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Facebook clinches another $100 million

Without a clear (public) business case, the latest king of the social networks is raising $100 million, according to Business Week’s FaceBook: Friends with Money, and also echoed by TechCrunch.

Here is some interesting data from the Business Week article:

• Facebook already raised $360m in last seven months: $240m from Microsoft for a 1.6% stake, and $120m from Hong Kong billionaire Li Ka-shing
• Facebook CFO Gideon Yu, former CFO of YouTube and treasurer at Yahoo, says “It will be used entirely for servers“
• The $100m is a loan from TriplePoint, not capital
• In March Facebook had 35 million users in US, 71% YoY growth
• Worldwide number of users tripled to 109.2 million, opening sites in Spanish, German and French
• Analysts estimate Facebook has 10,000 servers. The new funds could buy 50,000 servers more
• Google is estimated to buy 500,000 servers a year, and Microsoft 200,000

My conclusions:

• These are good news for server vendors: IBM, HP, Sun, Dell and Rackable System (the latter known to be a supplier of Facebook)
• Who said that barriers of entry for Internet business were too low? You’d better get a good CFO before you try to build your Data Center.
• Facebook CFO admits that it is easier and better to raise money when you are not in a hurry… and when the VC are still hot on Social Networks!

Good luck.

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Microsoft needs to revamp brand

Microsoft keeps losing market share slightly and continuously, in part thanks to Vista.

But let’s admit it, Vista is not that terrible, even if far from perfect. Microsoft  monopolistic habits and greed to milk the licenses cow, make people have a negative feeling (not to say hate) about Microsoft. Steve Ballmer’s arrogance do not help improve Microsoft image, and Gates stepping out did not help either. Bill Gates, still blamed with most of the evils of Microsoft, is a person that can only be admired for what he has done to bring computers to everyone, not to mention his philanthropic actions.

And then we have Apple 2.0. The turn around of Apple after Jobs return is amazing. Driven first by the iPod, then new MacBooks and iMacs, and lately the iPhone, Apple is more than ever the  iconic brand that sets the trend. Microsoft has never raised a fraction of the passion that Apple generates in their users. And with Vista being the excuse of many to switch to Mac, it is no surprise that Mac market share grows.

And if Apple was not enough to threaten Microsoft Status Quo, then we have Google with the same kind of bet for simplicity, user friendliness and its nearly altruist services and software in the on-line world. MSN, Hotmail and Live services inherit the same greedy behavior of Microsoft: did you ever got your Hotmail account reset and lost all your emails because you did not login for 30 days? how slow was Hotmail, partly due to the flashy banners all across the page? how long it took them to match the 1GB capacity of initial Gmail? and what about lack of POP support and removal of MS Outlook support, forcing the user to suffer their ad-intense webmail?

As the browser becomes the OS (by supporting the increasing offering of Software as a Service), Mac and Linux distros become stronger alternatives to Windows. SaaS brings the OS battle on-line, and that explains also the strong interest of Microsoft to become a stronger Internet player acquiring Yahoo.

Windows still enjoys a huge market share above 90%, but its brand is lagging behind Apple’s Mac and Google. That does not have to be a fatal illness, but Microsoft should better look into it before it is too late.

Market Share data source: Hitslink

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Broadcast or Unicast Mobile TV? Both

Mobile TV continue to expand in Asia, Europe and US. AT&T just launched a broadcast Mobile TV service, offering 10 channels for $15 a month. Verizon launched their service one year ago. In Italy UMTS mobile operator 3 (Hutch group) is the most successful commercial launch in Europe for Broadcast Mobile TV with 800.000 subscribers and an offer of 12 channels at 19 Euro per month. Japan is the world leader with 20 million mobile broadcast subscribers, followed by Korea with 8 million.

Broadcast Mobile TV technologies require an overlay network to the mobile cellular network, using a different spectrum to broadcast digital TV channels, and specific handsets equipped with “TV tuners”. This is a very effective way to reach a mass audience of mobile devices for a limited selection of a dozen of channels. (See video example of AT&T service on an LG Vu phone)

Mobile Operators are also offering Mobile TV in unicast using the 3G mobile network infrastructure and spectrum to deliver video through an unicast stream over IP. The most sophisticated services use a software Rich Media Client in the handset that enables a better user experience and more interactivity (see video example of Orange World Mobile TV)

Once of the advantages of unicast Mobile TV is that it enables an unlimited number of channels. Each user receives a dedicated stream delivering his video choice from an on-line catalog that includes Video On Demand, recorded TV shows, pre-recorded interactive channels or live channels.

In short Broadcast brings a few mass TV channels, and Unicast brings unlimited choice. Which option should mobile telcos choose? Unicast can complement a Broadcast Mobile TV service with a wider choice and VoD on top of the 10-12 channel package. So why not integrate both options in the same Service?

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IMS Vs. Skype

IP Multimedia Subsystem or IMS is an architecture standardized by 3GPP, 3GPP2 and TISPAN, that is the choice of telcos to implement not only VoIP, but also other multimedia services, such as videcalls, presence, instant messaging, push-to-x, videosharing, on-line address book, etc.

As an user, you can envision IMS as a service similar to what Skype offers today but standard-based, with assured quality of service and fully inter-operable among different telcos.

IMS software clients will run on different devices including handsets, PC/laptops and IPTV Set-top-boxes.

AT&T U-verse Voice is already based in this kind of technology.

But, if Skype is already free, why do we need IMS?

1) To avoid ending in a monoploy situation with Skype. As telcos adopt IMS, users will be able to choose their favorite service provider, and that will not impact what buddies you can talk to. E.g., you can not access Yahoo IM or GTalk users from Skype. Once Verizon, AT&T and Sprint have all IMS, you will choose your preferred operator, say AT&T, and still reach your buddies at Verizon and Sprint.

2) Quality of Service. IMS provides for guaranteed bandwidth. This will enable Hi-Def (1080) video calls, that best-effort Internet can not sustain.

3) Carrier grade service, including Emergency Services, not available from Skype.

4) Access from multiple devices and network access. Coupled with IPTV and Femto cells, as an example, you will be able to receive SMS, IM or calls on your TV screen or on your PC, even if you have been called on you cellular. With Femto cells, your presence info could be automatically updated when you reach home. Other services bundled with IPTV would include video conference from the TV, or having a voice, video or chat session open with friends on TV while watching the Super Bowl.

5) Open architecture, including a SDE (Service Development Environment) for developers to add Applications blended with your IMS Service. Applications such as those available in Facebook, could be made available on the IMS Service, bringing to power of Social Networks and Web 2.0 together with IMS.

Skype is a great service, but the potential is bigger with IMS, mainly because of the competition it would generate among telcos, that would drive more innovative applications and a better service at the end of the day.

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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.

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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.

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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 | 1 Comment »

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 »