- IN THIS ISSUE:
- * AOL Is Coming… Are You Ready?
- * Fishing the Muddy Waters: SBC Makes a Mysterious Move
- * Buying Value from Ericsson
- * Who Will Acquire Phone.com?
- * Who Is Controlling Symbian Anyway?
- * Innovative Business Models
- * News for the Financial Mind
What did we learn right before CTIA? Oracle fired on all cylinders and launched their mobile portal. Investment bank BancBoston Robertson Stephens says: “While the offering appears compelling, we wonder how long it will take for the network to become fully operational and gain traction with service providers, as other platforms are deploying solutions at an increasing rate.” Please read every word of that quote carefully: eMode (now WISE Portal) has to get a foothold on the market much faster in order to win analysts’ hearts.
Best Regards - Tapio Anttila
AOL IS COMING… ARE YOU READY?
America Online announced the formation of a wireless division, headed by an experienced venture capitalist Dennis Patrick who will be reporting directly to President Bob Pittman. This will certainly escalate the entry of AOL into mobile Internet. The first signs of a landslide are already in sight: AOL went and picked the low-hanging fruit Sprint PCS by cutting a deal which enables AOL services to be deployed on Sprint PCS phones. The open question is: Who will own the end-user? Rumors tell Sprint PCS was eager to promote Yahoo in the early days of the Sprint/Yahoo relationship some nine months ago. When they realized the potential conflict of end-user ownership, the promotion mysteriously dried up. In the new AOL deal there was a ‘facilitator’: MCI WorldCom, the new owner of Sprint, is the primary backbone provider for AOL. Hah!
In my opinion, if we try to pick the winner for the converge battle on the US market, AOL is the safest choice. Current operators range in comparison from pathetic (SBC) to not-quite-there (AT&T). The main thing AOL needs now is to get their market cap up again from $120bn to $200bn, then they can move on to acquire Phone.com. That should be clear in six months or so.
What we need is a strategy to handle AOL.
FISHING THE MUDDY WATERS: SBC MAKES A MYSTERIOUS MOVE
SBC is one of the few ‘mobile Internet companies’ whose stock continues to go down (with the exception of recent days’ hike due to Deutsche Telekom takeover rumours). Analysts tout the stock as a bargain but nobody dares to propose the grandmother to a dance even if she has started to use make-up.
A few months back SBC wanted to acquire an Internet portal and throwing darts gave Prodigy as a result. The ambition was easy to understand: get a real foothold on the consumer Internet market to build end-user relationships with. Rumors told they had been in discussions to acquire Lycos. That would have been a 10x better choice but it is easy to understand why Lycos shareholder killed the deal (if there ever was one): the ’shotgun marriage’ between Lycos and USA Networks had just recently collapsed due to incompatibility of the parties to mate and create sustainable value.
Last week SBC acquired Sterling Commerce, an established player in the business-to-business (B2B) services space. Telcos have a golden opportunity to become the hosting and backend service providers for electronic marketplaces and application service providers. This is a marriage between a traditional telco and a traditional e-commerce company from the EDI world. So far so good but the question remains: who is going to play with the equivalent leaders of the new generation, such as CommerceOne, Ariba and Scient?
The fact is that our dear home operator here in Silicon Valley, SBC (PacBell), has yet to show us an Internet strategy. Maybe we should help them?
BUYING VALUE FROM ERICSSON
It is clear that the market has understood from the avalanche of recent press releases that Ericsson has got back its strength. The future indeed looks very bright. And our exhibits at CeBIT and CTIA were great, best-of-breed! The opportunities for further improvement lie in the business model and solutions thinking. After touring both of the above-mentioned exhibitions within the last week I believe that
1) We don’t present our products enough under the same solution concept. WISE is a good start in this direction but in my opinion it should be the default way of presenting a product to the market, i.e. there should be a good reason for why a product is not a part of WISE. For example, we recently launched Mobile Internet Advertiser. The PU representatives at CTIA did not acknowledge that the product would be related to either Mobile ePay or WISE Portal. Is there a reason for this? I don’t think so. It would be equally important to have the WISE solution brand extended over the TDMA and CDMA product line, I understand this need has already been identified by the management.
2) The focus on business benefits has to be enhanced. When you visit the Ericsson stand at an exhibition, we too often see pure demonstrations of product functionality. There are a number of questions which often do not get a satisfactory answer: What is the value proposition of your product? How does this solution improve operator’s business model? What are the differentiators? It may be that operators seldom ask these questions - they may be more interested in the product functionalities. In that case we should lift the level of discussion onto top management, pose our own questions and answer them immediately thereafter. Easy, right?
WHO WILL ACQUIRE PHONE.COM?
At CTIA, Alain Rossman, the founder of Phone.com, gave one of the keynote addresses. He was introduced once again as the father of WAP (I am sure the local newspaper in Lund knows the truth in this, shall we ask them?). Alain presented the new strategy for offering a “communication portal” solution for operators. Over the portal framework there are a number of modules: 1) voice browsing (@Motion acquisition), 2) unified messaging (Onebox.com acquisition), 3) PIM/synchronization (Paragon Software acquisition), 3) Instant messaging (no acquisition yet) and 4) content (several content relationships).
It seems to me that Phone.com is moving up in the value chain and preparing for the company to be sold to the right candidate. The remaining acquisition is in the area of instant messaging, my friends tell me the candidate there is @Mobile and the final talks are underway. Then remains the question who will acquire Phone.com? AOL is perhaps my top candidate, especially given the pending opening in the instant messaging solution. However, the AOL stock price is down some 40% due to the Time Warner merger so they don’t have optimal currency for this right now. Another candidate is Ericsson who by acquiring Phone.com would get a kick-start for creating a separate mobile Internet unit for value creation, retaining talent etc. However, the price tag of the acquisition is perhaps as high as $15 billion and we can rightfully ask ourselves whether we can spend the money to create the new business unit and a better position through that. If I were Lars Boman I wouldn’t mind a $15bn budget…
And how about this quote from Alain Rossman: “We in the US are well ahead of Europe in WAP but they will catch up quickly.” I am not kidding, that’s what he said.
WHO IS CONTROLLING SYMBIAN ANYWAY?
I attended the Symbian Developer Conference two weeks ago in Silicon Valley. The event was nearly a fiasco in terms of having only a few hundred participants (the Phone.com Developer Conference last year was sold out at 1,100 participants). My prediction is that the Symbian Quartz platform will gain momentum because of its technical superiority. However, imagine how much cheaper and faster reaching this dominance would be if the owners of Symbian would require the platform to be marketed professionally!
I am also questioning what role Symbian will play in finding partners for the platform and how that will impact the Quartz third party developer strategy and broader mobile Internet partnering strategy at Ericsson. I just saw the following article in ZDNet: “In the United States Symbian CEO Colly Myers confirmed the consortium has held discussions with America Online Inc. and these are likely to continue. AOL has touted an “AOL Anywhere” access device but has yet to publicly decide on a platform.” (link here) If Symbian goes out to take a lead partnering with extremely strategic players such as AOL it might affect our opportunities with the company dramatically.
INNOVATIVE BUSINESS MODELS
Amazon launched their mobile e-commerce offering in the UK. The interesting detail is that they seem to be eager to support a business model where they subsidize the price of the data call. No further details available yet… Swatch and Sega announced a wireless Internet wristwatch… Matsushita and BT announced plans to develop a mobile music delivery solution, aiming at the NTT DoCoMo 3G market…
Internet Capital Group (http://www.internetcapital.com/) has formed a $100-million joint venture with DuPont targeting several B2B vertical markets where both companies play. The new entity, called CapSpan, will essentially incubate ICG portfolio companies as well as new companies in DuPont’s areas of expertise, including chemicals, construction and apparel. This is an interesting take on corporate internal venturing. Instead of having McKinsey build us an internal innovation management program, maybe we should let a leading VC fund to incubate our best ideas together with us. Some Ericsson employees would become rich in the process but maybe the ideas would hit the market faster.
NEWS FOR THE FINANCIAL MIND
The globalization of venture capital is an exciting trend. The latest entrant is Incuvest, a company which just closed a $100 million (!) first round. The company plans to acquire an interest in as well as develop incubator-like enterprises globally. IncuVest will provide this network of partner companies with capital, management, strategy, and marketing services. I am sure this is the start of the ‘mcdonaldization’ of both Bangalore and Kista. Rather than be exposed to a massive brain drain when these ‘fast money outlets’ come to the building next to you, Ericsson should become an active player in the globalization of high tech venturing. Well, this is what I have said for the last six months (remember SoftBANK?). http://www.incuvest.com
And there is more: PricewaterhouseCoopers said it launched an Internet incubation service in Europe that will provide $500 million in business services to entrepreneurs in exchange for equity stakes in the startups. Ericsson could adopt a similar strategy and give eMode (WISE Portal) to a qualified wireless ASPs in exchange of equity in those companies.
QUICK TAKES
Nokia partners with Cisco and CMGI to bring wireless services at the disposal of traveling businessmen at airports. Although the first phase is about wireless LANs, this is the first sign of Nokia working with CMGI, a leading global Internet powerhouse…
Remember Will Thomas who left the Ericsson IPO office in Menlo Park? He is now building Nominum, an service business for the open source naming conventions…
The mother-of-all Application Service Provider ideas is JamCracker, a meta-service which aggregates ASP services. Something for our bMode and eMode people to look into…
How to intelligently extract e-mail highlights from your Outlook into your WAP Phone? Take a look at AmikaNow…
Surfnotes is a service which helps you intelligently extract information out of any text material and bring it on your WAP phone under a category created by you…
Why would operators ever become bitpipes? Take a look at Yodlee and form your own opinion. This is a great company full of brilliant ethnic Indian (again!) entrepreneurs from Silicon Valley. Ram Shiram, head of bizdev for Amazon, moved down from Seattle to work for them. How are you going to compete as an operator with a service aggregator like this?
The price comparison service of the Swedish company GoYada is quite smart: The user calls the local number for YadaPrice, types in the product’s UPC/EAN (barcode) code, and the phone’s screen displays the three cheapest prices for that product and the participating online retailer…
The online calendaring company eCal got $13.5 m financing among others from Nokia. The company promises to use the money among other things to develop wireless applications…
(To view the embedded hyperlinks, view this section online at http://webacademy.ericsson.se.)
SELECTED THOUGHTFUL READING - “Taking the guesswork out of dying”, Jesse Berst writes on the emerging online death planning industry. I wonder what your death will mean to your mobile phone? Will it stay “always on” online as an interactive memorabilia of your extinct personality? In this industry also concepts “upsell”, “cross-sell” and “repeat customer” have to be redefined… - (go to http://webacademy.ericsson.se for links to stories)
