Wireless Telco Markets – Wow!

November 30, 2006

I’m reading Inder Singh’s, Prudential, report on Ericsson’s Analyst Day in Tokyo and it strikes me that I’ve become desensitized to the numbers. The numbers are just so absolutely huge. I’ve heard all of this somewhere before, but …. it bears repeating

  • 1 Billion handsets sold per year.
  • 2.6 Billion mobile subscribers worldwide.
  • Forecast 4.5 Billion mobile subscribers in next 5 years.
  • Mobile TV Revenue for FIFA World Cup >$300M
  • SMS ~1.5 Billion users per day
  • 41.5 Million SMS during American Idol
  • 3 Billion SMS during Chinese New Year’s Eve
  • Mobile Data Revenues >$100B
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Broadcom Acquires LVL7

November 29, 2006

Wireless Telecom Profits Trump Wireline

November 29, 2006

Wow! Good datapoint on why telco’s spend wildly on “wireless” infrastructure. Wonder what the trajectory of this looks like?

Wireless Telecom Profits Trump Wireline: “From a new StatCan report on the Canadian telecom industry:

In 2006’s second-quarter wireless industry total profits for the first time exceeded those of conventional wireline telecommunications.

‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ Q2 2005 ‘ ‘ ‘ Q2 2006 ‘ ‘ ‘ ‘ ‘ %
Wireline:
Operating profit ‘ ‘ ‘ ‘1,112,027 ‘ ‘ ‘ 821,731 ‘ ‘ ‘ ‘ -26.1
Operating margin (%) ‘ ‘20.0 ‘ ‘ ‘ ‘ ‘ ‘ ‘15.2 ‘ ‘ ‘ ‘ ‘-23.9

Wireless:
Operating profit ‘ ‘ ‘ ‘734,649 ‘ ‘ ‘ ‘ 996,457 ‘ ‘ ‘ ‘ 35.6
Operating margin (%) ‘ ‘27.4 ‘ ‘ ‘ ‘ ‘ 32.0 ‘ ‘ ‘ ‘ ‘ ‘ 16.5

(Via Paul Kedrosky’s Infectious Greed.)


Realtime Parking Data in Santa Monica

November 29, 2006

Realtime Parking Data in Santa Monica: “Whoa, I like this: The city of Santa Monica has launched a web-based service displaying realtime parking space availability on a lot-by-lot basis for the shopping district . Link this to vehicle navigation systems and SMS and a whole bunch of downtown congestion would go away as people would stop doing the daily parking derby.

As I have written here (too) many times, the theme for 2007 remains realtime. Trust me on that one.

(Via Paul Kedrosky’s Infectious Greed.)


Dr. Strangelove (Loving Huawei)

November 29, 2006

Dr. Strangelove: “

Or: How I Learned To Stop Worrying and Love Huawei. I know two American engineers who have relocated to China to lead optical module design teams at Chinese equipment companies. They live and’work in China for Chinese companies, using their skills to build custom modules – skills no longer in demand from their American Tier-1 telecom equipment employers.

Huawei and ZTE are more than happy to make use of their knowledge. Unlike most big Optical Equipment suppliers, these Chinese companies have gone counter to the trend of buying off the shelf optical modules. Instead, they continue to homebrew their own optics for the most demanding applications.

Huawei and ZTE understand how to gain a competitive advantage in high end Optical Transport; you cannot outsource a core competency to Bookham (BKHM), Avanex (AVNX), or Opnext (OPXT).

One of the more interesting speakers at the Gilder Conference was John Rutledge – I blogged his talk here. He’wrote a short summary of his impressions of China gleaned from his latest visit. He summarizes the threat China presents to the USA.

The big words in China are entrepreneurship and innovation. …The Chinese government knows they will not be able to continue growth through manufacturing. There is not enough oil, gas, and coal and the air and water quality is terrible. They have decided to grow by investing in IT (fiber optic communications networks) and human capital (education) to increase productivity. Fighting over textiles is yesterday’s war. We should be thinking about where Cisco puts their next R&D facility. China is currently bidding very hard for such operations to relocate to their country.

They may not need to bid, as many readers already know.’Huawei has vaulted to #2 supplier of optical networking hardware in the world with a 9.5% share’without even selling large quantities to tier-1 carriers.

I’ve been negative on Ciena (CIEN) for a long time because I believe their metro transport products are the most vulnerable to overseas commoditization. I believe that the only optical transport equipment companies that will profit and thrive in the long term are those that attempt to develop an internal component edge through R&D, like Infinera, or are big enough to sell an entire platform of products and perform the system integration – like Alcatel (ALA). Huawei is aiming to do both.

Huawei has already taken a dominant position in DSLAMs (#2) and Optical Transport (#2). So,’what’s next?

I think the answer is easy -‘Layer 2/3 switching for the Enterprise. Cisco (CSCO) has 70% global market share in this area and’derives at least 50%’of their operating income (my calculations, includes optical module resale) from this business.’Competition has effectively thrown in the towel with the exception of (surprise!) the Huawei / 3Com (COMS) joint venture. Huawei/3Com has secured 35% market share in China and has grown revenue 70% annually since 2004.

Important Footnote: I have expressed reservations about the accuracy of Huawei’s numbers (see Huawei 2005 Revenue).

Full Disclosure: I am short Cisco as a hedge against other positions.

(Via Nyquist Capital.)


Evolution of the Hard Drive

November 29, 2006

I’m afraid to read this ’cause its Christmas party season. I’m sure that I’ll end up “straining” someones brain with all these details. Cool Stuff. I did a sneak walk thru. It is as good/bad as I suspected. Trust Andrew@Nyquist to arm me with material my wife will hate at Christmas time 😉

Evolution of the Hard Drive: “

Toms Hardware Guide published an article‘about the evolution of the hard drive, including benchmarking tests that bolt old hardware (circa 1991) to modern PCs. In the last 15 years, storage density has increased 10,000x!

It’s worth a read, particularly for the graphics and narrative about how hard drive technology has evolved. I thought the graphic showing the evolution of storage from 1960 (the graphic on their website is munged, but the data is there) to today. It’s clear that Magneto-Resistive (MR) technology was a crucial development, as the graph knees right at that point.

The article examines in depth the relationship between storage density and the bandwidth to that storage (known as ’storewidth’) and how the bandwidth has failed to keep pace.

While this fact causes problems for general computing (and why Vista can now use flash memory to accelerate boot times), I believe that latent information (giant databases) and media (access is not random) have been the primary drivers for more storage capacity and are not as sensitive to access speeds.

Anyway, there’s lots of good raw data in the article that will get your wheels turning after a holiday break.

(Via Nyquist Capital.)


Squirrels Ate My FiOS

November 29, 2006

good fun … High-Tech meets Low-Tech. I like the gloves taped to the fiber line!

Squirrels Ate My FiOS: “

IMG_3126It’s not just a catchy title. I lost my FiOS connectivity Saturday morning, rendering my Verizon (VZ) triple-play package of voice, data, and television inoperative. The culprit? Squirrels.

I blogged my original install here. I’ve linked to a few of the original photos in the narrative below.

Voice, Video, and Data were all humming away Saturday morning. I phoned my parents, checked the Best Buy website for LCD pricing, and the kids watched some TV. After late morning family excursion to the park, supermarket, and a failed quest for Estes rocket engines for my son, we returned home to a home not unlike one circa 1900 (Not necessarily a bad thing). Sometime between 9AM and 1PM, we lost optical connectivity.

I went down to the basement, disconnected the’backup battery, and power cycled the Tellabs'(TLAB) ONU terminal. Nothing. Opened the ONU – aha – red lights where there had been none. Not good. Looks like an optical RX failure. Visual inspection of the fiber from where it emerged from the conduit all the way to the pole mounted connecterized service interface showed nothing out of the ordinary. I call Verizon on my cell phone. They run a remote loop test and confirm I’m down. They file a ticket and commit to fix the issue by November 28th (3 Days?!!?!??). It is 2 PM on the 25th.

Nothing happens for 4 hours. Cell phone rings. It’s Verizon. They’re working on the problem. Guy on phone tells me it’s a wide issue and crews are working on the issue now. Hmmm.

10PM Saturday night. Watching Downfall from Netflix (the whole circa 1900 lost it’s appeal quickly) and the doorbell rings. My wife and I jump – who rings your doorbell at 10PM? It’s two Verizon techs and they are walking around my front yard. I explain the buried conduit and show how it’s wired. They want to see my ONU, and I invite them in. They see the lights they expect to see on the ONU and leave.

Movie is over at 11PM. Verizon truck still outside. They’ve got the connecterized splitter inside the truck and are checking it out as I spy through the windows. I leave them alone and go to bed with their’trucks yellow warning light flashing through the bedroom windows as it spins.

Kids wake up at 6AM. Dark outside. Verizon truck still there. At 8AM I decide to offer the guys some coffee and’I’run into’the Verizon guy as I exit… he’s smiling. They found the problem. He walks me 200m down the street and points to a pair of work gloves duct taped to the fiber stretched along the pole.

They had quickly figured out that some of the fibers from the local splitter cabinet had been cut, but only a few. Considering they are all bundled, this was a bit odd. Verizon hooked up a high power laser (Neon/Argon? Man that must be one hell of a laser…) that emitted visible light and visually inspected the fiber looking up from the ground. They did this three times. Nothing. The fourth time they used the bucket truck to look at the fiber from above, and they spotted some small pinholes of light leaking out.

Turns out the fiber had chew marks on it, most likely from a squirrel. The tech had never seen anything like it. They swapped my house onto another fiber drop from the splitter until a crew can come out and replace the entire bundle. The tech duct taped his gloved to the fiber to mark the failure.

IMG_3126

Overall, I thought Verizon handled the failure very well. I’m not sure Comcast (CMCSA)’would spend the night troubleshooting their coax for voice issues. There are upsides to the old-school Telco mentality, though as a Verizon shareholder I shudder to think what this repair will cost them overall.

Closing note: my wife asked – did the squirrel get electrocuted?

Author is long Verizon and’Tellabs and holds Comcast puts.

(Via Nyquist Capital.)