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Reading the Tea Leaves

Reading Time: < 1 minute

The Buttonwood column in The Economist has some interesting takes on the current interest in internet stocks again. The column puts forward data from both the bull and bear point of view regarding internet stocks: Interesting take-outs:

  • Forrester Research figures quoted:
  • That in the US people spend about 35% of their media time online but that this attracts on 6% of advertising spending
  • Internet advertising in the US was worth about 12 billion USD in 2004, it is likely to grow by 25% in 2005 and tail off to single digit growth by 2010

Research quoted from the bear side of thingsindicated that:

  • People are less likely to give out their details online. Of the 30% who used online banking, many were now using it less and 14% had stopped using it for paying bills (GartnerGroup)
  • 18% of Internet users had stopped shopping online due to the fear of internet fraud (Financial Insights)
  • Even online dating is down in the US (Jupiter Research)

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Level 3

Reading Time: 2 minutes had an interesting report from Dow Jones Newswire how Level3 the backbone network provider had been exhibiting Enronesque traits.

Level 3’s capital-intensive business model is questioned (subscription required) by Helen Draper highlights how Level3 is having to invest huge amounts of money to make just a little money back, hurting its working capital. This was one of the factors that encouraged all the creative accounting at Enron.

I have a bit of related history. Back in the day I was involved in launching Enron Broadband Services in Europe. The operation was a start-up with just three bright Americans who were sent over to kick things off. I got them sorted with their first UK mobile phones, which were prepaid devices on Orange.

My team was responsible for introducing them to the European telecoms media and key contacts at the major peering networks in London. My job at that time wasn’t made any easier by Level 3. In a classic case of the Emperor’s new clothes or dot com hubris, Enron had a complex PowerPoint deck and a story that  didn’t make much sense. At the time Level 3 was both a supplier of capacity to Enron Broadband Services and a critic.

It’s then CEO James Crowe was a vocal critic of the Enron Broadband Services business model according to journalists that I had spoken to. Which made my job so much harder. It is ironic to think that Level 3 might be treading a similar path. 

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Smart Futures

Reading Time: < 1 minute

AlwaysOn have a number of great webcasts from the AO Innovation Summit 2005 in Stanford. I was particularly interested in the discussions on smart phones.

– I loved the description by one of the speakers about changing the names of smartphones to ‘social computers’. Whilst this was true – its a computer that is used for socialising, the phrase tapped into the lingua franca for the latest technology hot topic ‘social applications’ from social networks to tagging impressed the spin doctor in me.

– Seagate spoke about the rise of having a hard drive in cellphones, which I thought I was quite interesting, I can see that the continuing reduction in price of Flash and keeping a decent battery life is going to squeeze the opportunity for hard drive manufacturers

Converging Functions
– Opportunity exists for both converged and dedicated products. Both will co-exist because of peoples different needs
– Simplicity and integration were considered to be two key drivers for successful converged devices

– Terabytes on the phone will be driven by the ubiquity of smartphones
– Smartphones is currently outsold by ‘feature phones’ by 10-to-1

The Killer App
– Trip Hawkins – social networking (IM, Blackberry, voice), benefit improving their social life