- IN THIS ISSUE:
- * The Internet Summit – The Mecca of Dealmaking
- * We Should Be Transactional!
- * Wireless Innovation Laboratory
- * Killer App Based on Family Values
- * Improvement Opportunities of the Week
- * Wall Street Pick of the Week
- * What Does a CHO Do?
- * Bits and Pieces from the Internet Summit
I spent the beginning of the week at The Internet Summit in Dana Point, near Los Angeles. The event was a high-level gathering of 600 Internet executives, a good place to do business intelligence, hear how Ericsson as a company is being perceived and find new opportunities. I will leave for a brief vacation soon and there will be a break in my publishing activity. The next issue will be released on August 16th.
THE INTERNET SUMMIT – THE MECCA OF DEALMAKING
It is all about networking. Important people only want to show up if there are lots of other important people present. And when important people are around, things get done. The Internet Summit was organised by The Industry Standard, a leading weekly Internet trend publication based in San Francisco. Their Friday night rooftop parties have become an important venue for networking lately.
The conference attendance was around 500 people and according to the organizers 1,200 people had been turned away. The informal setting and lots of social events enabled some creative discussions and even lower-level individuals like myself were able to harvest an enormous amount of business contact assets. People like Jeff Bezos (founder of Amazon), Jay Walker (founder of Priceline), David Wetherell (CEO of CMGI), Tim Koogle (CEO of Yahoo), Masayoshi Son (owner of SoftBANK), Mary Meeker (chief Internet analyst at Morgan Stanley), Jeff Crown (VP of Strategy at Lycos) and Dan Gillmor (Technology Columnist at SJ Mercury News). What is left for Ericsson is to devise ways to do more business with these people.
WE SHOULD BE TRANSACTIONAL!
I have discussed Ericsson’s image in Silicon Valley with several people and the common denominator to our problems seems to be that we are not “transactional”, we are not making enough deals with the VC firms and Internet startups in order for people to proactively approach us. Says one Valley-based executive: “We don’t know what the Nokia guys look like, hardly anyone has seen them, but they make deals and that is what counts. Ericsson seems to have gotten name recognition through the CyberLab initiative but being transactional is more important.” Another executive said: “Even Nokia is slow in their decision-making since they don’t have a venture fund which would be a separate entity from the corporate structure. They need to circulate decisions via Finland and it may take weeks to put a deal in place.” Weeks? Right.
By the way, I ran into a media industry executive who was two months ago headhunted to lead the Nokia new media business development in the US. Some internal Nokia politics, however, put the deal on ice at the last moment. It will be interesting to see how Nokia will ramp up their activities when their WAP phone starts shipping. We ain’t seen nothing yet!
WIRELESS INNOVATION LABORATORY
Jay Walker, the founder of the innovative auction site Priceline.com, also has another company: Walker Digital (http://www.walkerdigital.com/). Its mission is to develop and patent (!) business models for the New Economy. The business model behind Priceline has been patented, the validity of which is now under fierce debate in various business schools. Talking to Jay Walker, his view of wireless Internet is that of a ‘service innovator’: “I think the applications will be totally different from what we think today…”
Maybe it would make sense to start a ‘Wireless Innovation Laboratory’ together with Walker Digital, focusing on devising new, patentable business models for the mobile world?
KILLER APP BASED ON FAMILY VALUES
Seldom do I see a new web property that gives this warm feeling: This idea cannot go wrong – this is in harmony with what man is supposed to do on earth! Ancestry.com and their sister site MyFamily.com are such sites, this company is out to make money. And it’s not a startup: Ancestry.com is a 15-year old publisher of print and electronic products for the genealogy market. They have created a market where you can research your family roots within hundreds of genealogy databases. Many of the databases are free but premium subscriptions between $19.95 and $99.95 per year will give you access to more data. Once the family tree has been completed, the clan can move on to build a family community on the sister site MyFamily.com. Ancestry.com has now over one million regular viewers. Needless to say, Americans are the most interested nation to do this type of research. And they also win my prize for the most innovative company slogan this week: MyFamily.com – It’s a relative thing.
IMPROVEMENT OPPORTUNITIES OF THE WEEK
I will keep on reporting here on more improvement suggestions for the Ericsson website. Ericsson has started to advertise on the web. Doing Ericsson-related searches with Yahoo, Lycos, etc. brings along an Ericsson ad banner. But why does the banner point to the Ericsson homepage? Don’t we have any campaign-type commercial message to say? Why should I click on that banner? Could I win a mobile phone?
Looking at the Ericsson.com homepage, and trying to be an ‘outsider’, the first thing I would do is to click on those new phone models to buy them. My expectations are of course that the phones are shipping. By clicking on the phone I get to one of the most awful product data sheets I ever saw, and there is no image of the product. At the end of the document there is a vague mention of the future shipping date. I would build a ‘community site’ for the R380, collecting names an addresses of people who find it to be a cool product. I would educate them on the product features and on switching benefits from their existing portable productivity tools. I would ask them to give suggestions for applications, added software features and accessories. I would engage the Ericsson R380 product management to lead discussion groups and chats with the user community. I would raffle off a number of ‘R380 vouchers’ per month to entitle to a free R380 when it eventually ships.
- WALL STREET PICK OF THE WEEK
Marshall Senk is the software stock analyst of BBRS and he discusses the potential for Microsoft’s planned tracking stock. The rumours of this decision send the Microsoft stock up 5 % a week ago, creating USD 40 billion market value for Microsoft in one day. “Based on recent moves, we believe Microsoft is getting more committed to launching an Internet tracking stock in order to try and better capture the value of its online assets. It may seem ridiculous to some that a stock trading at 21.5x 2000 revenues and a market cap around half a trillion dollars would need to capture more value. However, it remains difficult for Microsoft to attract senior talent away from companies offering options with potentially higher jumps in valuation than possible for Microsoft’s stock. Microsoft could also use a separate, richer currency for acquisitions. Can this stock work? The Internet is a big business for Microsoft, with revenues of around about $750 million for the June ’99 year, up around 75%, by our estimate. Issuing tracking shares would give Internet investors a closer look at how pervasive the MSN properties have become, particularly HotMail and MSNBC, both of which are category leaders. If the tracking stock were to trade at a median valuation among the consumer Internet names – around 30x 2000 revenues, it would derive a market cap of around $40 billion, putting Microsoft Internet at the upper end of the Web’s valuation range. One way or another, Microsoft is a critical component to the Web, with its operating system and browser software on almost every PC. It has also embraced the strategic challenge of extending that dominance to other platforms, through cable and wireless deals. As we have seen with AOL, there is more revenue past software from subscriptions and commerce. However, Microsoft remains far away from the type of relationship AOL has with its members by virtue of AOL’s branded community, content, and commerce offerings. Microsoft may need to patch together a series of acquisitions, housed in a separate stock, to create a competitive, communication-based service across multiple devices.” – Marshall Senk, Sr Software Analyst, BancBoston Robertson Stephens (http://www.softwarestocks.com)
Should Ericsson use a tracking stock to better capture the value in our wireless Internet market development and to attract top talent? Maybe the new CFO will tell us.
WHAT DOES A CHO DO?
At The Internet Summit I also met PlanetOut (http://www.planetout.com), the leading online community for the gay and lesbian people (500,000 unique visitors, 10 million monthly page views). It’s CEO, Ms Megan Smith, used to work for Geoworks and knows many people at Ericsson so if anybody is interested in developing wireless services and devices for this niche market Megan is a good person to start with. However, I remember two years ago our mobile phones division did not want to sponsor David Bowie based on his controversial past. Anyway, the founder of the company, Tom Rielly, gave me the most exotic business card I’ve got so far – his title is “Chief Homosexual Officer”.
BITS AND PIECES FROM THE INTERNET SUMMIT
China.com executive said Nokia has had a meeting with them about wireless Internet “but they appeared to be extremely vague and were not able to propose anything concrete”… Dealtime.com shops the web for you, the CEO was interested in wireless Internet opportunities… OneBox is a free innovative unified messaging service, pure IP-based and with patent-pending technology to minimize the cost of service provision… ZCentral takes an interesting, server-centric view on identity management, this could be a great WAP application… BigWords wants to start distributing mobile phones to students on their student portal which is mainly focussing on books today. They might also be interested in doing a WAP trial with a GSM operator, in that case the East Coast would be preferred. Here is an opportunity to acquire young customers for a lifetime… FasTV.com has searchable video technology. This will enable interesting applications for 3G… Zadu is developing a service similar to Third Voice but with real-time conferencing capability. I have to go and see a demo… Most of the emerging 3D virtual community business has been consolidated into one company, Communities.com, which acquired both The Palace and Onlive. I wonder how much development the actually do, 3D chats have not taken off… Brodia.com has a pretty impressive innovation to simplify the consumer shopping experience by creating a “shopping remote” which facilitates cross-site shopping (or should I say shop-hopping?) HOT!!!!… WorldSpy.com is the ultimate disintermediator for online commerce, selling merchandise directly from manufacturers to consumers. But it is also a reinterediator with a comparison-shopping portal serving consumers (read an article)… Netpliance, a start-up company in Austin, Texas, unveiled iOpener appliance, a monitor and keyboard device that comes without a hard drive but sports a built-in modem and processor for accessing e-mail, chat, and Internet sites. It will be priced at $399. In addition, Netpliance will be the ISP for approximately $20 per month. Second-generation screen phones have arrived… Works.com provides direct access to wholesalers and manufacturers of office and technology products and manages your company’s purchases online. By the way, this is one of the building blocks of a business model called franchising, the supply side uses pre-defined, branded formulas in order to cut operating costs and accelerate company build-up. We could sell mobile phones and enterprise solutions through a portal like this!… Respond.com is acting as a match-maker between buyers and sellers, enabling anomymous shopping. This is somewhat related to the Match Maker product of the Ericsson TeleINternet group in Dallas… Wanna start making money as a publisher? Even individual can start making money – use PublishOne.com with InterTrust digital rights management… (To view the embedded hyperlinks, view this section online at http://webacademy.ericsson.se.)
- SELECTED THOUGHTFUL READING – The Market cap of Microsoft now exceeds the GDP of Spain. “Could a software maker that operates out of a 265-acre campus in Redmond, Washington and that’s been around fewer than 30 years really have the same economic value as a pillar of Western Civilization that’s 500,000 times larger…”… Dan Gillmor, the Technology Columnist of San Jose Mercury News has got it right: Europe will lead the world into the era of wireless Internet. Are all American journalists as well-informed?… Multilevel marketing is hitting the web, consumers can try to sell more in order to be able to buy more, long live capitalism!… (go to http://webacademy.ericsson.se for links to stories)
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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.
