VMworld has continued to grow every year in terms of both user population and topic areas.  A few years ago, much of the VMworld content was focused on convincing data center managers that virtualization technology was here to stay and could be used for even mission critical applications.  Those are days long gone though and the show is now focused on how virtualization can migrate IT resources to the cloud but there’s also a heavy emphasis on the tools needed to get virtualization to scale and be manageable.

One of the more interesting companies at VMworld this year is a small start up called Xsigo.  In my role as an analyst, I see loads of start ups and there are very few that have technology that is differentiated enough for me to consider them “game changing.”  Riverbed was one, Xangati another and most recently SeaMicro are a few and Xsigo is another.

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The paid TV market is on the precipice of a fundamental change. Internet and mobile video are challenging traditional cable TV for the attention of viewers worldwide. Consumers are demanding more personalized, unfettered content and video service providers must deliver.

Earlier today, Yankee Group Analyst Dmitriy Molchanov and I hosted a webinar in which we explored the infrastructure, content and differentiation difficulties facing video service providers. check out the replay below to here our thoughts on how these operators can thrive in the future.

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To keep the Anywhere Network humming and serving customers’ voracious appetites, someone has to regularly pay the bills to suppliers and connectivity partners. In many mature markets, the traditional network cost management and partner settlement practices are well-understood processes, with standardized exchange file formats and automated systems. Operating under the banner of Network Cost Management (CM), this specialized corner of Accounts Payable is well served by vendors with feature-rich offerings and teams of subject matter experts ready to help you get the most out of the process of paying your wholesale network bills. It isn’t perfect (more on that soon) but at least we understand the problem to be solved.

But in the new world of digital content, the rules change. What happens when you have digital content partners sending products requested for download by consumers? We say we don’t want to be in the ‘dumb pipe’ business, but ask yourself if you’re ready to remit 70 cents on the dollar for what will soon become billions of transactions every month? Read the rest of this entry »

Last month I wrote a the post “Can Anything Derail F5?” where I explored F5’s business as well as the drivers of the application delivery controller (ADC) market.  One of the companies I mentioned in there was a small, niche vendor called A10 Networks.  A10 Networks has received many accolades since its launch in 2004 and has raised $39 million in funding through three rounds.

A10’s claim to fame has been that it can offer the performance of the market leaders such as F5 and Brocade but at a lower price making many wonder how they were able to get as price aggressive as they have been and still maintain traditional industry margins.  It appears now though that A10 may have taken some short cuts in product development.

Ushering in a paradigm shift in enterprise mobility and freeing the information worker…for a one-year old company with only 18 employees this is an ambitious goal, but then leapfactor don’t seem short on ambition.

Leapfactor is a cloud-based micro-apps company that is seeking to accelerate the trend of the consumerization of business processes through the proliferation of both ready-to-use and customisable micro-apps that can in theory run on any device and link to almost any back-end system (for starters think automated and customisable alerts & notifications, easy sharing of business indicators, and on-the-go work approval flows).

In an interesting call with their CEO, Lionel Carrasco yesterday, what struck me was not their ambition but how much of the emerging Anywhere could be seen in the micro-apps approach:

• The core proposition is a redefinition of where value resides in mobile communications, no longer HW, no longer even SW, but true to mobility it lies in customisation to the business, and agility in deployment and execution.
• Value can be realised quickly, negating in this case the need for large upfront investments in software licenses. Cost becomes OPEX and crucially it becomes flexible depending on user demand.
• The model is intended to be highly scalable, both in terms of the number of users for whom it could be deployed within a business and by having B2E, B2C and B2B applicability.
• Everyone can be empowered by the potential of mobility, not just those core application software license holders in your organisation.
• By offering a public SDK aimed not just at the professional developer community but company IT departments, and partners; it’s less about zero-sum winners and losers in mobility, and more about empowering the ecosystem.
• By making it easier to create, customise, and update applications, businesses are not slowed down by the extended product development cycles of for example SAP applications.

There are however the inevitable challenges and they are myriad – leapfactor’s CEO acknowledged that security around the cloud-based architecture is high on the list of their clients’ concerns. It goes further than security however, with recent Yankee Group data pointing not only to security but a host of other potential barriers that enterprises consider cloud computing to throw up.

Add to this the challenges of this business model for markets with a lot of legacy infrastructure. Not so much a problem for Brazil and Mexico, two of the focus markets for the initial deployment, but for Western Europe who is next in the line up, it will be a more complicated sell-in.

And let’s not forget the challenge of growing the whole ecosystem. This is difficult enough to do as a large enterprise, but as a start-up this will require a lot of clever partnerships with systems integrators, OEMs and others to make it work.

Nevertheless, the potential points to one of the most interesting dynamics of Anywhere – when innovations allow the Anywhere enterprise to focus less on the “how” and more on the “where” opportunities in the contact zone between businesses and their customers, and between employees and their business processes, the relationship becomes a reciprocal one, where each one has a mobilizing force on the other.

We in the prognosticating industry (if there really is such a thing) like to forecast the beginning and end of things.  And we are rarely correct.  GSM didn’t commoditize mobile services to the point where there were not competing players offering differentiated services.  Those of us in the North American market should probably have taken note.  But we have several of our own examples to choose from too.  The iPhone didn’t doom Verizon Wireless or Sprint or even T-Mobile into obscurity (nor did it kill off regional players like Metro PCS and Cellular South who are doing just fine, thank you) just as Verizon’s ability to offer a fixed/mobile bundle hasn’t doomed the other players.  The question is not: Why didn’t it doom the other players; the question is: Why did we think it would?
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I have the strangest sense of deja vu all over again.

Today, Verizon, AT&T and T-Mobile publicly announced a contactless payment consortium. It has no name, no CEO and no concrete details on cities of deployment, payment processor or, really much of anything. HOWEVER. It will use contactless (read NFC) technology to facilitate the payments and it may well bypass the traditional Visa and MasterCard duopoly. Intriguing.  So much so in fact that my colleague Andy Castonguay published a report on this very topic last month (available here).

Here are my $0.02.  Remember Simpay? No? Let me refresh your collective memories. In February 2003, Vodafone, T-Mobile and Orange formed a mobile payments association collectively called “Simpay”. The initiative had a simple remit – that subscribers could charge merchants and content resellers for goods and services to their mobile bill, bypassing traditional payment networks.

Fast forward to June 2005. Simpay press release:  “Following the decision of one of its founding Members not to launch Simpay for the foreseeable future, [...] not to pursue its activity on a pan-European scale as originally planned.” 

(cue sound of air being released from a balloon)

Why did Simpay fail? A variety of reasons… the readiness of consumers to use alternative payment mechanisms (cards, checks and most of all, cash), the relatively nascent mobile payments landscape in Europe at the time, the lack of retailer buy-in and, not insignificantly, one of the three major participants pulling the plug.

So, have lessons been learnt? The U.S. consortium that is yet to have a name* has, IMHO, more potential than the not-long-deceased European predecessor. And why?… 

• It is intended to be deployed in a single country. Admittedly a very large and diverse country, but at least the language is the same. Apparently.
• It may offer an alternative payment network to vocally disgruntled retailers that are looking to escape the shackles of Visa and MasterCard (but not too much)
• The technology is so very nearly there to offer contactless NFC payments at the point of sale in the US, AND there are a number of large retailers that already have the hardware in place from the last attempt to make contactless work, circa 2006.
• Operators may not be necessarily charging to a mobile bill, unlike Simpay, but to a third party. Hence, the potential for churn inducing sticker shock is  not expected to be a problem (banking / processing allegedly being dealt with by Discover and Barclays)
• The public at large is, theoretically at least,  prepared to experiment with new and exotic forms of payment. Tests of NFC have been done ad nauseum for years and in each of these rather self serving tests, the public has embraced the concept of tapping a phone / keyfob / card / dog with sticker on its nose against a payment instrument. People love this.

The one issue remains however. Consortium. Not to suggest that the triumvirate of AT&T, Verizon and T-Mobile can’t come to some equitable agreement on forming a mobile payments network, but it didn’t work before. And, all it took for Simpay to implode was one of the players to drop out.

Lesson learned?…

*May I be the first to suggest not a name, but a symbol like mid-90′s Prince, or an emoticon even? How about :-/

Whenever someone needs to dig  in a developed area (toddlers in suburban sandboxes excluded), utilities are responsible for marking the locations of existing pipes and cables in the construction zone with paint. Utilities commonly outsource this task to third-party locators. Wielding paint sticks and electromagnetic hand-held devices, these locators determine where the underground facilities lie, paint the ground a pretty color and head to the next job. If the dig goes smoothly, all is well. If Ernie the Excavator whacks a gas main with his backhoe, however, a massive liability battle is likely to ensue (not to mention significant downtime in the construction process and potentially serious  injury to  Ernie).

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Bull fighting is a powerful symbol in the Iberian Peninsula. The practice goes back at least to Roman times and but recently has divided opinion between those who see it as an essential part of the culture and those who view it as barbaric animal cruelty. In Spain, the bull is normally killed but in Portugal the spectacle ends differently and no bull is killed in front of the crowd.

Today, Catalonia – one of Spain’s largest Autonomous Regions – voted to ban the practice within its territory. This may mark the beginning of the end.

No less dramatic was today’s announcement in Madrid that Telefónica de España had finally killed Portugal Telecom’s resistance to selling Vivo in Brazil. After weeks of bitter fighting between shareholders and in the courts – including a dramatic withdrawal of Telefónica offer last Friday – the Spanish company was able to assume 100% control of what had been a contentious 50:50 joint venture. The price tag was €7.5B up from an initial offer around €5.7B which was itself a considerable premium over VIVO’s market cap at the time of the initial offer.

What will Telefónica do now that they finally have Vivo? Read the rest of this entry »

Will wireless kill wireline vendors? Will Google kill telcos? What is next-gen? The idea of strategic growth conjures up dozens of questions—and no specific answers. Mobile traffic is rising, and consumers and enterprises are constantly demanding more bandwidth, content and speed. The communications industry must work to keep up by both evolving traditional business models and building the capacious, ubiquitous network needed to satisfy demand.

Earlier today, I was joined by two of my Yankee Group colleagues, Benoît Felten and Camille Mendler, for a webinar about how the telecom industry will grow. Each of us offered up some unique perspectives on what a growth strategy might look like, from new industry partnerships, to next-generation access services, to mobile pricing.

The webinar runs about an hour: audio (mp3) and slides (pdf).