How are Telcos Like the London Times?

"Newspapers have found that chasing page views in the hope that advertising will save them is hopeless," says John Gapper, Financial Times columnist. And the newspaper industry's encounter with the Internet is very-much akin to the telecom, publishing, music and retailing industry's similar encounter: aside from removing a good deal of profit margin from the legacy business, the new Internet ecosystem will force providers to embrace new revenue models that supplement the traditional sources.

Where newspapers have had two sources--subscribers and advertisers--in the future they might require additional sources. Think about Bloomberg, for instance, which offers business information services but also television, radio, the Internet and printed publications.

Likewise, where most telecom providers have in the past had only one major revenue source, namely subscribers, in the future they likely must create additional revenue streams by providing valuable services to business partners, thus becoming "two-sided" or "multiple revenue stream" operations.

The point is that the Internet undermines the old revenue ecosystem and demands creation of a new model. It typically is the characteristics of success using the new model that remain murky.

Giving up on Internet-driven readership, News Corp. will soon put The London-based Times behind a firewall and even will prevent Google and other search engines from indexing the paywall content. television, radio, the Internet and printed publications.

The point is that News Corp has concluded there is no viable business model in the new Internet distribution system, save the closed model that essentially retrenches from wide Internet distribution.

Some might argue that is fundamentally what will happen with most service provider revenue from voice services as well. It will not prove viable except as a more-limited service more focused on some higher-paying customers, as much traffic bleeds off to free and low-cost alternatives made possible by the broadband accessed Internet.

News Corp estimates that the marginal revenue from an occasional browser is less than one tenth of a penny a year. Group M, the media buying agency of WPP, refers to the bulk of news surfers as “useless tourists” who not only pay nothing but have little advertising potential.

“Free distribution of premium content is like eating your babies," says Group M. "You will give value away until you go bust.” It's recommened strategy to avoid what it calls a “permanent oversupply of digital inventory” on the open web is by using a paywall to “lift the publisher out of remnant inventory and restore a much smaller but aggregated audience.”

Trade wide distribution for a smaller number of customers willing to pay, in other words. "Nice to have" must become "must have" for the strategy to work.

News Corp seems clearly to have concluded there is little money in online news, given the number of "free" providers. Providers in other industries, including telecommunications, will face different tactical issues, but the same strategic issue.

Over time, choices will have to be made about where it is possible to provide value, and where revenue streams therefore can be created and sustained. Willy nilly embrace of new channels likely will work no better than it has for most newspapers that have gone "online."

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I'm Afraid Greasy Screens are Just a New Fact of LIfe

Touchscreens on tablets, smartphones, MP3 players and all sorts of other gadgets just seem to be the way things are going. It's just a new maintenance chore we have to deal with.

Sprint Will Hit it Out of the Park with Evo

I think Sprint is going to hit it out of the park with the Sprint Evo.

Mobile Ads Up to 5X More Effective Than Online, Study Finds

Mobile ad campaign norms are four-and-a-half to five times more effective than online norms on measures of unaided awareness, aided awareness, ad awareness, message association, brand favorability and purchase intent, according to InsightExpress.

InsightExpress also says mobile media outperforms online media in ability to drive purchase intent (170 percent increase) and brand favorability (85 percent increase).

50 Million Femtocells by 2014?

More than 50 percent of mobile data sessions originate indoors, say researchers at the Yankee Group.

And since 40 percent to 60 percent of mobile operator operational expense is attributable to backhaul transmission costs, Jennifer Pigg, Yankee Group analyst, expects data offload solutions, ranging from femtocells to Wi-Fi,  to be a growing area of interest.

Indeed, 60 carriers are in femto trials, with 13 commitments and nine commercial services already launched (AT&T, Vodafone, SFR, China Unicom, DoCoMo, SoftBank, Optimus, StarHub, Sprint and Verizon).

Acer to Market Tablet and E-Reader

Acer Inc. will start selling its first e-reader later this summer and also a touchscreen tablet computer in September or October, according to the Wall Street Journal. The e-book reader features a six-inch display, while the tablet PC will feature a seven-inch screen, and is powered by Android.

The interesting angle here is that consumers will have a choice of form factors. Apple's iPad uses a screen that is almost 10 inches diagonally, while Dell will sell a device with a five-inch screen. Acer is in the middle with a seven-inch screen on its tablet.

The issue, beyond the broad issue of whether tablet PCs represent a new PC segment or a new device category, partly hinges on what people decide they want to do with such devices.

Smaller screen devices such as the Dell might be seen as functionally similar to smartphones, in terms of portability. Large-screen devices cannot be conveniently carried in pockets or purses, and likely will compete more with netbooks or notebooks.

The Acer e-reader, dubbed "LumiRead," has a six-inch display and is equipped with two-gigabytes of flash memory, which allow it to store up to 1,500 books. Acer, which shipped more PCs than any company except Hewlett-Packard Co. in the first quarter, will sell its e-reader first in the U.S., China and Germany.

Why E-Book Readers are Like Netbooks

In some ways, e-book readers are in a situation similar to netbooks, which is to say, they both are product categories that face substitute products. E-book readers are going to be pressured by tablet PCs and even smartphones, while netbooks are going to be pressured from one side by tablets such as the iPad and notebooks whose better features and prices will continue to make them suitable substitutes for netbooks in perhaps seven out of 10 cases.

According to the latest research from Informa Telecoms & Media e-reader sales are expected to peak at 14 million in 2013, before falling by seven percent in 2014 as the segment faces increased  competition from  a wide range of consumer electronic devices.

Multi-function devices notably mobile phones and tablet-form-factor computing devices are the chief competing types of devices e-book readers will face.

This is likely to lead to a segmentation of the e-reader market into two groups; low-price, low-feature models and higher-price devices with advanced features, Informa predicts.

In order to survive, there are a number of approaches that vendors can take. They can develop low-cost e-readers with minimal features that can be used in conjunction with a PC or USB dongle to access additional content. E-readers like the Kobo ($148), may appeal to the cost-conscious reader, for example, Informa suggests.

Alternatively, high-end e-readers will start to resemble tablet computing devices. These will in effect become more like smartbooks than e-readers. Early steps in this direction include Barnes & Noble's latest software update for the Nook which adds games and a more open web browsing functionality.

Many e-reader companies are already looking to develop an electronic reading platform, initially based on their e-reader devices, but that will extend across e-readers, mobile phones, netbooks, note-books and desktop PCs.

The point is that netbook and e-book product segments likely will change as more tablets and smartphones provide end-user functionality that competes with e-book readers and netbooks.