- IN THIS ISSUE:
- * AirFlash in Exclusive Deal with Excite@Home
- * Upcoming Business Model Events for You to Consider
- * My Neighbor on Palm and HandSpring
- * Linus Torvalds Wants Linux on Mobile Phones
- * Alex Gove Leaves Red Herring
- * Improvement Opportunities at Ericsson
- * Wall Street Pick of the Week
The weather in San Francisco was wonderful this weekend, maybe predicting a turnaround on the Internet market which has been rather sluggish lately. e-Christmas will be huge and the PMT (Pre-Millenial Tension) will make people want to “make themselves heard” on the Internet around the New Year’s. Major news last week? MindSpring and EarthLink merged to become Nr2 after AOL. MCI Worldcom might acquire Sprint. A huge amount of companies file again for Internet IPOs - the rage is on again. And now this AirFlash practically stole the AT&T opportunity…
- AIRFLASH IN EXCLUSIVE DEAL WITH EXCITE@HOME
Excite@Home said it formed an exclusive, joint-development alliance with AirFlash, a provider of content for mobile communications, to create a wireless application service that will combine personalized content from both companies. The core competence of Airflash is location-based technology which enables location-aware wireless portals.
This announcement is very important because Excite@Home is part of AT&T’s (owns TCI) wireless Internet strategy. The company CEO Tom Jermoluk speaks with AT&T CEO Michael Armstrong in his own words “several times per week”. The Airflash relationship seems to be exclusive. The deal is understandable given the fact that Excite is today managed by the ex-CEO of PacBell Mobile services and the VP of Business Development of Airflash was the VP of Business Development at PacBell Wireless Services. Also, Excite is one of the two portals (Yahoo is the other) who has had extensive discussions in the past for cooperation with Nokia (according to a reliable source).
This is another example of the need for Internet companies to secure their “application dialtone” is wireless-enabled. We could offer this service as well. All it takes is a pofessional services offering - we would even make money that way. Of course AT&T/Excite@Home would prefer to work with Ericsson if they can choose, we are global.
UPCOMING BUSINESS MODEL EVENTS FOR YOU TO CONSIDER
As part of the MISE Business Model Project I am coordinating, there will be two events to which I would like to invite all business development people at Ericsson who want to contribute in our project.
Firstly, we will organize together with EWIS a project kickoff seminar in New York next week on Oct 7th. This will coincide with the Fall Internet World. The purpose is to offer an educational seminar with external consultants explaining business model taxonomy and business modeling methodology. Please contact me if you think you would like to participate: tapio.anttila@ericsson.com.
Secondly, there will be a larger-audience seminar with a different focus in Stockholm on October 26th. The Web Academy Fall 99 Seminar will focus on business models and bring in a number of hot Internet startups to explain their plans to make money. The detailed program is still under development and dependent on the success of the Oct 7th seminar. However, send me an email if you want to reserve a seat in that one.
Please see the details for both seminars on http://webacademy.ericsson.se/projects/bm/main.htm.
MY NEIGHBOR ON PALM AND HANDSPRING
I talked to my neighbor Paul Ferris at Credit Suisse First Boston (who took Phone.com public, sold Ascend to Lucent and Cerent to Cisco). Paul belongs to the team of the feared Frank Quattrone, one of the most influential and controversial investment bankers in Silicon Valley. Our “corridor talks” are sometimes very useful.
We talked about Palm and Paul said they are planning for an IPO in Febuary 2000. He believes they will reach $2-3 bn market cap immediately. This sounds actually conservative since I read some analyst report who believed them to reach $10 bn and with bad luck $5 bn. We also chatted about HandSpring. Paul mentioned they are also planning for an IPO in Febuary 2000 and he believes they will hit the same market cap. He says HandSpring is targeting to exceed Palm in revenue within two years. I tend to believe him, HandSpring has done everything right, they still are a key developer in the “Palm business ecosystem” and they get access to the Palm developer network. I hope we are thinking about the ramifications to Symbian’s chances in the US in particular.
As a curiosity I can tell you that my neighbor was offered in June a job as VP of Business Development at Cerent (which Cisco recently acquired) but he declined. He would have made $12 million in two months. He says he’s not sorry. He said they placed Ascend’s CFO at Cerent six months ago and he ended up making $40 million in that period. Cerent’s lead investor Vinod Khosla at Kleiner Perkins netted $700 million in his pocket.
Paul asked us to take a look at PacketVideo (http://www.packetvideo.com/)…
LINUS TORVALDS WANTS LINUX ON MOBILE PHONES
I remember alerting my boss on the emerging popularity of Linux not more than some 18 months ago. And now Linus Torvalds, the creator of the operating system, will be one of the keynote speakers at Comdex Fall (along with Bill Gates, Carly Fiorina and John Chambers).
Linus Torvalds preaches the collapse of the software industry. He has repeatedly said in public: “I don’t understand why some should pay for software.” Along with what is happening in the industry with the emerging application service provider industry as well as the emerging embedded systems market, this evangelism benefits hugely from its perfect timing. A recent CNET article revealed that Linus’s current focus is on improving Linux for embedded systems. Could you please send me any info on client-side Linux development at Ericsson? Is this for real? Which vendor is going to be the first to jump on the Linux bandwagon?
Linus’s philosophy fits Ericsson perfectly - we never had time to become a software company anyway and thanks to Linux it might be our blessing. http://news.cnet.com/news/0-1003-200-123053.html?tag=st
IMPROVEMENT OPPORTUNITIES AT ERICSSON
I read through the special Telecommunications supplement to Wall Street Journal which (obviously coinciding with the PCS 99 in New Orleans) focused on wireless services and wireless Internet in particular. How can WSJ build a whole supplement with hardly mentioning Ericsson? How come most of the articles focus on Silicon Valley companies? Well, most of the articles in the supplement were written by the WSJ Silicon Valley office. If the marketing departments are not able to handle this better I can certainly help, particularly as we soon will (hopefully) have a world-class market message with a world-class marketing budget to support it. I can hardly wait to put a stop on Phone.com sucking our market cap.
WALL STREET PICK OF THE WEEK
Priceline announced the first licensee to its name-your-price auction business model. This is a highly significant piece of news and Ericsson should consider the lessons we can learn from it. A big part of our success in the future will rely upon our capacity to innovate on business models together with our operator customers. Can we become a licensor of business models for wireless Internet? “Priceline announced the formation of an affiliated company that will be the first licensee of its patented, name-your-price business method. The new company is a privately held startup to be called Priceline.com WebHouse Club (PWHC). The affiliated company, which allows consumers to name their own price on grocery items, is being funded by an expected $65MM first-round investment from Walker Digital, Paul Allen’s Vulcan Ventures, Wit Capital, and Goldman Sachs. Sources of upside to Priceline include the ability to benefit from the considerable advertising we expect from the new company as it launches first in the NY/NJ/CT tri-state area during Q4 and later nationally. In addition, all consumers that receive a WebHouse Club card must go to priceline.com to activate them, which should increase site traffic and create opportunities for Priceline to promote its existing travel, auto and financial products. Further, Priceline will receive high margin royalties from PWHC establishing a licensing opportunity which we believe can be applied to other businesses. We note that we believe Priceline can enter new markets more quickly through licensing its patented demand collection system while also driving higher gross margin rates. Finally, while Priceline has no financial exposure or downside risk associated with PWHC, Priceline holds warrants to become PWHC’s majority shareholder.” - Lauren Cooks Levitan, Sr Software Analyst, BancBoston Robertson Stephens (http://www.internetstocks.com)
QUICK TAKES - Cisco is set to buy WebLine Communications, a provider of customer management software for e-commerce companies, Ericsson gets increasingly competition from Cisco even in this area… Security First Technologies bought VerticalOne for $165 m, the vertical aggregation portal I mentioned a few weeks ago, another get-rich-quick scheme for these guys from Atlanta… Online grocery sales are starting to gather momentum with Webvan emerging as the leading contender and the recent hire of Andersen Consulting CEO (!) doesn’t hurt, either. Wireless groceries?… TrafficStation traffic warning system (available to cell phones and pagers) has an interesting business model: be a “Pager Pal” and earn money by reporting traffic incidents… Selling wireless Internet through child and elder care portals such as CareGuide.com?… The founders of Ascend have set up a new data networking company, Zhone Technologies… StartSmart.com helps you move all your subscriptions when you relocate, including wireless services (brilliant!)… Akamai was joined by Cisco in the introduction of a Cache Interface Protocol, important! Akamai also received a $15 million investment from Microsoft… CosineCom sounds like the vision our product IP@S once had… Since Saraide’s CEO is the ex-CEO or Verisign, it was not far fetched to expect Saraide to enter early into wireless e-commerce with a partnership with Diversinet which provides security and authentication technology. Saraide also announced WAP trials with BellSouth, I wonder whether that was in partnership with Apion?… Priceline.com licensed its business model to WebHouse.com, an industry first in the controversial case of Priceline having been able to patent a business model… SoftBank’s move to form a pact with Murdoch to globalize their Internet portfolio has created a follower, Asiacontent.com, which has some blue-chip names backing them, such as Viacom, H&Q and GE Equity (NBC)… Participate.com is running an outsourced online community management service, reminds me of what Zopps could be if it had product ambitions. By the way, these people just got $13 million in funding… DLJDirect online brokerage announced a mobile phone based service. Nokia seems to be working with TD Waterhouse Group, the Nr 2 US online Broker… Oracle entered the corporate portal software space by announcing the Portlet Framework… AOL says it is ready to make major wireless Internet deals. With whom?… MapQuest.com, a leading provider of online maps, driving directions and local information, entered in an major partnership with Nokia… A new innovative teenage payment service, Cybermoola, went live… Remember Aeris, the providrr of Aeris MicroBurst, the telemetry solution which uses a cellular network control channel? They just secured a $29 million late stage investment and Qualcomm was one of the investors… A Swedish company Transtema combined forces with Israeli-based Xacct for IP metering, billing and customer care solutions, sounds like EHPT is getting more competition… - (To view the embedded hyperlinks, view this section online at http://webacademy.ericsson.se.)
- SELECTED THOUGHTFUL READING - Business Week writes on Panasonic Incubator Center experiences in Silicon Valley… India is likely to kick-off Internet-based stocks trading by the end of 1999… First guns, then a kidney and now dope. Five hundred pounds of marijuana were put up for sale on online auction house eBay Inc… The First Annual DayTrading Conference and Expo for individual online investors was organized last weekend in Southern California - 2,200 people attended… - (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.
