This is a weekly newsletter describing what happened on the Internet market during the past week and how that might affect Ericsson (as interpreted my me, Tapio Anttila, working for LME/DMA in San Francisco as a business developer with a focus on Internet applications and enablers). The report will be published every Monday (except holidays). The next two weeks I am on vacation and there will be no reporting.

* * *

The past week I have spent in Asia, meeting customers as well as Ericsson management in Hong Kong and Malaysia. I felt I need to bridge the Silicon Valley experience with Ericsson’s global market situation and this certainly opened my eyes.

Hong Kong is an important test market for wireless Internet in Asia

The ability to build a strong customer case for wireless Internet in Hong Kong, one of the most competitive markets in the world, is of strategic importance. I feel we need to create an entire strategic framework which helps local companies in Asia to sell our wireless Internet solutions more effectively. We should 1) establish strong WAP marketing programme towards all major operators, 2) have a winning media and portal strategy to entice wireless operators to choose Ericsson, 3) carefully track competitor activities in the region to understand the strategy behind their actions and to 4) build showcase facilities for upcoming wireless Internet solutions. One of the key questions is: When will Microsoft establish a similar venture to Wireless Knowledge in Asia? Will the new BT agreement in Europe be extended into Asia? Probably yes.

Taiwan is another promising market for wireless Internet

To prepare for the big battle over wireless Internet in China, it would be good to enhance our activities in Taiwan. The country saw the most rapid growth in the number of Internet hosts during second half of 98 (according to http://www.nw.com ), Internet user penetration is estimated to be at 20 percent. GSM market is highly competitive and technology adoption is aggressive. We need to address e-commerce in Asia and Taiwan might be the right place to focus on that.

Telecom Malaysia has strong Internet ambitions

Telecom Malaysia (TM) is already the largest ISP in the country (after less than a year in operation) with some 300,000 subscribers, target 600,000 by end 99. According to the head of new media services in the company, they aim at becoming “the Yahoo and Hotmail of Asia”. The diverse cultural and language base was said to offer an excellent platform to host content production and packaging. The goal of TM is to offer hosting, portal and VPN services for the entire Asian market. The main partners are Microsoft and HP (which hints of an advanced e-commerce strategy). Main competitors were named as Singapore Telecom and Hong Kong Telecom. TM seems to have strong relations to the banks and media companies in Malaysia and the obvious government support might enable it to better materialize the portal ambitions which for example Telia has had (but where it has little core competence in). The big questions which remain are: How will the economy of Asia develop in the near future? How will the Asian Internet market react to the political bias of actors like Telecom Malaysia? The broadcast industry has so far given preference to “hubs” like Hong Kong.

Japan is an attractive test market for future Internet-based services

With the second largest national Internet user base, Japanese seem to have develop an Internet services market full of innovation and differentiation. Ericsson should invest in partnerships to develop applications on that market, with a view to the future 3G market. Again, I cannot help repeating the opportunity we have here to make a global venture with Japanese Internet and new media venture capital company SoftBANK. Here are some picks from a recent newsletter, just to prove the point:

Japanese Internet commerce to be worth $126 billion in 2002 — Tokyo-based Internet software developer a market research firm to sell Japan Access Rating, a service that will provide Web site viewer ratings and other market data to corporate users.  — MITI plans by April 2000 to develop an electronic insurance transaction system. — Tokyo-based Interactive Cable Communications will from April commercialize its online medical and health information service, which it currently provides to cable Internet subscribers. The company plans to develop its “Virtual Clinic” Web site into a medical Internet portal site.

Linux momentum is reaching serious levels - what is Ericsson’s position?

I was right 9 months ago when I first told Lennart Grabe (my boss at the time) about Linux. Then I was not completely sure whether my strong belief in Linux was partly due to its Finnish origin. More and more companies are announcing support or investments in startups focused on Linux this week and next, in conjunction with the first major Linux trade show. The message for Ericsson today is that Linux will scale beyond expectations - is this an opportunity to build a truly carrier-class infrastructure where you will pay for harware and services but no longer for OS-level software? The mindshare of Linux is astronomical. Also remember the potential fro Linux in developing countries - how about turning India into a Linux-powered IP testbed with Ericsson e-Services forming the foundation for a low-cost deployment? (SJMercury) (Wired) (Cnet)