Wednesday, August 31, 2011

Openwave fights back

A day after Openwave announced it has come to an agreement with Myriad group to settle their patent dispute, Openwave files for legal action against Apple and RIM.

If you remember, Openwave invented most of the technology around the mobile internet and browsing on a phone. Back in the days, it was called WAP. The user experience was poor (monochrome, slow, text based browsing) but was the foundation for today's Smartphones and tablets' success.
Openwave was then the uncontested market leader in the growing browsing gateway business and was licensing its technology to most handset makers, along with a WAP browser.

In 2008, then in full reorganization, Openwave sells the browser and messaging business unit to Purple Labs for $32M. It was not a glorious moment, after being the pioneer and leader of mobile internet, Openwave was separating from key assets to alleviate the financial pains it was experiencing. Along with these business units, a number of patents were transferred to Purple Labs. Purple Labs, now Myriad group has been contesting Openwave's right to use some of the technology derived from these patents and yesterday's announcement is now settling that matter. Openwave essentially buys back the patents for $12M.

Some of these patents are now the basis for the legal action filed today by Openwave against Apple and RIM.
"The complaint, filed at the International Trade Commission in Washington, DC, requests that the ITC bar the import of smartphones and tablet computers that infringe Openwave patents, including, but not limited to, Apple’s iPhone 3G, iPhone 3GS, iPhone 4, iPod Touch, iPad and iPad 2; and RIM’s Blackberry Curve 9330 and Blackberry PlayBook."

  •  Openwave's 212 patent generally allows a user to use e-mail applications on a mobile device when the network is unavailable — such as when a user is on an airplane.
  • Openwave's 409 patent generally allows the mobile device to operate seamlessly, and securely, with a server over a wireless network. 
  • Openwave's 037 patent generally allows access to updated versions of applications on mobile devices. 
  • Openwave's 447 patent generally allows consumers to experience an improved user experience in navigating through various pages of information without delay. 
  • Openwave's 608 patent generally relates to cloud computing. For example, the 608 patent enables data to be accessed or shared by different devices such as mobile handsets or computers. 
These legal actions won't change Openwave's capacity to effectively market their technology, but their capacity to monetize their intellectual property, if successful, will impact positively their valuation in the mid term.

Saturday, August 27, 2011

Dear Openwave, Juniper is now partnering with RGB Networks

In a solution brief stealthily released this week, Juniper introduces RGB Networks VMG transcoder product within its Media Flow solution as their partner for adaptive streaming.

This solution brief, centered around mobile video delivery uses a lot of the rhetoric associated with mobile TV and TV everywhere, touting computational performance and low heat dissipation for instance. The solutions seems to be addressed at carriers, content owners, cable operators who want to enable their own mobile CDN, rather than relying on Akamai and Limelight.
It is not surprising since it is, after all, RGB's core competency, to extend professional video encoding from cable to mobile networks. Hardware based, high performance adaptive streaming and its three proprietary flavors (Apple's, Microsoft's and Adobe's) seem to be the core of the solution. That is, until their acquisition of Ripcode last year which yielded, beyond a handful of wireless customers and a software based solution, the embryo of video optimization  technology for OTT traffic.

What I find interesting, is that the same solution from Juniper, Media Flow was supposed to be as well the core of the Openwave - Juniper partnership around video optimization announced at Mobile World Congress this year. 
If you remember the press release at the time, "Juniper Networks (NYSE: JNPR) has selected the Company [Openwave] as a strategic partner to integrate its Media Optimizer into Juniper’s Media Flow solution for mobile video optimization".

We all have seen Openwave's struggle to convince the market that they indeed have technology in this space, after over 30 announced trials and customer engagements and only Wattanya Maldives to show as an announced customer in the space.

At the same time, RGB Networks has made many inroads in licensing and OEMing its technology to core networks, VAS and optimization vendors to perform transcoding, not in the mobile TV/mobile CDN space, but for video optimization. Several vendors in the space have embedded their transcoder in their solution.

Reading between the lines, I can't help but think that Juniper might be thinking of RGB as an anchor technology partner for their Media Flow solution. It makes sense to consolidate both the video delivery for on-deck content announced here with the video optimization for OTT content with a single technology partner. At that point, RGB has a lot more references and technology than Openwave.

 I would not be surprised if Openwave's partnership with Juniper was at its end, whether it will be officially acknowledged or not, only 6 months after its announcement.

Tuesday, August 16, 2011

Google / Moto: your TV is the next battlefield

Goodbye Moto!

many out there look at Google`s acquisition of Motorola as a defensive step to ward off patent trolls and competitors aggressively pursuing Google and Android licensees. With 17,500 granted patents and another 7,500 filed, there has to be some value from Motorola`s pioneering technology in wireless networks. Whether this is worth $10.5B after the cash retained by Motorola remains to be seen.

While this is undoubtedly a key aspect of the transaction, I would like to look at the impact of this acquisition on the mobile and TV market.

Would Google entertain a rebirth of their handset strategy? While the attractiveness of the Android ecosystem is largely as a means to have a more open alternative to Apple`s iStore, nothing prevents Google to look at a more vertical, better experience on Google devices than on the OEMs. Lets not forget additionally, that part of the transaction is Motorola Set-top-box and connected devices business. Motorola, according to a study published by The Multimedia Research Group is ranked worldwide market leader in Video head-end and set top boxes shipments.

Why is that important? The next battle room for video is your TV screen. According to Strategy Analytics, TV industry generates $392Bn per year in revenue, half from advertising, half from subscription, payTV...
These revenue flows back approximately 1/3 to content owners, 1/3 to aggregators and channels, 1/3 to service providers.

The next frontier in TV, is OTT (Over The Top). In an OTT model, content providers and aggregators share the revenues 50/50, with nothing left for the operators. As Samsung, connected TV market leader, has created their vertical environment, with SmartTV, creating essentially an app store and a suite of apps that can run on their connected TVs, set-top-boxes, tablets and phones, I am willing to bet that we will see an Apple TV pretty soon (not the little box that connects your TV to iTunes, an actual Apple branded TV).

From then on, it is not difficult to see that the next OS and app store battlefield will be in your leaving room.

Will Google revive GoogleTV, with a new Android environment that can be ported by Consumer Electronics (CE) giants on their connected TVs, set-top-boxes, tablets and phones?
Will CE vendors choose to use Android, now that Google is also a competitor, with Moto`s acquisition? Or will they try to emulate Samsung and create their closed ecosystem?

I will examine in future posts some of the defensive strategies operators are putting in place to retain some value in this changing ecosystem.
I don`t know you, but for me, it spells interesting times for the future. Let me know your thoughts....

Monday, August 1, 2011

What makes wireless software companies profitable

Throughout my career, I have often been in situation to transition companies from custom development to product to solutions. We have discussed here what influences most the penetration of a new technology in the ecosystem. Along the road, I have noted a few numbers that seemed to make the difference between the companies that reached a profitable stage from those who did not. I will focus here particularly on product development and product line management

Below are a few of these numbers. I have researched over time many of those. I won't bore you with the maths or the academics, here are just my magic numbers.

Golden operating numbers for profitable wireless software business:
  • Gross margin >60%
  • License 70%
  • Maintenance and support 12%
  • Professional services 8%
  • Hardware / third party 10%
Many companies (all?) have to choose between short term, tactical opportunities, which might not be contributing greatly to the company's overall strategic direction but can influence the results of the quarter, and long term investments such as launching a new product which will cost money but not see an immediate result. Here is how I have been measuring whether my projects can meet the above profitability objectives.

Change requests, custom development
  • Roadmap acceleration 50% margin
  • Regular change request (could be resold but would not develop it if it were not paid for) 66% margin
  • Customization that cannot be resold 75%
  • Customization on old product branch, new product branch 80% and up
  • There is no such thing as "we'll make money on the next ones" or "lets spread the cost across several opportunities" . A custom work needs to be profitable on is own.
Business case, new product introduction

  • break even (development costs) within 12 months of the first selling month (GA)
  • 3 times development costs recovered in sales within 24 months 

These numbers do not guarantee profitability but I have found that not using them guarantees losses :-).

I am not sure these will be useful to you but I found them good guidelines throughout my career.

PS: Don't forget Hofstadter's Law: "It always takes longer than you expect, even when you take into account Hofstadter's Law"