First Coffee for 23 January, 2006

David Sims : First Coffee
David Sims
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First Coffee for 23 January, 2006

By David Sims

The news as of the first coffee this morning, and the music is Trane’s Blues, a nice John Coltrane collection:

Just like I said at the beginning of the season: Pittsburgh and Seattle in the Super Bowl. Why’d you ever doubt me?

Now here’s how to double your money: Take Pittsburgh and the 3 ½ Vegas line. The Steelers are going to destroy those people.

Now’s not a great time to be Vodafone. The British mobile colossus is tottering, buffeted by the slings and arrows of outrageous fortune, their CEO Arun Sarin’s getting henpecked by shareholders and the news won’t be good Tuesday, when they announce their subscriber numbers.

Oh there’ll be plenty new customers – about seven million, give or take. But some heavyweight investors, the ones whose opinions matter, want to see Vodafone “sell its struggling business in Japan and its minority stake in Verizon Wireless of the US,” Britain’s Sunday Telegraph reports.

Some industry observers put the Verizon stake as the biggest problem. Susie Mesure says “some in the City [London’s financial district] are losing patience and want to see Sarin offload Vodafone’s 45 per cent stake in America’s Verizon Wireless, thought to be worth $44 billion, and return cash to shareholders.” Vodafone’s “struggling Japanese business” isn’t viewed with much enthusiasm by analysts either.

Add the fact that revenues in Germany and Italy are falling, that organic revenue growth is dropping from 6.9 per cent in the second quarter to 6.2 per cent, and that its week-long drop in share price has resulted in a 20 percent loss over the past quarter, slicing over $10 billion from its market cap – 6.5 per cent of the total – and seven million new customers doesn’t seem all that wonderful.

And as the Telegraph says, the stock’s tanking, one of the worst performers on the FTSE “despite a 15 per cent rise in the dividend payment, announced in November, and an increase in the company’s share buyback program.”

Vodafone’s forging ahead with a service streaming songs directly onto customers’ mobile phones, albeit with the somewhat unfortunate name “Radio DJ.”

Slated for release later this year, it’s a cool idea to offer such themed collections such as “British rock” or “Hip-hop”, songs “chosen by DJs or celebrities,” New Zealand industry observer Reuben Schwarz writes, “and a personal channel customized to each listener… [tailored] to their tastes by rating the songs that are streamed to their phone. The service then uses software to find songs with a similar beat and harmony. On any channel, if listeners don’t like a song they can skip to the next track.”

Customers pay a monthly subscription free providing unlimited access to the service, and can buy songs for permanent download while they are being streamed.

But even when they’ve got hold of a good idea, it seems Vodafone puts their foot in it. Schwarz cites Ovum analyst John Delaney saying sure, they’ll be lining up for the service, but naming it “Radio DJ?” One of the biggest selling points of the service is “that the music is not punctuated by annoying prattle from a DJ,” Delaney says.

Sure there’s bitter competition, and T-Mobile’s certainly doing its part to kick Vodafone when it’s down, claiming over 750,000 customers in Britain lo these past three months, which might make Sir John Bond, the incoming chairman of Vodafone, wonder just what he’s getting into.

It’s not all gloom, however, there’s a bit of grim schadenfreude for Vodafone to raise a glass to, as today’s the last day of independent operation for O2, Vodafone’s biggest UK rival, which will be digested by Spain’s Telefónica at the end of the month.

But the dark cloud behind that silver lining is that the churn rates and subscriber acquisition costs which doomed O2 to sailing under the Spanish flag are haunting the entire industry. One stock analyst described the situation as “blockbuster customer growth, but [revenue] pain may overshadow.” In other words sunny weather, with rain.

Industry observer Philip Aldrick writes that Vodafone is also “struggling to prove that third-generation technology will generate the promised long-term growth in Western markets. Data services, excluding text messages, account for only 5 percent of revenues in key British, German and Italian regions. In Japan, the figure is 23 percent.”

As a result, he says, Vodafone’s keying up expansion into developing economies, “where customer growth remains strong.” And the jury’s still out on Vodafone’s announced plans to use its mobile network to offer fixed-line services in New Zealand, taking on Telecom New Zealand’s stronghold.

It is believed – i.e. the Telegraph reporter thinks – that “Vodafone has decided against bidding for Millicom, the $3.6 billion Nasdaq-listed mobile network operator, which last week announced that it had received a number of expressions of interest.”

And hey, what with running around trying to fill my reading list with recommendations from whichever terrorist is currently spewing garbage in the late Osama bin Laden’s name – tossup whether William Blum’s Rogue State or the Oprah-backed A Million Little Lies by James Frey is the more meretricious read – some things just got lost in the shuffle around here, and First CoffeeSM neglected to mention that Qpass, a digital commerce software vendor, announced late last week that “the Qpass digital commerce software solution has processed more than $1 billion worth of premium content transactions, making Qpass the first company ever to achieve such a record.”

“This value represents more than 400 million paid downloads processed and delivered via the Qpass platform,” company officials note.

Chase Franklin, CEO, Qpass nods to “the many content providers and mobile operators around the world who have deployed these services.” Champagne all around might be in order, Chase.

In 2005, the volume of transactional revenue that the Qpass platform processed was nearly three times the volume of 2004, averaging more than $2 million in revenue value per day. And although ring tones continue to represent the largest single category of premium content revenue; mobile games, video services and new types of downloadable applications – such as eBay, Mapquest, MobiRadio, and instant messaging – were the fastest-growing categories in 2005.

What Qpass actually does is enable the buying and selling of digital goods and services over any network. Their platform manages hundreds of thousands of content applications and services across mobile, VoIP, and WiFi networks and the company manages the entire digital commerce transaction process, from content sourcing, to merchandising and delivery, to billing and customer care.

Those allergic to unbearable tech geekiness, avert your eyes. As a public service to the pocket-protector crowd First CoffeeSM reports that O2Micro International Limited, a supplier of power management and security components and systems for the computer, consumer, industrial, and communications markets, has announced its SifoWorks M520 Version 2.01.06, internet security gateway appliance product, has passed the 1.0D criteria for ICSA Labs IPSec Product Certification and may use the ICSA Lab Certification logo on its SifoWorks model M520, Version 2.01.06.

The SifoWorks M520 IPSec VPN-Firewall product is based on a proprietary ASIC and achieves a wide range of high performance security functions at wire speed. The SifoWorks M520 contains security applications that operate with what company officials claim as “minimal latency,” including deep content detection and filtering, URL blocking and VoIP H.323 blocking.

The SifoWorks M520 is marketed primarily to medium and large-scale enterprises, universities, systems integrators and OEMs.

Whew. Reminds me of Steve Martin’s plumber joke.

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