Insight Community

Google and Apple continue as the biggest winners for the foreseeable future.

Hidden gems?  Ericsson will revive.  They have a complete, end-to-end solution perfect for developing nations.  I look for some of the big guys to buy into Eee PC or Everex to get small Linux platforms...what I call bloggettes.  

VoIP continues to be a winner and WiMAX will eventually help as soon as there is an economic model...which I think will be community-based rather than corporate.  Long-term Motorola could win a bit there, but I wouldn't hold my breadth.   

Sycamore and Ciena are hampered by being on the East Coast.  They just won't make it long term.   

Mobile in Indonesia is still underpriced.  Less so in China.  Africa is the future of Mobile...Ericsson is in the best position to capitalize.  Corruption and vandalism are issues.  

I think Cable and Wireless is a bit undervalued.  So too Comcast now that it has been smacked down.  They need a way to make their home Internet easy to use with VoIP as a bundled and supported package.  

Ebay won't make money with Skype but they can integrate it more with Ebay proper.  That will work.  Ebay is a good value right now. 

Smartphone makers are going to make a ton of money as the plans for using smartphones become more accessible to everyone.  Especially smartphones that get WI-FI will get a huge bump from the ubiquitous deployment of WI-FI in the USA.  WI-FI hardware makers will also benefit as more people with smartphones that are WIFI equipped will demand WIFI access.  I think Linksys will be the biggest beneficiary here, because their WIFI routers are cheap and effective.   

• Skype has the potential to become a huge player. It's currently blocked by U.S. cellphone carriers, but with networks opening, there's a real chance that Skype could get a piece of the action. (There's already a mobile operator in England offering customers "Skype phones.") This week Skype announced a deal with internet juggernaut MySpace, joining Skype's 245 million registered users with MySpace's 110 million profiles. Carriers will want to attact this community, especially as competition heats up. Zoom Technologies and iSkoot already have various pieces of the "Skype compatibility" puzzle. And one study suggested Skype may already be causing a drop in carrier-based international phone calls.
  
  
• The carriers are also resisting mobile advertising, while Yahoo, Microsoft and Google are pushing for it. But "open networks" will change the structure of carrier subsidies, and handset manufacturers will feel real pressure to increase profitability. (Advertising becomes much more lucrative when it can incorporate a consumer's position.) Ultimately some form of mobile advertising is inevitable, and this can only benefit the established powerhouses of online advertising (like Yahoo, Microsoft and Google). And if the advertising really is more effective, this could also be a boon to big online advertisers like eBay.
  
  
• Consumer profiling companies could become increasingly important, providing the crucial additional information for targetting those mobile advertisements. Household income, lifestyle preferences, and purchasing history are already catalogued in the databases of companies like Experian and Dunhill International. When the floodgates open for mobile advertising, expect a greater interest in existing consumer profiles.
  
  
• There's one feature of the gPhone will bring major changes: the gPay feature. Something similar has been implemented in parts of Europe as far back as 2000, and "cellphone pay" capabilities have been tested at fast food restaurants and vending machines. (It ultimately reduced the length of lines by eliminating the need to count out each customer's change, with revenue rising 1% for every six-second increase in speed.) gPay could potentially change millions of purchasing transactions, providing the long-sought "electronic wallet." Besides the technology companies handling payment processing, the eventual beneficiary could be any businesses that caters to mobile consumers (like Quiznos and Starbucks).
  
  
• The biggest beneficiaries will be cellphone developers. If the open gPhone platform catches on, they can "develop once" for all gPhone-compatible units. (In October, Wind River's mobile device manager told Business Week that having a few standard platforms could reduce their costs and development time by 30%.)
  
  But in addition, carriers recognize that "call quality" is becoming less of a distinguishing factor. Handsets will have to compete on their features — giving these cellphone developers much more importance. And it's not just Google who's actively recruiting developers; Motorola and Nokia have also released new developer tools.
  
  
• The iPhone has increased consumer expectations for cellphones, and the ability to play music is now a must-have feature. As this becomes standard issue on all cellphones, it would have to increase sales at digital music sellers like iTunes and eMusic.

And it's just possible that with all these new capabilities, the biggest winner will be: consumers.

Historically it is rare to see legacy companies usher in major new technology paradigms.   Generally it is the new, flexible, innovative upstart companies that benefit the most from sweeping change.   Even in the highly capitalized wireless industry I think this trend will continue, and we'll see several major players fall out as upstarts either eat their wireless lunch or grow much more quickly to challenge them in their own space.   Also, to the extent the major players survive I think the level of cooperation required in the market and by consumers make their old business models problematic and profitability will be tough to maintain.

So, who are these new players and hardware/software/service providers that will reap the rewards of the disruptive changes?

Small and medium sized or relatively unknown Open Handset Alliance Partners such as SIRF (GPS enabled location platforms),  PacketVideo, (mobile multimedia software) Telecom Italia (national telecom) KDDI (japan telecom) LiveWire Mobile, (personalization software for mobile) Nuance (speech and imaging software) HTC (smartphones). Larger partners will benefit as well, but their size may prevent reaping as high a percentage reward as Open Handset becomes a key new mobile standard.

Despite some lackluster early reviews from Android developers I remain convinced that major change will come from the Open Handset Alliance and Android open software standards spearheaded by Google.  

Although Apple iPhone and RIM Blackberry have the current edge and may maintain that lead for 1-2 years, I think it will be increasingly difficult to compete with the very open standards and cheap production model that Open Handset Alliance will bring to the market.   Some 3-4 billion mobile phones are in use worldwide, and an increasingly number of those are likely to use open technologies.   Early Handset Alliance partners are the likely beneficiaries as the Open Handset standards become the prevailing global standard.   

Freescale is a company to watch in the semiconductor space.   Created as the result of forced spinoff from Motorola Freescale's "breakthrough" Magnetoresistive memory or "MRAM" technology could have far reaching uses in the mobile industry.    Widespread adoption of MRAM in the mobile market could give this company a huge revenue boost, and as a semiconductor innovator they are well positioned to benefit from their strong R&D efforts.

Nanotechnology Companies:
Nanotechnology startups like Nantera in Boston are likely to bring remarkable innovation to the semiconductor space and thus to new mobile devices, but it is not at all clear which will succeed and which will fail.   Unlike the underwhelming  performance of biotech companies in the 1980s I think nanotechnology will so profoundly improve devices we'll see it used in virtually every aspect of our lives.    However, these profound innovations are probably at least 5-10 years in the future so picking companies would be irresponsibly speculative.

Infineon is the world leader in RF transceivers for mobile phones, with over a billion chips deployed to 25% of global market thanks to their quality "high integration" methods that fit many functions onto a single chip.  This reduces size and cost. Expanding mobile hardware deployments combined with more rapid turnover could help this company's bottom line significantly.

LTE deployments:  Joint testing, and reporting of ongoing results will continue out to the end of 2009, with initial LTE system deployments planned for the 2010 timeframe [source - Nokia].

It seems too early to know how LTE will impact the market, especially given the destabilization caused by Open Handset Alliance and the *billions* of new phones that will come into use globally over the next few years.

Nokia on LTE:
http://www.nokia.com/A4136001?newsid=1166691

Open Handset Alliance Partners:
http://www.openhandsetalliance.com/oha_members.html