Thursday, May 28, 2009

Think Payphones Are Dead? Not Max...

One thing my son Max is not... is predictable. For such a tech savvy guy, I was pleasantly surprised by his latest post. He's the last person in the world who would ever use a payphone - when was the last time you saw any teenager using one? And - as I discover to great dismay when I visit the U.S. - is how rapidly they're becoming extinct. It's like watching a movie after a nuclear winter, as you walk by these still-empty stalls and kiosks where the pay phones have simply been removed. Actually, Max used a photo of mine from a recent trip in his post to show what this looks like.

Anyhow, I get the message. Americans are so saturated with their cell phones, the concept of using a payphone is simply ludicrous. Maybe so, but I'll tell you it's not quite like that here in Canada. It reminds of how the big auto makers in the 40's and 50's had enough sway over the economy to see to it that streetcar tracks were ripped up or buried to give commuters more reasons to buy a car. Not very admirable tactics, but they got what they wanted. Sure looks like that's going to be the fate for payphones.

Well, Max has made a good case that marries 2.0 communications with 1.0 technology. His post recounts his discovery of payphones with keypads and the ability send text messages for only 10 cents. Hey, what's wrong with that? If carriers looked at this more creatively, they just might be able to find a host of new uses and services to make payphones worth keeping. I know they haven't had much success turning them into Internet stations, but y'know, Max makes a good point, and his post does a great job showing how this works step-by-step. And they sure have great real estate value to boot.

Have a look at his post for yourself and let him - me too - know if you agree. Sometimes you just have to look at the world a little differently. If the carriers out there want to get their hands on more of this kind of thinking, they should hire this guy - and I wouldn't say no!

Tuesday, May 26, 2009

Industry Poll - Independent Analysts Holding Their Own

I don't cite polls very often and I don't conduct my own polls as a matter of course, but this one caught my eye the other day. It was put together by Paul Greenberg, a well regarded thought leader in the CRM space. The poll was asking which enterprise analysts/firms people trust the most. Initially, the poll ran last week on Linked In, but then it was moved to his column page on ZD Net, where it could reach a wider audience. That turned out to be true, as the LI poll tallied 46 responses, while the current location has picked up 149 votes as of this writing. I could have run this late last week, but wanted to wait for the long weekend to pass to help boost the tally.

Anyhow, based on 149 votes, it's a pretty interesting pastiche of replies. No single analyst firm dominates, and it was great to see that the broad category "Independent Analysts" fared better than most everyone else, with only Gartner coming out a little bit ahead. Here are the top vote-getters...

Gartner 15%
Indies 13%
Forrester 10%
Bloggers 10%

Interestingly, the biggest response category was none of these - 18% said "I don't trust analysts". Well, fair enough - can't please everybody. Otherwise, here are the big takeaways for me....

- No surprise seeing Gartner at the top - but only 15% - sure is a fragmented market.

- Indies were was identified by name, but as a category, they definitely have a following, and hold their own against pretty much everyone else out there. I do my share of consulting in the enterprise space, so this is good news for people like me.

- Aside from Forrester, the other big name analyst firms rated much lower - only 3% for IDC and 1% each for Yankee, Aberdeen and my alma mater, Frost & Sullivan

- Institutional analysts rated 0%, which I found kind of scary. No doubt there would be some inherent distrust there, but I'll vouch first-hand that most of the research I see from this space is pretty good. That was a surprising finding for me.

- Very interesting to see Bloggers at 10%, and Journalists only at 1%.

This last point touches on all kinds of issues around category definition and the research methodology for this poll, but it's clear to me that bloggers are viewed as a credible source, whereas the mainstream media is not. No surprise there, but you have view all of this with a grain of salt since bloggers are such an amorphous bunch. Journalists are bloggers, vendors are bloggers, analysts are bloggers, etc. Very hard to really tell which is which, but at least the poll tells us which brands are well regarded.

Regardless, I find it disappointing that Journalists are held in such low regard, especially if you follow my thinking about blogging vs. journalism. We all know top drawer journalists out there, but they seem to be fighting a losing battle these days. As much as I like blogging, I DO NOT want to see a world where blogs become the preferred source of authority at the expense of journalism and their underlying principals that bloggers are not beholden to.

Crowdsourcing will probably win out in the end, but it sure places all the onus on readers to decide who to trust. No doubt bloggers usually have the best expertise, but until you know them on an individual basis, you don't know what their agenda is, and that takes work.

Reading the various comments on both polls - LI and ZD Net - I echo the thought that it really comes down to the individual at the end of the day. All these firms have really good enterprise analysts, and some not-so-good. I guess the firms that rate the highest just have more of the former. Setting aside the relatively small sample of this poll, this would be a very different exercise if the poll asked about which specific analysts they trust. At this level it's really about subject matter expertise, and to some extent, fame/general reputation, but that would add more clarity to the topic. It's great to see Bloggers rating so highly as a category/source, but that doesn't tell you much without knowing who these bloggers are. I suspect many will be with analyst firms, but many will be from other spaces this poll wouldn't otherwise capture.

I'll stop now. The market researcher in me has an endless fascination with this type of research, but I have to get back to work. You can review the top level results along with the comments on Paul's CRM blog page, and if you want to comment further, I'm sure he'd be happy to hear from you. I'm just happy to see the results, and will take it as further validation that the voice of independent analysts is still valued out there.

Monday, May 25, 2009

The Future of the Auto - Telecom Parallels

This morning I attended an event put on by Ogilvy Renault and Deloitte, whose TMT practice I follow pretty regularly. The MaRS facility has become a good home for their events, and that's a topic unto itself. MaRS is a unique concept for an innovation center/business incubator, and there are all too few of these to support Canadian startups. Their focus is mostly life sciences, but they have a handful of tech clients, and as my ties develop there, you can expect to hear more about MaRS in future posts.

Today's breakfast session was about the future of the car, which is a hot topic for just about everyone these days. The focus was mainly around cleantech and energy, so I didn't go there expecting to hear about what's cool in GPS, wireless broadband, smartcar technologies, etc. That would have been nice, but the energy angle was still interesting. The panel had a mix of academics and real businesses - the latter being Magna and Zenn Motor Company (this sounds pretty neat actually - a Canadian public company making an electric car - but within Canada, it's only available in Quebec - huh?).

Anyhow, there was a lot of talk about the challenges for using hydrogen and fuel cells to power electric cars, and I couldn't help but notice the strong parallels to telecom, and what IP has done to displace/disrupt the PSTN. Just substitute carbon/oil for PSTN, and hydrogen/fuel cells for IP, and the conversation unfolds pretty much the same. Very interesting - I love being an outsider at these things - I don't think anyone else attending was really thinking along these lines.

As with IP, most of us can see that hydrogen holds great potential and in time should supplant carbon-based fuel to power our cars. Being early stage technology (well, sort of - they've been working on this for a very long time), adoption has been held back by the usual suspects - high unit costs, unreliable fuel cell technology, limited distribution/infrastructure, and worst of all, a lack of political will/vision to bring the electric car into the mainstream. It's really scary when you think about how U.S. and Canadian governments have devoted so little attention to broadband policy/regulation, and how far we're falling behind the rest of the industrialized world. Same story here.

I couldn't help but also notice how much of a silo mentality there is in only talking about cleantech - as if that's the magic bullet that will save the auto industry. Aside from the banks, can you think of an industry that's in more trouble than this? If you think telecom is struggling to transition from 1.0 to 2.0, this sector really has a big hill to climb.

Not that I was expecting a broader agenda today, but there wasn't ever a mention about the bigger picture issues around what kind of cars we need today, how the industry is evolving, where the auto fits relative to other modes of transportation - especially in big cities, etc. There was, thankfully, one good question from the audience, asking about the impact of using lighter materials to build cars. No doubt, the technology is there to develop lighter, stronger materials, and of course that would be a huge step forward in making cars more practical.

One panelist did concede that when the Chinese start bringing $5,000 electric cars to North America, we won't be able to compete. Ugh. I don't think we're too far away from that scenario, and what is GM going to do then?

I could certainly go on about the parallels to telecom, but I think you can see where I'm coming from on that front. Give me a ring if you want to take that thought further, but right now I'm working up to my big finish. My reference to GM just now wasn't an accident. Today's session painfully reminded me of a must-see CBC documentary on the fate of the electric car. Titled "Who Killed The Electric Car?", if this doesn't lay bare the 1.0 thinking that has effectively destroyed GM, I don't know what will. In short, it tells the ill-fated story about the EV-1, perhaps the greatest flash of innovation from GM in a generation. It was a first generation electric car, launched as a trial in the 1990's in California in response to the growing need for greener, zero emission cars in that state.

As the film shows, the vehicle was a hit with the lucky few hundred who got to drive one. Then the dark side emerges, and we learn about the ugly forces that caused the EV-1 to be taken off the market, and then destroyed with barely a trace. If you thought Stalin's historical revisionism was evil, you'll love this documentary, and I'm so glad Michael Moore didn't get his hands on it first (mind you, Roger and Me is pretty good too!). For Canadians, of course, this just screams Avro Arrow, and you just have to wonder where the auto sector would be today if GM hadn't been so frickin' shortsighted. I better stop now if I know what's good for me. Anyhow, you can check out this doc online here, and if you get CBC TV, you're in luck, as it's being re-broadcast this weekend. If you care about the auto market, you don't want to miss it.

Wednesday, May 20, 2009

Google Book Search Settlement - Another Digital Pandora's Box

A very good friend of mine is an archivist with the Ontario government, and we share similar views on how technology is impacting modern life. He passed a really interesting item along that ran in yesterday's Washington Post. Some of you may be following this - Google's Book Search Settlement. I can definitely see how this has a direct bearing on the archive space, but also how it touches on a few tangents of my world - emerging communications technologies.

This story was new to me, and you should start here to get a basic grounding. The story was written by Brewster Kahle, and as the Director of the Internet Archive, he has a pretty good take on what this all means.

Basically, the issue is about how Google is waiting on a court ruling that could essentially grant them a monopoly on "in copyright but out of print" books - which, according to the article represents "50% to 70% of all books published after 1923". Wow - that's a lot of books, and the article goes on to say this would effectively allow Google to "privatize our libraries". If that's not a Big Brother scenario waiting to happen, I don't know what is.

I totally agree with the author that this could set a very dangerous precedent and runs totally counter to foundations of the Internet revolution. Most of us would agree that these principles are about openness, sharing and easy access - all of which serve to make information and knowledge available to anyone with an Internet connection. This is a very powerful concept for any discipline, especially education, where so much of the world has little or no access to books. To put this kind of control in private hands - whether it be Google or a startup - seems like a bad idea on so many levels.

Sure, Google has made the investment in time and resources to scan these books and bring them into the digital fold. It's the same Net Neutrality argument that service providers make when they build broadband networks and then don't want to share them freely with OTT operators. There is definitely a fair economic case to support this tradeoff, but in both cases we're talking about things that are essentially public domain - books and the Internet.

You can also argue that Google has the means to add lots of intelligence to the process of accessing these digital books, especially in terms of search and indexing of content. No doubt the possibilities to enrich the knowledge that can be gleaned from these books are very exciting and compelling. But again, privatization seems like to high a price to pay. Surely there is a better - and more egalitarian - way to approach this.

There's so much to consider here, and I'll leave this for you to explore further. Check out these links to get started - here, here and here. A lot of this is outside my everyday expertise, but it doesn't take much to see the implications here for other forms of copyrighted digital media - music, cinema, photography.

Regardless of this turns out, anyone following my world should follow this carefully because I think this will set some precedents for new business models, which is something this space desperately needs - but only the right kind. Stay tuned - I sure will.

Monday, May 18, 2009

Time Magazine's Top 10 Tech Failures - Vonage?

Here's an item that's bound to get a few people going. Top 10 lists are everywhere, and we all know their real purpose is to start a conversation since people rarely agree on these things. On that count, Time Magazine has succeeded. They just came out with a new list - "10 Biggest Tech Failures of the Last Decade". How can that NOT get your attention, right?

I don't normally read Time, but two paths led me here. First was Andy Abramson's post from today. He and I basically agree, and I'll amplify his thought a bit in a moment. The second is my son Max, who for some reason has recently started reading Time. Great to see him following the news of the world, since - like most teenagers - he doesn't read the local paper and hardly watches TV. Your guess is as good as mine as to why he'll pick one form of mainstream media over another, but at least he's reading. That's definitely another topic --- but not now.

Anyhow, their top 10 list is an attention-grabber, and includes some expected flops like Vista, Iridium, satellite radio, and yes, YouTube. Hard to argue with these, but seeing Vonage on that list certainly caught my eye.

I totally agree with Andy that Vonage was a disaster as an investment story, but we would both strongly disagree it was a tech failure. This is how these top 10 lists suck you in - we can't resist when winners and losers are identified in the media. Tech has been a dirty word on Wall Street lately, so we love reading about "failures". Reading over the criteria that define's Time's list, there's a disconnect to me between a company or a product failing and the technology itself failing.

Would Vista be considered a failure? As a product, probably - but Microsoft is doing just fine as a company(arguably), and no one would dispute how successful their desktop OS has been. Sirius XM - no argument there. The company is not a success and satellite radio has not taken over the world. The underlying technology isn't really the story here - it's really about a new business model to monetize radio. On and on we go - it would fun analyzing each one of these, but that's not why I'm doing this.

Let's just move on to Vonage. Has the company been a failure? I'd have to say yes, and you don't have to look far for supporting evidence on a financial basis. Sure, they're still operating, and they just shifted their marketing strategy to voice quality instead of price. It's probably too little too late, but at least they're trying. Has the product been a failure? I would say no. Today, Vonage is a solid, mainstream residential VoIP service. It's not the best, it's not the cheapest, and it's not the most cutting-edge.

However, it's got great brand recognition, a track record, a critical mass of customers, and for consumers, it works pretty well. That's not a failure in my books. As far as pure-play VoIP offerings go, they're pretty much the last one standing in the U.S. While they've probably peaked in terms of subscribers, they wouldn't still have 2.6 million customers - in spite of all the nasty litigation and value-priced Triple Play bundles out there - if the product was not fundamentally sound.

This brings me to the third aspect that defines "failure" - technology. Here's where I would object the loudest and longest. I've followed Vonage longer than almost anybody (and am on record as one of their staunchest supporters). This is where I think Time has got it wrong. When Vonage went public, they owned the residential VoIP market, and had over 50% share for a long while. There is absolutely no doubt they did more than anyone to build the foundation for VoIP in the U.S. I've long called Vonage the Kleenex of VoIP - the two words are synonymous. Without Vonage, we wouldn't have a consumer VoIP market, and guess what, they've outlasted CallVantage.

When Vonage started making noise in 2004, the RBOCs - as they were called then - got very nervous as the media was trumpeting the likes of Vonage as the successors to dinosaur telcos that would make them obsolete. This led AT&T to engage in an aggressive marketing campaign to compete head-to-head with their CallVantage service. A price war ensued, with the incumbents hoping this would drive Vonage out. It failed, and ultimately, AT&T was acquired by one of its offspring - SBC - for an embarrasingly low amount of money. It's a much different story today, but at the time, it sure looked like Vonage was going to kill the telcos. Fast forward to today, and you could argue that VoIP has failed as a technology because for all its effort, Vonage, barely has 3% of the market.

Sure, that's laughable, but if you don't think VoIP is the future of telephony - not just residential - then you probably think Iridium, Vista, HD DVD, and the rest of Time's top 10 list still have a chance. Vonage may have topped out as a market player, but they've long conceded that the cablecos now own the consumer VoIP space. While most of the growth in consumer telephony is wireless, there are still around 90 million landlines out there in the U.S., and there's no doubt that VoIP is going to become dominant there. And guess what - once we get LTE, WiMax, 4G etc. up and running, VoIP will do to mobility what's it's done to landline. I could go on, but I'm sure you get the idea. So, thanks Time for getting my attention, and next time, please be more careful - or consistent - in making these choices.

Friday, May 15, 2009

Amazon Kindle - Can Blogs and Money Mix? Should They Mix?

Rich Tehrani had a thought-provoking post yesterday that I have good reason to weigh in on.

As I learned from Rich's post, Amazon has opened up its blog beta to the world, and now anyone with a blog can register with Kindle, where blogs are offered on a subscription basis. Wow. So many things to think about here.

Rich covers important ground, likening Amazon's move here to Microsoft's early days when it basically cornered the market and could dictate the terms of doing business. Amazon definitely has amazin' market power, and what blogger wouldn't want to be on a platform like this with the potential to actually make money off their blogging. Like moths to a flame, I'm sure they will come in droves and droves, dreaming of easy money. Is this really a good thing?

Amazon, of course, is getting what it wants - tons of essentially free content to make the Kindle a sexier product. There isn't a blogger on the planet who doesn't want to make some money, so of course, they'll be all over this. Anyone who follows me knows the issues I have with bloggers versus journalists, and I really have no idea how Amazon is going to manage all this. How will they keep out the fairweather bloggers and wackos and self-motivated people with agendas - both good and bad. How will the blogs be evaluated, categorized, vetted, ranked, etc.??? So many questions here.

Anyhow, Rich rightly points out that nobody pays for content like blogs, so what makes Amazon think they have a winning business model? There's definitely a challenge here, but I certainly applaud Amazon for trying. Sooner or later somebody will come up with a viable business model for online content that isn't advertising driven.

Actually, I think Amazon just might have it right here, as the latest version of Kindle is another step along the way for the online reader concept, which I believe will be an important product category as mobile broadband becomes ubiquitous. It's early days, but things are changing, especially in the publishing world - just ask anyone in the newspaper business. We're spoiled in North America, but in countries like Korea, mobile readers are widely used for newspapers, and the green angle for saving our forests will eventually become as hot a topic as the need to find new/cleaner sources of energy.

It's not a big stretch in my mind for Kindle becoming a must-have gadget, especially for commuters, and I have no doubt there will be a segment of that market who will be willing to subscribe to their favorites, whether it be blogs, newspapers, serialized novels, etc. Of course this only works so long as the Kindle does not evolve into a larger version of an iPhone. Once you're on the Web, there is zero reason to pay for something you can get for free online.

That's just one area where things get complicated. Another is the fact that bloggers who join the Kindle stable are not exclusive, so they're not obligated to create new content that makes it worthwhile to subscribe to them on Kindle. That would sure change the equation, right. And then there are newspapers. I'm sure it's just a matter of time until someone like the NYT makes a deal with Amazon. It's one thing to monetize content with bloggers who are not beholden to any editorial guidelines, but it's a whole new ball game with the news. That's a huge topic alone, but I'm sure you get the idea.

And finally, as Rich notes, there's the revenue sharing issue. Is a 30% cut fair for bloggers? That depends on a lot of things, and to side with Rich, Amazon does hold all the cards, so they can justify keeping 70%. They know that 30% for bloggers is way more than the nothing most are getting now, so what's the problem? Maybe not so much now, but as this thing matures, there will be a few really popular blogs and tons that nobody ever reads. The vast majority will probably never earn anything, but among the winners, sooner or later those who are drawing big numbers will want a bigger cut, and then the balance of power will shift. Naturally.

Having said all this, I'm also speaking from a very small position of having a vested interest. Followers of my blog may know that my blog has been available for subscription on Kindle for a couple of months now, so I'm a bit ahead the curve on this story. However, unlike this public beta, I was invited to participate through a syndication service I've been with for several years. For me, the 30% revenue share is fine, since I'm not doing any of the marketing, and Amazon Kindle has far more marketing reach than my brand will ever have. Fair ball. Of course, when I went in, this was a pretty controlled group, so the universe of bloggers is pretty small. I have no idea what happens when/if thousands of blogs are added to Kindle, but that sure would dilute things for everybody, and I have no idea how anyone will know the good blogs from the bad blogs. It's not a problem I'd want to be managing. I should also say that it's too early to determine how well I'm doing, but I don't expect to get rich.

Just one more thing to note from Rich's post. I agree with him that whether you love/hate what Amazon is doing here, it's an important story to follow. If they somehow prove there's an appetite for paid content that will have huge and exciting implications for publishing. He's not betting on it, and I also agree that as mobile broadband becomes the norm and Netbooks really take off, the number and variety of free sources of content will proliferate and possibly overwhelm anything that Kindle can offer. Part of me likes this scenario - we all like free - but another part of me dreads it, not because I'll make less money, but newspapers could face extinction, and I don't think anyone really wants that. Enough. Kindle isn't going to save the world, but there's a lot to think about here.

Wednesday, May 13, 2009

What Service Providers Can Learn From CSI

What does a television show like CSI have to do with telecom?

Not much, really, but I recently got a chance to hear a keynote from Anthony Zuiker, the creator of the mega-popular CSI franchise. It's a great show, no doubt, but more importantly Anthony is very much part of how the experience of watching television is evolving. He calls it multi-platform story telling, and this is really about the overall entertainment experience which of course intersects big time with communications technologies, so here we are.

That's the topic of my latest Service Provider Views column that runs on TMCnet, and it's running live now. I think his ideas are very relevant for service providers, and once you read the column, I'd love to hear your thoughts.

Tuesday, May 12, 2009

Microsoft Cuts Include Response Point - One Step Backwards

Last week's cuts by Microsoft got lots of attention, but I've barely seen anything about the fallout for Response Point. I actually didn't catch wind of this until yesterday, and since then I've had dialog with a couple of Response Point team members to better understand what's happening.

I've been following Response Point for some time - such as here - and have always thought it was a great entree for Microsoft to serve the SMB voice market. There's so much at stake these days for owning the customer, and Microsoft knows it can't do this with software alone. They've invested a lot of time/energy/money to develop an SMB solution that bring the best of both worlds in terms of software and hardware, and that's what Response Point is all about.

In terms of public news about how the cuts impacted the Response Point team, I can steer you to two sites - their own blog, and the Mini-Microsoft blog. The latter post is more about the overall cuts from last week, but if you sift through the comments, you'll find references to Response Point.

My understanding is that Microsoft had to cut back support for initiatives that weren't delivering short term profits, and being a startup, Response Point clearly falls into that category. From all accounts I've seen, Response Point is not going away - they'll just have to make do for now, and support the current version as best they can.

Basically, this means living with Version 1.0, which launched in early 2008. They've been building their early momentum with this, but most people are looking to Version 2.0 to make Response Point a mainstream SMB solution. This version is more voice 2.0-oriented, and includes new features such as a softphone, Key System functionality, better branch office integration, and remote user connectivity. Unfortunately, the air has come out of this balloon with the funding cuts, as Version 2.0 was not slated for release until later this year.

So, development is now on hold until these cuts have been digested. Presuming Microsoft is performing better a couple of quarters from now, hopefully, they'll be able to revisit funding then and get 2.0 launched. Until then, the team needs to consider possibly launching a few core 2.0 features now to make Response Point more competitive, as the market is continually evolving.

This last point is the most troubling aspect of what these cuts mean, not just for Response Point, but Microsoft itself. We all know there's a huge land grab in play now for the massive SMB space, and there are tons of solutions to choose from. Response Point makes a lot of sense for SMBs who are Microsoft-friendly and want an easy-to-use solution. Furthermore, with so many new entries, buying from a trusted brand is an important comfort factor for an audience that is generally not that tech-savvy.

The problem facing Response Point is all the time they lose now to develop Version 2.0. This creates a bit of a vacuum that will quickly be filled by solutions that Microsoft will have a hard time competing with 6 months or so from now. Web-based offerings like and Vocalocity are starting to find their niche, as are hybrid PBX/router solutions like Jazinga. And then you have the whole Open Source ecosystem, along with a growing variety of hosted, managed and cloud-based offerings.

These cuts also reflect on Microsoft, who simply had to make a business decision to adapt to current market conditions. However, it sends a message that SMB is not their top priority (which is probably true), but for the legions of vendors, VARs and developers supporting Response Point, it's a step backwards for what most would see as a winning strategy for Microsoft. Tough choices for tough times, and I do hope that the Response Point team keeps things moving forward, as I think their offering could be a major cornerstone for Microsoft's value proposition in the SMB market.

Monday, May 11, 2009

Are Editors Canaries in the Coal Mine?

We all know how challenging the economy is, and telecom is not immune. There are certainly signs of life out there, but more often than not I'm hearing about people out of work, projects that are either being downsized or held up, or companies running out of money or being acquired.

In the past few days, there have been two high profile departures from Editors well known to anyone following telephony and IP. Last week, we all heard about TMC's Greg Galitzine and his decision to leave this space for entirely greener pastures. Aside from the fact that he's my point of contact for my Service Provider Views column, he's a regular go-to guy for many of us, and is probably TMC's most visible voice aside from Rich Tehrani. I'll say it here and now - Greg will be missed - great guy, and I wish him all the best.

Following this is today's news about Doug Mohney, another veteran Editor with a wide following. Most recently he's been with Fierce Markets, and I've known him for some time, with VON Magazine being his previous stop.

So, that's two well-known Editorial departures in the past 3 business days. Hmm. You don't need me to tell you how challenged the publishing industry is, and combine this with how squeezed telecom is now, I have to wonder aloud if this is the canary in the coal mine. Editors are by-and-large at the top of the food chain for handling the news, and when they start moving on, something must be up. I have no doubt that the transition from Publishing 1.0 to Publishing 2.0 will be just as calamatous as what telecom is going through, so it's doubly troubling when the news is about publishing in the telecom space. I wouldn't be at all surprised to hear more news items like this, and I also wouldn't be surprised to see a wave of consolidation happening later this year among publishers/show producers in our space.

Like telecom and television, the business model is broken. There just aren't enough traditional ad dollars to go around, especially to subsidize content that nobody is willing to pay for. Ugh. Something has to give here, and it would be naive to think that the industry can survive solely on Google-style ads. As they say, the best innovation happens in desperate times, and my takeaway from Greg and Doug's news is that publishing is ripe for change - but nobody yet seems to have the answer.

Friday, May 8, 2009

Aastra - Another Canadian Bright Light

Following my post the other day about MTS Allstream, I wanted to highlight another Canadian company that's on a roll these days. That company is Aastra, and I've blogged about them in the past. This is a company that has slowly built up a strong position in the IP telephony market, via both organic growth and a series of acquisitions, particularly in Europe. Aastra is one of a handful of Canadian telecom players that is publicly-traded and truly has a global reach. I know, this sounds a lot like another Canadian company that used to be a stock market darling, and if the truth be known, among Canadian telecom equipment vendors, I think Aastra is now poised to be what Nortel used to be.

Furthermore, their stock has held up well relative to other tech stocks, with a strong bounceback that has shares trading higher now than before the markets crashed last year. Much of this rides on their Q1 results which came out about 2 weeks ago. Sales took a big hit - down 16% - compared to Q4 2008, but more importantly, they're 56% higher than Q1 a year ago. Add to that rising gross margins, a sustained commitment to R&D, very little debt, and manageable operational expenses, and you have the making of a good growth story.

On the product front, they continue to innovate, and I think that has a lot to do with their success. It's hard to compete directly with the Polycoms, Avayas and Ciscos of the world, but they keep finding ways to add value to their lineup of SIP-based phones. One example is AastraLink RP, which integrates with Microsoft's Response Point, and won a 2008 TMC Product of the Year Award. Another would be ViPr, their touch screen videoconferencing solution which works with most any existing PBX. These are recent examples of how they're attacking specific niches and applications, and have many others in the mix, including Unified Communications, mobility and contact centers.

All told, there's a lot to like about Aastra, and in true Canadian style, they're doing it quietly but effectively. They should be familiar to many of my readers, but maybe not familiar enough, and with the flag-waving I'm doing this week, hopefully that will change now for the better.

Wednesday, May 6, 2009

MTS Allstream Earnings - Doing Things Right, But Not There Yet

MTS Allstream may not be a household name outside of Canada, but up here they are an important player in telecom. The company is really a hybrid, being a regional incumbent telecom but also a national operator serving the business market.

Today was their AGM, during which they presented their Q1 2009 results. Not being a financial analyst, I'll stay away from the operating results, but would like to cite a few data points that support what's on my mind. MTS Allstream has had its share of hits and misses, but has a solid position in its served market, and earns a pretty good return for shareholders. Futhermore, their home base - Manitoba - has not been hit as hard as the rest of Canada in this economic slowdown, so there is some decent organic growth that bodes well for continued success.

So what's on my mind? Well, the Q1 numbers provide nice validation for their IP migration story, which to me is the most important story for any telco to be telling these days. I can't tell you right now just how well they compare to the other major Canadia telcos in this regard, but it's fair to say they're on par or better, especially for digital TV. Just to stretch a bit, I was going to say that their transition to IP holds up well against operators outside of Canada, but I just saw BT's news today about how they're now re-thinking their converged services migration plan. Oooh - that's not good.

Back to Canada. Here are some numbers that tell their story, and to me, it's a pretty good model that other telcos should be striving for as they move away from legacy services to IP-based services.

- Overall, revenue from IP-based services (they call this "growth services")
was 47% of the total in Q1, and that's up from 43% a year ago. It looks to me like IP's share will hit 50% by Q3 at this rate, and that's a great story line. MTS Allstream is going in the right direction, and when combined with their cost-reduction initiatives, are setting themselves up for attractive earnings growth, which will look even better when the economy turns around.

- They have a good mix of consumer and business revenue - roughly 40%/60% - so they're not overly reliant on one sector. In fact, they reported 11% growth in both markets for "growth services", so they're learning how to migrate to IP successfully across the board - not just with one set of customers. This is really important, because in both markets the revenue growth for IP-based services has offset or exceeded the inevitable revenue declines happening with legacy services.

- There are several other encouraging growth metrics to amplify these trends, but you'll have to look for those yourself. What stands out for me is the progress they're making with digital television. It's not exactly IPTV - but it's close enough - and they've been doing this as long as any major carrier in North America. In absolute terms the numbers are small - $13 million in current revenues and about 85,000 subscribers. However, being the local incumbent, they provide service to virtually every household, and in the largest urban center - Winnipeg - 1 in 3 households is using their digital TV service. That's pretty solid market penetration, and with their recent launch adding HD, there's good upside ahead. You know what else is interesting? Their ARPU for digital TV is just under $50, and is not far off the $55.80 ARPU they're getting from wireless. Those are healthy numbers, and both are trending upwards. Add to this the revenues from landline telephony and Internet service (their largest revenue stream actually), and MTS Allstream has a nice growth engine, at least for the consumer market.

- I should also touch on wireless. As mentioned, ARPU is steadily increasing, and churn is not a problem. I don't have comparable data for the rest of Canada, but their churn rate for post-paid is 1.18%, and seems pretty competitive to me. It's also worth noting that wireless penetration is only 61.5% in Manitoba, which is well below the national average, which they estimate to be about 66% - sounds about right. As such, there is a strong growth market for them in wireless, and time will tell how well they attack it once the AWS winners come to market with their new services later this year/early 2010.

Ok, so why aren't we there yet? By all accounts, I'd say MTS Allstream is doing all the right things for moving along the IP migration continuum, and are as far along as any other major operator in Canada. Here's where I change my tune. While it's true that pretty much every line of business is performing well except for traditional long distance, all the metrics and narrative are presented discretely. That's the way it's always been done, I know, whether you're a telco or a cableco. First you talk about landline telephony, then you move on to wireless, then Internet, then TV, then business services, etc. It's a classic silo approach, much like the way their networks have been built, and it's all neat and tidy.

That may be true, be as we all know, that's not where things are going today. It's all about the bundle and converged services. Reading these reports, we might as well be talking about entirely separate companies for each line of business. Telcos are no different than any other business with multiple operations - each one has its P&L and often operate as independent fiefdoms, and can be very competitive with each other. On one level that can work to make everyone more effective, but in telco there's a lot of cannibalization going on, especially where wireless grows at the expense of wireline.

MTS Allstream is a big public company, and I know they have to report things this way, but sooner or later telcos will need to come up with more meaningful metrics about what's really happening in the marketplace. More importantly, of course, the silo approach to running these lines of business makes less and less sense the more converged their networks and service offerings become. This is going to take time, so it's not going to happen any time soon. But if this type of reporting is still the norm a year from now, I'd be getting concerned.

As I started out with this post, MTS Allstream is moving forward into the IP world pretty effectively, and that's the main message I'm trying to convey. They're getting good results, and have built some strong momentum. They also still have some losses to carry forward, so they won't be paying any big tax bills for a while. That said, the sub-story is the latter part of my post, and that's where I raise my questions. No doubt they're on the right path, but they haven't gone far enough yet. Hopefully I'm not alone in this thinking and next time around maybe some of those silos will start disappearing.

Monday, May 4, 2009

Mobivox Makes Red Herring Final Cut for North America 100

Some great news for Mobivox, a Canadian company I've been following for ages, and recently did some client work for.

Their CEO, Peter Diedrich, posted on their blog late last week about Mobivox making the cut for the Red Herring 100 North America.

This is one of their industry awards events, and starts with a field of 1,200 entries. As Peter's post explains, this was reduced to the top 200, all of whom will present at their event next week, and from this will emerge the final list of the top 100.

I'm happy to share the news that Mobivox made the cut, not just because I know what they're up to, but also because they're Canadian. Too bad they didn't make the Branham 300, which spotlights Canadian up-and-comers, but somehow I think that's about to change.

I won't be attending the Red Herring event, but I wish Mobivox the best of luck. The final 200 list doesn't seem to have been published yet, so I don't know who they're up against, but to learn more about the event as well as a list of last year's winner, check out their site here.

Friday, May 1, 2009

April Media Roundup

April was a modest month in terms of media citings, but for the record, here's a summary of where I turned up. First, I was cited in a few articles...

- IT World Canada - Cisco's WebEx/security announcements

- Tech Media Reports - Skype's impact on Canada if they become independent

- BBC News - Any takers for Skype?

I was interviewed for a podcast with TechTarget about trends in SIP. We did a second podcast as well, but it won't run until May...

- TechTarget - 5 things you should know about SIP

Finally, my regular bi-monthly column for TMCnet, Service Provider Views...

- MetaSwitch Forum Takeaways - What Big Carriers can Learn from Small Carriers

- Innovation - It's Out There if You Look