September 2005 Archives

I'm betting that I will not be the only one to use that headline to draw attention to the fact that Cisco purchased another company today.  Up next, P. Sherman Enterprises in Sydney...

Cisco Systems today announced a definitive agreement to acquire privately held Nemo Systems of Los Altos, Calif. Nemo Systems has developed leading-edge technology in the network memory space that will offer enhanced performance on Cisco's core switching platforms and service modules. Once incorporated into Cisco's products, the technology will allow customers to scale network systems and line card bandwidth while reducing the overall cost of high-performance networking systems.

Here is the rest of this release:

Under the terms of the agreement, Cisco will pay up to $12.5 million in cash for Nemo. The acquisition is subject to various standard closing conditions, including applicable regulatory approvals, and is expected to close in the first quarter of Cisco's fiscal year 2006 ending October 29, 2005.

Upon close of the transaction, Nemo will become part of Cisco's Data Center, Switching and Security Technology Group (DSSTG) reporting to vice president and general manager Tom Edsall.

About Cisco Systems
Cisco Systems, Inc. (NASDAQ:CSCO), the worldwide leader in networking for the Internet, celebrates 20 years of commitment to technology innovation, industry leadership, and corporate social responsibility. Information about Cisco can be found at http://www.cisco.com. For ongoing news, go to http://newsroom.cisco.com.

Cisco, Cisco Systems, and the Cisco Systems logo are registered trademarks or trademarks of Cisco Systems, Inc. and/or its affiliates in the United States and certain other countries. All other trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

I just got off the phone with Chuck Harris, VP of marketing at CopperCom who told me about their recently announced comprehensive transition program for CLECs faced with the need to migrate from UNE-P to a facilities–based model.

The program consists of a three major elements, including a rental program, which is essentially a “try before you buy” offering, allowing carriers to rent a CopperCom CSX softswitch, deploy it into their network, and eventually buy the CSX outright. Harris told me that in general, service providers stay in the rental program for about a year before making the decision to purchase the equipment.

The next element comprises CopperCom’s comprehensive operations consulting services, whereby trained personnel will help customers wade through the swamp of agreements and requirements and regulatory concerns as the carrier transitions to a new business model. Step three, closely related to consulting program entails CopperCom offering turnkey network services whereby they will take further steps to help their customers transition.

The program already boasts 20 or so customers that have taken advantage of various elements of the offering prior to the formalization of the program that CopperCom is announcing with this release.

Clint Wiley, president of New Frontiers Telecommunication, a Hagerstown, MD-based CLEC offered his comments, “CopperCom has been an instrumental partner to New Frontiers in our transition to a facilities-based operation. The guidance and flexibility of the CopperCom team, combined with the ability of the CopperCom softswitch, was critical to making our network deployment a success.”

So it appears that putting forth a good faith effort turned out to be enough this time. This time.

According to a report from the AP the Federal Communications Commission has backed off the deadline they had set for VoIP providers to shut off their customers’ service.

The report cited Commission statements saying that the status reports required from every Internet phone company last week showed that by "repeatedly prompting subscribers through a variety of means, the majority of providers .... have obtained acknowledgments from nearly all, if not all, of their subscribers."

The FCC said providers who have received confirmations from at least 90 percent of their subscribers will no longer face the disconnection requirement, but still must continue seeking the remaining acknowledgments.

All carriers below the 90 percent threshold will have until Oct. 31 to reach that level and avoid the disconnection requirement.

It will be interesting to see if the FCC’s appreciation of a good faith effort will extend to the November 28th deadline regarding E911.

As far as this saga is concerned, stay tuned…

I plucked this one off the wire....

Time Warner Inc. and Microsoft Corp. are in advanced talks over Microsoft buying a stake in Time Warner's America Online unit, the New York Post reported on Thursday.

Citing two unnamed sources familiar with the matter, the Post said the talks concern Microsoft acquiring an AOL stake and then combining it with Microsoft's Web unit MSN.

Microsoft would pay some money to Time Warner for the AOL stake, leaving the two companies approximately equal partners in the venture, the Post said.

A Time Warner spokeswoman declined to comment. Microsoft was not immediately available for comment.

Richard Greenfield, an analyst at Fulcrum Global Partners who said he himself was not aware of the talks, said that he thought any such deal could be premature for Time Warner, even if a combination could reduce costs.

"It feels to me like AOL is at the cusp of really proving itself from a portal perspective," he said. "I'm not sure why this is the moment to do it. They could get a much better valuation in a couple of months when they prove it more."

He added that investors are currently not giving AOL a valuation of more than $10 billion, but that the online service could eventually fetch a valuation in the $15 billion to $20 billion range.

According to published reports, residential VoIP subscribers are expected to dramatically increase in number spurring revenues for VoIP equipment to more than triple between 2004 and 2010. This prediction comes to us courtesy of iSuppli.

According to the El Segundo-based research firm, “the number of residential VoIP subscribers worldwide will rise to 197.2 million in 2010, up more than 40-fold from 4.8 million in 2004. The significant jump will help drive worldwide wireline VoIP equipment revenues to $24.5 billion in 2010, more than three times the $8.04 billion in 2004 sales. In 2005, VoIP equipment revenues will rise to $12.9 billion, up 60% from 2004.”

iSuppli predicts that the residential segment will be the fastest-growing portion of the entire VoIP equipment market, with revenues expanding to $10.6 billion in 2010, up 650% from $1.4 billion in 2004. The firm also believes that Japan and the United States, which today comprise about 83% of the overall residential VoIP market in terms of consumers, will continue to lead subscriber counts, and by 2010 the two nations will account for over 56% of all VoIP subs.

ViseonMedia, a subsidiary of Viseon, Inc., and exclusive source of TV-quality interactive programming to VisiFone Multimedia digital home telephones, today announced that ABC News Now has agreed to provide content in a VisiFone consumer pilot slated for 2006. ViseonMedia will receive selected programming from ABC News Now and will format and broadcast to VisiFone installed homes throughout the United States.

ViseonMedia will deliver news, sports, shopping, weather, information, and entertainment programming to VisiFone users around the globe. Consumers can choose to view personally customized content as well as control the features of their VoIP services directly on the screen of their VisiFone. ViseonMedia interactive programming on the VisiFone is not designed to replace the television or the web portal experience. Instead, it is a dedicated third screen within the home where consumers can automatically view personalized information on their preferred schedule in a TV-quality like experience.

According to International Data Corporation, three million users will have VoIP service in 2005, reaching 27 million users by 2009.

Looks like eBay is going ahead with their plans to buy VoIP service provider Skype in a move purported to add free Web telephone calls to its online auctions and fuel growth.

According to news reports, eBay said it plans to pay $1.3 billion in cash and $1.3 billion in stock for the Web communications company. It would make a further payout of up to $1.5 billion by 2008 or 2009 if financial targets are met, giving the deal a total value of up to $4.1 billion, executives of the two companies said.

$4.1 Billion? Excuse me, but that’s insane.

The report quotes individuals associated with the transaction explaining the merger as a move to strengthen the bonds between eBay buyers and sellers. eBay merchant sites will also be encouraged to use Skype software to allow customers with last-minute sales questions to click to talk to a customer service agent.

Executives of the two companies justified the combination by saying that the power of so-called "click-to-call" services to convert shoppers into buyers represents a far more lucrative form of selling proposition than advertising can. Skype also plans to add video calling and other features to its software.

Maybe they should have purchased Xten, a public softphone maker, who they could have had for a few tens of millions. Heck they could have paid double that company’s market cap and still received a good deal. Partner with a service provider, and take a penny or two off the traffic generated with eBay’s universe and voila!

The deal is expected to complete in the fourth quarter.

Skype expects to generate $60 million in revenue this year and more than $200 million during 2006. The company has yet to post a profit.

In a post last week, I questioned if this merger was the best use of eBay’s money. I’m still not convinced it’s such a good idea. In an exchange with a former colleague of mine, he tried to convince me of all the potential upside to this deal. He reminded me that “…eBay also owns 25 percent of Craigslist; imagine the social-networking prospects if every posting Craigstlist had a VoIP call button!”

He continued: “So you've got eBay, Craigslist, and Skype all together. What do online auctions, a bulletin board, and VoIP have in common?  They all connect people.  I hate myself for saying this, but there's a "synergy" there — smart mobs, information analytics, online democracy, power to the people, all that good stuff. Imagine the "platform" they could build with these three companies. Then imagine what would happen if they open-source that platform and run applications on top of it.”

I can’t argue with logic, and frankly, it’s not my dime, but rarely do the best laid plans work out the way they were intended. Think AOL Time Warner. I hate to be such a cynic, but frankly I think the only people making out on this deal are the founders and investors of Skype. God bless ‘em too! Their greater good was helping to place VoIP more firmly into the mainstream.

In talking with my friend, I mentioned that since I don’t see the real benefits to this partnership, it must mean that it’s definitely going to happen. He called me an “anti-visionary.”

Time will tell how wrong I was. Then again, when it comes to pass that eBay spins off Skype for a couple hundred million to Chinese conglomerate with a penchant for real estate and/or shipping, maybe people will remember one cynic who predicted it.

And oh the irony…

Reuters is reporting on a WSJ story today that has online auction site EBay Inc. in talks to acquire Internet-telephone company Skype for between $2 billion and $3 billion.

Skype has been rumored to be in discussions with other technology companies, but so far this summer there has been no deal.

While I understand the desire for even a leading company to maintain growth and identify new sources of revenue, but I don’t quite get the marriage of EBay and Skype. One of the unnamed sources in the Journal story said that “eBay was keen on adding services that make it easier to buy and sell goods online, as it did when it acquired the electronic-payment processing service PayPal in 2002.”

Does EBay want to enable buyers to talk to sellers? If that’s even a good idea, why not partner with or simply endorse one of the existing PC to PC VoIP services? Save the $3billion, and maybe take a small piece of each call generated within the EBay universe.

Does EBay really want to become a phone company?

Then again, I did write recently that we would see all manner of new phone companies sprouting up like mushrooms after rain (Disney, Nike, etc...) so why not EBay? They've certainly got brand recognition.

As they say, stay tuned.

According to a report coming from DigitalMediaAsia this morning, IPTV is poised for tremendous growth. Not surprisingly, China is predicted to be the runaway leader with nearly 5 million subscribers expected by 2010.

And, according to Telecom Web, Hong Kong telco PCCW profits recently soared by over 40 percent,  because of the carriers’ leading edge deployment of IPTV. In June of this year, PCCW’s now TV had over 440,000 subscribers, up 22 percent from 361,000 at the end of last year. It competes in the Hong Kong pay-TV market against operators such as i-Cable Communications, the leading cable operator in Hong Kong. Its success in the IPTV arena has shown the way for telcos worldwide as they begin deploying IPTV services and competing against satellite and cable pay-TV alternatives.

The DigitsalMediaAsia report goes on to say that the rapid growth in Internet protocol television (IPTV) over the next few years is to see subscriber numbers at end-2010 reach around ten times the 2005 figure. According to a report from market research firm Informa Telecoms & Media, which has studied some 50 countries, by the end of this year there will be just 2.7m IPTV subscribers globally, but that this number is expected to reach 25.9m by end-2010.

Looking ahead, China will be the leading IPTV market, with 4.9m subscribers forecast by end-2010, with the U.S. in second place with 3.4m. Hong Kong, the leading country in 2004 (with 475,000) will drop to 8th position by 2010, having been overtaken by the UK with 1.5m.

The top five Western Europe IPTV markets in 2010 will be France, Germany, Italy, the UK and Spain.

Macromedia, Inc. has announced an agreement with HP to jointly integrate, market, and sell solutions that unite Macromedia’s Flash Platform and HP’s Service Delivery Platform (SDP). Together, Macromedia and HP will enable carriers, network equipment providers, and telecommunication ISVs to streamline the creation of new communications, messaging, and collaboration solutions, and securely deploy rich multimedia services that leverage the ubiquity of Macromedia Flash Player and the depth of the HP SDP across fixed, mobile, and broadband networks.

According to William Stofega, senior research analyst, VoIP Services at IDC, "The Flash Platform combined with the HP SDP creates a robust, multiplatform solution for the enterprise that is suitable for stringent, mission-critical environments across the telecommunications network."

I received a pitch this morning to speak with a company in the Web conferencing space, and unfortunately I’m facing a whole series of cascading deadlines, and I will have to pass. However, it was still a successful pitch (IMHO) chock full of interesting stats regarding the Web conferencing market. Also it was couched in terms of the recent increase in fuel prices, i.e., “As gas prices continue to rise, people are looking for alternatives to business travel and long commutes.”

In the interest of sharing, I thought I’d include the statistics, which are compelling enough on their own, but really paint a picture when grouped together.  Thanks to Courtney Riley over at Ogilvy for reaching out to me, and sorry I can’t take the briefing with your client.

Here are the stats:

Web Conferencing
~ According to a 2004 study by Frost and Sullivan, Web Conferencing revenues will exceed $2 billion in 2009, up from $1 billion in 2005.

~ Average of 44% of 2004 IDC survey respondents planned to increase their conferencing usage by 100% in the next 6 months, up from 28% in the 2003 survey

Travel
~ According to In-Stat/MDT, 44 million workers will have telecommuted in 2004, and the number of remoter workers will reach 51 million by 2008

~ By 2010 more than 70% of work will take place at a different time/different place or same time/different place

~ 82% of workers collaborate with people in other locations

According to Wainhouse Research
~ More than 40 percent of people in the U.S. workforce are taking fewer trips

~ More than 70 percent are interested in alternatives to travel

~ 63 percent rate access to collaboration technology (such as voice, web and video conferencing) as very important, as opposed to 44 percent prior to Sept. 11

Conferencing & Collaboration Over IP Summit
Also, if you’re looking to learn more about the conferencing and collaboration market, you would do well to consider spending some time at the upcoming Internet Telephony Conference & EXPO taking place in Los Angeles — at the LA Convention Center — this October 24-27. The first day of conferences (10/24) will feature a day-long Conferencing & Collaboration Over IP Summit. It marks a great opportunity to learn more about this fascinating space.

The Summit will feature speakers from Microsoft, Yahoo!, Viack, Interwise, IPUnity, Alcatel/eDial, Inter-Tel, and more.

A new report from Paul Budde Communication (an independent telecommunications research and consultancy company based in Australia) was released today. The report, Global Telecoms Analyses and Forecasts for 2006 and Beyond takes a look at the telecom industry and comes with several interesting observations.

Budde believes that incumbents will continue to dominate the industry, and that we will see a series of “very interesting” mergers and acquisitions in the period 2005-2008.

Check out a more detailed article on the matter here.