Today’s NYT has the story: putting a mobile router in school buses to offset the sometimes long commutes kids have. The students can do homework and chat online with teachers while they cover the miles to and from school and sporting events.

Yet another example of the gradual expansion of the Anywhere Network.  It’s a natural hole to fill in the network fabric.

Here’s another one: Eurostar. I was stunned a few months ago when, after settling into my seat and carefully arranging my work things around me, I discovered that the train — a bastion of regular London-Paris commuters — was completely network-free.

Given that Google seems to be inclined to make large gestures to try to stimulate the behavior of others in the marketplace, perhaps its holiday-time free airport Wi-Fi should be followed up by free Eurostar Wi-Fi — perhaps during Roland Garros?

To be sure, the school students may not be using the access for schoolwork only. But the point is this: eventually we will find it incredibly anomalous to be offline. And talk of “going online” will feel just as incredibly dated. All of the things we will want to do while we’re moving around on public transporation — including the things that the providers of that transportation want us to do, like read their safety instructions and absorb advertising for their on-board food and drink — will require the network.

The rumors of a Motorola dismemberment plan have sprung anew with a Wednesday article in the WSJ.  Everyone, get your axes ready – either to grind or to hack off your favorite piece of the Moto beast.  The latest round of speculation points to the possibility of Motorola combining their handset and set top box divisions to build a new integrated future. Of course, speculation also exists pointing to the potential spin-off of these units.  Who are all these unnamed speculators anyway?  Whether it is to sell them off or create competitive advantage, the merger of the two units raises some interesting prospects.

If Motorola can come up with a workable structure to blend its mobile device unit with its set top box unit, then that new combined group would hold tremendous promise to integrate consumers’ digital media in an exciting way.  That combination would certainly attract the interests of companies like Huawei, Asus and others looking to gain more prominent market positioning in the mobile and CE industries.  Of course, if Motorola could do that easily, it wouldn’t be looking to dismantle itself and sell off the valuable morsels to the highest bidder.  So while I think the combination of the two units is a fine notion at a high level, the fact remains that Motorola has failed to integrate its two most important business groups in any significant way and will have to undergo major cultural and organizational changes to realize that vision. Back in early 2007, I met with then CMO of Motorola, Casey Keller, at a trade show to discuss media integration and device interaction between mobile handsets and set top boxes.  Keller shared the view that Motorola held the strongest potential hand in the business to do that, but was facing an anemic mobile device pipeline (how many ways can you sell a RAZR, after all?) and new levels of challenge on the set top box side as well.  So, vision took a back seat to triage and the more important task of stopping the bleeding, but execution proved to be elusive.  From YE 2006 to YE 2009, Motorola’s annual device sales dropped by approximately 65%.

Three years later, the Motorola device group is showing solid signs of rebirth with its recent line-up of smartphones architected around the Android platform.  The new expanding portfolio leverages Motorola’s greatest recent advance: the highly customized Motoblur experience that presents users with all their social networking and primary apps in a single view.  If this concept catches fire, it provides an interesting potential roadmap for Motorola to upgrade its set top box experience to include similar capabilities for social networking but, perhaps more importantly, media sharing among a consumer’s multiple devices.  With its massive share of the North American set top box market, Motorola holds a unique hand of assets and partners.  Cable companies have been desperate to extend their relevance beyond the TV and laptop and a set top box that easily interacts with mobile and CE devices, integrating digital media could be just the trick.

But the window of opportunity for this integrated approach is limited, so, Motorola, god speed. As Jeff Goldblum famously said in Jurassic Park, “Life, uh, finds a way.” In the consumer media world “life” is the idea of acquiring, enjoying and moving media on any device you want, whenever and anywhere you want.  Consumers are already experimenting with this in many forms.  Whether it is the game station, laptop, media gateway, transcoders, mobile apps, etc, consumers have a huge selection of ways to get media from A to B, but few are terribly satisfying from either a user interface or device compatibility basis.  This leaves Motorola with some wiggle room to merge the set top box business and mobile device unit to generate a new integrated vision of consumer media.  The vision will need to be both technical and cultural to bridge the gaps between the two business units, which share nothing beyond a company brand.  But with proper execution, such an approach could save set top boxes and the Motorola brand from being another set of fossils on the anywhere evolutionary path.

In a scenario that seems destine for a made for TV movie, Motorola reportedly is contemplating a new version of its spin off plan. The Wall Street Journal reported today that instead of spinning off the Home and Networks Mobility division from its handset group, the company is looking at continuing the auction of its wireless networks lines while creating a new publicly traded entity comprised of handsets and set-top boxes.
On the face of it, the combination of set-tops and handsets seems almost nonsensical. The former exists as a cozy effective duopoly with Cisco Systems–at least in the U.S.–is largely proprietary to every cable operator’s specifications, tends to stay in place for years and is as sexy as vanilla ice cream. Handsets are squarely in the consumer electronics camp where design and looks plays major roles.
But putting set-tops and handsets in the same group absolutely makes sense when we look to the future and in particular the future of the set-top. Set-top boxes are under increased pressure to start looking and acting like CE devices. And indeed many have been writing the obituary for the old cable converter for the better part of a decade.
I don’t necessarily believe the set-top is near extinction. However, its greatest threat is in fact coming from the CE community. While one can debate the relevance of stand alone devices such as a Roku or forthcoming Boxee box, increasingly gaming consoles and Blue-Ray players are taking on the same functionality as set-tops. Additionally, connected TVs have the same potential through are not being initially positioned as such. Regardless of the product, the end result is likely to force set-top box vendors to start thinking like CE vendors.

Today’s announcement by Google that it is exploring deploying an experimental 1 Gbps fiber to the home service in a small number of communities sounds like crazy talk (see Benoit Felten’s analysis for his view on this announcement). Could Google really believe that it could run an fiber-to-the-home (FTTH) service akin to Verizon’s FiOS as a side business? However as I reflected on the announcement and my recent reading of Ken Auletta’s book, Googled, I find myself thinking that this is anything but a side business. I think that this project is Google executing on a key element of its BHAG.

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I’ve always been one of those who stated that Google had no interest in being an infrastructure player. I guess I was wrong and this is proof once again that disruptive thinking is hard to anticipate (I guess it’s the whole point…)

Google has just announced a few hours ago that they were deploying a 1Gb/s FTTH “experimental” network in the US that would reach 50.000 to 500.000 homes. The announcement is light on details, like for example a timeframe, but reading between the lines there’s a few things that can be derived from it:

• Google doesn’t expect anything significantly disruptive to emerge from the National Broadband Plan (see the end of the first paragraph)

• Google intends to work with municipalities, which suggests PPP type approaches. This is smart and potentially fast.

• Google intends to prove by example the validity of an open access model. Google’s brand would likely solve the issue of existing open access networks struggling to attract customers because micro-ISP brands are not trusted.

• The real questionmark is “how much is this an experiment”. I have no doubt that Google wants to try and spur service innovation onwards and demonstrate best practices in deployment and open access. But do they want to become a wide-scale infrastructure provider is the real question behind the announcement…

One thing’s for sure, this is a big kick in the anthill. I will no doubt be writing a full report on this this month exploring the implications in more depth, so stay tuned!

(Cross-Posted to www.yankeegroup.com)

After months of collaborative works with a team of seasoned analysts, our special report on cloud computing entitled Clouds in 2010: Vendor Optimism Meets Enterprise Realities finally came to a completion. Our interviews with 25 cloud computing thought leaders about technology milestones and their metrics to measure success were inspirational and thought provoking.

On the agenda of the business executives we interviewed, cloud computing is an act for action. From enabling the use of cloud computing services to deploying enterprise-specific cloud computing models, business leaders are full of excitement. Their optimism is not without reason.

First, the new economic reality is driving enterprise customers to look for innovative IT solutions to keep their businesses afloat, if not prospering as they used to be. Also, technology barriers to move workloads into the cloud continue to fall as more vendors are taking an active role in addressing pertinent problems associated with service reliability, security, and interoperability. It could be in the form of strategic partnerships such as the technology coalition between Cisco, VMware, and EMC to boost the deployment of enterprise-class private clouds; and goal-oriented investments such as the acquisition of Cassatt by CA to expand its expertise in meeting the changing requirements of today’s data centers.

I agree that these are good signs of a potentially innovative market development. But healthy market dynamism should be based on a fine balance between an optimistic supply and a realistic demand. With growing pressure to control costs without compromising performance, one can only guess today’s corporations’ next moves. How do enterprise customers approach cloud computing in these days? Are they approaching the cloud with greatest ease?

The recent history of IT transformation in the business world should be a good indicator. On the demand side, business transformation initiatives are far from ending. From bandwidth utilization, IT automation, to cloud service management, the power of cloud computing has whetted corporate appetite for productivity at low cost. The growing availability of IT as a service will essentially shift IT’s role from managing hardware and software to managing services and providers.

Will 2010 be a banner year for cloud computing? Let’s prepare to review the special report with multiple lenses.

When researching my new book, ANYWHERE: How Global Connectivity is Revolutionizing the Way We Do Business, I was fortunate to interview more than 50 thought leaders in connectivity. Their input was invaluable and their ideas, advice and examples provide very rich context for the Anywhere vision. I’m sharing selected book interviews through the blog.

In this excerpt from my interview with Axel Haentjens, senior vice president Marketing, Brand and External Communications for Orange Business Services, Haentjens provides his take on how the upcoming ubiquitous connectivity revolution will change how enterprises do business, both internally and with their customers.

What do changes like pervasive connectivity and embedded IP in broader devices mean for enterprises?
I have been in the communications business for 15 years at France Telecom [FT]. In 1995, it was very clear that the desktop had to be connected. Now we’re at the point where we have laptops, BlackBerrys, PDAs, and more. So in the last two to three years, you could access documents and e-mail through a PDA from everywhere — from a train, on holiday, etc. For Orange [FT’s key brand], that translated into a huge success for our Business Everywhere tool. We have more than 1.3 million users.

But this year, we see something else. We’re now at the point of pervasive reachability, where you need to talk to people using various means that are all integrated. We ought to be able to start one way, and then move to another.

And it’s not only human connectivity.

Right. There will be five times more objects to connect than people, at the very least. There are mature applications today in tele-monitoring, fleet management and tracking goods. Orange operates mobile networks in 28 countries, including 15 countries in Europe today: 15 percent of our mobile B2B revenue is already M2M. It comes from SIM cards embedded into devices either for fleet management or remote monitoring, and it’s growing at a rate of about 20 percent per year.

Clearly tele-metering is ready. You’ll find security companies doing it, utilities also, and energy companies doing tele-measuring for gas and electricity. We see a lot of apps in vehicles, helping to manage thousands of trucks via geo-location and route optimization.

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Just over 10 days ago, America Movil (AMX) announced a reverse takeover of parent company Grupo Carso Telecom and the consequent purchase of sister-company, the fixed line and cable TV operator Telmex.

The press was rife with speculation what this might mean. Grupo Carso majority owner Carlos Slim was quoted about convergence so the telecom press mostly went off in search of the Holy Grail of converged triple and quad everything. (Grupo Carso is the holding company for all of Slim’s investments from retailers like Sanborn’s and Sears Mexico to bank Inbursa to Grupo Carso Telecom.) The popular press – especially in Mexico – tended to focus on the consolidation of major players and wondered out loud if this was a good thing for customers or not.

Predictably – given the very high market share of both Telmex and Telcel (America Movil’s flagship) – the Mexican competitors cried for government intervention to prevent further monopolization and the Mexican government said they would study the matter.

Frankly, I thought from the beginning that this was more about financial engineering than re-engineering. Complicated transactions like this one (reverse takeover, partial or complete buyout of minority investors) are usually trying to solve some technical financial problem like weak ratios in some part of the group, inconsistent bond ratings or elimination of a holding company discount. In particular, Grupo Carso Telecom, as a holding company with no direct operating activities, could trade at a discount of up to 10% to the expected “sum of parts” valuation. It really has no “raison d’être” and so some sort of reverse takeover was inevitable. The surprise perhaps was that it took so long to happen.

More importantly Slim’s overall management style leverages very focused units with clear mandates and clear performance measurement. As I have written on other occasions, America Movil and Telmex seem blissfully unaware or unconcerned about competitors’ efforts to bundle and package fixed, mobile, broadband and TV. Telmex sells triple play offers aggressively outside of Mexico (and would in Mexico if permitted to offer TV) but so far mobile has never entered the equation even where permitted by regulation. The two companies have shown little interest in network synergies although likewise they never strike deals with strangers. Finally, merging Telmex and America Movil’s quite different corporate cultures – despite their common roots – would have been a strategic flip and probably a management distraction with little positive to show for it.

But this is just my theory and I wanted some empirical evidence. What was the “smart money” saying?

The bond rating agencies were generally delighted putting America Movil on “credit watch with positive indications” a backhanded way of saying “we think this is probably a good thing”. Bond holders are worried about cash flow. Bring together companies with significant cash flow on their own to create a single huge cash generator and they are generally happy. Bigger cash flow means less volatility and more sources to cover loan payments and bond coupons.

Equity investors were decidedly negative. It’s a rule of thumb on Wall Steet that one should “buy on rumor and sell on news”. As the chart below shows, that certainly happened: America Movil stock rose from about New Years until the announcement and then dropped like a stone: from US$50 the day before the announcement to just under US$44 today. (The red line is America Movil’s stock price indexed to its value on January 4th, 2010. The black vertical line marks the peak on January 13, 2010.)

Usually investors punish the buyer and reward the seller. In this case all three participants in the deal, America Movil (AMX), Telmex (TMX) and Grupo Carso Telecom (TELECOMA1.MX), are all affected. This shows that investors have little faith either in cost synergies or upside from convergence. All they know is that buyers – especially those attempting to restructure, especially those trying to take out minority shareholders – usually wind up overpaying.

Admittedly this has been a rough month for Telecom stocks: AT&T, Verizon and Vodafone are all down and Telefonica has received a series of bad news of the kind that makes investors decidedly nervous (steep devaluation in Venezuela, rumors of squabbles among the Telecom Italia ownership group of which Telefonica is the leading shareholder, orders for Telecom Italia to divest Telecom Argentina).

The final nail in the coffin of convergence at America Movil / Telmex came recently when Slim told reporters that they would NOT be bundling fixed and mobile in Mexico anytime soon. Clearly he was thinking about the difficult regulatory and political situation for his companies in that country, although he seemed to dismiss the bundling idea generally even in countries where he legally can offer all four services either alone or in bundles.

For all the excitement created in the press – aided and abetted by the analyst community – this was a strategy devised by lawyers and finance types. Convergence was just a bit of spin-doctoring that eventually backfired.

Star Walk iPhone app on iPad

Based on all the details Wednesday, I’ve written an iPad analysis report that clients should be able to dive into later today. The bottom line: no matter how much you may think Apple ran its hype machine this week, the iPad will be a force to be reckoned with. Why? Because Apple has a unique vision for Anywhere devices and the marketing muscle to back it up. If you have comments or disagreements after reading it, please send them.

Meanwhile, a number of questions and objections to the iPad have popped up online, and given that I’m one of only about 500 people who has used an iPad for a half-hour or so, I thought I’d repond to them here. So without further ado:

Isn’t iPad just a big iPod touch?

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I’ll be publishing a detailed analysis for clients about the Apple iPad and its effect on connected devices (i.e., it’s a big deal) in the next day or so. I have also posted photos that I took of the press, VIPs, and tablets we saw today for those who are interested.

However, I also had some takeaways from the event that fell somewhere between the immediacy of my tweets and the detailed analysis mentioned above. As I look toward the iPad shipping in late March/early April, I see some changes coming. Specifically:

• iPad will knee-cap the netbook market. Despite the millions of units sold, netbooks deliver a lousy user experience; in fact, some netbooks have return rates of 33% or more simply because of that poor consumer experience (see the October 2009 Yankee Group report, Little Netbooks Can Sink Big Brands for details). Unless you’re an analyst or other traveler who has to spend much of your time writing, iPad will be a better investment. Oh, netbooks will survive, but they’ll be in the traditional race to the bottom of the price ladder, while Apple scoops up all the profits from the segment. Said another way, if you know that a device like the iPad will be available, why would you ever buy a netbook?
• Consumers will struggle with whether to buy the 3G iPad. iPad is the archtype Anywhere device: its broadband connection and its links to networked apps and content are what make it special. But given that adding a 3G connection adds more than 26 percent to the iPad’s purchase price, consumers will have trouble deciding whether it is worth it, even before the prepaid broadband connection.
• Prepaid iPad broadband will win over consumers. Apple’s announcement of AT&T’s mobile broadband pricing for iPad just told the consumer world that they are paying too much for mobile broadband on postpay plans. Most of the rest of the world already has some sort of prepaid mobile broadband; it’s just a matter of time before the U.S. gets with the program.
• iPad represents the beginning of the end for the PC desktop metaphor. Windows, mice, title bars, and open-save dialogs have been mainstays of PCs for more than 25 years; in fact, the introduction of the original 1984 Macintosh made them cool. Yet the iPhone and iPad use none of the software elements of these 1980s, opting instead for a full-screen multi-touch experience that makes smarter use of screen real estate. Once someone figures out how to integrate multitasking with multi-touch (10/GUI perhaps?) without dramatically increasing the consumer’s cognitive load, consumers may well decide that these graphical elements no longer serve any useful purpose and finally let them die a natural death. At the very least, they are unlikely to ever be cool again.