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Microhoo: Why people love weddings?

A wedding is the most common of the happy endings in movies, theater plays and also in the stock market.

A wedding of Microsoft and Yahoo would make very happy to Yahoo investors (specially those who bought in the last months), trading banks and stock brokers that will cash nice fees.

But what about the end-users? Why should we be happy with one option less for webmail, for instant messaging, for on-line video, for on-line pictures, and specially for on-line advertisement?

As a user, I always prefer to have three options than two. It is called competition, and it is what drives innovation, better service and better value. Oligopolies are not good for customers.

Stock market and investors love mergers and acquisitions. They make the market more active with bigger transaction (and fee) volumes. And above all it pleases investors, because a player in a market with two players is more valuable than a player in a market of four. In other words, business owners love oligopolies. Microsoft is the living evidence that a near-monopoly in the PC OS market brings huge returns.

Beware, because a Microsoft-Yahoo wedding will be a happy ending only for a few investors and bankers, but not at all for the majority of us.

Posted in Internet | No Comments »

Can Yahoo walk alone? The Market will decide

After Microsoft pulled off the $33 a share bid, the stock market is the judge to approve Yahoo board’s decision, by keeping the share price up, or to disapprove by sending its price below $20.

This morning Yahoo share took a 20% hit, opening at $23.02, after Friday’s close at $28.67. This is still well above the $19 price before Microsoft bid, so the hit has not been so deep as many would have expect, including Mr. Steve Ballmer. How do we interpret this?

1) Many investors think that Microsoft will come back to the table with a new lower bid, but still close to $30. Therefore it is not a bad deal to buy today at $23.

2) The market still values Yahoo as an independent company, with a share price well above the one before Microsoft offer. Yahoo first quarter results did beat analysts expectations, and Jerry Yang has launched many initiatives lately around a new strategy to turn around Yahoo. So the Market could be backing Yahoo’s board.

While I tend to believe that the rational of the Market is more aligned with the first interpretation, I do also believe that Yahoo still has incredible assets. As the successful entrepreneur Martin Varsavsky writes today in his blog, “Yahoo has half a billion unique users per month and outstanding products and services: Yahoo mail has more mail users than Gmail, Yahoo Messenger has more members than Google Talk, My Yahoo is the number one start up page in the world, Flickr is the best photo service [...]“. Martin suggests that rather than Yahoo being sold what it needs is a new management team able to recover the great image Yahoo used to enjoy. He even proposes some names such as Chad Hurley of Youtube and Niklas Zennstrom of Skype. I would propose Martin’s name too.

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Microsoft and Yahoo deal is over. Who wins and who loses?

Microsoft and Yahoo deal is over. Microsoft has withdrawn its bid as Yahoo did not accept the offer of $33 per share.

TechCrunch was the first to report the break in negotiations - I wonder how Mike can know so fast… or do they edit the posting time? Just kidding… -. Mike’s post was updated to include the letter of Steve Ballmer to Yahoo CEO Jerry Yang. TechCrunch also publishes the email of Steve Ballmer to his employees.

There is already plenty of analysis from the blogsphere, including suggestions of what to do with the $50 billion that Microsoft hasn’t spent in the deal. One interesting reading comes from GigaOM. In his view Steve Ballmer has played a Machiavellian move that leaves Yahoo is a worst situation than before the bid.  Not only Yahoo lost credit by looking for other merging partners and by agreeing to place Google ads, shareholders will also be angry to see shares fall after Microsoft withdrawal.

So, who wins? Mainly Yahoo and Flickr users, many of which are anti-Microsoft co-religionaries.

Who loses? Yahoo investors. They are the collateral damage of this story, specially those who took positions considering the bid would succeed. Yahoo management will feel more than ever the pressure of shareholders to demonstrate that Yahoo by its own is worth more than the $33 per share offered by Microsoft.

As for Microsoft, now that the story is over, they’d better focus their investment in delivering - Vista among others - and improving marketing and image, rather that acquire new companies. As read in a wise comment: “[...] how many people know what URL to enter for Microsoft Search? I don’t even know if it’s called Microsoft Search, Live Search or MSN Search…”

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Mac and iPhone also popular in Enterprises

Apple success in the consumer market, with Macs winning market share positioned as high-end stylish computers and iPhones revolutionizing mobile phones, might extend to enterprises too. BusinessWeek reports in detail about this trend in The Mac in the Gray Flannel Suit.

Mac’s move to Intel CPUs is paying back. Apart for the cost decrease, it enables Mac computers to run Windows. Better yet with virtualization supported by Macs, switching between Windows and Mac OS on the same computer is a matter of a click. This is like a “safety net” for companies scared to entirely break with Microsoft. With Windows support, and more and more enterprise applications running on the web (or as SaaS), Macs are beginning to be seen as an option for companies, that is also very well received by employees.

iPhone email capabilities are also appealing business users as an alternative to RIM’s Blackberry, with the advantage that they can use iPhones for both work and entertainment. A NY Times article this week analyzes the threat that Apple supposes to RIM.

Although in terms of market share in enterprise, Apple penetration in computers and mobile email is still very small compared to Microsoft and RIM, the power of Apple’s brand and their iconic, trend-setting products are not to be disregarded.

Posted in Digital Lifestyle | No Comments »

Why should AT&T sell iPhone at $199

TechCrunch reports a rumor that AT&T will sell 3G iPhones with 8GB at $199 in US. That would mean a $200 discount from expected $399 price.

AT&T must be doing some numbers and verifying that ARPU (Average Revenue Per User) for iPhone is significantly higher than the average. This would be explained by the high-income segment attracted by iPhone and also by the substantial higher access to web and multimedia services from its Safari browser. So the business case of a $200 handset subsidy could actually fly. Apple could also be ready to reduce price or the revenue sharing conditions, considering they only shipped 1.7m units in the first quarter when Steve Jobs’ target is 10 million units in 2008.

The only risk of an end-price reduction is that it might appeal not only to high-income users, but start to attract budget-constrained customers, that would not generate such a high ARPU as measured now.

Still it is only speculations, but we will know soon if TechCrunch rumor was well-founded.

Posted in Digital Lifestyle, Telecom | 2 Comments »

Mobile advertisement or mobile spam?

Advertisement can be an important source of revenue to Mobile telcos. And 2008 can be the year where it takes off at last. Still some of the mobile ads practices risk to be perceived as spam, specially SMS ads, where the telco should protect users with spamming filters.

While Mobile TV video ads insertion will seem justified by the user as a way to “pay” for content - following the free-to-air TV model -, I do not know anyone happy about the annoying SMS with a promotion to have a 10% discount on the purchase of a washing machine.

Starhub, one of the three mobile operators in Singapore, just launched a location-based ads service. Will location-based promotions be more successful than general promotion SMS spams by some merchants? Does the location info adds enough value to make the SMS welcome by the user? I have my doubts, but we will closely monitor the uptake of this service.

On the Mobile web advertisement, success is not yet there. While CPM, CPC and CPA show a higher value in mobile environment than in Web, the arrival of the iPhone and its Safari browser able to render regular websites, makes me wonder if mobile web ads will be any different from the web ads today. It is true that mobile operators theoretically have a lot of knowledge about their customers that could potentially make the ads more relevant, but I do not think that the current agreements of Yahoo and Google with mobile telcos are involving any customer info being offered by the operator.

GigaOM also wonders Are Personalize Mobile Ads Evil? Isn’t the screen too small to put ads?

Posted in New Economy, Telecom | 1 Comment »

Internet TV or IPTV? Who will win the battle?

While Internet TV enjoys the hype, the reality is that Telco’s IPTV is growing steady, while Apple and Amazon keep mum on their movie download service numbers.

Every week we have news of players entering Internet TV or existing players reinforcing their offers. This week ReadWriteWeb reports news fron Netflix with additional set-top-box support, Hollywood studios creating a JV for VOD, Sony preparing a PS3 video download service and Motorola planning a mobile movie download service.

IPTV makes less headlines, but still AT&T U-verse, Verizon FIOS TV, Telefonica’s Imagenio, Free Telecom or PCCW keep adding subscribers (and new features) to their Pay-TV services. While revenues from IPTV telcos are far bigger than those of Internet TV, it is also true that Telco’s IPTV investment is huge compared to that of Internet TV.

Internet TV main advantages are global reach and the immense choice of a very Long Tail of semi-pros and amateur content creators . YouTube, MySpace and others, together with social networks/blogs provide a distribution power that enables these creators to reach the mass. See BarelyPolitical.com as an example.

Big Media companies content rights are usually negotiated by country, as this maximizes the return for content owners. While telcos do not enjoy the global reach of Internet TV, they are very strong players on a country basis, so Media companies find in telcos a strong distribution channel. That is why iTunes and Amazon Unbox started their service available only in US, to be extended to other countries as rights get negotiated.

This is the window of opportunity that telcos must take, before Apple, Amazon and even YouTube reach the mainstream with a better user experience than today, as bandwidth grows and new set-top-boxes connect Internet to the TV screens.

IPTV brings today QoS and exclusive content to the mainstream. Internet TV brings the nearly infinite choice and movie downloads (only in US) to a younger segment. IPTV has some advantage today. Will they be able to keep it? The battle is still open.

Posted in Internet, New Economy, Telecom | No Comments »

Vista sucks. Ubuntu or Mac OS X?

Just google “Vista sucks” and you get 2.5 million results. It is now unanimous: Vista is slow, unstable and annoying. Apart from my Commodore 64 and the OS/2 Warp of my days in IBM I have always used Windows: 3.11, 95, 98, 2000, XP and now Vista. So if I divorce now from Microsoft, where can I go? and will I be able to survive without Windows?

For consumers that use the computer for Internet browsing, email, watching movies, listening to music (and Sync iPod), video-conference with the family, store and slide-show pictures, and produce video clips of the kids, is there a reason not to switch to Mac? A Mac can do all that, and probably far better than Windows. On top of that, a Mac is stylish. Whether an iMac or Mac mini in the living room, or a Macbook at Starbucks, you will be the envy of your friends (specially of those do not dare to get free from Windows).

Ubuntu is the other option. Open Source. You belong to a community with a cause: freedom and putting innovation at the service of the society. Let others build on top of what you have done. If you are a developer, master Unix, and love the share philosophy, there is no other option than Linux. Less fashion than Mac, but higher ideals. If you are not a geek but can not afford a Mac,  probably you can survive with Ubuntu for a basic use: Web, email, movies, music and pictures. For a more advanced use, you will need some Unix training first. Matt Assay’s post, Ubuntu, it’s time now, might convince you though.

Posted in Digital Home | 4 Comments »

Mac gains ground on consumers

Apple has presented results for the past quarter. Apple shipped 2.3 million Mac computers in the quarter, 51 percent year-on-year growth, with a revenue increase of 54 percent. iPod sales were flat compared to last year with 10.6 million units sold. More financial details on GigaOm or TechCrunch.

Mac is quickly taking market share from Windows. Today iMac is clearly the most stylish computer for home, and MacBook is the most desired laptop for personal use. In any Starbucks one can see the increasing number of MacBooks. Apple was never a threat to Microsoft in the past, but with more and more open standards, and easily portable applications, Apple is quickly gaining ground as the computer for home (and for Starbucks). Mac is no longer a niche product but a high-end choice for consumer computers.

Steve Jobs said that “… people are really noticing the difference between Mac OS X and Windows to a greater degree than ever before. The more people understand that there is an alternative, the more people are choosing a Mac.”

On the iPod side, apart from reaching market maturity, iPods sales might be stalling due to the wait-for-the-iPhone effect, with people delaying their older iPods renovation, waiting for iPhone to be available in their markets, or simply for the 3G iPhone. Still, sales of iPhone were relatively soft; 1.7 million units in Q1 for a target of 10 million in 2008. Again buyers maybe waiting for the 3G version, or for the price to come down…

Posted in Digital Home | 1 Comment »

Nokia Comes With Music

Nokia keeps its race with Apple to reach agreements with the record labels, in order to bundle content with the sale of devices.

NY Times, Nokia signs Sony BMG for Free Music Offering, reports that Nokia will offer 12-month access to music downloads from SonyBMG catalog, to buyers of Nokia music phones. What is new, is that users will be able to keep all the music they have downloaded during the twelve months. Nokia call this initiative “Comes With Music”, and is expected to be available in the second half of 2008.

The good news is that record labels seem to finally understand that CDs will soon die, and are looking for new models to survive.

Going to a model where music is bundled with a device, instead of with a service, shows how consumers are still reluctant to pay for intangibles, but are ready to pay when they get something physical in return. That also happens in the software world.  Microsoft has most of its software sales to consumers come bundled with new PCs. Adobe bundles Photoshop with Canon scanners and Nero comes with many DVD recorders. Consumers are ready to pay a bit more for a scanner and get in return Photoshop too. But buying stand-alone software is still rare in consumers.

Apple and Nokia know well the consumer behavior, and want to use the bundle model to better sell music (and their devices).

The losers in this story are the Mobile Operators, condemned not to be part of the music business. One notable exception is Japan’s KDDI Lismo service. They keep doing pretty well.

Posted in New Economy, Telecom | 1 Comment »