Kerton Wireless Review - August 2, 2001

from the kerton-wireless-review dept

Below is the first Techdirt published version of the Kerton Wireless Review, a new Techdirt column. The Kerton Group, a wireless consultancy and analyst publishes the Kerton Wireless Review on a regular basis, and it will be appearing on Techdirt from now on. If you would also like to subscribe to the email version, visit the subscription page. This week's column talks about AT&T's 2.5G trials, how small wireless companies can waste millions of dollars, and my personal favorite: the new Dockers for the busy tech professional. Click the "comments" or "read more" link to get the full article.

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1	What Did Broadband2Wireless do With Their Lunch Money?
2	An HVAC Company Goes Wireless
3	Marconi Stock Plummets, Trading Halted
4	Palm Strikes OS Deals With Major Chip Players
5	ATT Launches 2.5G in Seattle
6	Toronto Indy Broadcast on WAP
7	Hey.  N-i-c-e P-a-n-t-s
8	Bits and Bites
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1	What Did Broadband2Wireless do With Their Lunch Money?

This article, off Venturewire, blows my mind.  How does a small firm waste
their entire first round ($32 Million) in 5 months, with no backup plan?

"Broadband2Wireless Files for Chapter 7, Assets Up for Sale       
BOSTON (VENTUREWIRE) -- Broadband2Wireless, a provider of broadband
wireless services for residential and small offices users, voluntarily
filed for Chapter 7 bankruptcy on June 12 at U.S. Bankruptcy Court for the
District of Massachusetts in Boston, according to the court's records. 

The court also said that the auction and appraisal company Paul E.
Saperstein Co. has been given approval to auction the Broadband2Wireless'
assets, including its network. Neither Broadband2Wireless nor Saperstein
could be reached for comment."

In February Broadband2Wireless raised $32 million in first round financing
from Axiom Venture Partners, Credit Suisse First Boston, GP Investimentos,
Rakuten, TH Lee, and Yankee Tek Ventures."

Okay, so there's the Internet crash, there's Webvan, and then there's
fiscal irresponsibility.  I think Broadband2Wireless might be the latter.
To be fair, their flagship product, Airora, is the kind of product that
needs a lot of cash to set up.  Airora is a wireless ISP boasting broadband
speeds on a wireless infrastructure.  For $50/mo users can get 1.5MB
connections in their homes or wherever they can "see" a transmitting
station.  Folks, it's fair that it takes a big investment to set this kind
of service up  --think of Metricom's Ricochet--  but just like little boys
and girls need to learn to budget their allowance, so to must little firms
learn to budget their first round.  A contingency plan never hurts, either.

 And while Ricochet actually exists, I've found no evidence that Airora was
actually deployed anywhere.  No locations of installations are detailed.
The service requires a special paperback-sized modem, which was unavailable
on the website, and they had no images of it.  Did anything actually exist?
 I'm curious to see if some lawsuits are generated here.


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2	An HVAC Company Goes Wireless

It's always refreshing to see on old-school company catch on to how new
technology can contribute to the value of their products.  This time it's
Carrier, the HVAC equipment manufacturer and service company.  They have
released a new line of equipment controls which connect air conditioning
hardware to the Internet.  From there, they can be monitored, switched, and
controlled from both a Browser, and WAP phones.

One of the cool aspects of this is that the HVAC equipment is connected via
a GSM cellular module, which communicates securely with the Carrier
servers.  Thus, the service can only be accessed through Carriers web and
WAP sites (http://myappliance.com).  The back-end technology is being
provided by IBM.  I've been using some IBM technology called HomeDirector
myself for remote controlling of lights and appliances, but that is using
X10 technology and short-range wireless.  I love the idea of being en-route
to Tahoe for a ski weekend, and using my WAP phone to turn up the heat in
the cabin two hours before arriving.  A frivolous use of technology,
perhaps, but the Green party would have to approve.

Part of the benefit of the service is expected to be that Carrier's system
will be able to monitor and receive status updates from the myriad HVAC
units installed on customer sites, and detect problems early.  This will
allow them to pro-actively maintain the units, supporting customer loyalty,
generate service revenues, and increase customer satisfaction.

This service is being rolled out in Europe this summer, and will be
expanded the following year.

Personally, I'm concerned about the privacy aspects of this service.  I'm
not sure I want to have someone able to detect my HVAC settings.  They may
be able to determine exactly when it's "Jungle Fever Night", or "Dark Side
of the Moon" night at the homestead.  Somebody call the ACLU.


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3	Marconi Stock Plummets, Trading Halted

Marconi is a British-based wireless infrastructure provider, competing with
the likes of Ericsson, Alcatel, and Nokia for contracts to install
carrier-class telco facilities.  Early in July, Marconi joined the ranks of
victims of the economic downturn when they announced an earnings warning.

Marconi stock took a 54% nosedive before trading was halted on July 4 after
the company announced expected annual sales to drop 15% under last year,
and operating profits down about 50%.  In addition to the 8% of staff
already laid off this year, an additional 8% (4000) of staff would soon
joint their ranks.

I include this story mainly as a lead in to the observation that the phone
carriers and their suppliers all drank the same kool-aid.  They all had
somewhat flat projections for their sales of wireless services, but
believed that wireless data would rescue the situation, and create the
demand needed to justify the size of their businesses.

What happened was a one-two punch combination.  The left jab was the
general economic downturn, and the right knockout uppercut was the
lackluster consumer acceptance of the wireless Internet.  The result of the
lost bout is that most of the players in the wireless industry are
re-structuring, laying off, and outsourcing in order to meet the more
realistic timelines of slow consumer acceptance.


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4	Palm Strikes OS Deals With Major Chip Players

In the race for dominance among mobile OSes, Palm took a leap forward this
week.  They announced PalmOS license deals with Intel, Motorola, and Texas
Instruments.

Palm also announced that they would be separating their OS division into an
independent company.  Although there is no operational or financial
motivation to do this, the reason for the move is still clear:  Palm has
had a hard time licensing the OS to other firms while at the same time
operating as a competitor on the hardware level.  Hardware firms shopping
for an OS seldom want to buy it from their strongest competitor for fear
that the OS group will play favorites with their brethren.  The move to
spin off the OS group will likely ease some of these concerns, and win the
OS even greater acceptance.

Palm itself was spun off from 3Com just last year.

As I've discussed before, Palm, as a manufacturer, has had some serious
inventory problems from which they have yet to fully recover (the last
quarter lost ~$90 M on ~$165M in revenues), but the OS has proven to be a
winner.  You may hear the PocketPCs are now outselling Palm devices, but
check the data carefully.  Although significant, that data refers to total
sales by revenues.  It does not refer to units sold.  The PocketPCs,
costing up to five times the price of their Palm brethren, quickly rack up
revenue.  But the two most important metrics are i) market share in units,
because this tells us who is winning the customers, ii) and profit, because
in the end, that's what really matters.


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5	ATT Launches 2.5G in Seattle

AT&T Wireless has launched 2.5G services in their hometown Seattle this
month.  2.5G is a version of wireless technology which is loosely defined
as: always on, packet data, and faster than current cellular data.  flavor
of  2.5G offered by ATT will offer speeds of "up to 10 times current
rates", and will allow concurrent use of wireless data services and voice
services.

Initially, ATT will offer Motorola's Timeport 7382i, a dual protocol
(GSM/GPRS) terminal to access the service.   Motorola will continue the
national deployment, reaching 40% of its markets this year, and 100% by the
end of 2002.  After that, they will deploy 3G services using UMTS and EDGE
in the top US markets.

I have to say that the news I've seen about this 2.5G was about as
anti-climactical as an episode of Mutual of Omaha's Wild Kingdom.  2.5G was
supposed to be a big splash, but it sounds like the main new advantages
being touted are the ability to "surf" data with the phone while carrying
on a voice call at the same time.  At this point, I imagine about 0% of
consumers are interested in that feature.  Hell, as an industry we can't
even get them to browse, now browsing while you talk is supposed to add value?

So what does that tell you?  That the step to 2.5G is a waste?  Not so.  I
believe the infrastructure guys have done their job, and now the ball has
been passed to application and content providers.

If ever there was a case for a technology with a need for compelling
applications and content, 2.5G is it.  The technology enables great things.
 The most obvious that comes to my mind is Instand Messaging and other
communications apps that can take advantage of a always-on connection.
Please, please, someone cook up an application so AT&T can have something
to work with in their marketing beside concurrent voice and data.  As Eddie
Murphy says in Beverly Hills Cop, "Give me something I can hold on to."

And yes, well done to ATT for having a realistic migration path to 2.5G,
and then 3G. 


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6	Toronto Indy Broadcast on WAP

Meanwhile, in the wilds of Canada, BellMobility created a short-lived
event-based app to offer fans of the Indy car racing series.  The app,
available from their "What's New" and "Sports" categories, offered
up-to-the-minute stats on race standings, and other background information
about CART, the race organizer.  According to a BellMobility spokesman,
15,000 people accessed the site from both on the racecourse, and from
further afield.

Applications like this are a great way to allow an audience to drill down
into stats and details while in the stands of an event.  Other ideas which
could enhance the application include polls, tips, chat, messaging with
event staff or participants, and even audience participation in judging for
results.


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7	Hey.  N-i-c-e P-a-n-t-s -  Dockers Targets Geeks

I wrote almost a year ago of a Levi's garment that was designed to
accommodate a cellphone.  Well, the impetus has trickled down to the
Dockers division.  The San Francisco based clothier, has upped the ante
with their so-called "Mobile Pant".  The pants were designed for the mobile
professional, who overfills pockets, purse, and belt with PDA, phone,
pager, Blackberry, and such.

Co-marketing the pants with Motorola and Compaq, Dockers will illustrate
the benefits in real lifestyle situations.  The seven-pocket wonders will
surely be a hit among my crowd.  Our belts have been overloaded 'til the
point we look like techno-Rambos with buzzing bandoliers.  I'm convinced
I'm going to have a ring of tumors around my belt in ten years...  at least
that's my excuse for my growing waistline.

http://www.mobileinfo.com/News_2001/Issue30/dockers_pants.htm 


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8	Bits and Bites

The gross value and overall percentage share of wireless ventures in Europe
is rising. Some sources show that more than 7 percent of all ventures
funded on the Continent and in the U.K. were wireless start-ups. The total
value of the deals for those start-ups exceeded 19.2 million euros (US $16.96).


OnStar, the GM-backed telematics firm recently reached the 1 Million
subscriber March.  Telematics is access to data in vehicles.  The 1 Million
users point is extremely significant, in part because it is a big
milestone, but more importantly because it gives them the numbers they need
to stage a march on Washington.  They also recently signed a deal with ESPN
for voice-based sports content.
Telematics is pushing the envelope with respect to our available attention
span, and will play a big role in determining exactly what types of data
are allowed in vehicles, and which user interfaces will be permitted.


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later,
Derek Kerton,
The Kerton Group,
http://kerton.com

*Mr. Kerton is a principal consultant at The Kerton Group, based in San
Jose, CA.  For more info, visit http://kerton.com

*The analysis and opinions in this newsletter are the property of The
Kerton Group, an independent consulting firm.  Any re-use or re-purposing
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