Walmart Weighs New Video Streaming Service

A possible Walmart video streaming service aimed at rural and Middle America viewers is something of a “Fox News” strategy, aimed at a large segment of the potential audience whose cultural, religious and social views are distinct from those of urban viewers in big cities on the east and west coasts.

It is a risky thought. The U.S. online video subscription market is nearing saturation, so growth would have to come from taking market share. It will be an expensive proposition if Walmart produces some original programming. As Amazon Prime seems to have found, it is hard to create audience-attracting original programming.

Aiming for a cost that is less than Netflix or Amazon Prime, it is not yet clear whether the service would license content solely, or mostly; nor is it yet clear whether the service would include some original content.

Even if “free two-day shipping” is the main reason people subscribe to Amazon Prime, consumers still indicate that the video service is “very important.” Walmart obviously will try and leverage the stickiness of subscription video to reinforce its own retail strategy, which increasingly relies on online distribution.

source: Strategy Analytics

On the other hand, Amazon Prime is starting to generate significant direct revenue, even if the video service is a way to boost value for the Prime membership overall. Lots of consumers arguably join Prime just for the shipping benefits, with the online video a way of justifying the subscription’s value.

source: CB Insights

Also, there is evidence that online video viewers shop more using online services. That is another potential value for Walmart: it positions itself to grab a bigger share of active online shopping users.

So the point is that a potential Walmart streaming service provides a mix of value, including direct revenue, a potential boost for its online retailing business and a chance to create a new advertising and promotion vehicle.

source: Compete

In some ways that mix of value is true even for AT&T, whose DirectTV Now service primarily aims to generate direct subscription revenue, but also creates bundling opportunities for the rest of AT&T's subscription businesses, as well as an advertising opportunity.

source: Beyond Devices

App and Platform Providers Move into Health

It arguably is easier to “move up the stack” when a business already operates at the platform, app or device level. And that could be the case for Alphabet, Amazon, Apple and Microsoft as they seek to create new roles for themselves in the health business.

Alphabet wants to leveraging its extensive cloud platform and data analytics capabilities in the health area, including health records, for example.

source: Business Insider

Amazon is moving towards distribution of  medical supplies and pharmaceuticals. Alexa could become an in-home health concierge.

Apple logically sees itself as a medical device supplier. Microsoft operates Microsoft Health.   

Ridesharing Might Increase Traffic, But Public Transit is Failing, Anyway

Nobody knows whether ridesharing services increase traffic, decrease it, or have no effect. It is likely all three scenarios are possible, depending on geography. In parts of the country that are relatively dense, with highly developed public transportation, ridesharing might increase traffic, if it shifts ridership from public transportation.

This is a relevant trend for mobile service providers since such networks are expected to play a growing role supporting autonomous vehicles that might replace much of the human-driven ridesharing supply.

Some now argue that ridesharing services increase traffic. Others will point out that passengers are shifting away from use of public transportation is falling anyway, for obvious reasons: jobs and the places people live are more scattered than in the past.

In many U.S. cities, buses and light rail simply are not flexible and convenient enough to move people where they need to go.

That is why ridership of public transit has been falling. U.S. transit ridership in March 2018 was 5.9 percent below March 2017, according to the latest data published by the Federal Transit Administration.

In fact, use of public transif seems to have been falling for three years.

Ridership declined in all of the nation’s 38 largest urban areas (and the 39th, Providence, gained only 0.1 percent new riders). Transit systems in Austin, Boston, Charlotte, Cleveland, Miami, Milwaukee, Philadelphia, San Diego, and Tampa-St. Petersburg all suffered double-digit declines, with Austin losing 19.5 percent and Charlotte 15.4 percent despite being two of the fastest growing urban areas in the nation.

The problem seems to be that “big box” transportation does not work as well, anymore, since jobs now are more dispersed, in most cities. That is one reason some believe more flexible, smaller capacity solutions might work better.

And yes, with enough land use planning to densify urban cores one can concentrate work, but at the cost of creating unaffordable housing close to work. There is no painless solution.

One study estimates 70 percent of Uber and Lyft trips are in nine large, densely-populated metropolitan areas (Boston, Chicago, Los Angeles, Miami, New York, Philadelphia, San Francisco, Seattle and Washington DC.

Other studies reach opposite conclusions, arguing that ride sharing services can reduce traffic. One MIT study suggests multiple passengers per vehicle would have a clear effect on traffic.

  

Referred to as transportation network companies, such TNCs account for 90 percent of TNC or taxi trips in eight of the nine large, densely-populated metro areas (New York is the exception) and in other census tracts with urban population densities, the study estimates.

In suburban and rural areas, taxis serve slightly more riders than TNCs. The same is true in New York City (counting car services in the taxi category).

People with disabilities make twice as many TNC/taxi trips as non-disabled persons, but taxis account for two thirds of their TNC or taxi trips.

TNCs compete mainly with public transportation, walking and biking. About 60 percent of TNC users in large, dense cities would have taken public transportation, walked, biked or not made the trip if TNCs had not been available for the trip.

About 40 percent would have used a personal vehicle or a taxicab had TNCs not been available for the trip.

The bottom line, one study claims, is that  shared ride services such as UberPOOL, Uber Express POOL and Lyft Shared Rides, while touted as reducing traffic, in fact add mileage to city streets, at least in bigger urban areas.

Private ride TNC services (UberX, Lyft) put 2.8 new TNC vehicle miles on the road for each mile of personal driving removed, for an overall 180 percent increase in driving on city streets.

Inclusion of shared services (UberPOOL, Lyft Line) results in marginally lower mileage increases – 2.6 new TNC miles for each mile in personal autos taken off the road.

Shared rides add to traffic because most users switch from non-auto modes. But that is happening with public transportation in any case.

Customer Cloud Infrastructure Spending Grows 50%

Spending on cloud infrastructure services jumped 50 percent, year over year, in the  from second quarter of 2017, according to Synergy Research. Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) are now comfortably over $16 billion.

“Revenue growth at Microsoft, Google and Alibaba far surpassed overall market growth rate,” says Synergy, but Amazon maintained its dominance with 34 percent market share.

Smaller providers are losing share. Of the top 25 cloud providers, only three other companies have seen their market share increase significantly, though none of the three has yet broken through the one-percent market share threshold.

Meanwhile IBM market share has been relatively stable at around eight percent, thanks primarily to its strong leadership in hosted private cloud services.

source: Synergy Research

How Comcast and AT&T Strategies Compare

It would not be stretching an analogy to say that, in the U.S. market, Comcast and AT&T have broadly similar strategies. Both are the most clearly committed to diversifying their roles within the internet and content ecosystems, and particularly focusing on ownership of content creation assets.

In its second quarter, for example, Comcast earned about half its revenue from consumer triple-play services, its “legacy.”

In its second quarter, AT&T earned perhaps $29 billion from traditional mobile and fixed communication services, about 75 percent of total revenue.

Roughly 25 percent of revenue was contributed by the video distribution and partial results of Warner Media for the second quarter. So it speaks volumes that AT&T now says it is a “modern media company.”

One has to suppose that the goal is to shift as much as half of revenue from voice, mobile communications or even internet access to content ownership and content distribution.

It is worth noting that in the consumer services segment (exclusive of consumer mobility), about 71 percent of AT&T segment revenues now come from video entertainment, not voice or internet access.

The point is that content and related assets now are viewed as key by both Comcast and AT&T, essentially as a means to occupy different roles within the content and communications ecosystem.

And, eventually, the revenue profiles of Comcast and AT&T might not be too dissimilar. Where Comcast is diversifying away from its legacy video services position, AT&T is increasing its exposure in those areas.

Where business services and mobility are significant revenue contributors for AT&T, Comcast is growing in those segments. And where Comcast is a content creation company, so AT&T now is a content company, in part.

That fundamental "take market share from the other guy" strategy has not changed too much over the last two decades. Basically, telcos upgraded to broadband to trade market share with the cable competitors. Cable has grown by taking telco voice and internet access share in the consumer segment, and now is encroaching on business customer share.

Carrier Wi-Fi, Shared Spectrum Change Use Cases, Business Models

Carrier-grade Wi-Fi and spectrum sharing provide different value to actors within the ecosystem, changing the boundaries between private and public networks in new ways.

For mobile service providers, carrier-grade Wi-Fi mostly will be a way to incorporate unlicensed local networks as a core part of mobility infrastructure. Best-effort Wi-Fi mostly will remain a way to offload traffic from the mobile network.

For cable TV operators, carrier-grade Wi-Fi is a way to reduce the costs of entering the mobility business.

For business, government and other organizations, spectrum sharing will create new options for supporting private mobile networks that essentially compete with Wi-Fi as a local and private network platform.

Some entrepreneurs will see ways to create new wholesale venue communications businesses, offering indoor coverage to mobile service providers.

Fixed wireless internet service providers will see spectrum sharing as a way to remain relevant as bandwidth demands rise far above the traditional capabilities possible with legacy spectrum.

And a few large and well-heeled application and transaction providers might see new opportunities to build new access networks that better support their advertising, subscription or transaction business models.

Since the advent of the competitive era in telecom, and the rise of computing as a core use case, a distinction between “public” and “private” networks was created. In the consumer space, the “private” network is house wiring. In the business and enterprise space, private means the indoor or campus local area network.

In the 5G era, there will be additional changes. For the first time, enterprises and organizations will be able to create private mobile networks using 4G or other air interfaces. Such private networks might be used to support sensor networks or improve indoor coverage.

Speculation about the ultimate roles of private and public networks--especially the possibility that private networks might one day challenge public network roles--has bubbled up periodically over the past two decades.

Current practice suggests private networks increasingly act as extensions of the public network, though. That has been the case for mobile traffic offload (smartphones using Wi-Fi, as the best case).

With the rise of carrier-grade Wi-Fi and sharing mechanisms (the ability to aggregate mobile and Wi-Fi or other unlicensed spectrum), there is an important but slight shift of Wi-Fi roles. Essentially, Wi-Fi becomes core mobile network infrastructure, even if not owned or operated by any specific mobile service provider.

source: PwC

The ownership of assets might remain, but the use cases shift. There are some new revenue implications. If most of the value provided has an indirect revenue driver, there are some new direct revenue options.

source: PwC

Some venues might be able to provide wholesale access to any commercial mobile service provider, on the model of multi-tenant distributed antenna systems.

But one aspect of each use case does not change too much: private networks tend to be non-revenue-generating; public networks have to generate revenue. In common parlance, private networks provide valuable features at no incremental cost; public networks provide revenue-generating services.

Private networks always have indirect revenue or value models. The private networks are business infrastructure, not direct revenue sources in themselves.

That is true no matter what part of the network we discuss: in-home or premises “local” networks; access networks; metro facilities or long-haul assets.

Google and Facebook own and operate their own undersea networks because it provides more value, and is cheaper, than buying access on public networks. Consumers, organizations and businesses run their own Wi-Fi networks to connect users and devices to public networks.

In some cases, app providers and others also run their own access networks, generally as a complement to public facilities (providing access in high-traffic areas that boost use of their apps), but sometimes also to prod public carriers into boosting investment in access capabilities.

Most metro networks focused on business customers try, when possible, to build their own facilities. Sometimes organizations, governments or businesses also create and operate their “own” metro transport networks as well, for internal use.

In the long-distance undersea and terrestrial networks, perhaps half of all internet traffic actually runs over private networks, not public networks.

Carrier Wi-Fi represents a different business model than traditional “best-effort” Wi-Fi. One also can argue that carrier-grade consumer internet access represents a different business model, as well, a fact well understood by partisans on both sides of the network neutrality debate.

Broadly speaking, best-effort Wi-Fi is a mobile offload use case. Carrier-grade Wi-Fi is an “extend the network indoors” use case.

source: PwC

As Important as SD-WAN is, It Will Remain a Niche Market for Service Providers

With the caveat that it likely represents the future of most enterprise long-haul transport revenues, the SD-WAN market is a specialist segment of the market, very much akin to unified communications. It is important for enterprises and suppliers to enterprises.

It is a fundamental product for sellers of long-haul enterprise networking capacity. But the global SD-WAN market is rather a smallish part of total spending on public network communications services.

As for how big a revenue stream SD-WAN might eventually represent, just assume it displaces most of the present MPLS market.

source: Aryaka

For long-haul business connectivity providers, SD-WAN is as important as MPLS is, and private line used to be. As the humorous adage goes, "it may be a one-trick pony, but it's a good trick."

source: IHS

source: ITBrand

source: Transparency Market Research