Clearwire raises $600M in IPO March 8, 2007
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(Source: Seattle Times)
Craig McCaw is master of the financial markets. After raising almost a $1B from Intel and Motorola, Clearwire yesterday raised $600M in on of the most anticipated IPO in recent months.
The funds will go toward its effort to build a nationwide wireless broadband network based on a technology called WiMax. For the most part, the network competes with DSL or cable broadband providers, but because it can be mobile, it has the promise of developing a platform for new applications for Internet connections.
In its IPO, Clearwire sold 24 million shares for $25 apiece, reaching the high end of the expected range of $23 to $25. The company also exceeded expectations that it would sell 20 million shares, with an overallotment of 3 million. The stock is trading on the Nasdaq under the ticker symbol CLWR.
Ambassador of India to US on India March 7, 2007
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Attended a session with Hon’ Ronen Sen, Ambassador of India to the US. He has had an illustrious career in Indian Foreign Service with Ambassadorships to UK, Germany, Russia, Mexico and several other UN and diplomatic roles. Washington is actively seeking India as a trade partner with trade missions to India last year and Governor’s mission this year. Ambassador Sen has been active in promoting bilateral trade and was instrumental in securing Boeing’s multibillion dollar contract with AirIndia and is looking to get airlines fly direct to India given the amount of traffic that has increased in the recent years. He talked about significant challenges and opportunities for India and India-US trade relationship. The biggest area of challenge/opportunities are Energy, Health care and medical equipments, clean drinking water, airport and port infrastructure (there is not a single facility that meets Intl standards, which is kind of pathetic), Telecom, and of course IT.
He took several challenging questions from profitability of s/w companies in India to dealing with bureaucracy and was quick on his feet. The quote that i loved the most “Whatever you have heard about India is probably true” - from the good, the bad, the ugly to supernatural. India is a land of contradictions - you either love it or can go crazy trying to figure it out. I have been meaning to post my observations from my Dec trip to various parts of India but haven’t been able to .. will do so soon. Bottom-line is - it growing incredibly fast and opportunities abound but it is not for the faint-hearted. Stay tuned.
Nokia’s entry into mobile advertising March 6, 2007
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No wonder Third Screen Media has been shopping around. Nokia’s significant announcement into mobile advertising has left a number of startups scrambling for strategic options. Good news is it validates the space, bad news is they didn’t expect the big guys come out so soon. Companies with early patent disclosures will benefit.
Microsoft’s Reprieve March 5, 2007
Posted by chetan in : General , add a commentLooks like MS has gotten reprieve in the MP3 tussle with Alcatel. Phew for the industry.
Rule of Three
Posted by chetan in : 3G, AORTA, Carriers, US Wireless Market, Worldwide Wireless Market , 4 commentsIn their 2002 classic - “The Rule of Three: Surviving and Thriving in Competitive Markets”, Jagdish Sheth and Rajendra Sisodia presented a case that in any given market, at the end of the day, only three players survive or rather control 70 to 90 of the market. This is true across industries for e.g.
- McDonald’s, Burger King, Wendy’s
- General Mills, Kellog, Post
- Nike, Adidas, Reebok
- American, United, Delta
- Bank of America, Chase Manhattan, Banc One
so, how does that apply to the mobile, esp. US. Clearly, there are three dominant players - Cingular, Verizon, and Sprint with over 75% of the market. T-Mobile and Alltel make up the 16% while 9% goes to the remaining operators. The strategy for the mid-size operator in this brutal business is to acquire or get acquired. So, far Alltel has been acquiring smaller carriers (most recently Western Wireless). Now they want to get acquired as competition has been stiff and they can’t reach the scale of big 3. Verizon and Sprint are the likley targets but Verizon is currently more intersted in buying their stake back from Vodafone and Sprint is struggling. Another option is for a private equity firm to take ownership, keep on growing and sell it to either carriers when the timing is right, since the business itself is doing good.
T-Mobile has so far bucked the trend and decided to duke it out on their own. It is the hottest property that DT owns and it is making a go at it with serious 3G infrastructure investments. With the market approaching 80% penetration, growth will slow down. It will be a different landscape in 2-3 years, when we will approaching 90%. Either of the smaller carriers are likely to exist in their current form at that time.
Similar trends are evident in the handset industry with Palm looking for an exit. Having created the industry of PDAs and smart devices, they were slow to adapt.
US Wireless Data Market Update - 4Q06 and 2006 March 4, 2007
Posted by chetan in : 3G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, European Wireless Market, India, Indian Wireless Market, Intellectual Property, Japan Wireless Market, MVNO, Mergers and Acquisitions, Messaging, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile TV, Mobile Usability, Smart Phones, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so farUS Wireless Data Market Update - 2006
US Wireless Data Market update – 4Q06 and 2006
- US wireless data market continued its rapid growth in 2006. Wireless data service revenues jumped almost 84% to approximately $15.8B (from $8.6B in 2005). The service data revenues are likely to top $27B in 2007.
- The average data ARPU climbed 50% while the average voice ARPU declined 7% since EOY 2005. Overall ARPU declined 1% from 2005 levels.
- The strongest growth was experienced by Verizon which more than doubled its data revenues, up 101%, followed by Sprint up 69%, T-Mobile up 66% and AT&T (old Cingular) was up 62%. Except for Sprint, rest of the top 4 maintained a double digit growth rate Q-over-Q for the entire year (Sprint’s growth rate was marginally down to single digits in Q2 and Q3 but made up for the loss with a 19% increase in Q4).
- The top three carriers again garnered over $1B/quarter in data revenues for the second straight quarter, with Verizon coming out on top with $1.4B followed by AT&T at $1.3B.
- The US market added approximately 23M new subscribers or 1.92M subs/month. This puts the market at approx. 78% penetration. We will start to see the decline in market growth from here on.
- For the FY2006, Verizon’s data revenues were at $4.4B, AT&T at $4.25B, Sprint Nextel at $4B and TMO US finished the year at $1.6B.
- Verizon continued to dominate the 2006 ARPU sweepstakes with approximately 16% of its revenue coming from data services followed by Sprint and AT&T at 14.6%, and TMO US close behind at 13%. The average data ARPU is no at 14.5%. Sprint maintained its leadership in terms of raw data ARPU at $8.75. In fact, its CDMA data ARPU topped $12.
- Verizon gained the most number of customers in 2006 with 7.7M net adds followed by AT&T at 6.9M and TMO at 3.3M. Sprint at 1.6M, and Alltel with 1.56M rounded up the top 5.
- US 3G subscriber base continues to grow – primarily due to strong showing by Verizon and Sprint Nextel’s aggressive push. AT&T also covered significant ground while TMO is expected to join the fray by EOY 2007. As discussed in our 2005 paper, 2007 is priming to be the inflection year for 3G in US (and Europe). At the end of 2006, 3G penetration stood at approximately 10%.
- US Off-net revenues for the year exceeded $750M.
- In 2006, Data ARPU of CDMA/EV-DO carriers was 21% higher than GSM/WCDMA carriers.
- Several high-profile MVNOs were launched over the course of last year and the overall results haven’t been favorable primarily due to poor execution, instant crowding effect, and competition from big 4. Mobile ESPN was first to bow out. Helio and Amp’D have boasted $100 ARPU and 100K subscriber base but the burn rate and Cost of Customer Acquisition remains quite high.
- US wireless carriers maintained their strong showing vis-à-vis their peers worldwide. Verizon, Cingular, and Sprint maintained their ranking # 4, 5, and 6 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for 2006. US is the only country with 3 operators who generated $4B or more in data revenues in 2006 and are going over $1B/quarter now.
- For the second straight quarter- TMO US outperformed its parent TMO Germany
- Though mobile enterprise data growth doesn’t make headlines, there has been steady growth in deployments and revenues generated for carriers and product vendors. Verizon alone reported over 33% of its data revenues or $462M from the enterprise users in 4Q06.
- In terms of wireless investments, over $6.4B was invested in wireless related companies/startups in 2006. Source: Rutberg. Mobile TV/Video, Mobile Personalization, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas. M&A activity also picked up quite significantly.
- For the year 2006, mobile shipments eclipsed 1B mark for the first time with Nokia leading the way at over 347M in phone sales.
- Smartphone penetration increased into double digits and is slowly approaching the inflection point.
- 2006 started the realignment for “quad-play” and “quintuple play” positioning in the market. Clearly, bundling enhances life value of the customer and lowers churn but do you do it through partnership or investment is the question on the table.
Global update (more details in our worldwide data market update coming out soon)
- The worldwide markets ended with approximately 2.6B connections and are going to top 3B by end of 2007. Significant growth is coming from India and China with India registering an astounding 7M net adds every month now. China is close behind at 6M/month. Overall, the world market is slowly approaching 50% penetration (should reach the target in first half of 2008) with approx. 41% penetration at the end of 2006.
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NTT DoCoMo became the first carrier to cross $10B/yr in data revenues in a given calendar year. It was followed by China Mobile at $8.6B.
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Worldwide Handset market share 2006: Nokia maintained its number one position with 36% market share. Motorola increased its market share by 4 percentage points to 23%, Samsung dropped a point to 11%. Sony Ericsson edged past LG with 9% while LG dropped to 6%. Nokia shipped over 100M handsets in 4Q06 (a first by any OEM). Nokia’s ASP dropped by $2 from EOY 2005 while Motorola’s dropped by a whopping $27 putting the company in struggle mode. Sony Ericsson bucked the trend and increased its ASP by $17 showing a strong comeback.
- Most of the major carriers around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and O2 UK are topping 30%.
- China Mobile became the world’s most valued operator surpassing Vodafone.
2007 – Early signs
- iPhone: What’s in your pocket? – The launch of iPhone after years of rumors captured the imagination and headlines of the industry. The bar has been raised.
- Mobile Advertising – Tremendous activity (trials and press releases) in this area though there is confusion in the industry w.r.t the definition and the standardization process.
- LBS, GPS, and Navigation – It is becoming mainstream. What! We will have to pay for it?
- Enterprise Applications – Mobile Enterprise sector is quietly making strides with mobile becoming an integral part of corporate IT strategy though several challenges remain.
- Emerging Markets – Growth is in emerging markets but who gets to make money?
- Content Interoperability – Access to content across devices and networks is a challenge.
- Convergence – Mobile is converging with Net, Net is converging with cable, wireless phone is converging with desktop phone, voice is converging with data, CBS is converging with YouTube, Skype is converging with Qwest, … you get the picture.
- Others to watch – NFC, WiMAX, FemtoCells, Mobile IM, 4G, Mediaflo.
Your comments are always welcome.
Chetan Sharma
KTF Case Study
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Last year, I had the privelage of working in one of the most advanced mobile markets - Korea. Had a chance to work with some of the well-respected movers and shakers in the industry. The case study from my work can be found here.
Mobile the 7th Mass Media
Posted by chetan in : General , add a commentTomi Ahonen has pretty insightful discussion on mobile as 7th Mass media.
