Monthly Archives: January 2009

Telecom Slowdown? Seven Reasons for Hope

mobilephonespenetration

We have seen recent announcement of job cuts in almost all Telecom and Tech companies, including Microsoft and Google only to name those that are new to those announcements.

GigaOm recently echoed a recruitment firm report that estimated almost 200,000 job cuts in the tech industry in 2008.

Still there are reasons for hope that the downturn will be less severe with the Telecom and Tech industries as with others:

  1. On a global scale, the demand for communications and computing is far from decelerating. As can be seen in the chart above, the penetration of mobile subs is still low in regions such as China,  India or South East Asia that are adding an aggregate of 150 million new mobile subs each year!
  2. The rise of netbooks should contribute to fulfilling the demand for affordable computing in emerging countries and also on Wireless Broadband penetration in mature markets, as netbooks are a great opportunity to bundle more 3G mobile data plans. Laptops will outsell desktops for the first time in 2009 and that is good news for mobile operators.
  3. Broadband stimulus package. As President Obama said in the inauguration speech, it is time to “dust ourselves off” and begin the work  “to lay a new foundation for growth”, building “digital lines that feed our commerce and bind us together” […] “to meet the demands of a new age”. Broadband infrastructure is a must to incentive innovation and competitiveness, and other countries are pursuing similar initiatives, including UK, Singapore and Malaysia to name a few.
  4. Airlines should be worried about the slowdown, not telcos. Telcos have a great opportunity to sell more Telepresence and more Enterprise Communication tools to help enterprises save travel costs.
  5. How can consumers save more than staying at home watching IPTV, facebooking or browsing the web? Purchasing online cheaper and better (more informed at least), can save a few dollars for families.
  6. Telecom equipment vendors have not given yet prove of slowdown in telcos investment. Ericsson CEO said when announcing Q4 results “To date, our infrastructure business is hardly impacted at all”. Huawei even dares to predict 29% growth in 2009. Nortel filing bankruptcy is not a bad news for the surviving equipment makers, as one competitors disappears
  7. It will not be worse than the Internet/UMTS licenses crash in 2001. The Economist says “It cannot defy gravity, but the technology industry is faring better than it did in the previous downturn.” The article explains why IT investment is no longer a luxury for enterprises and how innovations such as SaaS that make companies more efficient can only grow.

That the slowdown is affecting the Telecom and IT industries is out of  question, as the drama of thousands of people losing jobs demonstrates. But there are reasons to hope that these sectors will be the ones to lead the recovery, and we hope that will happen soon.

Some interesting reading and charts from The Economist:
Technology stimulus plans – Paved with good intentions
Computers per person per region in 2009 – Chart
The outlook of mobile phones in 2009 – Chart (Origin of  chart above)


Bad Times for Sony

sony-ceo

Sony just announced its Q4 results with a 95% decline in profits. Extracted from Associated Press :

Sony Corp. said its net profit shriveled to 10.4 billion yen ($115.6 million) in the third quarter from 200.2 billion yen a year earlier. Revenue fell 25 percent to 2.15 trillion yen from 2.86 trillion yen. The quarter includes the year’s peak shopping season and is usually a big one for its core electronics division, which generates over half of its total revenues with well-known products like Bravia TVs, Cyber-shot digital cameras and Vaio computers.

[…] its usually dependable electronics division posted its first-ever operating loss in the fiscal third quarter. It also reiterated its forecast for a net loss of 150 billion yen ($1.67 billion) for the full fiscal year through March — its first loss in 14 years.

The Japanese giant blames the poor economic conditions, but Chief Executive Howard Stringer should re-consider Sony’s strategy to bring it back to a leading position, as things have not been rosy for Sony lately:

The economic downturn is not helping Sony’s strategic bets on PS3, Vaio or Blue-ray. Still a change is required, or Sony will end up entertaining the future only with their movies.

What Country Has Most Internet Users?

internet-users

According to comScore and echoed by The Economist, China is the country with most Internet users in the World, accounting for 179.7 million users out of one billion worldwide. The United States of America, until recently the leader, has 163 million users. With a far lower Internet penetration in China than the roughly 50% in the US, we will only see China widening its lead in this chart. Clearly a market not to be neglected.

A good way to enter the year of the Ox that just began.

Happy Chinese New Year! Gong Xi Fa Cai!

Picture from The Economist daily charts.


25 Years of Mac

This is the keynote in which Steve Jobs introduced the Mac and the famous 1984 ad directed by Ridley Scott. The ad would be aired only once during the Super Bowl, and cost Apple $1.5 million.

The original Macintosh was released on 24 January 1984. Known as Macintosh 128k, it was priced at $2495 and powered with a Motorola 68000 microprocessor. The Macintosh brought a true disruption to computer user interfaces, with revolutionary applications at the time as MacPaint, to draw with a mouse, or MacWrite, the first WYSIWYG word processor. You can have a feel of it with the demo of the first Macintosh by Steve Jobs in January 1984:

Read/WriteWeb has a nice compilation of pictures of all Macs until today. It is a great overview of computer history through Apple machines.

Last quarter Apple shipped $2.52 Macs enjoying one of its sweetest moments as the icon brand for consumer computers.

Steve, get well soon!

Desktops Say Bye to Digital Home

bye-laptop

Laptops are killing the Desktop PC at home as they already did in the office.
It is more and more common that each member of a family has his/her own laptop. Specially now that netbooks become an affordable choice for the first personal laptop of a child.

Soon home NAS will become popular as a cheap and green common storage for  songs, pictures and movies accessible by all family member laptops, and also by other devices such as a HTPC or a game console connected to a TV screen. Apple Time Capsule is a nice first try for a combine NAS/Wireless router in the Mac orbit.

Except for hard-core PC gamers, not allured by PS3 or the Xbox 360, there is no clear application that justifies the slight extra performance of a desktop versus a laptop. And the increasing move of apps to the cloud, does not help the desktop cause either.

As I read from Stacey Higginbotham, of GigaOM, quoting a research group:

TBR believes the combination of a stationary display, keyboard and mouse with a mobile PC is the ideal configuration for many users.

Why would you want to buy a desktop PC for home these days?

Some are already starting to predict even the death of the laptop… see picture of device projecting a keyboard on the table (and why not  a screen on a wall too)

Telefonica Impressive Performance and Spanish Telecos

telefonica-eleconomista Via El Economista I found this table that shows the impressive performance of Telefonica over the past eight years since Cesar Alierta took over the CEO position from Juan Villalonga. Telefonica has gone from 15th place in 2000 to be the 3rd Telco worldwide in market capitalization after China Mobile and AT&T.   

Telefonica started its international expansion into Latin America in the 80s. Juan Villalonga continued it during the 90s. The bet on emerging markets, specially Brazil, and the long-term commitment to the region even after the Argentinian crisis in 99, is now paying off. After Cesar Alierta culminated Telefonica’s leadership in the area with the purchase of SBC operations in Latin America, Telefonica Group has now more than 250 million subscribers worldwide, and growing. Later, the acquisition of O2 operations put the Spanish telco in the European map, after the earlier disappointing ventures with the expensive UMTS licenses in Italy and Germany.

Beyond the impeccable execution of Telefonica’s top management, I have my own theory of what contributes to Telefonica being the biggest Spanish multinational: its people.

For years the telecom engineering schools in Spain have attracted the best students, with the promise of a secure job in a promising sector in a country where unemployment rates had 2 digits for decades, before construction boomed fuelled by the now bursting bubble.

For years telecom engineers in Spain, telecos, had a reputation of bright intelligent people. Telefonica has been the top choice for telecos, ahead of other multinationals like Alcatel, Lucent, Ericsson or IBM and HP. Talent well managed always pays back. Well done Telefonica! Good job Mr. Alierta!

Disclaimer: I am Spanish and teleco, so I could be biased 😉

Netbooks, Moore’s Law And Which New App Will Come for Rescue?

eeepc

The rise of Netbooks, of which 21 million units* will be sold in 2009, may put in jeopardy the progression of Moore’s Law, as netbooks cannibalize sales of laptops. As a result of Moore’s Law, the price of a mid-range PC has not changed much since long, but every year the power of the machine you buy doubles the one available a year before. This exponential growth in performance can be easily tracked in the amount of storage that you get each year for a $25 SD card (8GB in 2008 vs 4GB in 2007) or for a $100 hard drive (1TB in 2008 vs 500GB in 2007). For microprocessors the rule is shifting from doubling clock speed, to doubling the number of cores every 12-18 months. This geometrical progression results in a laptop in 2018 with 256 cores and 32 TB solid-state drive.

Nebooks are driving Moore’s Law in a different direction. A Netbook has the power of a PC of 3-4 years ago, just at a fraction of the cost. And the reason netbooks replace laptops is that they can run the same basic applications that most people use: web browsing, email, writing docs or Skype. Although conceived as an ideal second ultraportable computer for road warriors, netbooks could become the prime PC for basic use in the office and at home for many in these times of recession.

Software, and in particular Windows, have driven the evolution of the PC hardware with “hungrier” software versions every few years. But Vista failed to bring any breakthrough features compared to Windows XP, and netbooks are benefiting from that.

What do software developers have in their roadmaps that will need 256 cores in ten years? Video editing, media encoding or photo processing software need powerful CPUs, but unless the future bring us an OS with disruptive user interfaces with 3D virtual reality, HD, plus voice and gesture detection, it is difficult to imagine why we will need 256 cores in a laptop or desktop PC.

What is sure is that Multi-Core CPUs fit nicely with server virtualization, and that will make data centers which host the cloud more cost-efficient. The demand for multi-core processors for servers will sure drive the CPU market, but will it be able to do it at the same pace as desktops were doing before? If we are to believe in the success of the cloud, not only the value is shifting from the OS to the Cloud, also the demand for stronger processors is.

We could well end up in 2018 with 256-core servers in the data centers and ultra small low-cost dual-core devices in our pockets connected to the cloud.

* The Economist: Less is Moore

Update:
Intel could report soon the first quarterly loss in 21 years. Even if they say Atom margins are similar to those of the high-end processors, there is always the doubt if cannibalization has anything to do with the loss. On the other side AMD says they will not address the market for netbook processors, instead putting all eggs on the high-end CPUs that will power cloud servers. Will we see the 256-core CPUs somewhere else than in servers?