11.27.07

Cracks in the Facade

Posted in Mobile, Technology Market Trends, Wireless at 1:02 pm by Tony Baer

As reported in today’s Wall Street Journal, Verizon announced it would open up its mobile network next year to non-Verizon phones. Obviously, Google’s noise for open networks has finally gotten a rise out of the nation’s second largest carrier. More importantly, this move could signify a major shift in business practices across the industry, as carriers finally ditch their outdated turnkey system practices.

Verizon’s move doesn’t necessarily translate to a literal definition of open networks; the move is more akin to Microsoft publishing the file format interfaces to its Office software products. And, while the step could place the industry more in line with modern practices from the computing sector, there remains one important difference: while computers are commodities, handsets as a generalization are not. Yes, voice handsets could be regarded as commodities, but the handset/mobile device market is so diverse that you have multiple types of products with different functions competing for different demographic slices of the marketplace. So that lays waste to the established notion of the computing industry that 90% of the value is now in the software.

But for mobile carriers, Verizon’s move signals a realization that their true value is the network and the services that networks provides. The impending auction of new bandwidth recovered from analog TV broadcasters underscores that point: with new spectrum, carriers can dispense more services. Yet, existing business models, restricting freedom of choice would simply act as a speed bump. With fewer hardware options, customers could not as easily gain access to new models that could take advantage of these new services, and with a restricted market, handset manufacturers would be slower to roll out updated models.

Ergo, there is far more upside for network operators to open their networks, because they will gain access to larger markets to which they can sell more valuable services to more customers.

While of course distinctions remain between telco network service providers and their IT counterparts, ZDNet blogger Dana Gardner suggested that recent trends of convergence are likely to promote more cross acquisitions in this space. Verizon’s move is entirely consistent with that.

Consequently, while it’s easy to conclude that Google’s rants for open spectrum might have prompted Verizon’s move, our take is that the advent of new spectrum finally brought the carrier to its senses.

04.29.03

Bypass Operation

Posted in Wireless at 12:12 am by Tony Baer

One of the few sleepers in technology today, WiFi could soon grow ubiquitous. Based on normal laptop replacement rates, industry estimates point to 20 – 25 million units alone, not even counting other devices like PDAs, appliances, or phones.

The quick hits are inside homes and offices. But well-publicized rollouts in Starbucks plus the blooming of free public hot spots have publicized the idea of broadband almost anywhere. Well, let’s not get carried away here — cell phones still don’t work away from cities or interstates. Nonetheless, the success of wired broadband in hotels at $10/night has proven that road warriors will buy reasonably priced high-speed access.

Of course, speed bumps await, like crowding or vulnerability to eavesdropping, but most of these problems will be resolved. The major hang up will be financing the build out.

Call us crazy, but we’re hazarding a few predictions:

* Technology: In the short run, WiFi will become a victim of its own success. Emerging alternatives that operate on less congested bands, could resolve bottlenecks. As for security, fixes such as digital signatures and encryption are already here today. Enterprises just have to enforce their use.

* Cost: Although individual hot spots are not that expensive, covering an entire metro area is another story. Existing and emerging technologies might resolve small parts of the problem, but it will cost billions of dollars to reach critical mass coverage. That will dictate a triage approach to build-out: premium, enterprise grade secure services introduced to downtown cores, office parks, hotels, and airports where business users are sitting down with both hands on the keyboard. The truly mobile Internet, strung out on cell towers long the highway, will have to await not just capital, but telematics innovations making the hands-free Internet possible.

* Market Development: Mobile carriers will open the battle, but lose the war. Their business models (private networks, dedicated hardware), technology (circuit-switched), and time charges are precisely the models that Internet users have rejected. (It’s amazing that cell customers still tolerate these 1970s-vintage business practices.)

The ultimate victors will be ISPs/wide area backbone providers (who already own the customer), aligned non-exclusively with third parries (like Cometa) that construct the build-out. There will be two tiers of service: enterprise class, which is secured, with the option of priority bandwidth; and consumer service, which is unsecured, less profitable, competing against piggybacked, informal neighborhood access.

No wonder we recently heard one observer characterize WiFi as “the great mobile carrier bypass.”

03.20.03

Honey I Shrank the Database

Posted in Networks, Security, Wireless at 12:07 am by Tony Baer

Each day, it’s becoming clearer that WiFi is just the latest in a long list of back door computing technologies that have made it into the enterprise. Like PCs, mobile phones, PDAs, and Blackberries before them, WiFi is a grass roots technology that IT groups are reacting to, rather than planning for. Today’s announcement of Cisco’s acquisition of Linksys, the leading maker of consumer broadband hubs, simply confirms this trend.

Hubs are becoming the latest must-have device for anyone with cable modems or DSL. Although Linksys also makes conventional wired hubs, it’s clear that the wireless is becoming the preferred way for sharing broadband connections at home.

The corporate angle here is that, for a large proportion of white-collar workers, accessing back office systems at night or on weekends has long been part of the workweek. Admittedly, when access to the Internet was through a single dedicated connection, passwords proved adequate for keeping out kids under the age of 6, while VPNs did their job in rendering transactions invisible to the Internet.

However, the new wireless LAN technologies currently lack adequate encryption measures. Although these security holes should be patched within 6 – 12 months, in the interim, systems administrators must further refine access control policies. The bright side is that organizations that effectively manage security in environments rife with quasi- legal MP3 downloads should make them better prepared when wireless LANs take center stage inside the enterprise.

01.31.03

Fool’s Gold

Posted in Technology Market Trends, Wireless at 12:02 am by Tony Baer

It’s human nature to get overexcited about “the next big thing,” and wireless is no different. With Intel about to debut Centrino, its new laptop Pentium that embeds WiFi directly into the chip, the tipping point is coming fast. According to some prognosticators, we could see over 40 million WiFi devices in less than five years.

Sound familiar? After Microsoft added TCP/IP to Windows 95, suddenly, anybody could get on the Internet — and did. With hindsight, we know that the sudden presence of tens of millions of new web users didn’t necessarily create new Internet-based industries, but prodded existing businesses to add new online channels. The biggest change was forcing companies to get serous about multichannel strategies, blending the customer experience, regardless of whether the interaction transpired via phone, web, email, chat, snail mail, or face-to-face. And, the economic downturn notwithstanding, that has created new opportunities for companies to add new value to existing customer relationships.

Ted Schell, chairman of Cometa Networks (a WiFi network wholesaler startup backed by IBM, AT&T, and Intel) predicted a similar future for WiFi, viewing it as a natural extension of the mobile workplace. He insisted that WiFi providers would succeed only if they built services that could fit into existing carrier offerings, such as VPN, rather than create the newest iteration of a CLEC (competitive local telecom exchange carrier).

According to Schell, WiFi providers targeting corporate markets must guarantee carrier- grade service levels and security, embed connectivity within existing corporate VPN offerings, and make the service available at distances no greater than a 5-minute walk or ride from where employees are likely to be during the workday.

As we noted a couple months back , WiFi will be the next little thing, with hotels a logical starting point for offering services. In this economy, it can become all too easy to hype any new technology that promises market sizes in the tens of millions. Yes, it might create a new opportunity for personal firewall vendors. However, more disruptive technologies like VoIP might be enabled by WiFi, but not exclusively tied to it. Like the Internet before it, WiFi won’t change everything, but instead, add valuable extensions to what’s already there.

11.22.02

The Little Technology That Will

Posted in Networks, Technology Market Trends, Wireless at 10:30 pm by Tony Baer

For road warriors among us, the promise of an untethered world is a mixed blessing. While some foresee huge productivity improvements from being always connected, for most of us, the very notion probably conjures up scenes of entrapment inside noisy commuter trains with everybody’s cell phones and pagers going off.

And, as one former itinerant consultant confided to us, isolation can be a blessing. There is a reason why libraries are supposed to be quiet, and, he noted, a reason why the isolation of cross-country flights can provide the most productive hours of consulting projects. Nonetheless, the unexpected success of Blackberries indicates pent-up demand for at least some mobile connectivity.

Consequently, we expect WiFi to become “the next little thing” for wireless. Cheap and simple, costing less than $500 apiece for local transmitters, almost anybody can set up a WiFi hot spot.

In that context, we were amused in reading accounts of a wireless forum at Comdex this week. The carrier and technology establishment is being caught off guard by this guerilla technology, just as phone carriers were when dial-up Internet flooded local switches a few years back.

Among key hurdles are billing and network handoffs, because mobile broadband — whether WiFi or 3G — will involve multiple carriers. While the problem has continued to dog even terrestrial carriers, that hasn’t shut down long distance service. Other objections were raised that WiFi won’t adequately cover the landscape. However, Qualcomm’s notion that 3G will make WiFi obsolete was pretty laughable, given the company’s track record supplying the proprietary technologies that have rendered U.S. cell phones useless in the rest of the world.

WiFi is the little technology that will. Although security questions remain, they will get solved years before 3G networks ever reach critical mass. With Intel about to embed WiFi into its P4 mobile chips next year, the installed base will quickly mushroom.

We expect that hotels could prove the tipping point, since WiFi is cheaper and quicker than extending T1 lines to every room, a captive market exists (road warriors have to sleep somewhere), and there is an existing billing mechanism. Furthermore, the environment is conducive but not ubiquitous (road warriors leave their rooms every morning). Our main concern, however, is that those poor souls won’t lose too much sleep in the process.