Has the Social Media Bubble Popped, or is the Real Bust Coming?

Whether we have been in a new Internet bubble like that of the years leading up to 2001 is a matter of huge dispute. Some might argue, based on the Facebook initial public offering, that the bubble already has popped. Others might argue the bursting bubble is yet to come. 


The argument that Facebook being the worst IPO of the last decade is a harbinger, but not the bursting bubble. That will happen only when valuations of most other firms with a social element also crash and burn. 


To be sure, some have been sounding the alarm for a year or more. "We’re now in the second Internet bubble," said Steve Blank, a serial Silicon Valley investor. 


The signals were that "seed and late stage valuations are getting frothy and wacky, and hiring talent in Silicon Valley is the toughest it has been since the dot.com bubble."


"The most telling indicator [of a bubble] is the $1 billion-dollar valuation," Gartner's vice president Ray Valdes recently argued about Facebook's purchase of Instagram. "Two- and three-person Silicon Valley startups [are] getting venture capital funding within days or weeks, rather than months, for stuff that is more of a feature than an actual product," he noted. 


Some of us would argue the bubble hasn't burst yet. You'll know when it does; it won't be a debate. 

Verizon 300 Mbps Will Cost $205 a Month

Verizon's new 300 Mbps high-speed access service, to be launched on June 17, 2012, reportedly will cost $205 a month, when bought on a two-year contract, according to the Verge. 


Non-contract service adds $5 a month to the cost, and customers who do not buy a bundled phone line will pay another $5 a month. 

When Will Twitter Reach $1 Billion in Ad Revenue?

Researchers at EMarketer Inc. have said that in 2014, Twitter will reach $540 million in ad sales, which make up virtually all of its revenue, up from $139.5 million last year. The obvious question is how long it might take before Twitter reaches $1 billion in annual revenue.


The answer might be important if you think Twitter is a valuable service that needs a big revenue source to continue to operate. 

NimbleTV Wants to "Outsling" Slingbox

In some ways, Slingbox has been a key motivator behind thinking about "TV Everywhere" and other services that allow consumers to view at least some of the programs they have purchased as part of a video subscription service on their PCs, tablets and smart phones.


With TV Everywhere, customers must first buy the video subscription, and only then add on the streaming feature, which, depending on revenue model, is either an additional feature or an incremental fee service. 


A new service called NimbleTV, which is said to be testing in the city of New York, apparently allows full placeshifting of the full package of television channels that a customer buys through a video subscription service. 


That "sell through" approach is intended to sidestep any copyright issues, as users must first buy  a video service, and then are using NimbleTV only as a virtual digital video recorder. The big issue could arise later, if NimbleTv succeeds, and then wants to be able to sell a Comcast service to a customer where the local provider is Verizon or Time Warner Cable. 


You might think video distributors would fear services such as NimbleTV or Slingbox, but Time Warner Cable actually gives a Slingbox, free, to customers who buy its $100 broadband access service, on the assumption that such users are heavy streaming video consumers. 


Also, Sling is owned by EchoStar, the sister company to Dish Network. 


NimbleTV also seems to be offering the content providers and distributors a revenue share, so there is incremental revenue involved the key stakeholders. 


Placeshifting, of course, has been the key value of Slingbox. As with any copying and viewing of network content, copyright law can become an issue, though courts have ruled that a consumer who only slings content to himself or herself at a different location is not violating copyright. 


NimbleTV itself says the service 'is based on the simplest idea: customers should be able to access the TV they pay for wherever they happen to be." As NimbleTV takes a "sell through" approach, meaning customers buy the content first, then are able to use NimbleTV.


"We also stand behind the idea that providers and content producers should be paid, so we view NimbleTV as a solution that’s both consumer friendly and industry friendly," the company says. 


Those of you with a technical bent might be wondering how NimbleTV will manage a process that conceivably could require capturing and storing an enormous amount of content, in real time, 24 hours a day, for every single customer. 


In other words, does NimbleTV "actually" capture and save in the cloud each unicast subscriber stream? Undoubtedly not. It is probably hoping to get contracts with each major provider in a local market, and then revenue share with those providers.


That will "solve" the content capture and storage problem. In essence, NimbleTV would store a "single" instance of each program, and then grant access only to those channels a subscriber has as part of his or her programming service. 


In other words, if it gets permission from the leading cable, satellite and telco providers in New York, it can capture and store "one copy" of each network program, but allow users to watch only  programs on channels each subscriber already has purchased from a supplier. 


Also, the service is geographically "tagged," so that today beta test customers get New York programming to a New York address, according to  BTIG Research.


NimbleTV hopes to escape legal problems by acting only as an agent for each subscriber, for "private performance" purposes. Also, NimbleTV will operate on a "single stream at a time" basis. 


In appears NimbleTV will capture distributor video centrally, at a data center, and not at a local subscriber location, where the content then is uploaded over the subscriber's own broadband connection. 


The destabilizing potential might come if a subscriber in one region wants to subscribe to a service package from a provider in another region. It isn't completely clear whether the video distributors and content owners will continue to work with NimbleTV if it were to allow a person in Denver to buy a service offered locally in Miami, for example. 


But NimbleTV is another example of how cloud-based architectures are potentially enabling new services that could start to challenge today's video ecosystem. And that could happen even with the support of the content owners and distributors who might ultimately be affected. 

Should Mobile Service Providers Embrace Over the Top Voice?

Telecom service providers face big challenges when deciding what to do about over the top applications. In some cases, especially in highly-competitive markets where over the top apps have gained significant share, it will make sense to compete with carrier-owned over the top apps. 


In other cases, OTT will make sense, but as a way of getting customers in out-of-region markets. In other words, a mobile service provider might launch a branded app, but mostly to gain revenue from OTT users who are not already "customers." In that scenario, OTT apps are less a response to in-region competition, and more a growth strategy for out of region.


In other cases, "not competing" might be seen as a safer approach. 


AT&T CEO Randall Stephenson, for example, thinks data-only pricing plans for mobile handsets are "inevitable."  As with "naked DSL (digital subscriber line) plans, AT&T would sell mobile broadband without voice service and then let users choose their own VoIP and messaging providers. 


"I don't think we'll see a big flash cut, but you'll see that propagate into the marketplace," Stephenson said, citing a 24-month time frame for doing so.


AT&T might guess, probably correctly, that such plans will appeal to a segment of the customer base. Keeping a "data only" customer is better than losing the whole account. 


So the "right" response to over the top competition can vary. In some markets, branded OTT apps might be the right tactic, especially when there is perceived upside from out of region sales. In other cases a "go slow" approach might be preferable. 

Amazon Bets Right on Kindle Pricing

Some observers understandably have worried that Amazon faces financial risk by pricing Kindle Fire devices at cost, or slightly below cost. The contrast is provided by Apple, which makes healthy margins (30 percent or so) on its devices.


But Amazon has a different business model. It wants to populate the market with Kindles that drive content sales. Apple creates content capability only to sell devices. 


The early evidence suggests that Amazon made a good bet. Device sales are driving higher content purchases. 

Verizon Buys Hughes Telematics, a "Real" M2M Business

Verizon Communications is acquing Hughes Telematics, a supplier of automotive location-based services including sensor and telemetry services, vehicle diagnostics, GPS tracking and emissions monitoring system for wireless fleet vehicle management.


A majority owned subsidiary of HTI, Lifecomm, also plans to offer mobile personal emergency response services through a wearable lightweight device with one-touch access to emergency assistance.


The transaction will expand Verizon's capabilities in the automotive and fleet telematics marketplace and accelerate growth in key vertical segments, including emerging machine-to-machine (M2M) services.


This is important for Verizon since machine-to-machine services are expected to be a key growth driver for mobile service providers. Also, M2M services such as these are the "real" M2M revenue sources, though many consider services for  "connected devices" such as tablets to be part of the "M2M" business.


That definition is used by the GSM Association, for example. Some of us consider connected devices and M2M to be separate markets.