March 6, 2008

What splinters in the US, consolidates in China: the evolving telecom/IPTV landscape

Filed under: IPTV,US/China,Wireless — Administrator @ 5:21 pm

I just finished breezing through a recent (28/2/08) Yankee Group Research report titled “From Gorillas to Guerillas, IPTV Changes Everything” that concludes IPTV will redefine pay TV in the United States (note: you can download the report for free but just register online).

Okay, I can dig it. Sure, why not…localization is what it’s all about. But that’s not what got me thinking about today’s blog, rather it was the following snippet from Yankee:

“…phone services used to be mass market, available nationwide. IPTV creates a new market dynamic by fragmenting the services market in the US. Every market will have a different set of competitors. As a result the United States is becoming a nation of hyper-competitive micro-markets. This transition fundamentally changes the market dynamics for all service providers, forcing them to convert from centralized, dominating gorilla to small, responsive guerrillas.”

Is it me or is China’s telecom (and Internet) market going in the opposite direction? Indeed, the theme in China is consolidation (read: monopoly).

Now, consolidation is very different from offering a nationwide service, for example a company that manages a nationwide branded hotel chain (offering consistent service quality) is very different from there being only one company providing nationwide lodging facilities. The former is a good thing while that latter is not, yet the latter is what’s rolling down the pipe in China – especially, in the telecom/Internet space.

So, what do we got? Well, here are a few:

Tencent/QQ = chat
China Mobile = mobile
Shanda = games

Odds favour IPTV will go the same way. One company is going to get the lion share of the market and that company may be Tencent…or even China Mobile.

Anyhow, thought this was an interesting observation…

June 12, 2007

You say GPS hardware, I say GPS software, let’s work the whole thing out…and vertically integrate!

Filed under: Technology,Web 2.0,Wireless — Administrator @ 4:43 pm

Over the past couple of weeks, we’ve been receiving wave after wave of business plans for Global Positioning System (GPS) related ventures – not entirely sure what is driving this sudden surge in cases but there you have it. Indeed, the odds-on favourite for the number one reoccurring business theme is:

“We’re China’s leading GPS software application vendor developing navigation and Web2.0 compliant applications and in search of US$2 to $5 million”.

Coupled with each offering is a competitive analysis whereby software ventures are championed and hardware ventures trashed. Not surprising – hey man, big upside over here, give us some cash – their motivation is obvious. Frankly, it ain’t that simple of an argument– the GPS industry is evolving rapidly, outside of China, and for once, we sense that China’s GPS industry will not adopt Chinese characteristic (the way Baidu and Tencent have) – um, go back, of course there will be some localization but this will happen to the extend that Chinese characters replace English, French, etc (and the minor bells and whistles) but by and large we don’t see much room for this to happen. In its place we see vertical integration theming its way nationwide.

A casual observation of China’s GPS universe reveals definitive gaps in the pro-software argument (“hey man, big upside over here, give us some cash!”) – the “hugest” being that fact that the H.M.S. GPS has already set sail – at least, for this cycle. Quite frankly, Chinese and foreign GSP ISVs, both large and small, too numerous to count, have built (circa 1997) substantial beachheads on China’s shores – the most successful Chinese ventures (just a handful) partnered, early on, with major technology companies and telco providers, such as IBM and China Unicom which helped them go to the head of the venture funding line whereby millions of dollars have been doled out by international and local vc funds, such as SAIF, Gobi and Oak Investment Partners (sadly, Ymer was not one of them).

With fresh funding and strategic partnerships these first movers have quickly moved up the value chain, offering sophisticated navigation engines and tools, nationwide map databases, and proprietary value-add networks (e.g. highway sensors and tags relaying traffic information). Given the fact that the demand side of the curve has only started inching up the scale, it reasons that a young enterprising start-up will find it extremely challenging to increase its footprint until such a time that demand outstrips supply. If you consider that there is only one dominate (virtual monopoly) mapping company in the US (Navteq) and one in Europe (Tele Atlas) it become clear the difficult new entrants face in light of China’s well funded incumbents (Lingtu, Careland).

Those in the pro-software camp fade GPS hardware investments largely because they claim the industry is over saturated, highly fragmented and competitive environment. However, I’m a bit uncomfortable drawing such definitive conclusions when the industry in its infancy (i.e. China accounted for about 3.5 – 4% of total global unit sales in 2006) and positioned to benefit from the convergence of mobile device market, rising in-car GPS penetration, and heightened recreational use.

On the contrary, highly fragmented and competitive industries tend to be fantastic opportunities for existing players with means to control their own destiny – the idea being to identify and then inject sufficient capital in a market leader, structure a well articulated and thought-out business strategy, look to roll-up (consolidate) smaller (synergistic) competitors, build strategic partnerships with other industry leaders (vertical integration), and then throttle up your execution machine (experienced management team).

However, how many GPS hardware players are out there suitable for venture funding – the equivalent of a handful, at the most.

Even so to suggest that an investment in a GPS ISV vendor trumps a similar investment in a GPS hardware vendor (largely because of the operating environment) may be off-center and is slightly ignorant of the dominant trend playing out in the industry.

Convergence – that’s the ticket. The GPS value chain is melting and evolving – the top 5 GPS vendors (accounting for 70% of global market share) now have capabilities in software development, chipset design (e.g. Garmin) and module/end-product production/design. And therefore, it becomes rather clear that as the industry matures in China, the leaders will be GPS vendors with vertical integration know-how and capabilities (either in upstream chipset design or software navigation engines) will lead their peers in terms of both technology innovation and product positioning.

To the point, some of the most innovative GPS software solutions are developed by leading vertically integrated GPS vendors, such as TomTom’s Map Share technology. This unique mapping technology allows users to easily and instantly improve existing maps as soon as they identify changes in the road network, for example a smart interface allows users to change street names, unblock or block-off streets, identify one way streets, etc. Furthermore, as TomTom’s mapping system is dynamic, all updates are shared with TomTom’s 10 million users (i.e. community).

This is exciting stuff – the next step in further developing this community is to overlay additional information, similar to what US based community site does with localized information generated by users.

March 10, 2006

Beav, you goof, monetization of music in China ends with 3G

Filed under: Regulatory,Wireless — Administrator @ 11:03 am

Today, we received Piper Jaffary’s latest China Analyst research note titled, “Music in China – Monetization Through Mobile Platform.” While we don’t have any major issues with their thesis that “several new developments [in China music industry] suggest that monetization of music, through mobile services, is beginning,” we do want to call them out on how profitable music will be for content providers, distributors and intermediaries.

First, here are some key findings on China’s mobile music market (source: Piper Jaffary 3/06):

We estimate the Chinese mobile music market size to be approximately $200-$400 million in 2006 consisting primarily of ringtone and caller ring back tone sales.

Yet, in both the U.S. and in China, young people who will almost never pay to buy a CD or download legal copies, happily pay $5-$20 per month in the U.S and $1-$4 in China.

What [kids] are telling us and the industry is that they are willing to pay for music, but only on their terms.

Good stuff, yeah? Sure, but wrong conclusion! Kids/adults in China (and everywhere else in the world) aren’t paying for ringtones because they want to, and surely not “happily” – they pay because they have no alternative; the mobile companies control the mobile pipe, the gateway, and without paying for that mobile connectivity kids/adults would be, well, they would have talk to each other a lot more. Come on Piper, get with the game – you guys sound a bit, well, a bit square (“Gee, Beav, I don’t know?”).

This gets us to our point, finally, that content is going to be free, all content that is, the music industry as a content provider will need to own that pipe if they hope to profit from mobile sales; and the reason, moving forward, is one acronym: 3G.

What makes people believe that they can control file sharing through mobile phones anymore then they control it now on PCs? Widespread use of 3G (medium – high end users) in China is a couple years off, maybe 3 years, however we are already witnessing the proliferation of WiFi enabled phones (Dopod 818pro in the house!) and WiFi hotspots in China; we believe this makes any hope of earning a sustainable profit from music in China a pipedream (ex-our carrier friends – love that growing ARPU). And, we haven’t even touch upon “off-line” mobile P2P sharing but that’s out there, too.

For the record, so Piper doesn’t cut us off, we think the guys at Piper do a great job, it is just we don’t agree with them on the medium to long term picture of music in China.

February 17, 2006

Mobile technology allows consumers to sereach for product reveiws, prices in Japan and China

Filed under: E-commerce,Social Networks,Web 2.0,Wireless — Administrator @ 10:34 am

USAToday reports that Toshiba, a Japanese electronics company, has developed mobile-phone technology that searches for product reviews on up to 100 Web journals, or blogs, in 10 seconds.

Although, there might be issues of trust (commentary) and accuracy (data), we like this concept very much and will be following its development closely.

In the same breath, there is a small Shanghai based venture called that is backed by Dragon Venture that does something similar, however its offering focuses on price comparison.

We are not a big fan of Kaible’s model as it’s less dynamic (real time pricing) and completely dependent on the participation of merchants providing reliable, truthful data. Furthermore, we don’t see the value in it for the retailers — why would they want to reveal pricing to their competition. And finally, anyone who has shopped in China knows plenty well that haggling (over the price) between customer and clerk is more the norm than the exception – how does Kaible account for this?

(One approach might be to encourage consumers to SMS/Email Kaible with price information in return for loyalty points, or a chance to with gift certificates – however the most powerful driver would be community.)

February 13, 2006

Nokia expected to roll-out TD-SCDMA offering…is a decision on 3G licensing close at hand?

Filed under: Wireless — Administrator @ 11:40 am

Back in November 2005, Nokia Greater China customer service and marketing SVP Zhao told Beijing Star Daily that Nokia was considering a move into TD-SCDMA handsets. Yesterday, reported on Nokia’s 2006 China Strategy, specifically noting Nokia’s move into manufacturing TD-SCDMA handsets.

Obviously, this isn’t earth shattering news (Motorola and Siemens have already moved in this direction), however it does provide another piece to the 3G “when will we get a decision on licensing” puzzle — in other words, if Nokia has spent the past four months chatting up their TD-SCDMA handsets then it is a good bet they had some “information” others might not (i.e. we might be closer to 3G “go” time then we think). As such, we’re revising our 3G licensing decision timeline from Q107 to Q306.

A small ancillary benefit from Nokia’s move into TD-SCDMA is that it should expedite the development of TD-SCDMA handsets with their massive R&D teams and experience in commercializing new technologies.

It will be interesting to watch what comes out of the 3GSM World Congress over the next several days regarding the 3G licensing decision in China.

UPDATE (2/14):
Today, noted the 3G royalty negotiation between the Chinese government and Qualcomm has run into a stalemate. This negotiation is carried out by the Ministry of Information Industries on behalf of all Chinese vendors, covering TD-SCDMA, WCDMA, and CDMA 2000.

February 3, 2006

Pulse Points…high-speed, localized, WiFi access sites

Filed under: Direct Marketing,Wireless — Administrator @ 7:22 pm

From my hometown, Boston (USA), comes “WiFi Pulse Points”, the Boston Globe writes:

They allow individuals [with wireless] to connect to a network, but not to the Internet or e-mail. Rather, these Pulse Points connect individuals to their location—and each other. They create a “situational community” of people who are connected simply because they are in the same place at the same time.

Content, content, content…

January 25, 2006

UBS Greater China Conference: Core 3G Findings

Filed under: Wireless — Administrator @ 11:14 am

Last week, I attended the UBS Greater China Conference in Shanghai. UBS does a nice job keeping this conference focused and intelligent. Ymer hasn’t touched too much on the status of 3G in China, but given the fact that all “big four telcos” (China Telecom / Netcom / Mobile / Unicom), as well as Huawei, Datang Mobile, and Spreadtrum were at the conference, perhaps this is a chance to reveal what was reported (nothing overly dramatic, mind you, hold onto your hats):

(1) Most agree China will issue 3G licenses this year — likely in 2H06.

(2) Most companies are expecting three licenses, which means some restructuring is needed among the Chinese telcos — this is old news, though.

(3) Maturity of TD-SCDMA is the biggest bottleneck today — again, the market assumed this was the case for sometime — the government’s licensing decision will largely be dependent on the maturity of this technology. The next stage of TD-SCDMA trials is critical in raising overall confidence in this technology which is expected to be completed at the end of 1Q06.

The upside — the fact that my Dopod 818pro isn’t 3G compatible won’t be an issue for at least another year…

January 23, 2006

NEW! Prepaid mobile numbers guaranteed for life in India

Filed under: Wireless — Administrator @ 10:20 am

Shailendra Bhatnagar, a writer for Reuters, reports that Indian mobile phone companies are taking cheap handsets and life-time prepaid services to India’s hundreds of millions of low-income earners ; the new service guarantees a number for life for just over $20. In the past, a prepaid number would cease to exist if it was not topped up after a certain period of time.

Less than 40 percent of India’s total area is covered by mobile networks, and fewer than 8 in every 100 Indians use mobiles — compare this with China where 30 in every Chinese use a mobile — sort of amazing how far China has come in such a short period of time…

What is also amazing is how fast technology becomes a commodity — even in a country like India with a lower mobile penetration than China (i.e. so much growth potential), carriers are forced to slash prices and design creative marketing campaigns — makes you rethink some of those business plans touting “breakthrough proprietary technology” as the core barrier to entry?!

So really, at the end of the day, I guess it does all come down “stuff” like controlling a proprietary network/database, branding, team and yes, execution. Funny ol’ world, ain’t it?

October 11, 2005 mobile search will never be the same again…

Filed under: Social Networks,Web 2.0,Wireless — Administrator @ 3:56 pm

We’ve been supporting a company called YDC Tech for the past year — the group has developed a search engine specifically targeting quarries in Chinese — the technology incorporates algorithms used in genome sequencing. So when a new search technology hits the air waves it peaks our interest

This morning, a new tag meta-search engine called was launched in Seattle; the two guys behind it are Chris Pirillo and Shayne Sweeney. The technology allows you to search for stuff by either going to or typing in your search quarry into that white address box in browser; for example, want to find “Chinese dog food” — simply enter the following

The way gada works is by cruising lots of different sites such as Google, Flickr, Yahoo!, etc and collecting all relevant information in a permanent URL; and so becomes a comprehensive result set for a tag link. Gada also outputs search results in RSS and OPML, allowing users to easily subscribe to and organize searches. Founder, Chris Pirillo, talks below about how this is perfect for mobile search:

“It was borne out of several frustrations. If you’ve ever tried to visit a Web site over a mobile device, you know it’s a pain in the knuckle. The domain had to be simple to key-in from anywhere. is 4232.2233 on most cell phones and PSPs. Normally, when you want to find something online, you have to choose a Web site (wait for the page to load) enter the query (wait for the second page to load) then see results from that provider. With “,” you insert the query *AS* the subdomain!”

I just want highlight this tagging thing…it has been around for a while however it has only caught on over the last couple of years…I think the best hope for a semantic web will come as a function of tagging. In the US, there is a company called that has been around for 2.5 years, Union Square Ventures recently seeded the company, and is at the forefront of tagging.

Back to Mobile Search: …in China we already have a couple, such as start-up, which offers mobile search to China Unicom and China Mobile. Cgogo claims its technology uses “fuzzy search and concept clusters rank algorithms”, grouping results in “concepts.” I’ve used Cgogo a couple times and, to be honest, it doesn’t work very well…

Another mobile search service is called Guanxi which is based in Shanghai. It is an okay service, however their database is limited to restaurants, clubs and entertainment venues only in Shanghai — sort of narrow. Guanxi is a service provided by a company called Mailman, which is one of several postcard distributors in town. I understand they are looking for angels to help them expand this service nationwide in 2006…

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