In this issue: Metricom gets USD 600 million from MCI WorldCom and Paul Allen – Web Marketing Belongs to Professionals – Women: an Fast-Growing Market Opportunity – GPRS… What GPRS? – Wall Street Pick of the Week – Barbies Are Made for Playing with
- I spent part of last week attending the Web Attack marketing conference in San Francisco.
Metricom gets USD 600 million from MCI WorldCom and Paul Allen
Those who read my newsletter dated May 31, 1999 perhaps remember my prediction that MCI WorldCom would be the lead investor for the build-up of the new Ricochet2 network. MCI WorldCom has signed a five-year, non-exclusive wholesale agreement valued at $350 million with Metricom for its Ricochet services. It now owns 38% of the company.
Having MCI WorldCom fragment the market and dilute the unified development towards 3G is something that requires careful consideration. Why did it happen? How does this play in the overall strategy of MCI WorldCom (SkyTel acquisition etc)? Will Metricom/WorldCom act based upon the business plan they described at the Mobile Internet conference in San Diego in May? Which other partners will be drawn in? Cisco? Microsoft? Wireless Knowledge is already a partner of Metricom. Will the service be re-branded under MCI WorldCom? Is this the beginning of another ‘standards war’ on the US market? How should GPRS marketing react to this? (http://www.wcom.com/cgi-bin/pr/display.pl?cr/19990621)
My take is that Metricom will eventually loose but with smartly executed strategy MCI WorldCom may speed up the acquisition of wireless data customers. This is very positive since it will help us move over the ‘chasm’ of where wireless Internet still is today. But how will they differentiate themselves from GPRS? How difficult will it be for our customers to win back the Metricom customers to start using GPRS? These are real questions.
Web Marketing Belongs to Professionals
The Web Attack conference in San Francisco was a gathering of 1,000 marketers and web designers pondering over ways to make web businesses successful. Gone are the days when web marketing was done by smart amateurs – now it is the business of true marketing professionals. Below five selected takeaways.
1) Offline marketing (TV, radio, print), as well as the integration of offline with online with the help of email (‘spiral marketing’) are critically important in today’s world where you have to build a brand fast. The use base of the career site Monster.com doubled after one ad on TV during the recent SuperBowl. Spiral marketing is an important opportunity for wireless Internet. Questions: Where is my customer today? Just now? Doing what? With whom? How do I get to him/her the right commercial, interactive message? (http://www.zdnet.com/anchordesk/story/story_2745.html )
2) In measuring the ROI of advertising spend, the most important measure is the lifetime value of a customer. This is why the customer acquisition costs for portals and are high and the market valuations of those companies have skyrocketed. The trick is to take the customer when he/she is young (teenager market!) and build that person up from a visitor into a buyer, into a repeat buyer, into a network buyer and finally into an evangelist. (http://www.netcentives.com/)
3) Personalization will be key to effective and efficient merchandizing on the web. The best online businesses are applying technologies which facilitate auto-segmentation of the user base. Take a look at Personify (http://www.personify.com).
4) Email as a direct marketing tool will be huge. Traditional direct marketing today is a $145 billion industry in the U.S. alone. Jupiter Communications forecasts that online direct marketing is expected to grow to $1.3 billion by the year 2002. More importantly, Forrester Research projects that the number of permitted commercial email messages is expected to grow from three billion to 250 billion by the year 2002. Think about the implications of this to wireless Internet.
5) When maximizing the lifetime value o a customer, one traditionally focuses on the four ‘p’s o Philip Kotler: product, price, place and promotion. In the web economy, one has to focus on additional ‘p’s: performance, personalization, privacy and people (= customer support). A successful mobile e-commerce should be strong on all these new ‘p’s.
An interesting vision from the conference moderator Michael Tshong (http://www.iconocast.com): “Maybe one day we have ISPs offering us free data mining service where they will post-process our email, index and structure the messages according to our preferences and deliver the messages to us according to rules optimizing the delivery for different devices.”
American Airlines said in their presentation they have plans to implement wireless Internet services to their website. (http://www.aa.com)
Women: an Fast-Growing Market Opportunity
In the previous newsletter we talked about teens as a growing segment of online users. Take a look at the fresh figures of Nielsen Media Research and you see the exploding presence of women on the web.
In April 1999 there were 92 million adults (over 16) online in USA and Canada which is 40 % of this population category. 46 % of these were women, up from 33 % in 1995.
The shopping interest (use the web for information and comparison not necessarily purchasing) has grown dramatically: In 1995, there were 6.6 million males and 1.4 million females in this category. in April 1999 the figures were 32.5 million and 22.5 million, respectively.
The purchasing interest (use the web to purchase from) has grown from 1.6 million males and 0.4 million females in 1995 to 12.4 million males and 10.6 million males in April 1999. In fact, the amount of women buying online has grown 85 % in the last nine months.
It is no wonder that Paul Allen recently invested USD 100 million into Oxygen Media, an emerging “Ladies’ Room” on the Internet. (http://www.oxygen.com/ladiesroom/index.html)
GPRS… What GPRS?
Most of us know MTV and that it stands for Music Television. But how many in the potential application development community for GPRS knows what GPRS is or stands for? Not Yahoo and companies in that category, believe me.
I had a need to send a partner candidate some information on our technoloy platforms WAP and GPRS. The WAP site http://www.wapforum.org was excellent (it is designed by Nokia’s ad agency Contra 
). The Ericsson’s WAP site was poor but at least the URL was easy: http://www.ericsson.com/WAP – one can even guess it.
Then I started hunting for the GPRS site. Nothing under http://www.ericsson.com/GPRS. I take the search engine and find http://www.ericsson.com/gprsapps/ – the home page of the GPRS Applications Alliance. The shocking fact was that there was nowhere on the site any explanation to be found on what GPRS is or what it does. We do give a lot of info on the site, we tell for example that the unit consist of 10 people and their phone numbers are there available for headhunters (something a Silicon Valley company would never do).
In summary: What a great source of information for competitors and operator customers. We must improve it a bit to make it more oriented towards third-party developers.
- Wall Street Pick of the Week
Last week Keith Benjamin reported a brick-and-mortal retailer going for pure online business idea. SoftBank, the ‘creator’ of Yahoo, E*Trade and Broadcast.com, moves in to position the company as a category leader with the necessary upfront financing. “Global Sports Interactive, the company that will soon operate the online businesses for six major sporting goods retailers including The Sports Authority, received an $80 million investment from Softbank Corp. for a 30% stake in the company. Global Sports also announced that it will be divesting its non-internet retailing activities, thus positioning itself completely behind internet retailing when it launches its Web site in the fourth quarter. We believe this double infusion of capital, coupled with the estimated $135 million in advertising already being spent by the retailers associated with Global Sports, should allow the company to make a big impact on the online sporting goods market when its affiliated sites launch later this year.” – Keith Benjamin, Sr Internet Analyst, BancBoston Robertson Stephens (http://www.internetstocks.com)
- Barbies Are Made for Playing with
In an recent article, The Industry Standard talks about the need for Mattel Media to understand that the true interactive of the web and that their the media property (http://www.barbie.com) needs a new and creative interpretation online, not just a transformation of the offline property into HTML. The new property needs to be a symbiotic package of content, communication, community and commerce. (http://www.thestandard.com/articles/display/0,1449,5216,00.html)
The development of wireless Internet faces a similar challenge: the services for SMS, WAP and beyond are at their best expressions of a new culture, a sustainable life form. Should we launch the “Ericsson Wireless Poetry Award”?
END NOTES – Aether and 3Com form a new company to provide wireless Internet service bureau offering (http://www.3com.com/news/releases/pr99/jun1899a.html) – 1,000 attendees at the leading MP3 confrence, the game is over for the record industry (http://www.thestandard.net/articles/display/0,1449,5056,00.html) – The V-Commerce Alliance headed by Nuance (http://www.nuance.com) will make its voice-enabling technology for Internet applications open source. – MyTalk from General Magic (using Nuance technology) will read you your email, signed a deal with Excite@Home (http://www.mytalk.com) – Inviso, the advanced handhel display company, is looking for industrial partners and expansion capital 4Q99 (http://www.inviso.com) – MedicinePlanet offers a web service where traveling consumers can store their health profile and get access to personalized medical attention by a network of English-speaking doctors in 226 countries. A wireless Internet opportunity! (http://www.medicineplanet.com) (http://www.thetravelclinic.net/) – Multiplayer gaming company VR-1 is very active in Europe with a number of telco partnerships (http://www.vr1.com/) – AvantGO received funding from Microsoft and 3Com (http://www.avantgo.com) – ThirdAge Media, the leading lifestage portal for the 45-65 year old community of men and women, received $89 million financing from CBS, Merrill Lynch and others. Wow, $89 million is a lot of money… (http://www.thirdage.com/) – Look at 4anything.com, a branded network of 2,500 community portals. This is the beginning of “useful browsing”. (http://www.4anything.com) - Phoenix Technologies has applied for 20 patents on its Internet platform-enabling software, which includes a new product category called Virtual Bundling Technology (VBT). VBT will provide Internet companies the potential to increase consumer reach, accelerate Internet user sign-up, and reinforce user loyalty and retention. I this type of technology would offer enhanced business models for mobile phones and prepaid services. (http://www.phoenix.com) – I found another seed-phase partner opportunity in the teenager online commerce space, Cybermoola. To view their offering, go to http://www.briefcase.com (user ID: ericsson, pw: cybermoola) and look under ‘files’. – Net Exchange is an email outsource company tightly integrated with a database backend for added functionality. This could be a great opportunity for our wireless ISP offerings.. Play around with it: http://nx.com, user name ‘rainmaker’, password ’1235′. – EuroSeek is looking for financing, USD 15-20 m. (http://www.euroseek.com) -
That was all for last week, this week I will be in San Francisco. In the next newsletter you will read, among other things, about Talking Drum, an exciting new startup in the wireless Internet space, founded by ex-MTV senior executives.
* * *
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.
