Subba’s Serendipitous moments

August 11, 2009

Mobile phones serve as catalysts for social media.

The mobile data services market is on an unprecedented roll. For the first time, wireless data revenue in the U.S. passed $10 billion in Q1 2009. Wireless data revenue in the U.S. itself maybe $42 billion by 2009 as per the respected analyst — Chetan Sharma who has provided details in his market update. The U.S. is now is the largest mobile data market, ahead of Japan and China. Verizon’s data revenues are close to $4 billion, just shy of NTT DoCoMo’s. The top four U.S. carriers figure among the top 10 global operators by way of mobile data service revenues.

I was curious to find out what could have led to the phenomenal surge. While there could be a few factors, in my view the single largest contributor has been the growth of social media. Let me explain:

As more and more people sign on to social networking platforms like Facebook, there is a compelling desire to share and be part of the communication. This naturally implies that more people are signing up for the mobile data plans which are far more profitable for operators. The key catalyst that contributes both to the social media and to the operator’s profit pool happens to be the ubiquitous mobile phone.

A simple, easy to use browser and a good camera on the phone is all that is needed. When the smart phone was invented, I bet no one saw this as a potential application. The iPhone showed what is possible and soon a variety of devices has made access to social media quite easy.

Now, mobile operators for a long time have tried to offer a variety of applications, but barring a few none took off. This only goes to show that managing a network and managing a application portfolio calls for different competencies. And suddenly when one was least expecting, there’s a big surge in mobile data services.

INQ Mobile — owned by Hutchinson Whampoa has launched a Facebook phone. In Hong Kong, where the INQ1 launched back in March, nearly 50 percent of its owners regularly use data services on a level that is four times higher than the typical 3G user base. Facebook usage is also 3-4 times higher than the average on other 3G devices on the 3 Hong Kong network, the company said. Soon we may have a Twitter phone as well.

So, we are back to where it all started: Carriers have become dumb pipes and the innovation is happening around the ends of the pipes — at the device level and at the application level.

So, like I normally say about innovation, the unintended effects of an innovation caused by seemingly disparate tributaries often causes a flood in an area that we least expected to happen.

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August 4, 2009

Google and Apple are now confirmed rivals

If there was any doubt about the relationship between Google and Apple, the abrupt resignation of Eric Schmidt — Google CEO from the Apple Board should lay it to rest.

I wonder whether the FCC’s investigation of Apple yanking out Google Voice has something to do it. I wrote about their possible rivalry here, but before I could even conceive of possible actions, the resignation was announced. Coming to think of it, Google and Apple are bracing to compete with each other. Google’s Android which will soon be adopted by many device vendors will be in direct competition with Apple’s iPhone. And the Chrome OS will be competing with the Mac OSX.

But is this new? These moves have been going on for the past few years and while the conflict of interest wasn’t that sharp the yanking of Google Voice seems to have brought all that into the open.

I admire both companies. Both Steve and Eric are respected Valley veterans. They have been role models for me. Nonetheless I have to say they always had antithetical approaches to shaping the future of the consumer experience. Some day there was bound to be a conflict.

Apple believes in creating cool products, but being a walled garden. It has fans, not customers. Even though the iPhone is supposed to be open, every application must be approved by Apple. I had talked about the walled garden approach here and it seems to have worked very well for Apple.

Google has adherents. It believed in openness and its whole purpose (even for its Chrome OS) was to reduce the significance of devices in favor of applications that will reside in the cloud. And once the cloud becomes the organizing system, the devices — be it the phones or the laptops do not matter.

Google crowdsourced its innovation. Apple built an innovation value chain in-house. Both models were successful. Yet I think at the core there is a deep philosophical conflict which manifests as a fight between the open and proprietary approaches.  I wrote about it in the mobile phone industry here and hence am not surprised that a rivalry has come about.

The Google Voice episode is just the beginning. The FCC enquiry may reveal more.

And if the Google-Microsoft war and the Apple-Microsoft war, wasn’t interesting enough, we will see a third war — the Google-Apple war.

August 2, 2009

IBM girds itself against Cisco.

A few months back I wrote about Cisco’s game changing play and in the process declaring war on IBM and HP. I also indicated that an imminent realignment of alliances is likely. I have been following the subsequent developments with a lot of interest and here’s an update.

I have not seen HP do much in terms of launching an offensive to Cisco’s play. Either they do not believe in Cisco’s ability to build a carrier class digital IT infrastructure or they are tied up with other myriad issues.

IBM on the other hand has upped the ante with a series of moves. It entered into a fairly strong relationship with Juniper Networks. While IBM did mention that it was also bolstering its relationship with Cisco, for the discerning eye it was just PRspeak.

Brocade’s Fibre Channel over Ethernet (FCoE) will be offered as the IBM Converged Switch B32 and 10Gb Converged. This will strengthen the OEM agreement Brocade with IBM earlier this year to resell Brocade’s Foundry switches.

The battle for data centers will invariably shift to the cloud. And the shift may even be quicker than one can envisage. And the first vendor that are able to demonstrate that data can be moved from one cloud to another without a hitch, has a significant advantage. With the agreements with Juniper and Brocade, IBM seems to have a strong advantage over Cisco.

It looks like an interesting battle ahead between IBM and Cisco. To me, it looks like HP is still being hesitant.

June 18, 2009

What ails Singapore entrepreneurs?

I am not talking about the entrepreneur who sells red bun and starts yet another coffee shop. I am talking about technology entrepreneurs who create products, services, generate jobs and stimulate growth.

Singapore is probably the only country in the planet which has a Ministry of Entrepreneurship staffed by eminent and scholar Ministers. The first to head the Ministry in 2003 was Raymond Lim a Rhodes and a Colombo Plan scholar. Subsequently it was headed by Dr. Vivian Balakrishnan for a very short time before Lee Yi Shyan took over.

Despite such scholar Ministers, Singapore has had limited success as entrepreneurs and very less of technology and new media entrepreneurs. The Government has put in all kinds of incentives and generous funding.

My own assessment after having done some serious thinking is as follows:

  • Few angel investors or Series A investors
  • Start ups don’t collaborate and create partnership networks themselves
  • Start ups don’t think global – they depend too much on the local market
  • Big Singapore companies are not encouraging about start ups
  • Start ups build business the traditional way – Not disrupting anyone
  • They try to copy other successes blindly
  • Clearly no game changing ambition
  • Less idealistic, hence do not get the new business models.
  • Excessive focus on making money quickly – No big picture or long term picture in mind
  • Focus on sales, not on a compelling value proposition
  • Start ups don’t even do simple, free marketing – blogs, viral marketing etc.

James Chan has some interesting observations and I would agree with all of them.

Does anyone have anything to add to this?

Isn’t is a paradox that we were once a nation of entrepreneurs? Our forefathers from China and India arrived here without any support with barely to survive and set up businesses. Even today the Chinese and Indians have successfully set up businesses not just in their own countries, but all over the world.

Where and how have we lost the spirit?

April 20, 2009

Oracle acquires Sun — Unexpected and interesting

Oracle announced that it is going to acquire Sun for $9.50 in cash valuing Sun at about $7.5 billion or $5.6 billion net of Sun’s cash and debt.

The deal comes after talks between IBM and Sun failed. I had analyzed why the IBM may not really need Sun here and here. IBM had offered $9.40 per share. Oracle’s offer is a 40% premium over Sun’s closing price.

However this acquisition by Oracle is both unexpected and very interesting. Sun’s software assets could become better strategic assets to Oracle than Sun’s server or storage business. After Sun acquired MySQL , the relationship between Oracle and Sun had soured. Oracle had acquired Innobase to neutralize MySQL but it hadn’t made much headway. Of course Java could become the pivot of Oracle’s middleware strategy.

The open source database angle becomes interesting. Having MySQL in its stable gives Oracle access to its huge developer base and web applications market. Will Oracle kill MySQL to protect the Oracle 11g cloud margins or milk it for whatever it is worth before allowing it to die in neglect will be interesting to watch.

Sun has a large installed base and becomes an immediate target market for Oracle to target with its applications.

Since Sun’s manufacturing is already outsourced, there’s nothing much left for Oracle to do. It can sell whatever is left in the hardware business — the storage, server and any other chip business to either HP or Dell.

Oracle now fine tunes the database performance on Solaris and sells a combo. HP and others will feel the impact.

Oracle gets the scale and muscle to attack IBM.

On the overall, there seems to be a better strategic fit between Oracle and Sun, than Oracle and IBM. Both companies also have a strong feisty culture and hyper competitive spirits so integrating them could be easier.

What is also interesting is that Sun’s board approved the deal quickly and unanimously after just scoffing IBM’s deal which was just 10 cents less per share.