We’ve got more signs of change from the earnings announcements, and as always change is good for some and bad for others. There does seem a bit of a bias toward bad-ness, though.
Nokia is going to shift Symbian support to Accenture and cut 4000 jobs. The move illustrates that there are significant challenges for Nokia in sustaining Symbian but it’s also virtually impossible for the company to drop it because of its broad commitment to the OS in its handset line. That Nokia got itself into this mess is an illustration of the problems that EU players have faced in coping with the pace of the US-driven wireless market. Consumerism is way too demand-side for a company that’s built itself on understanding only the evolution of infrastructure from the supply end.
That doesn’t mean everyone in Europe is in trouble, though. Ericsson’s profit nearly tripled, and this is a pretty clear indicator that wireless presence is the driver of vendor success in the telecom space. This gain, I’d note, came after a disappointing Sony Ericsson earnings call. The Ericsson news may bode well (even better) for Alcatel-Lucent, who also has very strong wireless credentials. That may in turn mean challenges for Cisco, Juniper, and other telco equipment players who lack any position in the RAN and lack strong credentials in wireless overall (Cisco’s buy of Starent notwithstanding).
Speaking of Alcatel-Lucent, they announced the availability of their OpenPlug tools to all developers free of charge. The move is an interesting one because it demonstrates that there are two visions of the service layer out there. The app programs of the phone/tablet players prove that an active developer community enhances a product’s sales, and that would presumably carry over into services. But a viable app community is normally generated by the expectation of a big payday for developers, which implies a large installed base and active marketing support. The Alcatel-Lucent OpenPlug strategy is almost certainly designed to pull through the Open API program and carrier-hosted (or Alcatel-Lucent-hosted) services. Right now, developers have little expectation of winning the lottery on that bet. Certainly they’re less concerned about the size of the opportunity if the cost of entry (in tool terms at least) is zero, but whether this move will be enough to bring a large number of developers to the Alcatel-Lucent table is yet to be seen.
Another piece of news with significant potential implications was the disappointing results from Akamai, more for guidance than for current performance. The Street recognizes that Akamai is probably the highest-priced and most vulnerable player in the CDN space, but it’s also starting to see that CDNs overall are going to be impacted (perhaps crushed) by the combination of direct telco/cableco entry and the availability of wholesale CDN services (from telcos like Verizon, for example) to content providers/producers. We’re starting to see that “content” is really two sectors; what you can monetize and what you can’t. Most of the former is focused on movie and TV media, and that’s something more in control of the players who own the material or the players who already syndicate it in broadcast form. In any event, the CDN needs of TV-Everywhere-like content are very different from those of traditional CDN-friendly content.
Moving past earnings, the flap on Apple and Google “tracking” users continues. I understand why people don’t want somebody taking their cyberpresence into a real physical meeting uninvited, so I understand why people are concerned about tracking. The problem is that many of these same people are checking in on a social network and advertising their location openly, or are running apps that might be doing all manner of LBS-based tracking down below the level of user awareness. All this points out that things like who you are, where you are, and what you may have rights to are truly personal and that you need to be aware of who know the things and how they’re using them. I think Apple and Google need to mandate that their developers fully disclose the use of this sort of data—what they do with it and where it goes. I also think that both companies and other smartphone/tablet OS players need to provide users a way of determining if a given application is accessing that data—it’s obtained through an API so it could be monitored.
In the M&A space, CenturyLink has decided to buy ISP-turned-cloud-provider Savvis, who promptly came out against cloud standards. There is no question now that the carriers see cloud computing as being critical to them, but there are multiple reasons for that belief and it’s hard to know which is more motivating at this point in time. The obvious reason is to sell cloud computing as a retail offering, binding it tightly to the network to create more value-add and higher ARPU. Obvious isn’t only, though.
In the economy, the Fed indicated that it wasn’t changing interest rate policies but did suggest that a “QE3” program of quantitative easing would be unlikely. Nobody believes that the US could sustain a stimulus strategy indefinitely, and the markets so far are taking the news that some end may be in sight in stride. Earnings continue to drive stocks, and earnings overall are still decent.