Microsoft & Skype

May 18, 2011

One can see why having Skype in the fold interests Microsoft.  The company could place the Skype technology across many platforms, from Office to Xbox to Windows Mobile 7 and beyond.  From the outside, the concern is the $8 billion plus price tag when even Skype’s own IPO filings were indicating a value of around $5 billion under best case scenarios.    Microsoft did not appear to have any significant competition for Skype, as the media has reported that Google and Facebook showed moderate interest.

Additionally, Skype has many rivals now and its technology is not proprietary, at least to the extent of preventing many entrants into the sector.  On top of that, Microsoft’s history of integrating acquired companies is spotty.  Lastly, the mobile operators may not react well to efforts to place Skype within Windows Mobile, as it could potentially eat into their revenue if customers choose to make free Skype calls that also use network bandwidth.

Having said all that, I’m looking forward to what Microsoft can do with its largest acquisition ever.  I’m eager to see if it will make Windows Mobile more competitive with Android and Apple and make Office more intriguing.  And, I fully expect to begin seeing a lot more ads in Skype as part of the monetization process.


Helsinki & Seattle: Tech Twins?

May 17, 2011

I see some similarities between Helsinki and Seattle with regards to where they stand in both the tech and venture financing sectors.  Both are somewhat overlooked because of their locales.  Seattle is considered too far from the center of activity in the Bay Area, Helsinki too distant from London, Frankfurt and wherever else Europe’s entrepreneurial and venture capital center sits.  Both cities, occasionally, are seen as having too few new ideas and funding.  Each has had promising companies/products snapped up by bigger players in bigger markets before they could establish themselves.  Both have local governments that do not necessarily provide a supportive business climate for startups.  Besides location, the weather in each city is not conducive to the successful recruiting of outsiders.

However, each city has clearly managed to develop a reputation as a tech center, even if smaller than rival regions.  Each has developed successful, world renowned companies/products in the tech space over the years.  Both have excellent universities providing ideas and talent.  Both have traditionally been strong in the telecom (McCaw and offshoots, Nokia) and software sectors (Microsoft, Linux).

We already have some tie-ins amongst institutions: the University of Washington, especially via its Scandinavian Studies Department and Foster School of Business, with the University of Helsinki and Aalto University, to name two; and of course, now the Nokia – Microsoft partnership.  Where else can groups under the technology umbrella from each region come together to benefit one another?  Perhaps venture capital or growth sector financing firms, incubators or start-up accelerators or even at the university level, tech transfer offices, might find some ideas worth pursuing with such interaction.

In short, the sectors in both cities succeeded in the past and should be able to carry that success forward into the future.  Given the similarities, maybe there is room for additional collaboration down the road.

T-Mobile USA and AT&T

May 16, 2011

This proposed deal seemingly validates AT&T’s strategy going back a handful of years of pushing forward with new technologies, from its bandwidth capacity to innovate phones with many features.  Conversely, around this same time, T-Mobile made the choice to be the value player amongst the mobile operators.  The company purposely delayed investing in its network and in seeking the advanced devices that would benefit from an upgraded network.  For awhile, this decision to follow its competitors worked, as the operator continued to add customers who favored the lower priced plans, even if it meant not having the most current phones.

But as network capacity increased in importance as customers began demanding the newest smartphones, T-Mobile’s strategy left them behind their competitors, with little leeway for catching up.  The decision to sell to AT&T is an acknowledgement that the gap had become too great to bridge on their own.  For AT&T this deals works as a shortcut to gaining needed spectrum to handle mobile data from the feature packed smartphones customers now expect.  Having decided that the government wasn’t freeing up enough spectrum via auctions, they must have decided this was their quickest way to gain capacity.  No doubt Verizon and Sprint are watching this play out with great interest, as they’re probably next up to seek merger approval.

Depending on the whims of the regulators who must approve the deal, it should probably pass.  AT&T has guaranteed T-Mobile USA a large breakup fee of over $6 billion plus other awards should the deal fail.  Regardless, one would think T-Mobile USA’s days as an independent operator are numbered.  While T-Mobile could spin off the operator into a public entity in the event that the merger doesn’t succeed, T-Mobile USA has been losing customers at an alarming rate and would have an extremely difficult time recovering at this point.   Its fate was sealed with those decisions made in the middle of last decade.

Ironically, this means the last of the mobile operators based in the Seattle area is being merged into an entity that already encompasses two previous versions of the same carrier, McCaw Wireless and AT&T Wireless.  We can hope that the mobile sector will still be a thriving industry locally even without a large, national player calling the area home.