Thursday, September 28, 2006

SHARING://Tips for WSJ and NYT readers

The New York Times recently had a deal with It allows an online reader to see dictionary information on any word by pressing alt + click. It even scans adjacent words to make sure the information is relevant (in case of homonyms). Pretty neat.

I'm not sure if a similiar service of the online Wall Street Journal is common knowledge. Select a word and right-mouseclick it, and you'll see related WSJ-articles.

Tuesday, September 26, 2006

DISRUPTIVE INNOVATION://Trading, 4G, place-shifting and wVoIP

Check out my Dutch language client facing blog. I try to focus more on stocks in my universe, but this post on disruptive innovation is a little bit outside that realm.

Monday, September 25, 2006

UPDATE://Shared service and leverage, telco/B2B convergence

Short updates on two previous posts:

Shared services: operators in India call for the establishment of a single "entity to lay the most modern and scaleable infrastructure and allow other operators to ride on that infrastructure".
A comparable idea (however different) is coming from BT: a BT Consultancy to help other operators build an all-IP NGN, to put some leverage on BT's 21CN efforts.

Telco/B2B consolidation: how about KPN + Wolters Kluwer? KPN is launching KlasseTV (Classroom TV) consisting of video clips supporting K-12 education.

MONETISATION://Divide and conquer Yahoo! and Google

It's a sellers' market. Top internet sites (MySpace, YouTube, AOL, eBay, Amazon, iTunes) attract interest from Google, Yahoo! and others to provide services and monetisation efforts. As these are potential competitors, the favored strategy is: divide and conquer.
  • eBay: alliances with both Yahoo! (US) and Google (non-US) for paid search etc.
  • CurrentTV: Google provides statistics and Al Gore is a Google advisor. However, the video deal went to Yahoo!.
  • MySpace: Google for ads, eBay is rumoured to be partner for ecommerce and payments.
  • Apple: Google is the search engine in the Safari browser, Eric Schmidt is on the Apple board. So, it looks like it will be Yahoo!, not Google, to win the video deal.

Tuesday, September 19, 2006

SHARED SERVICES://Wholesale operations in diverse industries

Shared services form an interesting link between telecoms, internet and media companies.
  • Telecom: wholesale services, structural separation, network services. See BT Openreach or perhaps Telecom Italia. Also, OPTA is considering how the new All-IP network that KPN plans is best opened to the competition. Any outcome is possible: resellers only, double street cabinets, structural separation or an Australia style joint effort from altnets aimed at a new FTTN (KPN style) or FTTH network (Verizon or Iliad style).
  • Internet: see my previous post on And to take this one step further: what could Google do with its massive server network? EBay is doing a little by providing infrastructure to the e-Media Exchange initiative from the advertising community for buying media.
  • Media: Switzerland Inc was suggested for the newspaper industry. Also, in this artcle a Publishing Cooperative is suggested for society publishers.

Wholesale services are a growing activity (even at a telco like BT) or a new source of revenue, albeit at a relatively low margin.

WEB SERVICES://More wholesale store services from

Amazon extends the leverage on its infrastructure by adding two services for SMEs (both in beta):
  • Fulfillment by Amazon (handling fee 0.50 $/item + 0.40 $/pound + storage fee 0.45 $/cubic foot/mo)
  • WebStore by Amazon (commission 7% + 60 $/mo)

From the release:

Fulfillment by Amazon frees online sellers from the time and money required to store, pick, pack, ship, and provide customer service for the products they sell online. Businesses simply send their products to an Amazon fulfillment center where Amazon stores and sends those products to customers who order them on or the business's WebStore. Amazon will also manage post-order customer service such as customer returns and refunds for businesses that use Fulfillment by Amazon. WebStore by Amazon allows businesses to create their own privately branded e-commerce websites using Amazon technology. Businesses can choose from a variety of website layout options and can customize their sites using their own photos and branding.


Two very diverse forms of enabling (potentially disruptive) innovation, WiMAX and open access scientific journal publishing. Kind of significant developments, because India is a large market and because Bill Gates has quite a few dollars.

Monday, September 18, 2006

FTTH://Grass roots initiative in the Netherlands

Planet Multimedia reports the launch of Stichting Glazenkamp (a pun on the Hazenkamp area of the city of Nijmegen and the Dutch word for fiber i.e. glas), a non-profit, supported by the city of Nijmegen, Radboud University and Surfnet.

So, no telco, no city, but a grass roots start-up.

The interesting parts of the story:
  • Bit rates are very high, at an average of 94 Mbps.
  • 28 Homes are connected and the target is 2500.
  • The organisation claims its success depends less on scale than on concentration and social cohesion of the participants. There will be no call-centers but instead the inhabitants will take care of issues themselves. Full roll-out depends on at least 50% taking part.
  • The network is open for service providers.
  • It piggybacks on the TeleMANN network of Nijmegen's Radboud University, supplying fiber connections to students in a nearby area, which buried some extra ducts.

CONSOLIDATION://KPN takes out another DSL rival

KPN buys another rival ISP in the Netherlands, this time Tiscali NL. Its market share will rise by 5 pp to 44%.

  • At 44% KPN is not yet at regulatory risk, but OPTA will be alerted. KPN is quietly trying to buy a DSL monopoly.
  • The price seems low, at 5.1 x EBITDA 2006 v. 8.1 for Tiscali as a whole. KPN pays EUR 255m = 21% of the total EV (which obviusly includes a takeover premium) for 13% of the total revenues and 36% of the total EBITDA. On the other hand, Tiscali has no standalone future, so KPN might have waited a little longer. And the Netherlands is among the most mature of its operations (LLU coverage 60% v. 18% in the UK and 40% in Italy).
  • KPN outsmarts France Telecom (which should be strengthening its new Orange operations), Telecom Italia (which should be adding a retail operation to bbned, which would not be for sale anymore, but everything is uncertain now in Italy) and Tele2 (which should not stop adding scale, after the Versatel acquisition). Of course, the Netherlands is a small place for those big guys, but they should not allow KPN to make this kind of deals.
  • Tiscali will update its Business Plan during the week of October 9. They seem committed to the UK and Italy. Consolidation is continuing.

Thursday, September 14, 2006

SPECULATION://Telco + B2B media

If telcos (BT, KPN) are so keen on expanding in health IT services, and telcos want to be in the media business all over again (Telecom Italia), then what is next: BT buying the Health unit of Reed Elsevier?
No wait, a full merger of BT Global and Reed Elsevier!

STRUCTURAL SEPARATION://Extortion, if not opportunistic or visionary

One last time (at least this week) on Telecom Italia, which the regulator urges to be more clear on its plans.

  • I suppose up to some point it is opportunistic, taking advantage of still high margins at TIM and structurally much higher valuations of B2C media. Now is the time to sell (TIM) and to become a media company.
  • At the same time, separating networks from services would be sort of visionary and could make the company future proof. We are talking natural monopolies (see Martin Geddes) and MVNO/reseller opportunities, as I noted before (see also Dean Bubley).
  • And if that doen't work, there is always extortion (thanks Keith). It works in the US, but it will be hard in Europe (see Germany).

To end, some speculation:
  • Telecom Italia Media is too small. Are takeovers on the cards? Endemol?
  • There are many takeover candidates for the international activities (France, Germany, Netherlands): Tiscali, AOL, Iliad, Neuf Cegetel, Arcor, Versatel Germany, etc.
  • To make the altnets in France, Germany and the Netherlands future-proof, more action is required. LLU investments are at risk (for the plain reason that street cabinets, contrary to COs, simply do not offer physical space for DSLAMs). Are fiber plans a la Iliad (or a la Telecom Italia's subsidiary bbned, which operates munifiber in the Netherlands as a wholesaler) on the cards?
  • Will TIM consider WiMAX (or any similar technology like WiBro, Samsung 4G, UMTS TDD or Flash-OFDM) to become a full-service operator?

Tuesday, September 12, 2006

CONVERGENCE AND SEPARATION://U-turns at Telecom Italia

Telecom Italia is forcing analysts and investors to rethink the convergence story. Still, the basic announcements are quite limited: separate fixed and mobile; separate wholesale and retail within fixed.
The trouble is that Telecom Italia say that the move is triggered by regulatory issues only and for some reason they stress that the focus will be on broadband and media. Also, time-to-market should improve and the group plans to expand internationally. No wonder that press reports assume that selling TIM and TIM Brasil is really what it is all about. That would help the net debt position and Pirelli.

  • Separating fixed and mobile: a clear u-turn. I find it hard to believe that convergence products would be a hard sell, but I do realize that it is a marketing tool only. Going forward, the issue could be resolved by becoming each other's reseller. TIM could even become a full-service provider once WiMAX (or another 4G technology) arrives.
  • Separating wholesale and retail (structural separation to a degree): openly following BT. A smart move, which could have more following. It stops telcos from defying the stupid network inevitability. Focus on broadband (ie being a pipe) is putting it a different way. Telecom Italia however is set to lose market share (at this point BT is a very different story).
  • Focus on media: too much credit to a tiny unit (La7, MTV, DTT). This too would be a u-turn, as most telcos have given up on telecom/media convergence (Telefonica selling Endemol, etc). Also, there is limited value in reselling content with small margins. Or would Telecom Italia now be a candidate for buying Endemol and the like?
  • Expand internationally: not without risks. In a way, this is the mirror image of being an incumbent. If the latter is a difficult thing, this could be a good thing. However, with PTTs moving toward FTTN, LLU investments are at risk. Also, BB markets are smaller and less profitable than mobile markets. Consolidation could help. I assume that bbned (Netherlands) is no longer for sale and now needs a retail operation. Telecom Italia could be a consolidator (AOL units, Tiscali, etc).
  • Selling TIM and/or TIM Brasil makes little sense to me. Mobile markets suffer from price cuts, but at least there is room for volume growth.

Monday, September 11, 2006

NEWSPAPERS://Switzerland Inc. for network economics

Editor & Publisher had this article on the newspaper industry. I wouldn't call it entertaining, but it is worth a read.
His reasoning goes something like this: if newspapers want to recoup their lost revenue, they need to succeed online. To do that, they need network economics: the network effect and scale economics. Establishing a 'Switzerland Inc.' could help them attain that.

SERVERS://The commoditization of computing has an interesting article on the commoditization of computing. A company called Cassatt, founded by BEA Systems founder Bill Coleman, helps boosting the utilization rate of servers. Its 'Collage' software is used by Pfizer, which aims as high as 70%.

Other companies mentioned are ActiveGrid, Ingres, PI Corp, Zimbra and Lok Technology. The whole 'Cheap Revolution' is based on open-source software. Profit margins are often below 10%.

The article talks about the big waves in the computer business: mainframes, minicomputers, PCs/servers and now the cheap stuff.

Looking at it from my point of view, I would conclude that costs will go down drastically for users like Google. Enablers will benefit, as they become the new standard. They could include Obviously, the future is less bright for traditional hardware and software companies.

THIRD PIPE://Minor movements around BPL, BiG and xMax

BPL: the IEEE 1901 Draft Standard is to be published early 2007. The FCC is supporting the technology.

BiG: Nethercomm claims field trials next year, but designated partners (utilities) deny. 6 Gbps brought to you for just $200 per household.

xMax: ZDNet UK witnessed a succesful trial in Florida. 4 Mbps at an 18 mile distance, supposedly NLOS too, and at tiny power usage.

CONVERGENCE://TI spinning off TIM?

Telecom Italia, according to Reuters and the WSJ, is planning a daring restructuring and a complte u-turn. It seems highly unlikely, unless TI thinks both fixed and mobile could be full-service providers (based on structural separation and WiMAX respectively). A far-fetched kind of multi-brand strategy. In short:
  • Sell-off TIM and TIM Brasil
  • Structural separation (but no sell-off of the fixed network yet)
  • Content deal with Sky Italia (News Corp)
  • Focus on fixed is a departure from convergence strategies adopted almost everywhere, even at a wireless company like Vodafone. Exceptions: Sprint Nextel and Alltel (selling off Embarq and Windstream/Valor). But Sprint has WiMAX as a fixed-line replacement.
  • Focus on IPTV seems to place TI head to head with other TV providers: satellite, free TV and FastWeb.
  • Structural separation would be a long-term solution to regulatory issues.
  • TI could still include a mobile component by sealing an MVNO deal with TIM before the spin-off.
  • TIM could enter the fixed/BB market through a merger/acquisition or by launching WiMAX/WiBro.

Thursday, September 07, 2006

WEB SERVICES:// branching out

There is a number of interesting developments around, outside the retail core.

1. Download services
We are waiting for Amazon Pages (books, announced November 3) and music (February 16). Today Amazon Unbox (movies/TV, announced March 10) is about to happen, according to the WSJ.

2. On demand services
On demand printing (with BookSurge) and DVDs (with CustomFlix).

3. Web Services
Amazon has recently launched S3 (storage, March 14), SQS (message storage, July 12) and EC2 (computing, August 24).

What makes interesting to me:
  • A focus on core business (which benefits from first-mover, scale and network effects). That makes it hard for anyone else to compete (except the likes of Wal-Mart, who inevitably lag Amazon's technological sophistication. Amazon is the default web store to refer to for many sites, including Google. Also, the likes of Google don't see Amazon as a threat. Plus, retailing is still moving online and Amazon is still adding stores.
  • At the same time, Amazon is entering new territories (see above) and hurting a number of players. Amazon employs thousands of engineers - there is lots more to come.
  • Amazon has surprisingly few partners. Microsoft is an S3 customer and supplies technology to the A9 search service. Only recently has Amazon started serving ads for companies that don't sell stuff on Amazon.
  • As Nicholas Carr previously suggested, Amazon could split the company. would be a client of

SPECULATION://Wolters Kluwer Analyst Day

Wolters Kluwer quietly changed the agenda for the September 27 analyst day, devoted to the troubled LTRE division.

Originally it was intended to include (as it still reads on the IR site):
  • 8:30 am - 2:30 pm: General overview and strategy
  • 2:30 pm - 4:00 pm: Break-out product sessions

But now it reads in a new email:

  • 8:30 am - 10:00 am: Strategy Update
  • 10:00 am - 4:30 pm: LTRE divisional day (including product demos)

To me, that reads like instead of being focused exclusively on LTRE, an update on the group as a whole is included. What could that mean?!

Friday, September 01, 2006

VOIP AND PAID SEARCH://The eBay-Google deal

The eBay/Google was widely covered, especially well in the New York Times. Going over the alliance after returning from my holiday, I noted some important aspects of the deal:
  • It covers markets outside the US, presumably because Google is strong 'abroad' and US-partner Yahoo! has auction sites elsewhere in the world. And how about keeping both of them happy?
  • Before anything happens, users must indicate which service they wish to use: Skype or Google Talk. Skype (proprietary) and Google Talk (SIP-based) will be made interoperable (but not for voice!). Will that work (and how long will this take)?
  • It appears to be a call-back system: surfers enter their phone numbers and receive a call from the advertiser. (AOL uses the Ingenio system, that uses dedicated phone numbers in ads that users can click on.)
  • Google (and Yahoo!) ads could conflict with seller interests. This takes some careful targeting, which is done by only allowing ads for complementary products. (Amazon does pretty much the same thing, by allowing ads from companies that don't sell items on Amazon.)
  • Last but not least: neither sellers (who are too busy) nor buyers (Marktplaats recently ended the service) seem to be interested in using the service.