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Friday, July 25, 2014

Comcast Improving Broadband

On Monday, I wrote about FIOS success in broadband and its use of fiber optics to improve speed and bandwidth.  Historically, cable operators have used coaxial cable to the home which can slow down speeds as more users are attached to the node.  Well as broadband becomes more valuable to a consumer than cable TV, Comcast is now upgrading its infrastructure in certain markets, replacing cable with fiber to the home.  Great for consumers but most likely an expensive upgrade that will need to be reimbursed through higher fees.

According to the Wall Street Journal, Comcast and other cable operators are using fiber in any new builds that they are doing.  Unfortunately, the report goes on to say that Comcast does not have plans to replace all existing coaxial with fiber.  It certainly will get more expensive the longer they wait.  With more consumers adding broadband subscriptions, usage will increase, and speeds will decrease at peak periods on coaxial cable systems.  And with more homes streaming, the situation will continue to worsen.  Fiber systems have higher capacity to handle increased usage. 

In addition to fiber, more investment will be needed in technology that improves streaming capabilities and enhances speed.  Given the limited number of players offering broadband, cable and telco, new competitors are needed to enter the space to help keep pricing in line; otherwise, consumers will only continue to see their data usage bills rise and rise some more.  Demand for fast broadband access will only continue to rise. 

Thursday, July 24, 2014

Facebook Conquers Mobile

When Facebook users began to migrate from their pc to smartphone and tablet, shareholders were concerned that the ad model would crumble and Facebook would take a hit.  But given their recent quarterly earnings report, Facebook has embraced the mobile platform and uncovered a growing revenue stream. 

"The social network reported that profit more than doubled and revenue topped estimates for the ninth straight quarter."  It is a world of more than just display advertising; rather, sponsored content with video and a targeted approach.  And as CEO Mark Zuckerberg knows so well, this world changes at an ever quickening pace.  He is making new investments in untried products, all to stay relevant for the long haul.  Products like Oculus VR and services like WhatsApp can potentially bring new sources of revenue back to Facebook. 

For the present, Facebook must contend with user satisfaction and usage.  It is harder to find new users to the service and a challenge to keep them active users too.  Constant reinvention that encourages tune-in rather than pushes current users away.  It is the challenge every time an upgrade is released.  Still, Facebook seems up to the challenge and certainly has the financial resources to invest and grow.  It was a great quarter and as some shareholders have speculated, facebook could now be considered undervalued. 

Wednesday, July 23, 2014

Apple Patents Smartwatch Called iTime

On the heels of its quarterly earnings, Apple also received a patent on its smartwatch design, labeled iTime.  Of course, this patent was first submitted 3 years ago, an eternity ago in the world of internet connectivity.  Much has changed, digitally, creatively, ergonomically that the smartwatch device could be either a breakthrough or an expensive timepiece.  Certainly, the design elements, as described back in 2011 didn't consider as much.  It seems almost as a placeholder.  While iWatch was a media created brand, thought up as an extension to its iPod, iPhone, iMac, iPad branding format, the release of the patent name iTime will not be the official brand name. 

Many expect Apple to schedule a product announcement release in the late Summer/ early Fall with a sale of the device in October, in time for the Holiday Season.  I suspect neither iTime or iWatch will be the official brand name for this smartwatch device when it is finally announced.  Its announcement would also tie in to one for the next generation iPhone.  

Tuesday, July 22, 2014

Netflix Surges As More Consumers Join

I joined Netflix first when it offered DVDs through the mail.  I lasted a year.  I preferred the immediacy and choice that cable offered.  How simple to scroll through on demand and watch shows and movies from a wide sources of content.  My daughter encouraged us, after the latest snow day this winter, to join Netflix again.  This time for its streaming content.  And we are now loyal users.

For each of us in the family, Netflix offers and recommends content that matches our interests.  Easy to discover content, easy to use, and easy to watch.  Like many others, I am currently fixated on Orange Is The New Black.    And it is fair to say that some of my TV time has switched from cable to streaming. 

I take my own experiences and can easily see why Netflix has been doing so well.  Since their misstep a few years back with trying to separate their DVD business from streaming, they have recognized the value of original content and used it to drive subscriber growth.  Whether it is OISTNB or House of Cards, it has led to both Emmy nominations and awards.  With their quarterly earnings announcement, Netflix continues to attract viewers, "signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs."  In the US alone, they have now over 36 mm households.  And while the stock market always wonders how long such growth can last, I expect Netflix will find new revenue models to further improve their value.
signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs. - See more at: http://www.multichannel.com/news/tv-apps/netflix-pushes-past-50-million-subs/382645#sthash.b3NKB1Z8.dpuf
signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs. - See more at: http://www.multichannel.com/news/tv-apps/netflix-pushes-past-50-million-subs/382645#sthash.b3NKB1Z8.dpuf

This years Emmy awards are next month and most likely Netflix original shows will win more statues.  That kind of publicity will cause more households to want to watch its programs.  And once they watch one episode, the Netflix feature that automatically loads the next show to start will keep them tuned in.  It encourages binge viewing, but it also encourages loyalty. 

Monday, July 21, 2014

To Better Compete, FIOS Improves Broadband

Verizon FIOS has a competitive advantage over cable; its broadband speed, mainly because of fiber to the home, is greater than cable's coaxial connections.  And as customers seeks more streaming media to view and upload more content to the cloud, the faster the connection, the better the experience.  FIOS can, with minimal investment, support that objective by increasing its upload speed to match its download speed.  "FiOS says the rollout should be done by the fall, and 95% of customers will receive it automatically."  And FIOS says this enhancement is being delivered at no additional charge.

While concern over net neutrality still mounts, most customers really just care that their content is accessible, without delay, when they want it.  When they encounter buffering, no matter what the reason, it creates a bad user experience.  The more speeds are improved, no matter the content, no matter the direction, the better the customer will value the service. 

FIOS growth has been slowing while cable operators have seen gains as well in broadband customers.  But as broadband continues to become more valuable than cable, FIOS may have the advantage when marketing superior broadband speed.  And while upload speed may not yet be as important as download speed, the need is coming.  Cable operators need to push more investment into improving their lines. The total broadband experience matters and slow internet only frustrates consumers who then start looking for a new provider. 

Friday, July 18, 2014

Microsoft Giving Up On Xbox Original Content

With the news that Microsoft was cutting jobs came word that their Xbox Division would also be giving up on an original content strategy,  Back in March, I wrote in my blog that I did not think it was in the best interest of either Xbox or the Sony Playstation to create exclusive video content when the primary intent for these devices was gaming.  Nadella must agree.  Per Re/code, "Microsoft will shut down the Xbox Entertainment Studios, ending an ambitious foray into original video programming."  Instead, the focus for Xbox for now will be video gaming.  I couldn't agree more.  Sorry to see Xbox Entertainment Studios go, but it was not a good fit. 

Given the device appeal as gaming, the clear driver is video games that stretch the uses and the imagination of the consumer, interactive, challenging, and fun.  It is a unique ecosystem that reaches an important core audience.  And while the extension of the product as a distributor of video content adds value to the device, exclusive entertainment content does not.  Microsoft is smart to leave that now to Netflix, Amazon and others and be an aggregator of these platforms.  Xbox now can create exclusive gaming content instead. 

As to video content, I would suggest that Xbox reach out to Apple; given the new direction of each, Apple might just be willing to let Xbox also connect to its iTune library.  That type of partnership could deliver terrific entertainment value to both parties.  For now, Microsoft is slimming down and focusing on its future.  It is the proper means to a stronger company. 

Thursday, July 17, 2014

Microsoft Slimming Down To Better Compete

With a plan to cut about 14% of their employees, Microsoft hopes that a smaller company is a stronger company.  Most cuts seem to come from their recently acquired Nokia phone business whose phone line was Android based.  The division will now devote its time and energy to phones running Windows instead.  Where the rest of the cuts come from will be known in the next few months.

Clearly though, cutting jobs is not the means to a more nimble, more customer focused company.  Corporate culture starts at the top and it will be Nardella's job to shape and instill a new mission and strategy down into the ranks.  That change will not come easy.  Where the other business units fit in to the new strategy has already caused some to speculate that XBox could be spun or sold off.  Given the success of XBox to the bottom line, such a move could also hurt the business.  On the other hand, it could also allow Microsoft to apply a more laser focus on what it needs to do well to stay relevant in the coming years.  These layoffs are simply the first step in a long process. 

Wednesday, July 16, 2014

Why Net Neutrality Matters

A funny take on a very real issue.  


Time Warner Says Its Content Is King

Time Warner, owner of HBO, CNN, TBS, TNT, Warner Bros. and more, sees its worth more than the huge sums being thrown at it by Fox.  It should come as no surprise that Time Warner is being pursued.  By streamlining themselves over the years, first by splitting off Time Warner Cable, itself up for sale by Comcast, and most recently its Time Inc group, Time Warner has turned itself into a video content pure play.  And while they have initially rejected the Fox and Rupert Murdoch offer, I believe this is more a negotiation process to get to a higher valuation.  As content is king, it demands  a premium price.  And if not Fox seeking to acquire, then perhaps CBS or Viacom or Liberty.  So let the dance begin, the end of Time Warner is approaching.