Friday, February 1, 2008
How Microsoft-Yahoo Stacks Up with Google
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Why Microsoft Wants to Buy Yahoo
Putting the assets together boosts combined search market share to 36 percent, compared to Google's 53 percent, giving Microsoft-Yahoo a fighting chance to compete in a market that will not support any other serious contenders for leadership.
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Roughly the same logic holds for other Internet applications where the three companies compete, or might like to. Microsoft is a contestant in the MP3 music player business and never has been able to challenge Apple. Maybe the Yahoo assets somehow can help Microsoft do better in the music or video download markets.
As you would expect, Microsoft argues there are significant benefits of scale in advertising platform economics, capital costs for search index build-out and in research and development that it will benefit from.
True, though part of the broader problem is the sheer range of competencies the companies require, the markets they participate in, the media types they support and the ecosystems each has to find a way to fit into. The problem is that the places Microsoft might potentially have to compete are so diverse.
There's ad placement, blogging platforms, collaboration, software development, mapping, location services, mobility, peer-to-peer distribution, photo sharing, social networking, communications, video, enterprise applications and analytics, for example.
Search is the obvious place Microsoft gains mass. One cannot yet forecast how well the Yahoo assets will help in all the other areas.
There's danger of another sort here for Microsoft as well. Never before as Microsoft made such a large organization. And there's a cultural issue as well. Though it never is easy to integrate two or more companies, there's an additional problem here. Yahoo has become a lehargic company that can't seem to innovate, and can't seem to move fast even when it knows where it wants to go.
Microsoft, on the other hand, no longer is a fast-moving company, either. In the Web services area, it has shown no ability to seize market share and momentum sufficient to wrest leadership from Apple or Google or Amazon, for example. In fact, it is precisely frustration with Microsoft's inability to seize leadership that prompts the "buy share" strategy.
Putting two slow moving or arguably ineffective companies together does not seem a recipe for reinvigorating innovation within either of the two former companies. Sure, it buys Microsoft market share in the search market. Whether Microsoft will be able to do anything with its new assets is the question.
Microsoft's desktop and office productivity software businesses remain formidable. It simply isn't clear whether those assets help Microsoft so much in the ad-driven search business.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Thursday, January 31, 2008
at&t Wireless Outage
In case you are having trouble sending and receiving email on your at&t Wireless smart phone, or are unable to get connected using your data card, there is a wireless network outage affecting at&t Wireless users in the Midwest and Southeast.
Labels:
att Wireless,
outage
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Magnitude of Nextel Blunder
In its most-recent 8K filing with the Securities and Exchange Commission, Sprint Nextel Corp. says it may have to write off the full value of the $31 billion worth of "goodwill" carried on its books as an asset related to the Nextel acquisition. The move will not affect Sprint Nextel's cash balance or future cash flows but will affect the company's statement of assets.
One way of looking at the impact of the overpayment is to analyze the former Nextel's contribution to Sprint Nextel's overall business. In the most-recent quarter, Sprint Nextel reported $8.04 billion worth of service revenues, of which the former Nextel business contributed 35 percent, or about $2.6 billion. On an annualized basis, call that $10.3 billion of gross revenue.
Sprint's profit margin on wireless services is about 32.4 percent. So call the former Nextel profit as $3.3 billion a year. The magnitude of the overpayment is 9.4 times the annual profit from owning the business.
One way of looking at the impact of the overpayment is to analyze the former Nextel's contribution to Sprint Nextel's overall business. In the most-recent quarter, Sprint Nextel reported $8.04 billion worth of service revenues, of which the former Nextel business contributed 35 percent, or about $2.6 billion. On an annualized basis, call that $10.3 billion of gross revenue.
Sprint's profit margin on wireless services is about 32.4 percent. So call the former Nextel profit as $3.3 billion a year. The magnitude of the overpayment is 9.4 times the annual profit from owning the business.
Labels:
Sprint Nextel
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Sprint Made a $31 Billion Mistake Buying Nextel
In its most-recent 8K filing with the Securities and Exchange Commission, Sprint Nextel Corp. says it may have to write off the full value of the $31 billion worth of "goodwill" carried on its books as an asset related to the Nextel acquisition. The move will not afect Sprint Nextel's cash balance or future cash flows but will affect the company's statement of assets.
The coming write down essentially means Sprint overpaid $31 billion to acquire Nextel. Blunders of that magnitude often are enough to spell the end of independent life for any corporation that makes such a sizable mistake.
The coming write down essentially means Sprint overpaid $31 billion to acquire Nextel. Blunders of that magnitude often are enough to spell the end of independent life for any corporation that makes such a sizable mistake.
Labels:
Sprint Nextel
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
C Block Hits Threshold for Open Access
The C Block of 700-MHz frequencies today hit the minimum amount required to trigger the "open access" provisions Google had been so anxious to foster. So now we have to wait and see who ultimately wins the spectrum. At this point, Google's minimum business objectives have been met.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Taiwan Earthquake Just a Year Ago
And speaking of cable cuts that massively disrupt global communications, it was just over a year ago, in December 2006, when an earthquake took out a number of Pacific cables.
Those cable cuts took out much voice and Internet communications in many parts of Asia, as well as 60 percent of capacity between Asia and the United States.
The 2006 Hengchun earthquake occurred on December 26, 2006 at 12:25 UTC (20:25 local time), with an epicenter off the southwest coast of Taiwan, approximately 22.8 km west southwest of Hengchun, Pingtung County, Taiwan, with an exact hypocenter 21.9 km deep in the Luzon Strait ( [show location on an interactive map] 21.89° N 120.56° E), which connects the South China Sea with the Philippine Sea.
Those cable cuts took out much voice and Internet communications in many parts of Asia, as well as 60 percent of capacity between Asia and the United States.
The 2006 Hengchun earthquake occurred on December 26, 2006 at 12:25 UTC (20:25 local time), with an epicenter off the southwest coast of Taiwan, approximately 22.8 km west southwest of Hengchun, Pingtung County, Taiwan, with an exact hypocenter 21.9 km deep in the Luzon Strait ( [show location on an interactive map] 21.89° N 120.56° E), which connects the South China Sea with the Philippine Sea.
Labels:
outage
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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