- - Metricom is Still a Small Question Mark
- - Nortel Networks Presented Their Wireless Internet Program
- - iPulse in Growth Pains - Are We Moving Ahead with IP Speed?
- - To Define the Battlefield, You Have to Talk to the Generals
- - Zopps Network is Gathering Momentum - No, Seriously!
- - Wall Street Favorites - The Pick of the Week
- - Introducing Erics.com - the Leading European Online Powerhouse
This is a weekly newsletter describing the non-confidential part of my work during the past week and how I see market evolution affecting Ericsson (as interpreted my me in my role 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. For subscriptions go to http://webacademy.ericsson.se/elists.
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I spent most of the week in San Diego at the Mobile Internet and Information Services conference, along with some partnership meetings there. The event was a typical IBC conference: small audience and the content of the presentations was sometimes quite thin. Roughly 10 percent of the participants were Ericsson employees, IBC has a good Ericsson address database.
Metricom is Still a Small Question Mark
I know Metricom (http://www.metricom.com) no longer is a popular topic at Ericsson but I have grown to like following the company. There are still surprising issues, such as why on earth Metricom is invited to speak at a commercial 3G industry event in Chicago in August. I see the “Cisco-camp” evangelizing for a “pure IP” alternative to 3G, a vision into which “local plays” like Metricom and MobileStar (http://www.mobilestar.com) are suggested to match well. Anyway, I spoke with the Metricom VP of Business Development, John Cornwell.
Metricom is planning to deploy Ricochet2 (128 kbps) to 46 cities within 18 months from closing the financing needed, USD 450 m for deployment and USD 400 m for running the network. Target price for the service (retailed by telcos and ISPs) is USD 59.99 for unlimited 128 kbps service.
On the business model side things look much better for Metricom today than a year ago. They have surprisingly mature plans for everything. Says John Cornwell: “Think if us as UUNET - very little consumer orientation, large corporate accounts and strong focus on vertical resellers.” The target market is SMEs, large corporation CIOs are too critical for wireless Internet at this point. For the vertical sales strategy, Metricom is developing a gateway as well as negotiating for a service bureau partner. For the horizontal sales strategy, they are aiming at signing a nationwide ISP partner, smaller ISP partners and telco resellers. Telcos are expected to pick up Ricochet2 as the fourth service in the bundle, the fourth element is generally said to have a magic capacity to reduce churn.
On the terminal side Metricom is looking for an industrial partner with Uniden ranked as Nr one and Ericsson as nr 2, Novatel and Sierra Wireless are fallback options. 3Com was mentioned as the Nr 1 candidate for a channel partner. They plan to continue their internal chip development. A PC Card type II modem is scheduled to ship in 3Q 2000 for $199 retail target.
Metricom is getting very little guidance from Paul Allen in terms of how his investment (now over $90m) in the company should be used. “We know Paul Allen has an nationwide interest in a push media broadcast business model.” Microsoft is not seen as a favoured partner or investor due to their “greedy image”.
To sum up, my prediction is that MCI Worldcom is their preferred candidate for a nationwide ISP partner who is supposed to come up with the required $850 million. In the light of the absence of their wireless play and their recent acquisition of SkyTel for $1.3 billion, MCI WorldCom also is committing itself to a future where all is not cellular…
- Nortel Networks Presented Their Wireless Internet Program
Nortel believes the focus shall be on wireless-enabling access to corporate business productivity resources. They introduced Internet Skyway which still resides in the R&D labs in Dallas. The project covers development very similar to WebOnAir and EVO. On the WAP server and gateway side Nortel has cooperation with Apion (http://www.apion-tss.com). Also last week, Nortel announced the establishment of their 3G research consortium together with a number of universities in Australia - looks like a global initiative.
My concern here is that even if Ericsson has a lead in product development, Nortel has more focus on the important corporate market for wireless applications and connectivity.
iPulse in Growth Pains - Are We Moving Ahead with IP Speed?
iPulse (http://www.ericsson.com/ipulse), the recently announced communications portal architecture Ericsson developed together with OZ.com (http://www.oz.com), is facing some apparent difficulty in responding to the demand from customers and potential partners (which in a way is always also a positive sign). When a large European telco gets a demo but no follow-up, there is a problem. When a leading streaming media technology company wants to discuss with iPulse technology integration and partnership, the iPulse team has difficulties finding resources for a meeting. That is a problem. I feel this “let’s wait and see if someone buys the product and then we can give it some resources” -attitude.
We have to learn to invest more in business development in the “Era of Business Model Marketing” (see the previous issue of the newsletter). For iPulse, there has to be a clear business model, a demo, a viral marketing strategy and business development resources who go out and cut deals that solidify the leadership of iPulse in its business model category.
- To Define the Battlefield, You Have to Talk to the Generals
Did you notice the recent acquisitions of Yahoo, GeoCities and Broadcast.com? What was common to the three companies? The main investor in the background: SoftBank, the Japanese high-tech keiretsu of Masayoshi Son. Who masterminded the creation of NBCi, the online arm of NBC? GE Capital, the investment arm of GE controlling NBC. Who broke the suggested Lycos - TicketMaster Online CitySearch - USA Networks deal? CMGI, the lead VC behind Lycos.
The online battlefield is being shaped by these background actors and it is crucial for Ericsson to get access to these people and to get a seat at the dinner table where the future business models are being discussed. This way the powerful actors come to think of Ericsson as a partner for their next brilliant move. We should have high level executives discussing these opportunities, doing the BUSINESS MODEL MARKETING (this starts being a buzzword).
- Zopps Network is Gathering Momentum - No, Seriously!
- Zopps (http://www.zopps.com), originally called The Ericsson Employee Network, has been on the drawing board a bit too long, the first conceptual ideas were thrown in the air in Fall 96 and the first country commitment (Spain) was received in Summer 97. I hear people start losing their faith. However, the new version of Zopps is underway at LME/I and the Zopps Team will get together in San Francisco for a workshop during the week starting June 14. This will include a cocktail & demo party on June 17 where a small number of Ericsson Internet products and initiatives will be demoed to the Silicon Valley web developers and Internet industry players. If you feel you have something to show or some people to invite, please contact JC Strickland at LME/DI.
The biggest opportunity for Zopps would lie in being a catalyst for Internet business development activity. iPulse product unit has already queried the possibility to do a product field trial on the Zopps network. Here is a quote from the upcoming issue of the publication of the Institute for the Future which shows how Silicon Valley think-tank sees the potential of Zopps: “Ericsson hopes that employees will learn from their kids as they prowl the web, with an indirect benefit of exploring how the Web might create new opportunities for Ericsson’s business. Since the Internet has become the largest “market test” in history, this is an ingenious way to take advantage of learning resources from family members and retirees. Nothing beats first-hand experience in this emerging cyberworld.”
And talking about eating your own medicine, Sun Microsystems said they are moving all their employees to use AOL as their corporate mail platform.
Zopps should have financing from the corporate business development and HR functions, otherwise its full potential will not be reached.
Wall Street Favorites - The Pick of the Week
Last week Keith Benjamin touched upon the popular topic of pure-play etailers vs. brick-and-mortar retailers, arguing for the long-term attractiveness of Amazon.com. “While most eTailers seem to be compared to Amazon given its franchise status and valuation, we are challenged to understand the relative valuation of the Internet’s leading eTailer and this week’s IPO of barnesandnoble.com (BNBN). In our opinion, the most important difference between the two is how online shoppers will perceive their brands as eTailing evolves. We believe online shoppers associate BNBN’s brand with Barnes & Noble’s retail stores, such that the company’s online could potentially be limited to sales of just books, music, and videos. We view BNBN as a case where a significant bricks-and-mortar presence, while helping to jump-start online efforts, effectively caps an open-ended eTailing opportunity through the brand’s perception in the physical world. … Currently trading over 40% off recent highs, we strongly recommend purchase of Amazon’s shares during this period of market weakness and in advance of announcements that we believe will point to Amazon’s growing presence as a true eTailing portal.” - Keith Benjamin, Chief Internet Analyst, BancBoston Robertson Stephens.
Introducing Erics.com - the Leading European Online Powerhouse
A few weeks ago a VC consultant David Blumberg came up with a great proposal: why not change the name of Telefonaktiebolaget LM Ericsson AB to Erics.com? Since there are no major European online brands, we would leapfrog to the number one position with the establishment of http://www.erics.com. Looks like we would have to purchase the domain from a certain Eric on Long Island, though.
END NOTES - According to Sun, more than 25 Java/Internet appliances will be launched at the upcoming JavaOne conference in San Franciso on June 15-18. (http://java.sun.com/javaone) - Sierra Wireless has gathered an impressive herd of companies to support their strategic marketing initiative in the area of wireless data, the WirelessReady Alliance (http://www.sierrawireless.com/alliance). - Sendit AB which was recently acquired by Microsoft, plans to establish a “Wireless Valley” incubator in Stockholm (http://www.sendit.com) - There is a very interesting Asia Pacific Venture Capital event coming up on June 7-9 in Silicon Valley - too bad I cannot attend (http://www.aamasv.com/) - Take a look at the DealTime “personal shopping portal”, another potential wireless Internet play (http://www.dealtime.com).
That was all for last week, this week I am in Stockholm attending the GSM Data customer event and having lots of internal meetings.
