Monday, December 31, 2007

2007 Top Ten: Technologies to Watch

My picks are telepresence, femtocells and Docsis 3.0

2007 Top Ten: Technologies to Watch
December 28, 2007, Light Reading

There's no point in dwelling on the successes and failures of the past for much longer. It's time now to look ahead at some of the technologies our editors think will be white hot in the coming months:

10. GPON and WDM PON

Carriers are already starting to look beyond GPON to WDM PON. Neither will be deployed in a large scale next year, but the pursuit of both will have a significant impact on the kinds of services that start to capture attention. That said, BPON works well enough for some carriers, so we expect the GPON rollouts to be slow and WDM PON rollouts to be a novelty. Still, the influence those technologies have on services that startups begin to build will be huge.

9. Docsis 3.0

2008 just may be the year we finally see cable's answer to fiber-to-the-home, Docsis 3.0, show up in real live networks. And not a moment too soon, either. Investors are starting to fear that the telcos can't be caught by cable in the bandwidth race. Comcast Corp., the largest cable operator in the U.S., has seen its stock fall more than 35 percent this year alone.

8. Cable Bandwidth Tools

As customers demand more and more HD content, cable MSOs are coming up with creative ways to squeeze as much bandwidth as possible out of their networks. Some of these methods include switched digital video, node splits, and advanced compression techniques.

These technologies will also be of interest to AT&T Inc.. Ma Bell has been criticized for going with a slower FTTN (fiber to the node) architecture for its new U-verse service that supposedly won't be able to handle future bandwidth demands. But AT&T has been maintaining all along that bandwidth tools such as encoding and compression will help it meet whatever demands get thrown its way.

7. Telepresence

What we used to call video conferencing is getting a fresh coat of paint thanks to more reliable IP connections and better video technology. Teliris , way back in the 90s, first started deploying the technology that is supposed to make people thousand of miles away feel as if they're in the same room as you. This year, Cisco Systems Inc. and Nortel Networks Ltd. have come up with their own telepresence kits as well. These setups are costly, but we're getting closer to that feeling of being on the deck of the Enterprise in Star Trek.

6. WiMax Devices

The initial deployments of WiMax handsets will be something worth watching, but so will the costs of these devices. With the first generation of WiMax mobile phones set to hit the U.S. in 2008, some analysts are predicting that certain models could cost as much as $1,500. That's not cheap, but if the technology truly works, demand could hit its stride late in '08.

5. Femtocells

Femtocells, the wireless (cellular) home base stations, are expected to hit it big in 2008. Sprint Nextel Corp., in fact, is rumored to be trialing the biggest femtocell project of them all. What's the business case? Well, we'll see. But we do think that the technology could be significant in saving operators from having to upgrade wired connections to hard-to-reach homes.

4. Saeco Talea Touch

Again, we go a bit off topic, but we have to pause here to say that the Saeco Talea Touch simply seduces every coffee drinker in its path. The fully automatic coffee machine features aesthetically pleasing chrome titanium accents and an inviting user interface. A statement in modern coffee technology, the Talea Touch takes no prisoners -- it only takes five minutes to prepare that daily caffeine fix for your pathetic addicted soul. You'll be turned on the very instant you see it. The only question is, will you return the favor?

3. Bendable fiber

Fiber-to-the-home as a technology made major strides in 2007, but getting fiber directly to the millions of people who live in apartment buildings, other multiple dwelling units (MDUs), or the island of Manhattan, has proved to be a big headache due to the cable's signal loss that results when being bent. Corning Inc.'s new Clear Curve technology could help carriers achieve major MDU gains in 2008. The new fiber can be bent around corners with virtually no signal loss, making it much easy to deliver FTTH services in places that aren't usually fiber-friendly.

2. Provider Backbone Transport (PBT)

Call PBT controversial all you want, but the disruptive new flavor of carrier Ethernet was one of the most talked about new technologies in 2007. In 2008, it could end up being one of the most widely deployed. Some vendors claim that every Ethernet RFP they're seeing from the carriers has some form of PBT in it. That doesn't guarantee PBT will get deployed or will be the star of the show, but it indicates how keen carriers are on keeping Ethernet connections low cost and easy to manage.

1. Packet optical

The market for packet optical switches arrived in 2007, but it won't have a financial impact on vendors and carrier networks until 2008. These transport devices, packed with Sonet/SDH, wavelength switching, and connection-oriented Ethernet, are getting interest from Verizon Communications Inc. and other carriers, as they look to cram more types of traffic on Sonet networks and deliver packet-based services, too. Heavy Reading's Sterling Perrin says the packet optical market could find its way to $1 billion by 2012. Given that the market's just getting going, we expect some big packet optical developments in 2008 to help that figure along.

Monday, December 24, 2007

India Telecoms Update @ Nov07

India Telecoms Update @ Nov07
  • 8.22 mn sub adds taking total 264.8 mn
  • 8.32 mn wireless adds taking total to 225.5 mn
  • Overall teledensity @ 23.2%
  • Broadband subs base upto 2.9 mn

Mobile WiMAX certification programme open – standard set to drive uptake

To term LTE as being several years behind Mobile WiMax is definitely not accurate. In my opinion, the traction today clearly lies with LTE and its slated to become the predominant mobile broadband standard. Easier (faster and cheaper) evolution from existing 3.5G networks and greater device traction weigh strongly in LTE's favour.

Intel's WiMax push and integration of related chipsets with consumer electronic devices like laptops would definitely provide some impetus to mobile WiMax.

Mobile WiMAX certification programme open – standard set to drive uptake
20/12/2007 - by Andrew Beutmueller, Telecom TV

Mobile WiMAX, long the neglected waif of the wireless world, took one Cinderella-like step closer to the ball yesterday with the announcement by the WiMAX forum that certification testing is to begin immediately and will closely be followed by shipment of certified mobile WiMAX products "in early 2008".

The WiMAX Forum, organised specifically to certify and promote the “compatibility and interoperability” of IEEE 802.16/ETSI HiperMAN standard broadband wireless products, has invited vendors immediately to submit their 2.3GHz and 2.5GHz Mobile WiMAX technology for testing at the organisation's lead certification laboratory at the Centro de Tecnologia de las Comunicaciones, or the AT4 wireless complex (formerly CETECOM) in Spain.

"This important milestone in our WiMAX Forum certification programme culminates years of development of our certification process and signifies the success of the WiMAX ecosystem's progress and market lead relative to alternative mobile broadband technologies such as LTE which are several years behind WiMAX technology," says the president of the WiMAX Forum, Ron Resnick.

Mr. Resnick adds, "The beginning of Mobile WiMAX certification enables our member companies to deliver on their business commitments, and, ultimately, moves WiMAX service
providers closer to bringing the mobile broadband Internet experience and new applications to consumers around the globe next year."

And just in the nick of time, say analysts who are predicting a Mobile WiMAX boom over the next several years. For example, UK research house Juniper estimates that WiMAX 802.16e mobile technology will be supporting 80 million subscribers within the next five years.

Howard Wilcox, the author of the Juniper report says, "We are seeing more and more Mobile WiMAX 802.16e trials and network contracts … in all regions of the world.”

Mobile WiMAX also received an important technical nod of approval from the International Telecommunication Union (ITU) back in October when its Radiocommunication Sector (ITU-R) endorsed the WiMAX Forum's version of IEEE Standard 802.16 as an IMT-2000 technology within the 2.5-2.69 GHz band.

Howrd Wilcox of Juniper comments, “Mobile WiMAX will represent a single digit proportion of the global mobile broadband base by 2013.

This will be a tremendous achievement for this new technology platform which has recently been boosted by the ITU's endorsement of it as an IMT2000 specification.

The Juniper report also points out that Mobile WiMAX service revenues will exceed US$23 billion per annum by 2013 in the top markets for the technology, that is, the US, Japan and South Korea.

The proliferation of very low cost laptops, and other broadband-capable portable comms devices including smart phones, MP3 players and games consoles will further drive the demand for mobile WiMAX infrastructure.

Dr. Hyun Pyo Kim, the director of WiBro planning for Korea Telecom says, "In Korea, WiMAX technology is the cornerstone of our mobile broadband deployment. Today, with more than 100,000 active Mobile WiMAX users and 410,000 subscribers projected for 2008, the availability of WiMAX Forum Certified mobile equipment will enable us to significantly expand our customer base and mobile broadband service offerings."

Four more certification laboratories are set to open in the US, Taiwan, China, Indian and Korea that will further enable the commercial launch of certified Mobile WiMAX products submitted for conformance and interoperability testing.

"Certification facilitates Xohm's model for open access," says Barry West, the president of Sprint's Xohm Business Unit. he adds, "We applaud the WiMAX Forum for this important and timely step, which will encourage device innovation in anticipation of Sprint's WiMAX network launch in the U.S."

The WiMAX Forum estimates that more than 300 operators in over 65 countries have deployed Mobile WiMAX pilots and trials.

Skype's 'Make-or-Break Year'

Finally EBay gets moving on Skype. With its phenomenal 246 million registered user base, a quarter of whom are active users, its a shame the EBay hasn't been able to monetise it effectively till now.

Beyond current voice and IM, would EBay also look to Skype as an online purveyor of digital content or would it look at building it as a social networking asset or a mash-up and would it weave in advertising ? Its all currently open to debate and I hope EBay finally has a plan !

With social networking being the kind of dial tone for the next generation, my vote is clearly for leveraging Skype to create social assets. Whats also clearly missing in the SN domain today is integration of IM+VoIP capabilities (apart from the recent Skype and MySpace deal) and thats where Skype holds tremendous value with its user base rivaling the likes of MySpace and Facebook.

Skype's 'Make-or-Break Year'

EBay may be more apt to sell the online phone service if new initiatives, including a digital-content push and a potential social network, aren't successful

by Olga Kharif, Businessweek

Still smarting from the indignity of having its value slashed by $1.4 billion, Skype now is grappling with a growing list of customer complaints about its popular Internet phone service and speculation eBay may be looking to unload the business.

Skype users are complaining on blogs of long waits for customer care. The loss of a vendor agreement forced 8,000 customers with local London phone numbers for their Skype service to change those numbers. And then there was the debacle in August, when the service went down entirely for several days. And most important, customer minutes of use are expected to be flat or lower this year compared with 2006.

The news has been so discouraging for so long that some wonder whether eBay might be ready to throw in the towel and sell the lemon it bought for top dollar in 2005. The whispers are that eBay has shopped Skype to Google, News Corp., and Yahoo!. Yet sources tell that eBay may want to tinker a while longer to make Skype pay off.

Skype Strategy

It's easy, of course, to see how Skype could be an asset to a company such as Google. For example, Skype might fit well as a mobile service on the new Android software platform Google's developing for cell phones. And since it's already interoperable with Google Talk, Skype and its tens of millions of active users could help turbocharge the online chat service, which has yet to build a strong following. But eBay may not want to give a competitive advantage to its bitter rival, whose Google Base and Google Checkout services seek to bite into eBay's bread-and-butter auctions and PayPal online payment business.

More important, the true integration of Skype into eBay's business may be just beginning. In October, eBay Chief Executive Meg Whitman promised to increase investment in Skype in 2008. And the bottom line is turning the corner: Third-quarter revenues nearly doubled to $98 million in the past year, and the business is expected to show a full-year profit for the first time in 2007, easing the drag on eBay's results.

In fact, the auction giant suddenly finds itself free to tweak Skype's strategy substantially for the first time since the $2.6 billion acquisition. Skype's two principal founders left their strategic posts in a recent reshuffle, clearing the way for new management. And until October, when those founders and Skype's early shareholders accepted a final half-billion dollar payment, the business was keenly focused on user and revenue targets set in the buyout to pay them up to $1.7 billion in extra rewards.

Digital Frontier

Now that Skype no longer has to worry about those metrics, people familiar with eBay's plans believe the new management may drastically alter its course once a new CEO is named. It may refocus on improving the user experience, fostering Skype's community of users, and creating more ties-in with eBay's other units—a prevailing rationale the company stressed when acquiring Skype. Many people close to Skype believe eBay may wait to see how this new strategy works out before putting up a "for sale" sign.

A new version of Skype's software, due in early 2008, may contain a number of innovative features that could, finally, demonstrate Skype's strategic importance to eBay. One project in the works, says a person familiar with Skype's plans, would allow eBay—one of the Web's top purveyors of physical goods—to sell digital content. With 246 million registered users, about a quarter of whom use Skype regularly, the Internet phone service provides a plum base of potential customers for music, video, and software downloads.

Skype also is looking to add more premium voice offerings such as Skype Extras, which allows users to get translators for phone conversations and tutoring in other languages. Future applications may include carrying calls between a psychologist and patient, or between technical support and clients, says an insider. The voice push also includes a new Skype-brand cell phone (, 10/18/07), introduced recently in Asia, Australia, and Europe, that the company hopes to distribute through smaller wireless carriers around the world.

Social Rivalry

More social networking features are in the works as well. Analyst Jon Arnold of telecom consultancy J. Arnold & Associates suggests eBay could parlay Skype's huge user base into a social network rivaling MySpace and Facebook in size. The service already offers video-calling and messaging functions that lend themselves well to social networks, as evidenced by Skype's new integration deal with MySpace.

More such deals are expected. Research from consultancy Parks Associates shows that 7% of social networking participants also use services like Skype daily, and a third make Web-based phone calls at least once every few months. "It's a smart play to integrate voice into social networks," says John Barrett, an analyst at Parks. "The social network is kind of the dial tone for the next generation."

With so many strategic balls in the air, Skype's future as part of eBay will hinge largely on the success of these initiatives. Says Scott Sleek, an industry analyst at consultancy Pike & Fischer: "This is really going to be a make-or-break year."

Sunday, December 23, 2007

How to Build a Winning Team

How to Build a Winning Team

Guest columnist Nikos Mourkogiannis says a group's success ultimately depends on its balance. He offers a simplified framework to get the right mix

by Nikos Mourkogiannis, Businessweek

What does it take to put together a winning team in business?

Volumes of articles and books have been written on the topic over the years, offering advice on how to avoid the dysfunction that often renders teams ineffective. We have all been part of groups that failed, either because of hidden agendas or personalities that didn't quite mesh.
In my experience as an executive and a consultant, I've come to believe the personal style of team members has the greatest influence on a group's success. More important than any technical skill a team member brings is the ability to work closely together, free of backbiting and political maneuvering. The key is having the right mix on your team.

The Four Types of Employee

By and large, there are four archetypes of people in companies: magicians, warriors, sovereigns, and lovers. You can easily define them using the Jungian framework introduced by psychologist Robert Moore and mythologist Douglas Gillette.
  • Magicians - They are the rational yet imaginative souls in your organization. They think a new idea or insight is the only thing that can move the world. In truth, they're obsessed by ideas. Their answer to feeding the troops is to pull a rabbit out of a hat. These types of people think a mere argument over an idea equals action.
  • Lovers - For them, everything comes down to human relations. They're pragmatic but emotional. They focus on building the winning coalition. They are obsessed not by ideas but by feelings. They consider agreement an action.
  • Sovereigns - They are the emotional and imaginative types. They focus on the big picture and judge everything on whether it leads to where they want to go. They redefine what people consider is possible. They are obsessed by beliefs. And they consider direction a form of action.
  • Warriors - They are rational and pragmatic. They're focused on the next battle and can only see clearly what's directly in front of them. They hold people accountable to systems and the fairness of those systems. They're obsessed by facts. For them, action is finding the critical factor to get something immediately accomplished.
Apple's Steve Jobs is clearly a magician. Watching him introduce a new product on stage is like watching a master magician pull a rabbit out of a hat. Microsoft's Bill Gates, with all his competitive juice to dominate his industry, is a warrior. IBM's Tom Watson, who plastered the walls of Big Blue with "Think" signs, was a magician. Could anyone think of GE's Jack Welch as anything other than a warrior? Indeed, one of the most fascinating campaigns in all of business is the attempt by Welch's successor to transform a warrior company like GE into a hothouse of ideas. Jeff Immelt, whose "imagination at work" vision for GE is an extreme departure from the Welch years, will have a hard time of it without more magicians on his senior team.

Maintaining the Balance

Obviously, this framework is a simplification, but there are logical implications for any leader assembling a team. The most effective teams maintain a balance by having a healthy variety of types in key roles because each type is good at doing different things. A mix of magicians, warriors, lovers, and sovereigns will get you the best team possible.

When one type dominates, friction and conflict can occur: a fall-off of creativity, a lack of flexibility, risk aversion, and paralysis. That's why the most effective leaders know who they are and surround themselves with people who complement their strengths and offset their weaknesses. The warrior needs a magician, a sovereign, and a few lovers. What often happens in organizations is you get a group of warriors, and they don't like the magicians so you don't have any of them on your team.

Clearly, there is beauty in balance. That is the place where individual team members become more sensitive to each other's needs. Too many magicians and your team will be pondering opportunities all the time, but will lack decisive action, even though the thinking will be excellent. Why? Because magicians are more concerned with having it done "right," rather than having it done. They're especially vulnerable to pursuing superior technology at the expense of something that customers would buy. And a group of them in a room will look more like a debating society than a high performance team. Too many lovers and you have another set of problems. These employees value consensus to the detriment of results. They hold far too many meetings. They do too much talking and not enough acting. The lover excessively relies on outside advice and often appears to lack both competitiveness and edge.

The Right Mix for Your Team

Too many warriors, on the other hand, will experience difficulty if anything in the environment changes. They won't be proactive and will consequently miss opportunities competitors may exploit. They appear as a parade of soldiers, and they can be innovation-challenged. Too many sovereigns will often pull an organization in too many directions at once, or will radically change direction often. Sovereign-dominated teams will have no center of gravity and will keep many unresolved business issues up in the air all the time. They appear fragmented, with poor communication, and they often struggle with strategy and direction.

That said, some companies require a predominance of one type or another to effectively pursue certain strategies or values. Magicians are the best fit for innovation-based companies in which discovery is crucial to success. Warriors are ideally suited for highly competitive environments that demand a conquering-the-world mindset.

Do you have the right mix on your team?

With Richard Rawlinson and Simon Gilles, vice-presidents at Booz Allen Hamilton.

Thursday, December 20, 2007

Google builds Wiki rival

Interesting development and increasing evidence of the Googlisation of our world. Biggest difference vis-a-vis Wiki are :

- Plans to link articles with their authors, including a photo of the writer next to each piece and ;
- Not allowing other people to edit or change, whereas more than eight million articles on Wikipedia are constantly updated, not only by anonymous users, but also by a network of dedicated editors

The business model continues to remain advertising.

Google builds Wiki rival
by Leila Makki and CommsDay, TelecomTV

Internet search giant Google has announced the construction of an encyclopedia project to rival Wikipedia that lets people write entries on any topic. The project, "knol," which is currently in the beta phase and available "by invitation-only", stands for 'units of knowledge'.

“Our goal is to encourage people who know a particular subject to write an authoritative article about it,” says vice president of engineering, Udi Manber in a Google blog post. “There are millions of people who possess useful knowledge they would love to share, and there are billions of people who can benefit from it.”

The wiki project seeks to emulate the user-contributed Wikipedia online encyclopedia, but with a couple differences. Google plans to link articles with their authors, including a photo of the writer next to each piece.

The company says, "We believe that knowing who wrote what will significantly help users make better use of Web content. Books have authors' names right on the cover, news articles have bylines, scientific articles always have authors; but somehow the Web evolved without a strong standard to keep authors names highlighted."

Moreover, Google will allow users to rank and review the knol entries, which will then be used by Google’s search engine to display the results in ranked order.

Another difference from Wikipedia is that California-based Google will not allow other people to edit or change knols, whereas more than eight million articles on Wikipedia are constantly updated, not only by anonymous users, but also by a network of dedicated editors.

Moreover, where Wikipedia is non-profit organisation solely dependent on donations, Google expects to monetise the free service by placing advertising in selected articles. The search engine giant plans to share revenue generated by the adverts with the authors.

As usual, what goes around comes around and so even as Google moves into online encyclopedias, Wikipedia is developing a search engine to compete with Google. This September, the founder of Wikipedia, Jimmy Wales announced he is launching a new search engine called; Wikia Search that rather than using algorithms to do the ranking of web sites, it will be done by people!

Wales believes that human beings have better “editorial judgment” than computers in choosing which websites are most relevant in searches.

He says, “If you consider one of the basic tasks of a search engine, it is to make a decision: ‘This page is good, this page sucks.’ Computers are notoriously bad at making such judgment, so algorithmic search has to go about it in a roundabout way."

Wikia Search too is looking to turn a profit by featuring advertisements on search pages. It reportedly has the financial backing of, Bessemer Venture Partners, and the founder of eBay, Pierre Omidya.

Friday, December 14, 2007

Mobile Ads: Not So Fast

Ads on cell phones have long been hailed as the next big thing but most analyst forecasts are way too rosy and it will take more time for the industry to learn, mature and grow.

Advertisers are just now testing and learning. That testing could take a while: After all, it took advertisers 10 years to dive with both feet into a medium called the Internet.

It's also too early, though, to say whether networks and phones will become open enough to facilitate a mobile ad boom any time soon.

Mobile Ads: Not So Fast

Mobile advertising revenues aren't growing as fast as expected, and that could spell trouble for a bunch of venture-funded startups

by Olga Kharif, Businessweek

Ads on cell phones have long been hailed as the next big thing. But flipping through industry forecasts, Didier Kuhn says, "I don't believe the figures I am seeing." And he doesn't mean that in a rah-rah kind of way.

Kuhn, CEO of a mobile advertising company acquired by Microsoft in May, views most analyst predictions as way too rosy.

Gartner expects $11 billion in global revenue from ads on mobile devices by 2011, up from less than $1 billion a year now. Strategy Analytics sees an even bigger $14.4 billion revenue pie by then, accounting for a fifth of all online ad spending. These forecasts are "incredibly steep," says Kuhn, relieved that his company, ScreenTonic, has Microsoft to watch its back as the market develops. "It will take slightly more time for the industry to grow."

Wireless Carriers: Not So Eager

Mike Baker, vice-president in change of Nokia's ad business, also sees a longer wait, suggesting it will take at least five years for the industry to surpass $10 billion in annual revenue. "The near-term visibility is cloudy," he says.

Realistically, no matter how often you see people checking e-mail on a BlackBerry or surfing the Web on an iPhone, the vast majority of consumers are just beginning to use their phones for functions, other than calling, that are conducive to ads. Today, only some 16% of U.S. wireless users access the Web on those devices at least once a month, according to JupiterResearch. It doesn't help that the U.S. economy is being buffeted by the mortgage crisis and housing slump.

Wireless carriers, meanwhile, have been slow to embrace ads, fearful their customers will be driven away by floods of text-message spam or banners and pop-ups crowding such a tiny screen. As a result, only 10% of nearly 2,000 Americans surveyed by Jupiter earlier this year said they'd ever received a text message from a business. "Advertisers are just now testing and learning," says Baker. That testing could take a while: After all, it took advertisers 10 years to dive with both feet into a medium called the Internet.

Venture Capital Spree

But despite the likely delay in a mobile ad boom, investors have been pouring millions of venture capital into this nascent business: Last month, a startup named Amobee drew funding from mobile carriers Vodafone and Telefonica. Also in November, Draper Fisher Jurvetson invested $2 million in mGinger, and Millennial Media raised $15 million from a group led by Charles River Ventures.

This rush likely was instigated in part by a series of acquisitions in the sector. In September, Nokia bought Enpocket, a provider of a mobile ad platform. In May, Time Warner's AOL unit purchased Third Screen Media, a mobile ad broker. That same month, Microsoft acquired ScreenTonic. Financial terms of these deals were not disclosed.

Startup Squeeze

Problem is, many of the big players, such as Nokia and Microsoft, have already placed their bets, so the funding and takeover spree may turn scarce for scores of other small mobile ad startups. "The technology in most of the startups isn't very different," says Baker. "I don't think there's a lot of extra value" in more purchases for Nokia. Most of the startups enable advertisers to contact users via SMS and multimedia messages. Many promise to insert ads into mobile music, video services, and mobile games.

That said, there are potential acquirers out there. Google still doesn't have the technology to serve SMS and multimedia ads onto mobile phones. "We'll continue to invest," says Dilip Venkatachari, a product management director at Google. So may traditional ad agencies and media companies that haven't yet developed a mobile play. But Nokia's Baker says many of these companies are choosing to develop the capabilities internally rather than through acquisitions.

Any unaffiliated startups will face an uphill battle competing with handset makers and the Internet giants that have already jumped into the mobile advertising market. Yahoo!, which boasts 500 million users of its online services, is now showing mobile display ads in 16 countries, working with huge carriers such as Vodafone. "For us, this is a very strategic area for the company, where we invest a lot of people and dollars," says Gary Roshak, Yahoo's vice-president for mobile advertisers and publishers.

With the market not growing as quickly as expected, "it causes a problem for the many startups because they'll need to make their cash last longer," says Baker. As such, industry insiders predict that many of them may be snapped on the cheap in a year or two.

A Google Boost?

Many of the startups reject this glum outlook, pointing to new opportunities such as Verizon Wireless' plan to open its network to more devices and services as a potential kickstart for the mobile ad business. It took about 1½ years to get U.S. wireless carriers to allow its subscribers to receive text messages bearing coupons and ringtones created with the Web site's do-it-yourself software for small businesses. If wireless networks become more open, such approvals may take less time, says Rich Eicher, president of Skycore, the company that launched CellySpace on Dec. 4.

Another possible boost may be the emergence of touch-screen devices like the iPhone, which make it easier to click on an ad, as well as phones based on Google's Android, a new wireless software platform designed to enable easier and cheaper development of mobile applications. "Clearly, more openness is going to open up more opportunities," says Paul Palmieri, CEO of Millennial Media, which delivers mobile ads for Ford and Procter & Gamble.

It's too early, though, to say whether networks and phones will become open enough to facilitate a mobile ad boom any time soon. "Right now, what we are really in is the foundation stage, trying to determine how to move into mobile advertising," says Phil Holden, a director of online services at Microsoft.

Sprint remains on track for 2008 WiMAX launch

Not the end of the road yet for WiMax in the US ?

On the WiMax devices front, based on potential application scenarios (fixed, portable), I see connection cards, internet tablets, ultramobile PCs and other consumer electronic devices becoming available.

Sprint remains on track for 2008 WiMAX launch
13 December 2007,

Despite the recent break up of its WiMAX joint venture with Clearwire, US carrier Sprint Nextel remains on track for a commercial launch of the wireless broadband technology next year.

Sprint is soft launching its WiMAX network in three markets between now and Christmas, with several hundred employees testing the network over data cards.

After initial trials in Chicago, Baltimore and Washington D.C. get under way, Sprint will expand the soft launch to more markets early in 2008, ahead of a planned commercial introduction later in the year.

Speaking at the company's analyst and investor day earlier this month, CFO and acting CEO, Paul Saleh, said that he still expected Xohm to deliver a "path to new revenue growth".
At its 7th Annual Developer Conference, which kicked off in Kansas on Thursday, Kevin Packingham, vice president of wireless product management for Sprint, said: "Each year we bring together hundreds of developers so that they have a clear understanding of the most current information on exciting products, including the latest phones and, this year, our upcoming Xohm products and services."

At the developer conference the company issued a statement saying that as part of its planned 2008 commercial availability of Xohm, "Sprint has commitments from ecosystem partners for WiMAX network access on new and innovative devices, including connection cards, internet tablets, ultramobile PCs and other consumer electronic devices."

The announcement appears to be an attempt at soothing the concerns of those companies involved in the Xohm ecosystem. The recent departure of chief executive and chairman, Gary Forsee, and the termination of obligations regarding the WiMAX build out partnership between Clearwire and Sprint have cast clouds over the future of the deployment.

Wednesday, December 12, 2007

WiMAX - India Opportunity Bigger Than the Chinese Market

There definitely exists tremendous potential for WiMax in India particularly for fixed/portable broadband access since existing landline infrastructure is limited and rather dilapidated and expanding it is expensive and time consuming.

The other potential application for WiMax in the Indian scenario is cellular backhaul.

WiMax - India Opportunity Bigger Than the Chinese Market
Cellular News, December 11, 2007

The Government of India says that it is in favour of promoting manufacturing of WiMAX equipment. This is to reduce the cost of deployment also, said Shri. R. N. Padukone Senior Deputy Director General, Telecommunications Engineering Center, Department of Telecommunications, Government of India while speaking at WiMAX Forum India Summit. He further added that the equipment devices for use of WiMAX need also to be very cost effective soon.

Telecommunications services in India are moving to the new generation networks, which is expected to provide affordable broadband connections with lots of features. WiMAX too, is expected to be an integral part of this transformation that would provide high bandwidth within long ranges from hot spots to serve the entire country by 2010. However, it was felt during the WiMAX summit that for widespread use of WiMAX in India, the licensing regime needed some changes.

"There is no doubt that WiMAX is the way forward, in case India needs to reach out to all of its population within the stipulated time frame, it needs to act now," said Dr. Mo Shakouri, VP & Chair Marketing Working Group, WiMAX Forum. According to Dr. Shakouri the way Internet was converging into communications and also making radical shift in socio-economic relations, the deployment of WiMAX would make a huge impact on the Indian economy. Already there are over 400 operators globally for WiMAX technology.

In his keynote address, Mr. Jagbir Singh, Group CTO, Bharti Airtel said, " for WiMAX to have a successful deployment in India, one of the most important factors will be the low-cost of deployment." In his key note address, he dwelt on business models that would help achieve this aim. "The Indian opportunity is much bigger then the China," added Mr Singh. Mr. Singh's point was further enhanced by A. Sethuraman, CMO, Alcatel-Lucent, who during his address elaborated upon the projects which were offering solutions for the deployment of Wi-Max in the country. He lauded the Government's move to establish over one lakh community service centres that would be the right approach for spreading broadband to rural areas. Wi-Max would strengthen this programme to bring low cost broadband to rural areas.

According to Prateek Pashine, VP - Marketing & Techology Group (Broadband & Retail Business) VSNL, currently spectrum was one of the most crucial issues. "Spectrum for WiMAX is not yet available for commercial applications," said Mr. Pashine. "The opportunity for broadband exists and wireless broadband would be very predominant for India. He pleaded for an end to the current debate over spectrum and instead pointed towards a situation wherein more spectrum is made available for broadband services throughout the country.

Tuesday, December 11, 2007

Bharti, Voda-Essar, Idea To Merge Tower Assets Under Indus Towers

Valuations roughly translate to ~ INR 20 million ($0.5 mn) per tower. Cost to create a similar asset is roughly less than half that.

Bharti, Voda-Essar, Idea To Merge Tower Assets Under Indus Towers
Business Standard

This could be possibly the way to go forward in telecom infrastructure business and create wealth for all stakeholders. Three leading GSM operators, Bharti Airtel, Vodafone-Essar and Idea Cellular, have joined hands to set up an independent tower company called Indus Towers. Bharti and Vodafone- Essar will each have 42 per cent stake in the new company, while Idea Cellular will have 16 per cent stake, says a report in Business Standard.

The three companies will merge their existing passive infrastructure, including towers, in 16 telecom circles. The report says, quoting sources, that the capital investment in these towers will be to the tune of over Rs 35,000 crore and the enterprise value of the new company will be around Rs 150,000 crore ($37.5 billion).

Indus plans to scale up the number of towers to around 200,000 towers in the next two to three years. The new company will control around 60 per cent of the over 120,000 towers in the country. This makes economic sense as laying towers by every telco will just lead to duplication and not wealth creation.

Bharti Infratel, the infrastructure company of Bharti Airtel, has a presence in 23 circles with around 50,000 towers. The company will transfer its passive infrastructure assets in 16 circles (30,000 towers), while it will run the business on its own in the seven remaining circles (20,000 towers), the report adds. Idea Cellular has transferred around 10,000 towers in nine out of the 11 circles that it operates in and Vodafone-Essar has merged its entire infrastructure (30,000 towers) in its 16 circles.

Reliance Telecom Infrastructure Ltd had sold 5 per cent equity to seven investors for Rs 1400 crore ($337.5 million), valuing the company at Rs 28,000 crore. It controlled about 13,000 towers then.Indus Towers stands to gain with the support of three major players as other independent companies like Amercian Tower Corporation and Global Tower are looking to set up shop in India.

Upheaval in India's Mobile Market

Add the spectrum tangle and the India market provides a heady mix !

Upheaval in India's Mobile Market
Unstrung, December 10, 2007

It's been a busy few days in India's mobile market, with Bharat Sanchar Nigam Ltd. (BSNL) , Vodafone Essar , Bharti Airtel Ltd., IDEA Cellular Ltd. , Nokia Siemens Networks , and Reliance Communications Ltd. at the heart of the action.

Nokia Siemens spurns BSNL deal

After months of negotiations, Nokia Siemens has decided not to become one of the major GSM infrastructure suppliers for BSNL's massive network expansion project.

The vendor had been offered a contract worth around $875 million to supply GSM equipment for 9.63 million new mobile connections, but it has walked away from the deal because the terms were financially unfavorable.

"The pricing and terms and conditions were such that we do not see this opportunity as a sustainable one," says the company in an emailed response to questions.

Nokia Siemens is looking for ways to increase its margins after a difficult first seven months of operations -- taking on the BSNL deal, while adding to the top line, would have put pressure on the company's financial strategy.

Now BSNL, India's fourth biggest mobile operator with more than 31 million subscribers, needs to place the order elsewhere. Ericsson, which has already struck a deal to supply the carrier with equipment for 13 million new GSM connections, was one alternative, but has reportedly turned down the offer.

Whereas Nokia Siemens couldn't identify any profit potential from the deal it was offered, Ericsson's scale could have made an extension of its existing contract attractive, according to analysts at Dresdner Kleinwort .

However, capacity was always going to be an issue for Ericsson. "Given the enormity of emerging market wireless demand, Ericsson's greatest challenge is not to find new customers but rather to allocate its resources in the wisest of fashion," stated the Dresdner team in a research note.

Carriers for mobile tower venture

Three of India's GSM mobile operators, Vodafone Essar, Bharti Airtel (through its subsidiary Bharti Infratel Ltd., and Idea Cellular, have formed Indus Towers, an independent company that will provide mobile tower sites and services to all operators "on a non-discriminatory basis."

Bharti, one of our Top Ten: Emerging Markets Carriers, and Vodafone will each own 42 percent of the company, and Idea the remaining 16 percent. Bharti is India's biggest mobile carrier, with nearly 51 million customers, while Vodafone Essar is in second place with more than 37 million. Idea has nearly 20 million customers.

The partners say this is a "major step towards achieving the Government’s vision and TRAI’s recommendations for passive infrastructure sharing and will create a lower cost and more competitive operating environment for mobile operators in India."

Previously, Vodafone signed an agreement with Bharti Airtel to share around 70,000 mobile towers in order to speed up network rollout in rural and suburban areas.

Those towers, plus other assets, will be folded into the new company, which will now build out new tower sites in 16 of India's 23 telecom "circles" (geographic markets).

Analysts at Dresdner believe a further 30,000 tower sites will be developed, and that the move will free up capital expenditure that can now be used to buy more network equipment.

India is one of the fastest growing mobile markets in the world. According to the latest statistics (end of October), the country has more than 216 million mobile subscribers, with more than 7 million new accounts being signed up each month.

Reliance ready to expand

CDMA operator Reliance has taken delivery of its new, nationwide GSM license, and is set to extend its GSM network beyond the current eight circles in Central and Eastern India across the whole country, adding 70 million lines of new capacity.

The carrier, currently the country's third largest mobile operator with about 5.1 million GSM subscribers and more than 32 million CDMA customers, received government approval for its expansion plans in October.

Now the race is on to see which vendors can land the network expansion contracts. Reliance began inviting bids a year ago, with local reports valuing the project at $7 billion, though that figure has been modified to around $5.7 billion. The carrier is believed to have received RFP responses from Alcatel-Lucent, Ericsson AB, and Motorola Inc.

Saturday, December 08, 2007

A Rural Health Clinic in a Box

The bold aim here is to transform, through technology, the cost and delivery of health care to India's villages.

Apart from providing much needed services to villagers, the developed diagnostic kit helps city doctors manage remote virtual clinics.

From my experience of having spent a lot of time in rural India across multiple states, there is a virtual absence of any medical infrastructure there. Individual medical practitioners with suspect qualifications and experience and ill equipped private clinics in the nearest town is the best that's available to the rural diaspora.

And thats where the huge opportunity lies with over 70% of India's 1.1 bn population residing in rural India.

I see a number of opportunities here for mobile services to aid and facilitate this :
  • Providing backhaul via the cellular network for reports generated by the diagnostic kit to subsequent prescription in turn for example by sms
  • Clicking and sending pictures off the mobile terminal of affected body parts for example for examination and prescription by appropriate doctors in some urban location
  • Centralised patient records database which any doctor has access to even via sms for a charge as folks in rural India typically have access at best to small medical practitioners and clinics who typically don't maintain records of patient medical history
  • Check-up and medication reminders via sms
A Rural Health Clinic in a Box

Indian business Neurosynaptic Communications brings health care to the country's poorer citizens with a portable diagnostic kit

by Nandini Lakshman, Businessweek

Nestled among residential homes on a quiet, leafy street just steps from Bangalore's busy BTM Ring Road stands the single-story office of Neurosynaptic Communications. The five-year-old company still has the feel of a startup: bare red and yellow walls, empty desks, and 20 or so young techies huddled over their PCs in the research and development lab.

The simplicity of the office is deceptive. Neurosynaptic's product is sophisticated and hugely ambitious. The company's bold aim is to transform, through technology, the cost and delivery of health care to India's villages. It's done through a portable medical diagnostic kit the size of a boom box. Priced at an estimated $300 the kit performs five key tests, including blood pressure, temperature, and even an electrocardiogram, and relays the information from rural settings to top city hospitals via computer. The cost per exam: anywhere from 38¢ to 63¢, compared with $5 for an electrocardiogram alone from a doctor in town.

The pioneer of this unique device and service is Sameer Sawarkar, a slight, soft-spoken, 35-year-old former signal processing and embedded systems expert at Motorola. His portable kit—which also contains a digital stethoscope and can check pulse rates—is specifically built for use by the village paramedic who goes door to door doing regular checkups and making emergency calls to locals.

Beyond India's Borders

The patients visit local multimedia kiosks which are profliferating across Indian villages - where the tests are performed and the results transmitted to an affiliated doctor or a city hospital via a computer connected to the Internet. The doctor then diagnoses any problems and recommends medication via video conferencing, all at the kiosk. Sawarkar says "[It's] not mandated only for villages, and we see a huge untapped market" for the product in urban areas, and elsewhere around the world.

So far, 70 kits have been distributed globally, and the response has been heartening. In India, seven of the kits are already in use in villages in the south and west Indian states of Tamil Nadu and Maharashtra. The kit has export value too. Recently, Sawarkar visited San Francisco to seek nonprofits willing to distribute the kit. And other developing markets like the Philippines, Tanzania and Latin America are natural cutomers for his "virtual clinic" kits.

It has been a hard slog for Sawarkar, who began his journey five years ago. After earning a master's degree in electrical communications from the prestigious Indian Institute of Science in Bangalore, Sawarkar landed a research job with Motorola.

Venture Capital Boost

But driven by his childhood experiences, he always wanted to start his own company. With scarce healthcare available in his childhood village of Amravati in Maharashtra, he decided to do something about it using his knowledge of technology. With a buddy and fellow engineer from Motorola, Rajeev Kumar, Sawarkar toiled to prove that by using technology, health care could be delivered to the poor at an affordable price.

Lacking focus at first, Sawarkar and Kumar burned through ambitious ideas such as creating new virtual limbs for the disabled and bringing sight to the blind with vision sensors. But in 2003, they received $177,000 in seed money from a local venture capital fund and the Telecommunications and Computing Networking Group (TeNeT), the innovation arm of the Indian Institute of Technology in Madras. TeNeT advised Sawarkar to look for technology that was more down to earth, sustainable, and mass-produced.

That led to the idea of a portable diagnostic kit—and now that product could be the beginning of a breakthrough in health care around the world. Apart from providing much needed services to villagers, it helps city doctors manage remote virtual clinics.

Filling a Health Insurance Gap?

And the need is great: Two-thirds of India's 1.1 billion population live in the rural heartland, and the country has no national health insurance. Those in need typically walk miles to the nearest government clinic, which is more often than not unmanned and ill-equipped to take on more than minor ailments. For Sawarkar, the goal was simple: "Every individual should get the best quality health care at an accessible place and affordable price points."

So far, about 50,000 people from 20 villages have used Sawarkar's kits. By January, there will be 25 kiosks spread across many more villages. Now the entrepreneur is joining with pharmaceutical companies to sell subsidized medicines to the villagers. And over the next five years, he wants to add pathology, eye care, cardiovascular disease, and biochemical tests to the kit. "We want to solve the common man's problems—that's the core," says Sawarkar.

Thursday, December 06, 2007

Verizon Embraces Google's Android

Growth, lowering customer acqusition costs and Google's open Android platform which will allow support for a plethora of applications were probably the key reasons for Verizon to emerge open access.

Clearly the Android system gives a lot of developers the opportunity to develop applications for a wide range of handsets

Verizon Embraces Google's Android

How Verizon Wireless learned to stop worrying and love open access. Step one: Realizing it's a way to add low-cost customers

by Spencer E. Ante, Businessweek

In yet another sudden shift, Verizon Wireless plans to support Google's new software platform for cell phones and other mobile devices. Verizon Wireless had been one of several large cellular carriers withholding support from the Android initiative Google launched in early November.

But given the stunning U-turn Verizon Wireless made Nov. 27, announcing plans to allow a broader range of devices and services on its network, Chief Executive Officer Lowell McAdam says it now makes sense to get behind Android. "We're planning on using Android," McAdam tells BusinessWeek. "Android is an enabler of what we do."

McAdam's Open-Access Campaign

Though skeptics see ulterior motives and question just how easy Verizon will make it for rival products to get on its network, the surprise embrace of an open-access model and of the Android software culminates a dramatic yearlong evolution in the company's thinking. The effort, championed by McAdam, involved meetings with the chairman of the Federal Communications Commission and late-night bull sessions with the top two executives at Verizon Communications, which owns Verizon Wireless in partnership with Vodafone.

All the while, McAdam kept focus by carrying a crumpled piece of paper in his pocket with seven bullet points defining what an open-access policy would mean to Verizon Wireless. "The paper is all wrinkled and it's got coffee stains," he says.

McAdam was more amenable to shifting gears thanks to time spent during the 1990s in Europe and Asia, where the wireless industry is more of a free-for-all. As vice-president for international operations at AirTouch Communications, now a part of Verizon Wireless, McAdam says he was impressed that European and Asian mobile carriers backed technologies that allow subscribers to switch to rivals with ease.

By contrast, Verizon Wireless has created the most profitable U.S. cellular business by tightly restricting the devices and applications allowed to run on its network. But over the past year, the company's leadership came to conclude that it was time for a radical shift. Such a move, they reckoned, might help Verizon Wireless keep growing while holding down costs.

Combating Market Saturation

When Verizon Wireless was founded in 2000, it ran 27 call centers to provide customer service. The company cut back to as few as 17 centers at one point, but the count is now back to 25, each with about a thousand employees. The company's 2,300 stores, staffed by 20,000 employees, are also costly. While workers in those stores used to spend nearly the entire day signing up new customers, now only a tenth of their time is consumed by new subscribers. Instead, the bulk of their energy goes to helping current subscribers with questions and problems. McAdam & Co. decided the business model was not sustainable. "If we get to 150 million customers, boy, that's a lot of overhead," says McAdam.

In an open-access model, though, Verizon Wireless won't offer the same level of customer service as it does for the roughly 50 phone models featured in its handset lineup. Though the company will insist on testing all phones developed to run on its network in the open-access program, Verizon plans only to ensure the wireless connection is working for customers who buy those devices. "They have to talk to their handset provider or their application provider if they have particular issues," McAdam says.

What's more, the open-access approach may enable Verizon to tap into niche markets that haven't been worth targeting. Verizon Wireless subsidizes the cost of all the handsets it sells directly to customers. Thanks to the costly process of developing phones with the likes of Samsung and LG, then testing each for hundreds of factors such as how hot the screen gets, only devices with mass appeal get the nod. "I can't go to 100" handsets in the lineup, says McAdam. "If a particular product can't generate 100,000 [purchases], it's not worth doing."

But with "outside" devices developed under Verizon's new policy, handset makers will bear most of the development costs. And because users won't be buying such devices from Verizon, the company won't be subsidizing those purchases. As a result, Verizon's network may come to support hundreds of devices, many customized for non-mass-market needs the company doesn't serve. "This allows them to add customers onto their network without having to spend as much to get them," says Todd Rosenbluth, an industry analyst for Standard & Poor's (which, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP)).

Verizon envisions a similar explosion of wireless applications. The company currently offers about 800 applications such as music, games, and videos. The menu might have been even larger by now if not for the rigorous testing that Verizon requires of each developer for every application. "Small companies have a hard time affording the development," says Greg Pelling, CEO of CounterPath, a Canadian provider of Internet calling software for Verizon Communciations and other phone companies. Google is hoping the large, open scale of its Android platform will remove that hurdle, slashing development costs. So does McAdam, who expects a flowering of tens of thousands of applications.

FCC Wireless Spectrum Auction

Verizon's conversion to open systems began last winter when McAdam, freshly promoted to run Verizon Wireless, began thinking about the implications of a federal auction of some especially valuable wireless spectrum in early 2008. At that time, Google and other tech companies began lobbying the FCC to require that auction winners allow any device or application on that spectrum. That got McAdam thinking it might be time to open up Verizon's airwaves. He batted the idea around with Chief Marketing Officer John Stratton and Chief Technology Officer Richard Lynch.

In the spring, Verizon Communications Chief Operating Officer Denny Strigl challenged McAdam to crunch his ideas down on paper. "Denny Strigl says if you can't put it on half of one side of paper, you haven't figured it out," says McAdam. "I kept playing around with it until I got it to one-third of one sheet of paper." Separately, Verizon CEO Ivan Seidenberg laid down his own challenge, urging McAdam to find ways to keep Verizon Wireless growing at a time when a quarter-billion of the nation's population already has cell phones, limiting the available crop of first-time customers.

By late summer, McAdam walked into Strigl's office on a Friday night and struck up a conversation about his crumpled paper. "Denny's eyes lit up," says McAdam. Then Seidenberg walked into the office, and after McAdam laid out his thoughts, the CEO said the open model might even help solve the growth challenge.

With a green light from above, McAdam held a meeting in October with his top managers and explained the new direction the company would be taking. Most of his staff got it, though some were apprehensive. "Others said, 'Whoa, this is a big change,'" recalls McAdam.
Jumping on the Bandwagon?

Then Google unveiled its Android platform. While Sprint Nextel and T-Mobile were among the 34 charter members of this Google-led "Open Handset Alliance," the two biggest U.S. carriers, AT&T and Verizon Wireless, were notably absent. "To get into that press release really didn't do anything," says McAdam. "We needed to understand the details of that operating system."

When Verizon executives and engineers examined Android's software tool kit, however, they were impressed. "Clearly the Android system gives a lot of developers the opportunity to develop applications for a wide range of handsets," says McAdam. Not only did the company decide to support Android, but McAdam says the new platform was a key influence in adopting open access. "Android really facilitated this move,"says McAdam.

Some critics are suspicious of Verizon's cellular glasnost, alleging it's merely trying to curry favor with regulators or scare rivals from bidding in the FCC auction. Yet there's little doubt Verizon also recognized that market demand for open networks would be impossible to hold back indefinitely. "Five years from now the industry will be open like us," McAdam says. "I think we could be at an inflection point."

Skype Out?

The Skype stats for FY07 : 200+ mn users generating ~ $300 mn in revenues

Disruptive innovations—the simple, cheap, accessible solutions that create new markets and transform existing ones—make attractive acquisition targets. The Skype saga shows how moving quickly is a critical component of making disruptive acquisitions work.

Other key reasons for the Skype disappointment :
  • Lack of a compelling standalone business model
  • Didn't replace email s the preferred mode of communication between users
  • Inability to move into lead generation
Generally speaking, companies seeking to acquire disruptive businesses need to strike before the market recognizes the disruptive potential. Once the potential is widely acknowledged, price tags can quickly soar.

Skype Out?

eBay's struggles to make its acquisition of Skype work show how moving quickly is a critical component of making disruptive acquisitions work

by Scott D. Anthony, Businessweek

Disruptive innovations—the simple, cheap, accessible solutions that create new markets and transform existing ones—make attractive acquisition targets. eBay's struggles to make its acquisition of Skype work, however, show how moving quickly is a critical component of making disruptive acquisitions work.

When eBay plunked down $2.6 billion for Skype in 2005, fans of disruptive innovation cheered. Indeed, in a 2005 analysis titled "Let Disruption Ring," we here at Innosight hailed the acquisition, praising the fundamental disruptive potential of Skype's free Internet-based telephony solution, how eBay users could flock to using Skype instead of email to communicate and the potential for eBay to use Skype to move into new businesses like lead generation.

We did raise one cautionary note: With a $2.6 billion tag, eBay was paying a pretty penny for Skype's disruptive potential. As we wrote: "eBay's acquisition might have been even sweeter if it had acted last year when Skype's price presumably would have been sharply lower."

In early October, eBay announced it was taking a $1.4 billion charge related to the acquisition. About $500 million of the charge was a payment to some of Skype's shareholders and management team, including founder and CEO Niklas Zennstrom. Zennstrom stepped down as CEO but plans to remain involved as Skype's executive chairman.

The other $900 million was an "impairment charge"—eBay admitting it simply paid too much for Skype. Even Zennstrom admitted that eBay might have "overshot in terms of monetization" for his company.

The write-down didn't affect eBay's stock—most analysts had already assumed the acquisition was overpriced—but analysts used the news as opportunity to castigate eBay's failure to find new growth as its core auction model slows. eBay has gone from one of the leading lights of the technology industry to a seemingly mature business whose stock has been essentially flat for the past four years.

Skype has had some successes over the past 24 months. Analysts estimate that Skype's revenues have grown from about $60 million in 2005 to somewhere north of $300 million this year. Skype has more than 200 million registered users (although analysts estimate only about 50 million users actually use Skype). Despite the positive developments, Skype's performance hasn't been enough to justify eBay's price tag.

What went wrong? Three of the assumptions we made when praising the acquisition don't seem to have panned out:

1. Skype has not created as compelling a standalone business model as eBay had hoped. While users around the world continue to revel in Skype's simple, cheap, convenient service, the company hasn't yet figured out a breakthrough business model to monetize that user interest. Skype calls between computers are free, meaning the majority of Skype's revenues come from charging users modest fees to call landline phones, a relatively low margin offering.

2. eBay's users were largely satisfied with the ability to communicate via email. When eBay purchased payments provider PayPal for $1.5 billion in 2002, it was the de facto payment mechanism for eBay purchases. eBay users didn't seem to migrate en masse from email to Skype.

3. eBay has been unable to move into lead generation. Two years ago one rationale for the merger was the ability for eBay to use Skype to help broker connections between consumers and local service providers, such as handymen or plumbers. Emerging providers like Angie's List and ServiceMagic have begun to generate traction in this space, but eBay has made no obvious headway.

It is possible these assumptions were just wrong. Not every acquisition or innovation turns out to be successful. While PayPal and eBay's recent $310 million purchase of ticket broker StubHub seem to be successes, by all accounts Skype looks like a disappointment.

Generally speaking, companies seeking to acquire disruptive businesses need to strike before the market recognizes the disruptive potential. Once the potential is widely acknowledged, price tags can quickly soar.

Who are some companies that got it right? Consider Cisco's 2003 purchase of home networking provider Linksys for $500 million, News Corp's 2005 purchase of the parent of social networking powerhouse MySpace for $580 million, and CVS's 2006 purchase of MinuteClinic, whose nurse practitioner based diagnostic kiosks are disrupting health care, for $175 million.

Note that these purchase prices are substantially smaller than the mega-deals that so frequently land on the front page of the Wall Street Journal. In the early days of a disruptive innovator's journey, the market is likely to undervalue its potential. Companies that develop the ability to recognize disruptors before market data makes the potential obvious can snatch emerging giants at very reasonable price points.

Returning to Skype, a final possibility is that eBay didn't put the right management team in place to realize the full value of the company. Zennstrom is a restless explorer, who also pioneered music sharing site KaZaA and emerging video provider Joost. Many times exploiting an opportunity requires a team that has different skills from the team that created the opportunity.

Don't close the door on Skype just yet. Many disruptive businesses take several iterations before they discover a compelling business model. If eBay allows Skype to continue to iterate and experiment, that winning business model—think social networking, advertising, or something that no one has yet dreamed of—just might emerge.