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Posts from September 1, 2013 - September 7, 2013

Goodbye Vodafone Says Verizon-What this May Mean

The buyout of Vodafone's minority stake in Verizon Wireless means Verizon can now make the mobile division a fully integrated part of its overall business, just like AT&T has done with their mobility unit. Largely this benefits the Enterprise customers as now they can buy from one sales team, not have to in theory have two different account groups.

The second thing it does is accelerate the deprication of DSL to non-existance, as Verizon, which is all about LTE, will push the rip and replace and expanded footprint where DSL and ADSL couldn't go. I will also go out on a limb and say that Verizon will accelerate their FiOS build out, not slow it down/let it grind to a halt. Why? fiber backhaul and fixed mobile convergence. Let's face it, you can build all the towers and get faster radio access networks out in the hinterlands, but if the fiber isn't in the ground to get it back to the network, you have bottlenecks. So what good does it do selling $59.00 a month LTE service if the speedy content doesn't go anywhere fast? How can VoLTE work, and be the replacement for Circuit switched calls if the network won't support the volume? Enter the need for more fiber in the ground, and since you can split off more local loops to that massive network, why not get more people connected who are paying more for it. Combine the two and you have speed, access and capacity.

That's the opposite of what AT&T is doing, using a hodgepodge of wire types -fiber, coax and copper to get to the prem. And since home users tend to not switch carriers as much as mobile users do, getting more FiOS users for Verizon is good long term business.

Today it's Microsoft and Nokia, Are Dell and BlackBerry Next? And Where Is Yahoo?

The news sites are a flutter with the realization that Microsoft if buying Nokia for less money they paid for Skype, hyping the idea that ex Microsoftee Steven Elop is the potential heir apparent to Steve Ballmer.

I personally think this is simply a thinning of the herd, and as new stars rise, older ones with assets -the Nokia patent pool, massive distribution teams, a very skilled hardware design and manufacturing team was attractive to Microsoft, especially with all the cash they have offshore.  They pick up a team to build things and with their own sales force and mobile operator deals actually sell them, and what's more they reduce by a factor of 4 their royalty payments.

Unlike Dell, which use sub-manufacturers to make computers, now MSFT has it's own plants and people, and unlike Dell Microsoft has now has a team that knows how to design and build very good hardware--you never heard bad things about Nokia smartphones-more often you just didn't find them when they were really hot, or when you did, they sold very well and impact the top line for the Finnish company. This is exactly why Dell needs to buy BlackBerry. They get smartphones and own an OS. The world is moving from powerful desktops and laptops to smarter, faster and more powerful tablets and phones, and while BB's issues are largely sales, Dell's folks know how to do that.

But back to Microsoft. They have a leadership problem. Elop while a possible answer, he will likely be looked at as a returnee, so not the right choice as picking someone from the existing executive suite, even a slighlty reconsitituted one means the rest on the team feel passed over, and the rivalry it causes during the run up to the annointing is also very bad for business, as the direct reports all line up like gladiators. That leaves looking outside--way outside. And I mean way outside. Hardware is not what the future is about. Software is. And consumer marketing models are where the thinking is. Look at Netflix. Look at Nike. Look elsewhere...

Enter Yahoo-and a whole new management team. What they are doing is all about aqui-hires and building a new team from the inside out. In essence the Yahoo leadership is buying up pieces and parts -- that are all human capital, taking some of the newly acquired IP and incorporating it into what will be a very efficient mobile and cloud services focused team. This is exactly where Microsoft (and Dell) are both super light.

In my view Yahoo becomes an attractive aqui-buy for either Dell or Microsoft. It gives either a new leadership team, cash, cloud and mobile. It also brings new, next generation services, which Dell lacks in a consumerization of the enterprise model world.

Personally, I am not surprised by the Nokia buy by Microsoft, as the writing has been on the wall since 2012's CES where I saw nothing new with the Surface line of tablet PCs. The lack of 3G modules then was a huge OOPS for Microsoft, and something that Nokia's engineers never would have missed. 

One more thing--Nokia has a massive developer program, and rich API's. Don't be surprised if Microsoft looks at Twilio, plugs that into Skype/Lync and then delivers it all to the new handsets. In an LTE era, voice is no longer about minutes, and the data pipe of wireless is the new wire. We're far from done seeing buying going's a great time to be in M&A.