NFC Has Hit the "Trough of Disillusionment"

Google Wallet co-founding engineer Rob von Behren has left Google for payments startup Square. It isn't unusual for engineering personnel to change jobs. He had been working on Google Wallet since 2009. 


But there will now be suggestions of two types. The first is that Google Wallet "is in trouble." The other suggestion might be that near field communications "is in trouble." One might argue that neither really is the case. 


Rarely does an important new technology succeed the first time, or succeed right away. Apple's success with the iPad follows more than a decade of manufacturers trying to create a big new market for tablets, with almost no success. The Apple iPod is more nearly an example of an innovation that breaks the rule and becomes a nearly-instant success. 


But that's unusual. Almost always, a foundational technological approach takes time to show its significance. For that reason, many have been warning that it was "inevitable" that near field communications would pass the peak of its hype cycle and enter a period of disillusionment, which one might argue now is happening. 


That does not mean NFC will "fail," merely that it could be an important technology that ultimately will prove to be a mass market success. But that could take some time. Just how much time is not so obvious. 


But most important new technologies, especially when they involve change in a big and well-established ecosystem, take some time to mature. In part, that can happen because a value chain is complicated enough that lots of different contributors must be put into place to offer a full and robust solution. 


But in technology, the "best" solution, technologically, does not always "win." The perhaps classic examples are VHS and Betamax standards for videocassette recorders. Betamax was "better" in technology terms such as image quality. But VHS was "good enough" to satisfy market demand. 


If we assume NFC now has entered a period where the hype has crested, that might only mean that the typical hard work to construct a workable ecosystem can now proceed. That might also occur simultaneously with market success for other approaches that are good enough right now to win in the market. 


What cannot be predicted is whether the good enough solutions will preclude the "better" solutions, or whether it will simply take NFC the typical time most important technologies require to become mass market realities. 

Some Problems Cannot be Fixed: are Voice and Messaging Those Sorts of Problems?

IP-based social messaging services on smart phones cost telecom operators $8.7 billion in lost text messaging revenue in 2010, and $13.9 billion in 2011, Ovum estimates. 


The decline, representing nearly six percent of total messaging revenue in 2010 and nine percent in 2011, is expected to continue. Optimists will argue that over the top social messaging represents an opportunity. Pessimists, or perhaps realists, will argue that there isn't all that much service providers can do except slow the rate of revenue descent. 


That might seem defeatist, but there already are prior examples. Telcos were not able to arrest dramatically-falling long distance calling rates over the past few decades. Telcos have not been able to reverse the trend of declining local voice lines for about a decade.


Text messaging appears to be the next service to enter a "mature" phase, as well. The point is that a product late in its life cycle is not that big an opportunity, except for the last remaining consolidator of such services. 


Much the same argument--that incumbents should embrace it fully-- has been made about VoIP services. But, with some exceptions, it has proven difficult for incumbents to embrace VoIP in ways that are revenue neutral. 

For example, VoIP service provider revenues will reach $18.9 billion, in the U.S. market, by about 2015, according to the Telecommunications Industry Association.

That compares with circuit-switched voice revenue that, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service, the data suggests.

But the notable point is that VoIP does not represent all that much revenue. In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

Why Family Mobile Data Plans are Coming

There are a couple of good reasons why U.S. mobile service providers will offer multiple-device mobile broadband plans, at some point relatively soon. Historically, plans of this sort have been quite effective at encouraging the addition of incremental users and devices. 


Family plans worked well to create incentives for parents to outfit their children with mobile phones, by lowering the incremental cost of adding the next device. Family plans also discourage churn. 


In the past, family plans have lowered barriers to use of voice and text messaging services, but mobile broadband has to be bought for every discrete device on the plan, with no advantage to the end user for volume purchases. 


As users, especially the higher average revenue users, adopt and use multiple devices benefiting from mobile broadband access, the attractiveness of "family" data plans will grow. A big surge in tablet ownership in the December 2011 holiday and Christmas season illustrated what you might have expected, namely that wealthier households own and use more tablets and other gadgets. 


According to the Pew Internet and American Life Project, adults over the age of 18 tend to own and use many mobile and portable devices. That is especially true for tablet users and e-reader users, who are more likely to own mobile phones, desktop PCs and e-reading devices, for example. 

25% of Households Worldwide Now Have Wi-Fi

At the end of 2011, 439 million households worldwide had installed home Wi-Fi networks, equivalent to 25 percent of all households, according to Strategy Analytics. 


The firm predicts that the total worldwide number of Wi-Fi households will reach nearly 800 million in 2016, a penetration rate of 42 percent.

Wi-Fi Households – Penetration of Total Households: 17 Selected Countries in 2011

Wi-Fi Household Penetration %						2011
South Korea						80.3%
United Kingdom						73.3%
Germany						71.7%
France						71.6%
Japan						68.4%
Canada						67.8%
Italy						61.8%
USA						61.0%
Spain						57.1%
Australia						53.8%
Czech Republic						31.6%
Mexico						31.5%
Poland						28.0%
Russia						22.9%
China						21.8%
Brazil						20.4%
India						2.5%

Consumer Mobile App Revenues to Pass $50 billion by 2016

Juniper Research has projected that annual revenues from consumer mobile applications will approach $52 billion by 2016 as consumer smart phone adoption accelerates in tandem with the emergence of a mass tablet market. The forecast might raise some pertinent questions.


Just what will that new revenue stream indicate about the emerging role of tablets in the device universe, and what, in turn, tablet apps might mean for the devices we know as "personal computers." Much will hinge on how that new revenue is created. Some will consist of content purchases. Some will be provided by in-app purchases of digital and physical goods. Some of the revenue will come from advertising and promotion. Other revenue will be generated by app sales (software purchases). 


Some of those shifts will affect the way PCs are designed and used, more than the others. Kip Cassino, Borrell and Associates EVP argues that by 2016, most computers available to consumers are going to look and act just like today’s iPhones and iPads. That means they will be able to communicate like cell phones, they will all have built-in GPS, and they will feature cameras and touch-screen interfaces. 


Most importantly, Cassino argues, they will depend on apps instead of expensive, bundled software  In fact, what we now call computers will have largely faded from the scene, except for some business and gaming applications. Personal computers will be replaced by mobile devices of one sort or another, Cassino argues. 


You don't have to agree with the time frame to agree with the direction of the user experience Cassino describes. 

Windstream, Frontier Make More Money from Business Customers than Consumers

Windstream Corp. defines itself as "a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. 

Frontier Communications says it is "a provider of  voice, broadband, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications for medium and large businesses in 27 states."

What you might say about those statements is that they are as much "aspirational" as a description of where each firm gets most of its revenue right now. 

At December 31, 2011, Frontier had 3,103,800 residential customers and 309,900 business customers. 

Business revenue tells the story, though. For the six-month period ending Dec. 31, 2011, Frontier earned $692 million in business customer revenue, and $544 million in consumer revenue.  

For Windstream, results were even more pronounced. Business revenue in the fourth quarter of 2011 were $888 million, while consumer revenues were $118 million. 

That is not to say a "typical" independent or rural telco will have an opportunity to create that sort of revenue distribution. Both Frontier and Windstream benefit from a presence in some mid-sized markets as well as rural areas, so the opportunity to sell services to businesses is greater. 

But results at both firms show a strategy that will work for the larger independents, namely an out-of-region emphasis on business customers and revenue, compared to in-region customers. 

India Will be World's 2nd-Largest Mobile Broadband Market in 2016

India will become the world’s second largest mobile broadband market within next four years with 367 million mobile broadband connections, second only to China, which will have 639 million mobile broadband subscriptions in service, the GSMA predicts:


The U.S. market, in contrast will have 337 million mobile broadband connections by 2016. 


Mobile broadband connections currently stand at a bit more than 10 million HSPA connections across the country. That number is expected to grow by 900 percent to 100 million connections in 2014. 



Tablets are a new factor in some markets. So is Long Term Evolution, though not in the Indian market.

Is Skype a Service, App or Feature?

According to Reuters,  Facebook and Google separately are considering some form of deals with Skype.


Facebook apparently has had preliminary discussions about buying Skype, while Google is said to be considering a joint venture. 


Not to be silly, but is Skype a "service," a "product" or a "feature?" To be sure, Skype generates something on the order of $900 million in revenue, the last time we had access to published information, in 2010. At that revenue run rate, Skype said it lost a bit of money, though, so it is a "revenue neutral" business, in a literal way, or at least used to be. 


That isn't to say all consumer "VoIP" services or business IP telephony services have similar issues. 

VoIP will continue to expand at double-digit rates in 2012 followed by high single-digit gains, averaging 9.4 percent on a compound annual basis for the forecast period to $18.9 billion, according to the Telecommunications Industry Association. 

Still, to keep matters in perspective, "legacy" circuit-switched voice revenue, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service. But the notable point is that VoIP does not represent all that much revenue, in an overall sense.

In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

In contrast, fixed network broadband access services will amount to about $46 billion in annual revenue by 2015. Entertainment video will contribute about $14 billion in annual revenue in 2015.

So VoIP will be a bigger revenue stream than entertainment television, but not by much. In 2015, legacy voice still will be the single most-important revenue stream for fixed-line service providers, by far, even though it is declining.

Skype revenue might or might not actually create earnings. 

Sprint Announces HTC Evo 4G LTE

Sprint just officially announced the HTC EVO 4G LTE, which is a variation of the HTC One. It features "speed and feed" advancements, but most users might not care about that, so much as the bigger screen, which measures 4.7 inches.

The new EVO also comes with a new Sprint service called HD Voice, a MicroSD slot and a 1.5-Ghz dual-core Qualcomm chip. Speeds and feeds get too much attention. If you have used the Sprint Evo, you know the kickstand is a big deal. Only now it will be red, and easier to see.

Seriously, the kickstand is really useful.

34% of U.S. Teens Own an iPhone; 40% Will Buy One in Next 6 Months

You probably won't be surprised to learn how popular the Apple iPhone is in the teenager demographic. About 34 percent of U.S. teenagers already own an iPhone, while 40 percent of those who don’t own an iPhone are expecting to buy one in the next six months, a new survey by Piper Jaffray suggests.


Piper Jaffray polled 5,600 American teenagers, which finds continued, rising interest for the device in the high-school demographic. 


The percentage of teens who own an iPhone rose to 34 percent from 23 percent in fall 2011, and 17 percent in spring 2011. Meanwhile, the percentage of those who hope to own one rose from 38 percent and 37 percent during the same time periods. 



Some 20 percent of U.S. mobile phone owners now describe their phone as an Android device, up from 15 percent in May 2011, according to the Pew Internet and American Life Project. 
Some 19 percent of mobile phone owners now describe their phone as an iPhone, up from 10 percent in May 2011,  according to Pew. 

LightSquared Mulls Bankruptcy

LightSquared is "seriously considering" filing a voluntary bankruptcy,  Reuters reports. That would appear to be a new position, since Chairman Philip Falcone had been insisting he would try to revive the company, in part by litigating the Federal Communications Commission's refusal to approve its petition for re-purposing satellite spectrum to build a terrestrial Long Term Evolution fourth generation mobile network. 


The new stance could be the result of pressure from major stakeholders, especially creditors, who are themselves threatening to file bankruptcy claims. 


Voluntary bankruptcy has frequently been a business strategy in the telecommunications business over the last decade or so, allowing firms to stave off creditors, erase debt and start over. The principal asset LightSquared would continue to own is its spectrum, even though the FCC has concluded that use of much of that spectrum to support a terrestrial mobile network would pose unacceptable interference with GPS service, aeronautical communications and military communications. 


At least near term, the biggest beneficiaries would seem to be the largest U.S. mobile service providers, who will not have to face a new LTE network operating on a wholesale-only basis, enabling many new competitors into the 4G market. 


But Clearwire, itself a major wholesale provider of 4G service, should be positioned to pick up many of the wholesale deals LightSquared had gotten, and now has lost. 

Little Innovation in Global Mobile Handset Business?

Some might argue there has been a slowdown in mobile device and application innovation over the last year or so. Whether, in most years, it is possible to point to huge breakthroughs, is an arguable point. 


But an inability to point to a single big innovation does not mean change is lacking. A sharp change in the installed base of Android and Symbian devices might indicate only a change in potential innovation, not innovation itself.  


But the explosive growth of the tablet market might be a clearer indication of innovation. True, we have been talking for some time about the smart phone as representing the next big wave of personal computing. 


We are talking about the "post-PC" era of computing, sometimes in reference to mobiles, sometimes in reference to tablets. Those changes likewise might be viewed more as "enablers" of innovation, rather than direct instances of innovation. Others would disagree, arguing that device adoption is itself a significant innovation. 


At least some of us would dispute the notion that there has been "little" innovation in mobile devices and apps over the last year. Some would argue that truly-important innovations take time to gain mass market adoption. In fact, really-important changes should be measured in decades, rather than years. 





Still, much of the innovation some expect will come in the area of user interfaces, moving beyond "touch" to include voice recognition and gesture recognition, for example. 

Mobile Business Finally Moving Beyond "Feeds and Speeds?"

The telecom industry is turning away from an emphasis on “speeds and feeds” to focus on customer experience, says Jean Foster, NeuStar VP. In many ways, that is parallel to a similar change PC suppliers have had to make over the last 10 years, when the value of raw computing power ceased to be as important as many had believed.


Foster notes that, at Mobile World Congress in 2011, the show buzz was all about fourth generation networks (4G) and Long Term Evolution. In 2012, there was a much-greater focus on the experiences mobile networks can offer. 


That's a significant change. From a marketing standpoint, it means more attention will be paid to what a 4G network means for users, other than "faster" access. For an industry that worries rightly about becoming a commodity supplier of simple "access" services, that is a useful change.

Over 1 million U.S. cable subscribers cut cord in 2011

According to Convergence Consulting,  2.65 million American multi-channel video service subscribers abandoned their video service between 2008 and 2011 and switched to over-the-top services such as Netflix.< By way of contrast, from 2000 to 2009 cable operators and satellite video providers added an average of around two million subscribers a year.

The report says that only 112,000 cable, satellite and telco TV service subscriptions were added in the United States in 2011, less than a third of the 380,000 added subscriptions that Leichtman Research Group reported in March 2012. 

What Would Your Business Look Like if the Key Constraint Became "Free?"

Though it might at one point have seemed ludicrous to imagine building a business on the backs of an assumption that computing hardware or bandwidth would someday be essentially "free," that has been a fundamental precondition for businesses ranging from Microsoft to Netflix to Google.

Computing power, alone, does not define the present, or the future. But it is helpful to remember that overcoming "impossible" business conditions can be imagined, and can be used to build huge new businesses.

Moore's Law allowed a young Bill Gates to imaging what his software business would look like if "hardware were free." Netflix assumed something similar would happen with consumer bandwidth, allowing Netflix to build a business of streaming entertainment video.

These days, other companies, including Netflix, have looked at Moore's Law and tried to imagine what their businesses would look like if "bandwidth were free." The point, by the way, is not that the inputs actually are "free," only that the inputs stop being barriers.

Smart engineers once believed it was "impossible to squeeze all the information contained in today's high-definition TV signal into just six megahertz of bandwidth. It once was thought impossible to load 40 channels of standard-definition video onto an analog laser. None of those feats are unusual today.

The point is that, at least where Moore's Law can be brought to bear, business leaders need to envision what is possible if some currently expensive barrier disappears.

The first semiconductor devices appeared 42 years ago. If we compare the evolution rate of the chip to that of the earwig, we get a ratio of 0.0000000097:1. That is, for every year it took to evolve the bug, it took a ninety seven hundred billionth of a year to evolve its electronic intelligence partner. If this rate continues, we’ll see chips as intelligent as we are within a decade, by 2023.

What would a world where devices are as smart as we are look like? It is impossible to envision any more than our great-grandparents could foresee the impact of plastics, automobiles, or airplanes. We are chained to the attitudes and realities of our past. Psychologists tell us that less than 1 person in 10,000 can foresee a future that’s very different than at present.

Not to be a Pessimist, but is "Cloud" UC an Admission of Defeat?

"Cloud-based" Unified Communications as a service now seems to be supplanting "collaboration" as the term of art for unified communications. Of course, every time the industry does that, it raises questions about whether the new buzzwords are mostly an attempt to refresh up and re-spin the argument for older products that simply haven't gotten the traction supporters would prefer to have seen.

That is not to say UC or hosted IP telephony or even IP phone systems are unimportant, especially for some niche suppliers in the broader communications business.

It is to note that, despite all the effort, UC and hosted IP telephony revenue remains at levels that make them "niche" products suited to some providers, but not really a big deal for any tier-one service provider. And that status virtually guarantees there will be little in the way of tier-one marketing push for the services, for simple reasons: the financial payback simply is not there.

According to the Telecommunications Industry Association, for example, the global telecom business represents about $4.7 trillion worth of revenue, globally, of which perhaps 46 percent represents service provider revenues earned from end users, either business or consumers.

The balance of revenue includes end user gear, software and services that complement or support communications functions provided either by network service providers or enterprises. So you might say direct service provider revenues are about $2.1 trillion.

In the United States, unified communications will represent about $1.7 billion worth of revenue. VoIP, including both the dominant consumer revenues and a smaller amount of business revenue, will represent about $14.6 billion.

By 2015, analysts at Gartner forecast, shows the IP voice-as-a-service in North America might reach $2.2 billion. The market obviously is much smaller than that at the moment.


That isn't to say hosted IP telephony, or cloud-based voice, are not driving a significant amount of access revenue. In fact, now, and by 2015, access revenue (SIP trunking, for example) will drive more revenue than hosted PBX services do.

Is hosted IP telephony the next generation of "Centrex?"  If so, that might be an admission that, after a decade of missionary work and evangelizing, unified communications and hosted IP telephony have failed to make much of an impression on business communications buyers.

Fiber Glut Redux?

You can draw your own conclusions about whether a higher tempo of optical capacity investments is a "bubble" or simply a prudent response to fast-growing demand, or something more nuanced. Once again, it is likely a bit of both will happen.

Excess capacity will be installed on routes that won't prove to "need" the capacity, while some of the capacity will be built at locations where it really does represent a good business case. But, as always happens, there will be over-investment on some routes.

The Wall Street Journal discussion settles none of the questions, but raises the "right" issues about substantial new demand, the importance of "location" and the "competition" from improved laser technology that could jeopardize the new cables and fibers.

How a Business Loses 90% of its Value in 5 Years: Could it Happen to Telcos or Cable?

"Avoid zero" is a paramount bit of advice I recall hearing often at a streaming media start-up. That can be difficult.

After changing hands three times in six troubled years, the Philadelphia Inquirer was was sold for a tenth of the half-billion dollar price they fetched as recently as 2006, according to consultant Allen Mutter.

A decade or so ago, the Inky and the Philadelphia Daily News would have been worth the batter part of a billion dollars. The assets have sold for $55 million.

The broader implications, for any business facing disintermediation from Internet and Web alternatives, would seem to be clear enough. If a business, or an industry, faces sure decline of its primary revenue source, that business or industry has to find a replacement.

You might argue the telecom industry is in that situation. The difference is that the telecom industry already, at least once, has shown an ability to replace a key source of revenue and profits.

Globally, earnings growth at the largest public telecom companies over the last three years trailed revenue growth by an average of 50 percent over the last year, according to AlixPartners. This is especially the case in North America, where earnings before interest, taxes, depreciation and amortization trails revenue growth by a factor of ten, AlixPartners argues.

Overhead costs (sales, general and administrative) also are outstripping both earnings and revenue increases. And though carriers have pared capital investment where they can, postpoining projects that will need to be undertaken at some point, such restraint never can last indefinitely. The common pattern is three lean years followed by three to four where spending ramps up again, one might note.

Those findings are consistent with virtually all other studies of global telecom provider financial performance, and simply point out the structural changes occurring in the telecom business. Basically, older legacy products that underpin the bulk of total revenue are in a declining phase.

Until quite recently, robust growth of mobile services has compensated for the weaker fixed-line performance. But the wireless revenue growth engine now is peaking as well, at least in developed markets.

That means the largest global operators are entering a period of heightened danger and opportunity. The way some of us might describe the challenge is that carriers essentially must replace "half of all existing revenue within about 10 years."

And there are good reasons for making those sorts of predictions: it has happened at least twice in the past couple of decades. Most cannot now remember a time when "long distance" represented nearly half of all revenue for a large U.S. telco. But that once was the case.

And where local telcos once had nearly 100 percent of the market for fixed line voice, the only question now is whether the large providers will stabilize somewhere around 50 percent of the total market, or drop lower.

To be sure, mobile service revenue has been the run-away killer revenue source for most tier-one providers.

Broadband has helped a lot, and video helps a little. But mobile and broadband are mature, and video, though it will help, is a relatively lower-penetration, lower-margin service for most telcos.


Though it is likely mobile broadband will help preserve roughly the existing revenue contribution from mobile services, it is starting to appear as though even mobile broadband will fall short of fully replacing declining mobile voice revenues. So far, there is no clear industry consensus on what the new revenue "killer app" might be.

That suggests a period of continued experimentation with multiple new potential revenue sources, until something clearly emerges.

Of course, carriers can work at cutting  operating costs. But it is the "revenue enhancement" part of the strategy that is the toughest, as carriers have been cutting costs for nearly a decade already. 


And part of the problem is that it takes a fairly good-sized new revenue stream to make a difference for a tier-one telco or cable company. It isn't an easy thing to identify any new market, and execute well enough, to capture $1 billion in new revenue over a five-year period, for example.

Android, iPhone Wi-Fi Patterns are Different: Issue is "Why?"

A comScore analysis of U.S. Wi-Fi and mobile Internet usage across unique smart phones on the iOS and Android platforms reveals that 71 percent of all unique iPhones used both mobile and Wi-Fi networks to connect to the Internet, while only 32 percent of unique Android mobile phones used both types of connections.

If one assumes users are rational, how does one explain the difference in behavior? Also, the pattern of behavior in the United Kingdom is consistent with the U.S. results, as 87 percent of unique iPhones used both mobile and Wi-Fi networks for web access compared to a lower 57 percent of Android phones.

U.S. smart phones on the AT&T network were more likely to use Wi-Fi than those on other major operator networks, likely due to AT&T having both a greater iPhone market share and the largest Wi-Fi hotspot network in America.

Some might argue the problem is just that Android users can't figure out how to use Wi-Fi on their devices.

In the U.K., smartphones on the Vodafone, Telefonica and Orange networks were more likely to use Wi-Fi than were others on other U.K. operators.

In the U.K., the scarcity of unlimited data plans and higher incidence of smart phone prepaid contracts likely contributes to the use of Wi-Fi.

In addition, the current lack of high-speed data networks in the U.K. might also lead users to seek out higher bandwidth capacity on Wi-Fi networks, comScore speculates.

In the U.S., the increased availability of LTE, 4G and other high-speed data networks doesn't explain the pattern of heavier iPhone usage of Wi-Fi as well as the preponderance of devices on the Wi-Fi-extensive AT&T network.


 

Apple Earns 80% of Mobile Handset Profits in 4th Quarter 2011

Apple and Samsung accounted for a stunning 95 percent of the handset industry's profits during the fourth quarter, according to a study Canaccord Genuity Canaccord Genuity.

By itself, Apple accounted for 80 percent of the profits in the period.  That isn't the first report showing similar results, only the latest.

Social Networking Displacing "Knowledge Management?"

Sometimes it isn't easy to understand how dramatically-new technology can be applied in a business setting. Consider "social" software and networking.

As it turns out, enabling workers to set up profiles, form groups and "follow" each other's status updates can provide direct business value. It isn't just the social connections. The new software increases productivity by making it easier for employees to identify who does what within an organization and to share their knowledge.

Some of you might instinctively recognize that these are the sorts of problems "knowledge management" was supposed to address, a couple of decades ago. 

Social networking might be providing some of that value in a new way.

That doesn't necessarily or primarily mean using Facebook, though. Tibco Software launched a service called tibbr that not only enables users to follow what colleagues are doing, it also allows them to follow data, such as the status of an order or invoice.

The 25 Brands Small Businesses Respect Most

A list of the 25 brands small business executives respect the most has Apple at the top, followed immediately by Google. The l;ist was developed as a part of surveys sponsored by the Business Journals.

The study was based on interviews with more than 2,000 small and medium business owners, CEOs and presidents. This year, 291 brands were included in the proprietary study conducted annually by the Business Journals.


The study shows increased business usage of mobility products such as tablets, smart phones and cloud computing. But no communications company appears in the top 25, though. 

Retina Display Appears to Drive New iPad Sales

If Changewave survey respondents are indicative of broader buyers, the new "Retina" display on the latest Apple iPad accounts for the buyer interest. The high-definition display far outweighs other attributes consumers indicated were their favorite attributes about the latest iPad.

The High-Resolution "Retina" display was cited by 75 percent of buyers as the attribute they liked best about the device. Battery life, processor speed or faster mobile broadband ranked much lower.

Mobile Commerce Seen as Biggest Transformation of Telecom Industry

Mobile commerce, mobile banking and mobile payments  will have more impact than converged services, next generation networks or Long Term Evolution, a survey of 137 global service provider executives suggests.

That might come as a surprise. Keep in mind the survey was largely of revenue assurance professionals, whose job roles and perspectives are different from those of marketing, operations or financial professionals, perhaps.


But the rankings might also reflect a clear recognition that new revenue sources from banking, payments and commerce will have new revenue leakage impact to account for.


Billing and security issues also will increase, and those also are issues revenue assurance personnel would be acutely aware of.

Will Google's New Tablet Store, and Tablet, Succeed?

The fact that Google is launching an online store to sell a new line of branded tablets is not as major a move as opening a line of retail stores, something Amazon apparently actively is considering. The bigger issue is whether Google can create a successful tablet.

Some might speculate that Google will have no more success than it did when it launched the Nexus smart phone, attempting to sell it essentially over the objections of the mobile service providers. Some would have suggested that would not work.

But selling PCs is different from selling mobile phones. Tablets are more like PCs, in terms of the "necessary" involvement of any third parties. PCs, tablets and other personal devices are bought at retail outlets, not just phone stores, where most mobile phones get sold. In principle, selling tablets online will not be as difficult as selling mobile phones online.

The bigger issue is whether the Google tablet has developed, or can develop, the app ecosystem and cachet of the iPad, or create some new identity and niche in the tablet market.

Users of the Kindle Fire might note that the Amazon "content store" is so rich with book and magazine content that the relative availability of other mobile apps, compared to the iPad,  is not a real problem. One might argue the Kindle gets used frequently for reading and other Amazon purchases,  so has a distinct niche in the market. The Kindle Fire acts as a portal to Amazon content, to a large degree.

Google will have to find some role of its own, one might argue.


Some might argue that there is, functionally, no way for any other firm to "compete" with the Apple iPad. Instead, other distinct niches have to be discovered. 

Google's Android Doesn't Generate Much Revenue for Google: Maybe it Isn't Supposed To

Multi-product firms tend to sell products with varying profit margins, and different gross revenue contributions. Google doesn't appear to be any different. Most of Google's revenue is generated from advertising, and some from software licenses.

It appears the open-source Android effort has generated less than $550 million in revenues for Google between 2008 and the end of 2011.

The figures also suggest that Apple devices such as the iPhone, which use products such as its Maps as well as Google Search in its Safari browser, generated more than four times as much revenue for Google as its own handsets in the same period.

If correct, those figures would not be terribly surprising. The whole point of Android was to create a widespread mobile ecosystem that is the foundation for the actual revenue-generating activities, not a terribly important revenue creator in its own right.

Is Multimedia Messaging Service a Success, or Not?

Is $30 billion worth of revenue, on a global basis, a big deal or not? In a business that generates $2 trillion annually, perhaps not.

Still, expectations often are crucial when assessing the relative success of any new communications service.

Multimedia Messaging Service, for example, was viewed through a text messaging lens. Compared to some other services, MMS contributes a meaningful amount of revenue, though not compared to text messaging.

Portio Research thinks MMS to generate over $180 billion for the five-year period 2012-2016.
Such a demonstrable pedigree over the years has made it all the more baffling as to why such a valuable service never shook-off the industry misconception that it was a failure.

Some would say MMS launched with the unrealistically high expectations that it would mirror the success of SMS. It hasn't.

Why Developers Write First for iTunes App Store, Later for Google Play

Money talks. The rich get richer. The big get bigger. All three rules of thumb apply to mobile app stores. Using revenue per app at Apple's App Store as an index, developers ought to favor iTunes, as they will tend to earn more than four times as much revenue as the same apps created for Google Play, the Android app store.



Amazon Appstore revenue is 89 percent of iTunes App Store revenue, and Google Play revenue is 23 percent of iTunes App Store revenue, according to Flurry.

Are "Bits" "Just Bits?" Almost Never

What is the difference between Comcast selling cable TV service and Comcast selling a IP-delivered video service? Answer: potentially only the regulatory regime each service operates under. There are, to be sure, many important business ramifications. But video services regulation now is as broken as voice regulation has become, as virtually all services and all networks use Internet Protocol.

For purposes of engineering, it often is true that "a bit is just a bit." For business and regulatory purposes, that almost never is the case. It matters who sold a bit, who bought a bit, where the seller is located, where the buyer is located, what equipment was used to receive and use the bits, what sort of network the bits moved over, and any number of other distinctions.

These days, in the video entertainment business, a key distinction exists between a "managed network and service," and the "un-managed Internet," as different rules apply to treatment of bits in each bucket. Basically, entertainment bits delivered over a virtual "managed network" are exempt from "Internet" rules, even when delivered over the same physical network.

The reasons are largely because in the past legacy services including voice, TV, newspapers and data services were regulated in distinct ways, and those distinctions remain in place, even if the technology used for delivery now has largely converged.

There are many practical implications, though. Comcast can use a managed approach to deliver hundreds of gigabits worth of data, 24 hours a day, seven days a week, as "cable TV," without charging any of that usage against a customer's broadband access bandwidth allocation.

Data services purchased by business users likewise are exempt from the "Internet access rules."

But Comcast cannot, on its "high speed access" service, discriminate between different bits, meaning all services are "best effort" only. And usage of bits in that manner have a physical cap, each month.

So the reality is that some bits on Comcast's network are treated one way, other bits get treated differently, from a regulatory point of view. That means users are not "charged" usage for watching television bits sold as part of Comcast's Xfinity video service.

Users are charged for using any "Internet" apps, though. In the same way, Verizon's users are not charged for use of IP voice services as part of their high-speed-access services, even though, increasingly, every service Verizon delivers uses IP and flows over the same facilities.

PayPal, Gas Station Chain use GPS to Launch Mobile Payment

Regional gas station and convenience store chain Cumberland Farms has launched a new "SmartPay" mobile app that uses GPS to launch a PayPal account transaction and offers a five-cent-per-gallon discount for doing so.

The app can be launched at a supported Cumberland Farms location, and then GPS is used to determine where the user is. Once the user enters the pump number, the app automatically makes the payment and emails a receipt.

Some might argue that is perhaps a more-interesting use of "location-fixing" technology than near field communications.

Cloud Computing Will Drive Revenue, But What Types, How Much?

Service providers widely believe cloud computing will be an important source of new revenue, and there is truth to that belief, but possibly not the way many are thinking about the business. Cloud computing includes a number of discrete potential revenue streams, ranging from direct retail sales of applications to end users, either consumer or business. There is the rental of computing cycles and storage capabiltiy, as well as "platform" as a service, where a customer might rent an applications environment, often for purposes of developing new apps, for example.

By most current projections, SaaS will represent the biggest business, representing the most revenue. IaaS might be the next biggest, while PaaS will remain the smallest business, in terms of revenue. One forecast by the Yankee Group has SaaS representing perhaps 70 percent of total revenue in 2013.

North America, specifically the U.S., currently represents the largest opportunity for SaaS, and it is the most mature of the regional markets, Gartner argues. SaaS software revenue is forecast to total $9.1 billion in 2012, up from $7.8 billion in 2011, Gartner says. But that is revenue earned by software suppliers, not directly by hosting companies, data center providers or telcos.

North America shows the highest SaaS deployments in expense management, financials, email and office suites, for example. It might be prudent to discount the notion that cloud computing revenues for service providers running data centers will capture very much of that sort of revenue.

Verizon Promises Mobile Video Service

Mobile video is the benefit for end users if the Federal Communications Commission allows Verizon Wireless to buy spectrum from several U.S. cable operators. Though it is not formally linked to the spectrum sale, Verizon has agreed to provide its products to Comcast, Time Warner, Cox Communications and Bright House Networks under “agency” agreements, in return for Verizon rights to sell cable products under similar agreements.

The agency agreements allow the cable companies to sell existing Verizon products, under the Verizon brand name and retail packaging, and allow Verizon to sell existing cable products, likewise under the existing cable names and packages. If the deal is approved, the partners would, in five years, be able to buy wholesale from the other partners and then “rebrand” them for retail sale.

One suspects there will be a tie-in with the new online video venture Verizon has created with Coinstar, the owner of the Redbox DVD rental kiosk business, though that has not been formally talked about, in public, by Verizon or Coinstar.

One suspects there are other implications, if Verizon’s spectrum buy is approved, and as plans for mobile video are developed. One clear problem is the amount of bandwidth any mobile video service would represent. Many users would find their monthly data caps are reached after watching just two movies, for example.

That suggests something will have to be done that removes that threat. Many have speculated that one solution is to exempt the viewing of such video from user data consumption caps. That also implies, though, that the video service providers and content owners can agree on some reasonable formula for “paying for” the use of such bandwidth.

Proponents of “network neutrality” might have problems with such deals, but that is one reason some have argued against confusing “no blocking of lawful applications” with separate policies to manage networks for performance, or to create different charging mechanisms for different applications and use cases.

Entertainment video has been the poster child for such differential pricing. Other real-time services such as voice and conferencing have been similar examples of applications that virtually demand packet prioritization to maintain quality of experience, at times of network congestion.

Congress, FTC Look at "Mobile Money"

Though executives at banking and financial services firms, as well as telcos, are well aware of the key role regulators play in shaping their businesses, technology firms, especially software concerns, probably do not fully realize how much regulation ultimately will shape the mobile commerce, mobile payments and mobile wallet businesses.

At the moment, most of the activity consists of efforts by participants to get traction with key stakeholders, early in the creation of what most hope will prove to be large businesses.

At some point, regulation is going to play a bigger role in shaping the fortunes of contestants, though.

"Money" is a highly regulated function, and banking likewise is a business with lots of regulatory context. Some of those rules relate to consumer protection, while many others limit and define the lawful scope of what can be done.

So it is no accident that both Congress held hearings on mobile money in March 2012, while the Senate and Federal Trade Commission also plan their own hearings in April 2012.

“We are, I think, on a precipice of some fundamental change in the way money is exchanged between consumers and businesses,” said Rep. Shelley Moore Capito (R-W.Va.) during the House Financial Services Committee consumer credit panel’s hearing on The Future of Money.“


The Senate banking committee also will hold the latest in its series of planned sessions on the mobile payments issue, and it plans to call witnesses from the Federal Reserve system to discuss information security and financial disclosure issues.


Separately the FTC will hold hearings on April 26, 2012. 


Among the questions are "jurisdiction," as one might argue the Consumer Financial Protection Bureau, the Federal Trade Commission, the Federal Deposit Insurance Corp., the Federal Reserve or  Federal Communications Commission have roles to play. 


Unfortunately, some contestants will wind up finding out that regulatory bodies have imposed rules that make some business plans unworkable, others merely much less profitable. 

"Post-PC" Means More Androids than Windows Devices

Android will be the leading platform for “smart connected devices” by 2016, overtaking Windows and iOS in units shipped, according to International Data Corporation.

The IDC predicts that in 2016 shipments of smart phones, PCs and tablets will reach 1.84 billion. This will be more than double the 916 million shipped in 2011, which created $489 billion (£308bn) in revenue.