Thursday, July 28, 2005

Reed Elsevier blame a bit too much on the seasonal effect

In Reed Elsevier first half statement, management rightly point to some severe seasonal effects, related to the timing of educational publishing, medical books and trade shows. But these can hardly be blamed for:

  • The tacit reduction of the Elsevier growth target, which moved form 'at least 5%' (at the February full-year statements) to just '5%'.
  • The zero underlying growth (excluding currencies and acquisitions) of Harcourt. How come Pearson, Thomson and McGraw-Hill managed to grow their education businesses by 14%, 10% and 12% respectively?

Tuesday, July 26, 2005

New video on demand services

Akimbo Systems unveiled the new 'Queue-and-View' service for cable boxes. Allows cable subscribers to view Akimbo-content.

Linksys, part of Cisco, acquired Kiss Technology. It is similar to Akimbo.

It looks like VoD technology suppliers (such as these place-shifting players) can add interesting services to hardware suppliers and service providers. As stand-alone companies they may not survive, competing with the like of Verizon's FiOS TV.

Yes, investors are overlooking the seasonal effect

The summer slowdown in search related marketing, as shown in both Yahoo!'s and Google's results, caused Merrill Lynch to lower their estimates.

The Online Publishers Association also notes a, not very surprising, slowdown in ecommerce time spent online in the US. However, year-on-year there is still considerable growth (17.5% in June 2005, 18.4% in May 2005, 15.7% in June 2004). Basically good news then for eBay, and all the rest.

Friday, July 22, 2005

Positives for VNU from Arbitron and IMS

According to a study by Forrester Research, introduction of Arbitron's Portable People Meter (PPM) to replace the diary system, will expand the radio advertising markt in the US by $696m. Greater accuracy and higher ratings will drive the value of radio commercials (and by implication: the value of the currency that PPM data will represent). This is particularly good news for the PPM trial that Arbitron is conducting in Houston. And also for VNU, being Arbitron's partner in 'Project Apollo' (for use of the PPM in measuring both radio and TV listener/viewership, to be coupled with consumer spending data from ACNielsen). Earlier positive news was the establishment of the 2,100 people panel for testing the PPM in Houston. Arbitron is on track to expanding the panel to 15,000 by year end. Also, in its Q2 report yesterday, Arbitron says the costs of Poject Apollo were less than anticipated.

Earlier this week merger partner IMS Health reported better than expected Q2 numbers.

Of course, in the case of VNU, bad news is never hard to find. Now the National Association of Broadcasters decided to support Senator Burns' bill, requiring MRC accreditation before a rating service could be introduced as the market's currency. Aimed squarely at Nielsen Media's Local People Meter (LPM), developments have less and less of an impact, as the market roll-out of the LPM continues. Just like the above PPM, it replaces paper diaries, thereby enhancing the value of the ratings because of greater accuracy. It might also expand the TV market, as it simply counts more viewers than paper diaries. Thus the value of a 30 second spot increases.

Broadband: high growth (except in South Korea)

Some highlights from the Point Topic report 'World Broadband Statistics: Q1 2005' (requires free registration):

  • DSL grew by 10.4%, cable modem & other by 5.0%.
  • DSL now counts for a total of 107m lines, 65% of the total 164m lines.
  • Cable remains dominant in the US and Canada, but DSL grew faster.
  • Overall Turkey showed the highest growth of the number of broadband lines (37%).
  • The saturated South Korean market grew its lines by only 1.4%, and the number of DSL lines actually declined (by 0.7%).
  • In Germany, the market is strongly dominated by DSL, and cable declined from an already low level by 53%.
  • In the Netherlands, cable modem broadband growth narrowly outpaced DSL growth (10.9% vs. 10.3%), thereby regaining some market share.

Did you know ...

... that personal web surfing costs companies in the US $300bn per year? According to this survey by AOL and

New bill could drive digitalization of health records

Interesting times for Wolters Kluwer Health a.o. as four US Senators launch a bill ('Wired For Health Care Quality Act'). It aims at subsidising health-care providers to develop IT systems.

Wednesday, July 20, 2005

Are Yahoo! investors overlooking the seasonal effect?

Yahoo! lost over 10% after hours on its Q2 report. Revenue disappointed only marginally and the guidance range was narrowed, whereby the mid-point actually came up a little.

The possible negatives seem to include a slow-down in search-related advertising revenues. Yahoo! doesn't break down the marketing fees into search and banners, but if traffic acquisition costs (TAC, fees to distribution partners) are anything to go by, it seems to be caused mainly by the well-publicized seasonal effect. Look at the sequential growth rates: 7.1% in 05Q2, 20.5% in 05Q1, 16.7% in 04Q4, 12.6% in 04Q3, 7.7% in 04Q2.

So what disappoints most? The fact that Yahoo! did not once again succeed in beating the consensus.

Tuesday, July 19, 2005

Holiday digest: broadband considerations

The big question in broadband is: will there be room for yet another type of infrastructure, beside the incumbent technologies in both fixed and wireless:
  • Fixed: DSL (telco copper) and DOCSIS (MSO cable)
  • Wireless: GSM (Europe) and CDMA (US)

Contenders are:

  • Fixed: FTTH (fiber), BPL (powerline) and BiG (gas)
  • Wireless: WiMAX, WiFi, BoS (satellite), as well as proprietary technologies such as UMTS TDD (from IPWireless), Flash-OFDM (from Flarion Technologies) and iBurst (from ArrayComm).
The safest bet would obviously be to say: new technologies will mainly be alloted to rural and otherwise complementary deployments:

  • Its just too late. Incumbents have the infrastructure, brands, cashflows, client relations, etc.
  • There will be no regulatory support to get the new technologies off the ground, because there is sufficient competition already.
  • New technologies are as yet unproven; there are no standards yet, therefore no interoperability; also, no roaming yet; earlier attempts failed (MMDS, LMDS).
  • Existing technologies have room to grow in terms of capacity, bit rates and related costs: VDSL for telcos; DOCSIS 3.0 for cable; UMTS and HSDPA for GSM; EV-DO and EV-DV for CDMA. Sprint will even start selling EV-DO as a wireless backup link for data.
  • Despite Intel and other's support, it remains to be seen if sufficient financing is available (what ever happened to vendor financing ... ?).
  • Fiber is simply a very costly choice. However, if existing telcos (Verizon et al as opposed to Bredbandbolaget or FastWeb) choose to build out FTTH-networks, obviously the chances are much better.
  • With Nextel merging into Sprint, its iDEN technology (form Motorola) will be replaced (no definitive choice for the future yet; Flarion trials ended, IPWireless trial will start). This doesn't bode well for proprietary non-standard technologies such as UMTS TDD, Flash-OFDM and iBurst, because standards are needed for interoperability. And without that, service providers will be completely dependent on a single vendor (IPWireless, Flarion or ArrayComm, respectively).
  • Specifically, for BiG, the gas grid is not ubiquitous. And for BPL, the power grid in rural areas is not suited for broadband.

The main attractions of wireless broadband technologies are:
  • No legacy switched voice network. Providers can jump into converged offerings (voice, video and data in IP networks; fixed/mobile).
  • Cheaper than newly built fixed networks, especially FTTH.
    Much like fixed networks, wireless networks can boast ever expanding bit rates through technological breakthroughs as well.
  • While earlier standards (MMDS, LMDS) failed, WiMAX has learned a couple of lessons: it is standards-based (thus enabling interoperability between different vendors' equipment), it requires no line-of-sight (no hindrance form snow storms or flocks of birds or other disruptions) and it preferably uses licenses spectrum (to avoid interference).

My personal bet would be on cellular providers:
  • They are incumbent operators.
  • Their networks are ubiquitous.
  • They have the inherent cost advantage of wireless versus fixed.
  • HSDPS and 4G are promising.

For background reading, and also to highlight how quick things change in the broadband space, an overview of recent developments:
  • Light Reading along the way in this article implicitly assert that broadband + MPEG-4 = FTTH (MPEG-4 is the new compression standard. It requires half the bit rate of MPEG-2. One HDTV stream needs only 3-4 Mbps of bandwidth.)
  • NTT DoCoMo, on the way to 4G, have achieved 1 Gbps.
  • The new DOCSIS 3.0 standard will deliver 100 Mbps bit rates to cable operators. Interestingly, also IPTV and videoconferencing. Available early 2006.
  • The WiMAX Forum started testing a first batch of equipment, probably from Airspan, Alvarion, Aperto, Redline and Siemens. Official WiMAX equipment will be available early in 2006. All this relates to the 802.16d (or 802.16-2004) standard. Mobility will be added in 802.16e, to be ratified toward the end of 2005.
  • PanAmSat is working on a satellite-based version of WiMAX (base stations mounted on satellites). Services are to include IPTV to the entire US.
  • The next WiFi standard (802.11n), enabling bit rates of 100 Mbps, is closer than expected earlier. This way, WiFi could fend off teh WiMAX threat.
  • Japan Telecom will begin trials on a wireless network combining WiFi and Flarion's Flash-OFDM.
  • Flarion scored several deals lately (Croatia, Malaysia, Virginia, Finland).
  • Google et al invest $100m in Current Communications, which offers BPL in Ohio in conjunction with utility Cinergy.
  • Nethercomm, developer of BiG technology, will host a conference on August 24-25. It now aims to work with a telco or cable operator, but how remains unclear. Cooperation with an unaffiliated ISP (such as AOL or EarthLink) seems to make more sense.

Friday, July 01, 2005

Sling Media presents: The Slingbox

For video on demand, here it is: the Slingbox.

Mobile gains on fixed

Look at these. Mobile communications' usability has further to grow. Which may help stimulate mobile substitution.

  • T-Mobile introduces web'n'walk: open internet on a number of handsets. No more walled garden. Google will be installed on the home page, increasing the look and feel of PC-based internet.
  • Vodafone will introduce MSN to the mobile world. Seamless access to MSN Messenger from PC and handset alike.
  • Amp'd Mobile, the new youth-oriented MVNO on the Verizon Wireless network, will introduce Push-to-Talk, using Kodiak Networks' technology.

Open access gains steam - again

The RCUK is a strong proponent of open archiving. To the point where you start wondering: could this trend toward open access create a valuation gap between the Reed Elsevier (which is vulnerable) and the Wolters Kluwer (which is not) shares? Over the past week, Reed is down c. 1.5%, Wolters is up some 3%.

New to the UK: 24 Mbps

Check out this new provider, Be. They will bring ADSL2+ at 24 Mbps to the UK, starting in London.

Broadband penetration has gone up dramatically in the UK, but not at such 'speeds'.

My July diary

Taking a much needed break, first half of July. This is what I will miss, including the start of the reporting season:

  • Turk Telekom auction (55%) winner to be announced (July 1)
  • OPTA publishes market analysis for VoIP in the Netherlands (early July)
  • KPN conference call on fixed division restucturing (July 6, 10:00)
  • Vivendi Universal Investor & Analyst meeting, Paris (July 6, 15:00)
  • Wegener: deadline for EC inquiry into PCM alliance (July 7)
  • Fox (News Corp): movie release 'Fantastic Four' (July 8)
  • KPN: lock-up on 14% state holding expires (week of July 11)
  • Sprint Nextel: AGM decides on merger (July 13)
  • Arbitron publishes a roll-out schedule for the Portable People Meter (in conjunction with VNU?) (July)
  • AOL relaunches as a free portal (July)
  • Village Roadshow (Time Warner): movie release 'Charlie and the Chocolate Factory' (July 15)
  • Croatia decides on decides on fourth mobile license (mid July)
  • 10th anniversary + release 'Harry Potter 6' (Bloomsbury/Scholastic) (July 16)
  • Italian regulator rules on new MTA tariff cuts (July 19)
  • Always On Innovation Summit, Stanford University (July 19)
  • Yahoo! Q2 (July 19 after market closes)
  • Cingular (SBC/BellSouth) Q2 (July 20 before market opens)
  • eBay Q2 (July 20 after market closes)
  • SBC Q2 (July 21 before market opens)
  • BellSouth Q2 (July 25 before market opens)
  • Q2 (July 26 after market closes)
  • Reuters Q2 + strategy update (July 26 before market opens)
  • Verizon Q2 (July 26 before market opens)
  • Telecom Italia H1 (July 26 after market closes)
  • Thomson Corp Q2 (July 27 before market opens)
  • Reed Elsevier H1 (July 28 before market opens)
  • Vivendi Universal Q2 (July 28 before market opens)