I’m a firm believer in celebrating all the milestones in life. (At right are some fabulous fireworks from Boston’s Independence Day celebrations, as shot by YG’s own Carl Howe from our offices that evening.) Tuesday was a good day for Anywhere–the world’s move to ubiquitous connectivity and all it will unleash–because British Telecom announced that it will provide the UK with more fiber for delivering broadband capacity to its citizens’s homes. (See this earlier post for a taste of the agita that’s been building around this.)

The good news: it’s a much-needed market signal. BT is showing commitment at a time when it would be easier to hold back. (Was its hand forced by Virgin’s more aggressive approach?) This should encourage other participants essential to making the Anywhere Network happen in the UK — competitors, equipment vendors, more.  BT says the fiber buildout will add 3%-5% to its capital expenditures each year for the next five years (with the first results in 2009). These spending levels will help boost the UK’s current household broadband penetration from 50% today to something beyond Yankee Group’s current CAGR forecast by 2011 of 28% (info here if you’re not a YG Connected View client). That’s one adjustment to our outlook we’ll be happy to make.

Like many milestones, it’s just progress, not a full victory. Some of the fine print:

• It ain’t all the way there. The plan falls short of committing to anything as ambitious as full fiber to the home, and rather is focused more on putting fiber in the access network up to the cabinet–a way-station to the consumer’s premises that means the capacity actually reaching the home won’t be as great as it would with fiber all the way there.
• It ain’t going to be 100% fiber. As part of the expanded broadband delivery, the company plans to use a copper-based broadband technology called ADSL2+; while better than speeds currently delivered by ADSL, it doesn’t offer the same bandwidth that a fiber-to-the-home link does.
• Language is fun. You have to love the marketeers who create phrases that suck us in. The BT release features this doozy: “super-fast broadband.” What does that mean, specifically? Even BT’s not sure. The Q&A in the release includes a question about how that’s different from “next-generation broadband”, but the answer doesn’t define it.
• Ofcom is the escape hatch. The commitment is clearly gated by what the UK regulatory body’s support will be for BT charging others to use what it builds. Our own take, from Dianne Northfield’s quarterly regulatory review: Ofcom’s making the right noises. But if Ofcom doesn’t step up, BT has pre-warned us all on its intent to slow or change plans.

Light those fireworks anyway, to mark off another step on the path to Anywhere — the pervasive, high-capacity connectivity fabric that will rock our world.

The emergence of ubiquitous connectivity–changing the meaning of location in our lives as a global network lets us be wherever we want–provides enormously rich research fodder for Yankee Group analysts. The move to Anywhere is nothing more, but nothing less, than what we care about here.

Summer is for reading, and I enjoy seeing what our clients are reading of our analysts’ work. And read they do; to paraphrase Mark Twain, reports of the death of the written word are widely exaggerated. (Mostly spread, I suspect, by people who don’t like to write!) Here are the six most widely read reports by thousands of Yankee Group clients in the last three months — and what they have to say:

1. Anywhere Network Scorecard: Phil Marshall sets out Yankee Group’s unique assessment methodology for the work we’ve begun to score global network providers on their journey to building out the Anywhere Network.
2. Surviving the Digital Home: Josh Martin calls out the winners — technologies, behaviors, companies — in the game to build out the fully digital home environment. Given spiralling energy costs, it’s good to see that tele-working will improve dramatically.
3. Riding the Wave from Mobile Commerce to Mobile Transactions: Jon Paisner, Chris Collins, and Nick Spencer explain how and when mobile transactions will finally emerge after years of wishful thinking, as Anywhere Consumers embrace financial services on mobile devices.
4. Advancing Mobile Applications through Managed Services: Nick Spencer shows how application architectures and the IT channel play in increasing adoption of enterprise mobility.
5. Thinking Beyond Flat-Rate Business Models: Ari Banerjee says that next-generation business models for network providers–charging a premium for quality of service, for instance– means tackling new kinds of charging technologies inside the network itself.
6. Finding a Femto Future: Roberta Wiggins forecasts the world market for femtocell technology: cool in-home bandwidth distribution that’s a game-changer for consumer broadband. But she also sees potential beyond residential applications, into the SMB/SOHO markets too.

The first report is available free on our homepage; the others are only available to Yankee Group Link Research clients. Check them out — and tell me what else you think we should be investigating on the road to Anywhere.  Happy reading!

One of my most memorable job interviews ever was one in which I was asked to come up with an answer on the spot to this question: “What are the odds that there are at least two people who live in New York City and have the exact same number of hairs on their heads?” *

It was a programming job; the interviewer was looking for a display of a rational problem-solving. Nonetheless I compulsively said the first thing that came into my head: “One hundred percent. I personally know two bald New Yorkers.”

Smart aleck. I got the job offer, but I knew I hadn’t really demonstrated the thinking they were looking for. I’ve just started a cool book called Guesstimation: Solving the World’s Problems on the Back of a Cocktail Napkin. If I’d read this then, I’d have had the tools to think through that question in the way I suspect the interviewer had hoped.

We’re doing some interesting guesstimation at Yankee Group right now, though, so it will come in handy. As part of some work we have underway to assess the scale and pace of the emergence of ubiquitous connectivity — what we call Anywhere — we’re sizing its impact today and in future. I’ll post again here in a few weeks when it’s finished, so you can see what we have come up with and share some feedback. But at the moment the project is reminding me of the basic challenge of predicting the future: combining art and science in just the right measures. As the book’s authors point out, too many decimal points in a forecast ”are like lying,” since they suggest a level of precision and confidence that these methods can’t possibly offer up.  We’ll round the numbers up to the nearest hundred billion, I promise…

* The current population of NYC is over 8 million, and the average human has 100,000 hairs on his head. so you figure it out.

I had an interesting call with Rizwan Tiwana, the CTO of Wateen, a large competitive operator which recently rolled out a 802.16E WiMAX network spanning 22 major cities across the nation of Pakistan.   I was looking forward the call because Wateen sits at the bleeding edge of two next generation service and access network technologies, WiMAX and IMS.  Wateen also represents one of a small handful of operators with the combination of both technologies in commerical operation. 

As of today, there are approximately 25K Wateen subscribers who are using their WiMAX connections for both Internet connectivity and voice services.  That voice services are served up over an IMS control plane is a watershed moment for an industry that has seen some negative press on the viabilty of delivering voice over IP services over WiMAX.  So far, so good for Wateen and its WiMAX partner Motorola.  They are excited about ramping up the subscriber base even quicker when the next generation of CPE devices become available in the next half year.

I inquired as to what has made them successful and Mr. Tiwana boiled it down to this; setting realistic expectations and thorough network design and testing.  As he succinctly puts it…”WiMAX is not GSM or CDMA, you can’t just throw up towers and expect blanket coverage.”   Instead, they have taken pains to educate their users on what to expect in terms of coverage and ensure their sales channels also set realistic expectations in the market.  Its good to see a success story like this for WiMAX and IMS and I hope Sprint/Clearwire are paying attention. 

The Wall Street Journal yesterday raised a few Anywhere eyebrows with this paragraph at the end of an article titled Firms Hitch Wagons to iPhone. The paragraph that caused this fuss was as follows:

And those that have been sanctioned by Apple are finding out too late that they have guessed wrong about the depth to which Apple is willing to help them. Makers of location-based software expected to benefit from the new iPhone’s global-positioning system. Yet they are finding out that Apple won’t support “applications designed or marketed for real-time route guidance.” The clause in the iPhone developer tool-kit agreement essentially voids months of work by TomTom NV and other navigation providers.

Could this be? Could Apple be an Anywhere spoilsport and refuse to allow location-based applications?

Now, being a registered developer, I have the software development kits (SDK) for both the Apple iPhone and Google Android [shameless research plug: Yankee Group clients should look for a Decision Note comparison of the two SDKs and how developers should choose between them to be published soon]. Unfortunately, the Apple SDK license terms are confidental so I can’t quote chapter and verse here (software license restrictions and end user license agreements are a rant for another post). However, I can provide my personal interpretation of Apple’s legaleze, which luckily isn’t too tricky. Full disclosure: I am not a lawyer, and this opinion should not be construed as legal advice. Always consult your own attorney on legal matters.

Read the rest of this entry »

Some funnels are good, and others are bad. For example, funnel cakes fall into the “good” category, but funnel clouds are considered by many to fill the obverse role.

In the world of marketing, there is the often-mentioned “marketing funnel” which shows the range of marketing activities from awareness all the way down to (purchase) intent. The proverbial “line” of above- and below-the-line fame lies somewhere about two thirds of the way down the funnel, and it speaks volumes to the types of marketing objectives that exist in the world of advertising.

Put simply, brand advertising dollars are invested at the top of the funnel where they drive brand and product awareness. Further down the funnel, performance marketing budgets reach closer to purchase intent. As this happens, it becomes easier to measure campaign effectiveness in terms of click-through rates and intent to purchase.

A few days ago, I was talking about targeting with someone who quickly repeated the current industry assertion that online marketers will want to deliver an automobile advertisement to someone who’s in the market for a new car. This is true, but the true question isn’t whether targeting can deliver such an advertisement — it’s how much will marketers be willing to spend to reach buyers in this stage of the process. Dollars per funnel inch…or something like that.

Because not every advertising dollar will get spent at the bottom of the funnel. And even as hundreds of companies hope to make it big by bringing scads of targeted digital inventory onto the market, we have to ask this fundamental question — what is the proper ratio of dollars spent at the bottom of the funnel in comparison to dollars spent at the top? 1:2? 1:3? 1:5?

It’s an open question, but I have to wonder whether anyone is thinking about the size of the market for below-the-line, performance-based, digital advertising targeted at consumers at the “intent” stage of the marketing funnel.

Sorry to be such a reductionist, but this is the epistemology that keeps coming to mind. Digital advertising can be disruptive, but it won’t likely change the core fact that no marketer will want to wait until someone is looking for a new car to introduce them to their brand. Imagine trying to sell a Lexus over a Toyota when that time comes. If you can’t explain the brand at the top of the funnel, then how will you succeed by focusing all your resources at the bottom?

You won’t. And that’s why — as a marketer — I’d prefer to make a calculated investment across the funnel, not just concentrated at one spot on the bottom.

What if our ability to imagine a world for consumers made richer and more productive with connected devices was limited by the imaginations of the engineers chartered with building them? What if how we’re conceiving of these things is one of the very things holding them back from arrival on the market?

Michael Rayfield, GM of nVidia’s mobile business unit, showed me a prototype Anywhere Device last week that his firm built to showcase its Tegra computer-on-a-chip family–a potential core component in an entertainment-focused device. What I learned reminded me that the way you ask a question at the outset of any undertaking has a huge influence on the nature of the answer.

“One of the problems with the mobile internet devices out now such as the Eee PC is battery life. That’s because engineers seem to approach the design challenge by taking a conventional x86 PC design and saying, ‘How will we cut back the thing’s power requirements?’ nVidia decided we could help the industry by creating a sample pocket-sized mobile device that could be really useful for 24 hours without a recharge. We think that’s key to a successful consumer experience. To do that, our design process started with a zero power budget.”

I did the expected double-take with that remark. To design a power-miserly device, they decided to allocate no power? “Not far from it,” Michael said. “What we said was, nothing gets power in the design until it’s been proven that it’s needed.”

I thought suddenly of NASA’s Apollo 13 mission, the so called “successful failure,” when following the initial crisis, grounded crew member Ken Mattingly (left in the NASA photo above, next to mission capcom Joe Kerwin) was tasked with figuring out how the crew would re-start the command module without exceeding the limits of the reduced power available. In the film version of events, after many attempts based on removing steps from the power-up sequence, he finally realized he needed to start over — to design a brand-new power-up sequence that didn’t cause the system to overload the available power.  Only then did they manage to address the severity of the limitations. 

It’s a compelling dramatic moment in the film. More importantly, it’s a reminder that a zero-based approach to anything ensures you take nothing for granted. In the case of nVidia’s zero-based power budget, the thought exercise worked in spades. The device that Rayfield’s team built serves up gorgeous high-resolution graphics, multi-tasks like crazy, and runs forever.

Just as the technology industry suffers from blind incrementalism–as in, what other new slick thing can we add to this product–it also suffers from, shall we say, decrementalism. Why do we like the iPhone so much? One reason may be this: its designers didn’t aim to out-do the smart mobile phone category, but rather to come up with the best hand-held device they could make, starting from a clean sheet of paper.

I’m sure some 2009-2010 connected devices will benefit from nVidia’s power re-think. The real question is, what false assumptions have we been making about what needs to be in a connected device? What zero-based rethink can we do on function?

Checking in from the sunny and 107 degree Las Vegas, Nevada where the NXTComm tradeshow was held this week. All of the usual suspects carted their fancy booths, big staffs [armed with the latest and greatest corporate messages], various SWAG items, press kits and demo equipment into the heart of Sin City.

Word from vendors is that overall show attendance was a “mixed bag” and while the show seemed busy, several exhibiting vendors lamented that the quality of attendee or for short–QoA–left something to be desired. I suspect that this means that average foot traffic is approximately 15-20% “true” prospects for the solution that vendor happens to be trying to sell. The rest of the human traffic includes competing vendors [dressed incognito sans the normal logo’d golf shirts], business development folks, partners, staff, press/analysts and various other riff-raff. I saw an adorable older couple, must’ve been in their mid-80s, laboring around from booth to booth collecting vendor SWAG items including those squishy stress balls, flashing lapel pins, pens, and boxes of mints…..I guess it’s more interesting than walking around a mall.

My personal opinion is that smaller vendors with scarce marketing resources can find much better bang for the buck out there to drive lead generation. Educational webinars come to mind here, Yankee Group often has several hundred attendees show up and even more register with their contact details and interest areas. At NXTComm, the no-frills exhibitors are promptly rewarded with awful floor location and non-descript signage which in turn guarantees that they are left wanting for any traffic at all. Even this guy. Not sure how to fix this, but another strategy I’ve seen work well is making the lower-cost investment in an adjacent hotel suite or meeting room which allows the advantage of the common assembly of partners, customers, press and analysts without incurring the big expenses of an actual exhibit.

I’m betting that this show survives, if only because its among the last games in town which a singular focus on the telecom industry. A piece of advice for show organizers that one of my colleagues pointed out—get rid of the 3rd show day, its overkill and three days is too long to be away from the office/real job. Keep an eye out for my show re-cap which will be published for Yankee Group clients within a couple days.

You gotta love the progression of the communications bundle. After a decade of getting into each others’ businesses, the cable companies and telecoms operators are thinking long and hard about their bundles. Brian Stelter at the New York Times has written an interesting piece about how internet service providers are starting to look at the meaning of “unlimited” internet access. Evidently, many large ISPs are thinking twice about the levels of bandwidth and traffic that they’re honestly willing to provide for a fixed rate. And Brian hits the nail on the head by talking about online media consumption. In the world of flat-rate internet access, iTunes, Netflix and Hulu are free riders.

Last week, I was listening to the radio and heard a nearly identical story about airline travel. The editor for that piece took the angle that airlines are nickel-and-diming the flying public by charging for baggage, seat upgrades and so on and so forth. Because now that the load factor for major airlines is over 80%, those seats are filled with people who buy their tickets based solely on price. And with rising fuel costs, airlines are looking to the amount of weight they’re carrying around, and those 90 lb suitcases are coming to mind as a way to cut costs…or at least grow revenues.

As a marketer, I see this very differently. This is just the natural evolution of a marketplace bundle sold around a single value proposition — price. Read the rest of this entry »

I’m not a big cereal eater, but I do like the occasional bowl of Wheatabix.  I’m not the only one who recognizes the value of a diet high in fiber.  I was in Europe last about 6 weeks ago and walked right into its on-going fiber debate (see this post).

This week, back again for various events in southern Europe, I got another dose. Everyone (except that banker in London who doesn’t know why British families need broadband) wants a fiber-rich network. The issues in the way are simple, but the permutations of solutions to each quickly become non-simple.

• Who builds it: The state? The incumbent network provider, forced then to share it with others? Many competing providers, creating redundant infrastructure?
• Who pays for it: The state? The incumbent? The providers? Customers? Utilities and other owners of rights-of-way where fiber is installed?
• Who gets to use it: …you get the picture.

A recent Yankee Group report by regulatory expert Dianne Northfield (from our Link global regulatory dashboard assessing broadband regulation in 45 countries) has stirred the pot, predicting that European next-generation (fiber-based) network regulation will become more granular, down to the sub-national level, rather than harmonized at the EU level, even while the EC attempts to create yet another regulatory body that oversees its member nations’ own regulatory agencies. Not that any further stirring was necessary, given the alphabet soup of associations (APDC, BSG, ETNO, and ECTA to name just a few) already pummeling each other with their argumentation and interpretations of EC directives.

A very senior exec at a European carrier erupted in frustration to me this week: “Someone needs to ask the EC why they’re so in love with the British regulatory model. Typical government types, missing the point. It might look good on paper, but exactly how has it sped up fiber deployment in the UK? The model the EC needs is the US. There, the FCC has stayed out of next-generation fiber network regulation… and Verizon has spent billions to build out a fiber-to-the-home network. We know we have to do this here, and there is plenty of competition to make sure it happens.”

The network is the raison d’etre of the flattening world. Freidman’s money-maker could never have been written without the network linking India’s call centers to the developed world. A state of the art network must evolve throughout Europe to keep the region from losing further ground economically. Making the sweeping over-simplifications that both CEOs and Americans are (in)famous for, my answer at an APDC dinner event in Lisbon this week was this: “Every day’s delay is an added cost. Make it fast and fair. But make it fast.”