Friday, March 28, 2008

Confronting the Great Firewall of China

I returned yesterday from China, where I was in Shenzhen, attending ZTE's Global Analyst Conference. (More on ZTE in a future post.) Using the Internet there was an adventure in finding out what I could, and more usually couldn't, get to. Many of the sites that I regularly visit (most of which could hardly be called political or provocative) were blocked.

Pretty much any blog, no matter its contents, was out of reach. I tried accessing blogs through both a feed reader and Firefox to see if the problem was that RSS feeds were blocked, but I got the same result. Even blogs that are completely politically innocuous, such as Engadget and Gizmodo, were unavailable.

Interestingly, I could post to my own blog, but I couldn't read it. Similarly, my mail client could send mail, but not receive it; the only way that I could receive mail was through a web client. I was in Shanghai and Hangzhou last year, and I didn't notice the same level of interference.

On my way back to the States, I had a wait for my return flight at Hong Kong International Airport. Using PCCW's free WiFi service, I fired up my browser, feed reader and mail client, and everything worked just fine. I could access all of the sites that were blocked just a half-hour away on the Chinese mainland, as well as get my mail.

It may have been the combination of the Great Firewall with the fact that my hotel was right next to the local police station, but I felt more than a little paranoid and uncomfortable while I was in Shenzhen. The city is very modern (it's the place where China's experiment with Capitalism inside of Communism began,) and the people were very friendly, but I frankly don't look forward to going back.

Comcast and BitTorrent: Best Buddies?


Yesterday, Comcast and BitTorrent announced that they're working together to help Comcast address network congestion problems in a "protocol-agnostic" way. This is perhaps the ultimate marriage of convenience for both companies. Comcast's unannounced throttling and blocking of BitTorrent traffic, identified first by TorrentFreak and verified by the Associated Press, made Comcast into the poster boy for net neutrality. By the same token, had Comcast continued its traffic interference unimpeded, other service providers would have undoubtedly adopted the same techniques, and BitTorrent's attempt to turn itself into a legitimate competitor of Akamai, Limelight Networks and other Content Distribution Networks would have failed.

It remains to be seen how "agnostic" the resulting techniques will be. Will they favor BitTorrent's content provider-oriented DNA protocols over those of competitors, or will it be some kind of agreement by Comcast not to block P2P seeding completely, but rather, to limit the available bandwidth for P2P by some other methods? So far, the statements from Comcast and BitTorrent are fairly content-free as to what's actually going to be done.

In any event, Comcast may succeed in getting the FCC to back off on its investigation of the company's traffic throttling practices, while BitTorrent may remove an enormous impediment to sales of its services.

Breaking Up is Hard To Do?

Well, THAT was fast! No sooner did I finish my blog entry on Motorola's mobile handset business than the company announced that it will split into two parts, with the mobile business in one company and everything else in the other. Details about the breakup are still very sketchy, and the distribution of stock in the two companies to Motorola subscribers isn't planned until some time next year.

The breakup might placate Carl Icahn, but it does nothing to solve the fundamental problem at the mobile division, which is that the company is an "also-ran" in every product segment. That would probably be fine if the company was at least a strong number two in most segments, but it's not. If the recent Mobile World Congress is any indication, Moto's product development process seems to have stalled, and the pipeline of compelling future products is in doubt.

CTIA starts next week, so we'll have another view into Motorola's future product pipeline. However, if the rumors that have surfaced so far are true, Motorola's introductions will focus more on WIMAX and picocell base stations than on new handsets.

It's difficult to believe that Motorola can fix its product development problems while its mobile business is in the limbo of a spinoff that's as much as a year away. Whatever Motorola does, either to sell or spin off the business, has to happen quickly, not next year. Otherwise, the company's market share, and the resulting value of its mobile business, will continue to deteriorate.

Tuesday, March 25, 2008

Cisco: Hello, Moto?

I'm at the ZTE Global Analyst Conference in Shenzhen, China, but I'm following Carl Icahn's latest moves on/against Motorola. In the past, there were many rumors that Motorola would spin or sell off its sputtering mobile phone business in order to raise cash. Those rumors were incorrect (at least at the time,) but Icahn's renewed activity has led me to speculate (and that's all I'm doing) about who would be a good buyer for Moto's handset business, if the company decided (or was forced) to sell.

Most of Motorola's competitors either ruled themselves out the last time or, like Nokia, would likely be ruled out due to antitrust considerations. But there's one company that I think should be ruled in: Cisco. Yes, Cisco and Motorola are fierce competitors in many aspects of the cable and IPTV businesses, but Cisco only has an IP phone business right now.

Adding Motorola's mobile handset business would dramatically increase Cisco's telco business, but it would accomplish two more important things:

  1. It would make Cisco one of the largest players in a business that's far more important than PCs and set-top boxes combined to getting IP-based content and services into the hands of consumers. Last year, according to Strategy Analytics, 1.12 billion mobile handsets were sold, vs. 267.7 million PCs shipped worldwide, according to IDC.

  2. It would turn Cisco into a consumer brand, an objective long cherished by Cisco management. Last year, Motorola shipped 159 million mobile handsets. Imagine the consumer impact if those handsets carried the Cisco logo instead of Motorola's.
Yes, Motorola has slipped to Number 3 worldwide in the mobile handset business behind Samsung, but by a tiny amount. Strong product management and creative recruitment of development teams from competitors could turn the situation around for Cisco, not to mention the fact that team morale at Motorola would most likely improve immediately.

"Hello, Cisco" has a nice sound to it. Let's see if it sounds good to Motorola as well.

Wednesday, March 19, 2008

VOD Gets Traction


According to this article in CED Magazine, Comcast's VOD service has had more than seven billion views totalling more than one billion hours since the service was launched in 2003. Monthly, there are more than 275 million views totalling more than 130 million hours, and approximately 40 million movies are being watched on-demand.

Comcast's VOD library consists of more than 10,000 titles available each month, approximately 90 percent of which are free to view. By the end of the year, the company expects to have 6,000 movies in its VOD library, half of which will be in HD. (Given the statistics, they most likely have less than 1,000 movies available today, of which only a relative handful are in VOD.)

It's easy to forget, but cable VOD is most certainly a direct competitor for Apple TV, Vudu, Amazon Unbox on TiVo, and similar services. (DirecTV is readying its own Internet-based VOD service for later this year.) I think that it's far more likely that consumers will use the VOD service that comes from their incumbent video service providers than buy and install a separate set-top box that offers much the same content.

Travel Tip: Saving Money on Mobile Calls


Over the past year, I've traveled more than I ever have before, to London, Shanghai, Amsterdam, Paris, Singapore and Rio de Janeiro, not to mention points all across the US. (I've started the loop again--London last week, and Shenzhen next week.) Shortly before I signed up for this job, I switched my mobile phone service to Verizon, which probably has the best service in the US. However, Verizon uses the CDMA transmission standard, not the GSM standard that's used in most places around the world.

Even if CDMA worked around the world, however, I'd still be stuck with high roaming charges. To get around those costs, I buy a prepaid SIM card in each market, and use it in an inexpensive tri-band GSM phone that I purchased from T-Mobile and had unlocked. I don't need a SIM for every country; for example, my Orange UK SIM works across Western Europe, and roaming charges there are reasonable.

For other countries, I did some research on the Internet to find the local operator with the best prices and coverage. For Singapore, I went with M2, and in Rio, I used TIM. The biggest problem with this approach is that I have a phone number for each SIM card, but I know some people who use Skype to forward calls from one central number to their SIMs as needed. You'll have to pay Skype's per-minute rates for the incoming calls plus the mobile phone operator's charges for local calls, but the combination is still much less expensive than international roaming with a US carrier. In my case, I simply distribute my SIM number as needed. Either way, you'll save a lot of money for a little inconvenience (purchasing a SIM.)

Sunday, March 16, 2008

IPTV: The View From London

I just returned from IPTV World Forum in London. This is the world's largest trade show dedicated to IPTV, which doesn't necessarily make it very big (attendance was esitmated at 7,000 early in the show,) but does make it quite influential. Senior executives from many if not most of the world's largest telecommunication companies attended, although the focus was clearly on Western Europe (there are separate versions of the show covering Asia, Latin America, Eastern Europe, and for the first time this summer, North America.)

I wish that I could tell you that I saw something earthshaking, but I didn't. That's one of the problems of being an industry analyst; we see almost everything well before it's revealed publicly, so there are rarely big surprises. However, at a show summary session on the last day, one of the analysts had an interesting insight: There were no content companies exhibiting at the show. Compare that to The Cable Show, the National Cable & Telecommunications Association's conference, which will be held this May in New Orleans. Virtually every cable network that operates in North America will either be exhibiting or operating a suite at the show. These are the same companies that sell programming to IPTV operators, so why aren't they at IPTV World Forum?

My suspicion is that they see the Forum as a technical and engineering show, in much the same way that the Western Cable show eventually turned into a technical show before it was discontinued. The problem is that the primary thing that IPTV operators have to sell is programming. If the programming vendors don't see the industry's premier trade show as a viable venue, perhaps they don't take IPTV all that seriously.

What's the subscriber count at which programmers will see IPTV as a serious business? 25 million? 50 Million? My argument is that they need to take IPTV seriously now, even if it won't be a "real business" by their measures for a few more years. In particular, they need to start thinking about how the markets for their programming will change when the telcos are "busting silos" between the Internet, set-top boxes, mobile phones and landlines. In the long run, this is how IPTV will compete against cable and satellite.

Sunday, March 02, 2008

Mea Culpa


Yesterday, David Pogue commented on my previous post ("Sorry, David",) and said that I had misunderstood his point when he was on CNBC last week: He was explaining why DVDs wouldn't be overtaken by online movies, NOT why Blu-Ray wouldn't be overtaken. Although I continue to disagree with his arguments against online video (at least in the 2-3 year timeframe,) he's right about my misunderstanding his position on Blu-Ray.

I didn't see his entire segment on CNBC. In the part that I saw, he was holding Blu-Ray boxes in his hand, so I assumed that he was comparing Blu-Ray against online. I wasn't able to watch the segment again, either on the CNBC or New York Times websites, to factcheck. I should have at least reread his article on the Times website, but I didn't do that. I made assumptions based on incomplete information, and I'm sorry about that. This is a case in which I should have waited until I could rewatch his video before posting.

I can't say that I'll never do something like this again (incomplete information is how the world works,) but in the future, I'll certainly make sure that I read the whole article (or watch the entire segment) before I comment.