Adtran is going to buy NSN’s wireline broadband business, a move that I think shows a lot about the space overall. Obviously you don’t make a compelling offer to sell a business that’s got nowhere to go but up, and even outside the US wireline broadband is in trouble. I wonder if Adtran isn’t admitting that it’s in DEEP trouble here in the US too. The company hasn’t been turning in bad numbers but the bloom has long been off the DSL rose here unless you presume that there’s going to be continued upgrades to the outside plant to shorten the loop. Some operators told me that they’ve concluded that running DSL at rates approaching 50 Mbps incurs most of the cost of FTTH, largely because you can’t really leverage loop plant by shortening unless the initial aggregation point for the copper is pretty close to the home.
The big problem is that you have to put a DSLAM where there’s loops to attach to it, and if the loops were initially thousands of feet long they likely don’t converge at a convenient point short of their current point of concentration, which is usually too far for high-speed DSL. If you try to redirect the loops you’re pulling copper along new paths, which is crazy given that you can pull fiber. If you accept lower density with loop connection, you have to run too many fiber DSLAMs and you have too low utilization. The point is simple; only TV delivery is profitable in wireline, and we can’t easily do TV delivery in even HD mode much less 3D and still do broadband on long-loop DSL. So NSN is smart dumping its wireline assets and Adtran may be signaling some real problems.
Some will say that the solution to all of this is streaming TV, but I’m a skeptic here. If you have high-quality broadband you can surely stream TV, but if getting high-quality broadband means FTTH then you can deliver channelized TV too and that’s more dependably profitable. The goal of TV isn’t to justify IP deployments, after all, it’s to entertain people. Most of them want a multi-channel experience.
HP has some news too; it’s discontinuing its current TouchPad line as promised but it’s making WebOS open-source and it says it will release a tablet based on WebOS in 2013. That seems like “there’ll be a pie in the sky by and by” to me; safely beyond the current planning horizon and possibly beyond Whitman’s tenure at HP. Why? Because nothing she can do will restore the luster of HP fast enough. To bet on open-source and not on Android is just crazy unless you think that somehow you’re going to sponsor WebOS more than Google sponsors Android. After an MMI buy?
The data center is where HP has to shine; Leo was right about that. Wrong about how to be a success there, though. A single app doesn’t make you a data center player. HP has a good asset story in the data center but their lack of a convincing cloud strategy has really hurt them. That lack would be understandable if everyone had jumped out early and claimed all the good defensible positions, but in our fall survey we found that only 11% of enterprise technologists said they could confidently articulate ANYONE’s cloud strategy fully. Furthermore, almost 90% said that they believed that the popular view of the cloud was inaccurate. So here’s the cloud, the most important philosophical concept in all of IT, with a wide-open space where vendor engagement and articulation should be, and HP decides to be a lukewarm follower? Gosh, “clouds are artifacts of alien zombies” would have been more exciting, or at least press-worthy, and that’s what HP needs now. You can’t lead a market from a position of invisibility.