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?

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.

Observations:

• 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.

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

Forbes.com 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 Amazon.com. 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)

Observations:

• 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.

WEB SERVICES://Amazon.com branching out

There is a number of interesting developments around Amazon.com, 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 Amazon.com 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. Amazon.com-the-retailer would be a client of Amazon.com-the-technology-company.

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?!

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.