coming months, if only because T-Mobile USA parent Deutsche Telekom really needs a "plan B" that allows it to gracefully exit the U.S. market and redeploy capital elsewhere.

In that vein, SNL Kagan says it has been told both Dish Network and Google have submitted formal offers to buy the firm. One never knows whether, in fact, such bids have been made, or how serious such bids might be.  Rumors of that sort get "leaked" all the time as trial balloons, sometimes in hopes of spurring serious thinking on a transaction.

That Dish Network plans to build a Long Term Evolution fourth generation network is not in doubt, and Dish executives have not shied away from saying they will buy or build as makes sense, financially.

A Google bid would be more complicated, given Google's status as primary backer of an open mobile operating system and owner of Motorola Mobility, a handset manufacturer and retailer. But, these days, it is quite hard to avoid all possible channel conflict.

Most people can think of all sorts of reasons why Google would not want to own T-Mobile USA. Operating a service provider business is a lower-margin business than Google is used to, is a difficult business that might slow the rest of Google down, raise new regulatory concerns and also make many of its other businesses a bit harder to run.

On the other hand, most people could probably think up ways it would benefit Google's other mobile-related businesses if Google had a ready made way to create products, define handsets and then get quick adoption in the market on at least one leading network.

It's the sort of thinking one suspects is happening at Amazon, about why it wants to be a supplier of tablet devices, and might well want to get into the smart phone business as well.

Smart phones and tablets both have become important content consumption platforms, and both Amazon and Google are in the content business, in different ways.

But it's just a rumor, at the moment.

Intuit Launches GoPayment Mobile Payments in Canada

Intuit's "GoPayment" dongle system, now is available in Canada. GoPayment is similar to Square, so if you understand what Square does, you also understand GoPayment.

The basic idea is simple, and elegant. Merchants often want to sell products in locations where a cash register and credit card terminal are not available.

In other cases a merchant cannot justify the cost of owning and operating such equipment. GoPayment turns an Apple iPhone, Android phone or a BlackBerry phone into a terminal that can accept debit cards and credit cards.

Google Social Search

Google search keeps getting more social, adding the ability to integrate web content, profiles, personal results and other content, including local content.

Social Search will include Google+ posts, for example plus user personal photos, making any single user's search results highly personal (and private).

Now, typing just the first few letters of a friend’s name brings up a personalized profile prediction in "autocomplete" mode. A results page for a friend will include information from their Google+ profile and relevant web results that may be related to them.

In addition, you’ll find profile autocomplete predictions for various prominent people from Google+, such as high-quality authors from our authorship pilot program.

Once you select that profile, if you’re a signed-in Google+ user, you’ll also see a button to add them to your circles right on your search results page.

Since some of the information you’ll now find in search results, including Google+ posts and private photos, is already secured by SSL encryption on Google+, Google decided that the results page should also have the same level of security and privacy protection.

"Search plus Your World" will become available in mid-January 2012  to people who are signed in and searching on https://www.google.com in English.

"Next Big Thing" Will be Mobile-Related, But Give it a Couple Years

Hot new mobile devices have been the big reason people have spent money on mobile services over the last several years, you might argue. For starters, it often is impossible to purchase a device without also buying other products, such as mobile data plans.

You can get a tablet and use Wi-Fi for connectivity, but in the U.S. market, for example, it is virtually impossible to buy a smart phone without an accompanying data plan. The caveat: you can buy a full price, "unlocked" smart phone, not from a service provider. But almost nobody does this.

With the Consumer Electronics Show now in full swing, you will not be able to avoid hearing about the "next big thing," or the "lack of the next big thing" coming out of CES. Sometimes the hype matches an eventual trend, and sometimes it does not, so be circumspect.

Among the devices of recent years to have been the "big thing" at CES are netbooks (up and down), 3D TVs (hasn't taken off), tablets (clear winner). But in decades past, there have been entire shows where nothing even that pronounced really has emerged. Some years, the industry itself looks only to refine an existing trend, because there is, in fact, no "hot" new product category.

To the extent you can say there is a "new category," it would be ultrabooks, the new "thin and light" notebook PCs that are supposed to compete with the Macbook Air. If you think about it, you can probably see the problem here. Most people do not buy the Macbook Air, when they buy a PC.

They mostly buy notebooks, it is true. But the Macbook is at the high end of the market, and most people do not buy products at the high end, in any market. So a reasonable person might argue that although ultrabooks are nice hardware, they will not create a big new market.

If pricing stays high, then few will be sold. If pricing drops, as virtually everybody expects, then ultrabooks will simply become the new form factor for many notebook PCs.

The other problem some might note is that with very few exceptions, hardware doesn't drive the market the way it used to. You can say the Apple iPhone did so, and you can argue the tablet does so. But PCs haven't created sizable new markets for some time. I'm not saying they are less useful, but it is an established category.

The other problem is that as most of a consumer's devices, and virtually all the portable devices, become multiple-purpose devices, more of the value has moved to software and communications. Some 48 percent of the respondents to a survey conducted by CTIA-The Wireless Association and conducted by Qualtrics say their mobiles have become their primary ways of using voice communications.

Also, when asked what they thought was the most important function of their mobile devices, 61 percent said the Internet; 42 percent said text messaging or instant messaging and 40 percent said voice. Smart phones are multi-function devices.

"You've got a computer in your pocket, you've got a computer in your briefcase, you've got a computer on your desk — and pretty soon you're going to have a computer in your TV — all running apps — and they're going to do most of what you want to do," says Selburn. "The problem is: How do you wrap up an app and put it under the tree at Christmas?" CES: No killer app?:

Some 48 percent of the respondents to a survey conducted by CTIA-The Wireless Association and conducted by Qualtrics say their mobiles have become their primary ways of using voice communications.

Also, when asked what they thought was the most important function of their mobile devices, 61 percent said the Internet; 42 percent said text messaging or instant messaging and  40 percent said voice.



It would be fair to note, with regard to CES or device trends in general, that we sometimes hit periods when there is no "hot new category." Tablets were the last clear winner. But that doesn't happen every year. Ultrabooks are interesting. But it is reasonable to ask whether they can create a whole new category, or simply change an existing category in some significant way.