Top 10 Wireless Stories of 2008(Gerson Lehrman Group)

Analysis: Story 10: Femtocell strategies are pursued. AT&T’s and Verizon’s pursuit of a femtocell strategy is good news for an important technology implementation. The need to drive intelligence down as close to the user as possible right into the cell and sector is paramount to ensuring multimedia and Internet services can be sold and used.Story 9: LTE is actively pursued by Verizon and AT&T. LTE got a big boost from these two carriers. Thanks to the participation of these two very deep pocketed carriers, vendors are able to pursue LTE standards and technology development without having to hype the idea to the financial community and their own shareholders. I have lost count of the number of times a vendor had to convince a carrier an idea was hot or Wall Street an idea was a money maker. Vendors were handed a “get out of jail free” card thanks to Verizon and AT&T. Look out for Huawei and ZTE because they are huge LTE supporters and I am guessing they are pressuring American carriers to buy LTE now.Story 8: Apple’s iPhone created such a stir in the handset community that now vendors like Nokia and LG utilize touch user interface technology, high resolution color displays and smartphone technology. Thanks to Apple, the other vendors did not have to spend an inordinate amount of time explaining any of this to their shareholders. Heck, even RIM got into the act with touch user interface technology. I have always believed that the best business is FEAR of losing. Once Apple announced it was going 3G, well that certainly got every vendor’s attention. I just love competition; it spurs innovation. If Nokia wants to stay the world’s biggest seller of mobile handsets; about 37 Million units a month, they better come up with something to compete with the iPhone.Story 7: Introduced in late 2007 and wildly promoted in 2008, Google’s Android platform has given hope to those who support open platforms. Unfortunately for Google, Android did not catch the attention of Wall Street the way the iPhone did. Unfortunately for those who support open platforms, Google’s platform has been criticized for not being that open. However, I would not worry about Google because Wall Street is looking for any exciting news or news that it can make exciting so Google will get some help by analysts in 2009. Further, all of the criticism from open platform supporters plus the recession may actually get Google to pay attention. Why did it make my list for 2008? The answer is simple it got the attention of most of the major technology players and ignored by Verizon. Verizon chose LiMo and was the only major U.S. carrier to ignore Android. Android created quite a stir and then suddenly dropped off the face of the Earth. Verizon saying no to Android also created a big stir as well. Verizon is still ignoring the iPhone.In 2008, Google launched their new web browser called Google Chrome. It kind of snuck in there with all of the bad news about the recession. What is important about this event is that Google has tended to more right than wrong. Next, the web browsing business is not what it used to be; exciting and quite frankly now requires you to have a mobile strategy.Google Chrome is part of larger effort for Google to become the dominant force behind content management. Keep an eye this company because Google Chrome has the potential to turn the world on its ears; quietly. Expect a mobile version for sure and expect it tied to Android. Android will be kind of pointless for Google if Google does not tie Chrome to Android – you have to generate synergies between your products. Story 6: Alcatel-Lucent says goodbye to Pat Russo and a sad realization. This giant of a telecom technology company changed leadership in mid-2008 without a lot of fanfare but a lot of relief. Pat Russo was a CEO who did a monumental job restructuring Lucent twice. Russo proved CEOs that restructure companies need to leave after a merger; CEO burn-out is not a myth. Alcatel-Lucent a combination of France’s premier telecom technology company and the United States once-premier telecom technology company handled the recent leadership transition somewhat smoothly now they have to fix the company in the midst of a global recession. This is a company to keep an eye open for. Two countries have too much vested in this giant for it to fail.The sad realization I mentioned earlier was the United States’ loss of leadership in telecom technology development. With the sale of Lucent to Alcatel, the United States allowed its premiere manufacturer and telecom technology developer to be sold off to the French. We even sold off our nation’s telecom think tank along with Lucent. Bell Labs has done nothing significant in the last two years. Even if Alcatel-Lucent is successful in its restructuring efforts, what is there left for the United States?Story 5: Sprint’s roller coaster restructuring activities for 2008, including the new Clearwire. Sprint hints at selling Nextel and then changes its mind. Then it closes the deal with Clearwire. Hesse makes management changes. Then WHAMMO!!! everyone realizes we are in a recession, now everyone is scrambling to figure out what will happen to the company now. I love the excitement and challenge of an operational restructuring. Financial restructurings (the typical ones) are about throwing money at a problem and buying your way out of a bad deal. Operational restructurings are about hunkering down and getting the problem fixed. Operational restructurings require real knowledge of the company and business; besides they are more exciting. However, the biggest news for Sprint was its continued support of WiMAX. This was a huge shout for support for a wireless technology many are seeing as 4G, which I can be included as one of those voices.Then there is the new Clearwire. The old Clearwire is replaced with the new Clearwire, but now the company can count its investors to include the old Clearwire, Sprint, Comcast, Time Warner, Intel, Google, and Bright House Networks. Not exactly a shabby group of companies but certainly a group of companies motivated to get into wireless. This joint venture was quite a coup, no matter what you think of WiMAX. The venture gave WiMAX a major boost. The real challenge now is getting this joint venture functioning. This group has committed to invest over $3 Billion into this company. With this much money and talent, there are no excuses for failure. Thank goodness Ben Wolff is running the show; Hesse has his hands full with fixing Sprint.Story 4: The collapse of Yahoo. This is not a good story for investors. However, the collapse of Yahoo should become a business case study for corporate executives and investors in how not to believe in your own hype, not under estimating the other guy, not over estimating your own value, not forgetting the shareholders, not getting greedy, and knowing your company’s actual value. Yahoo a disappointment to investors. Yahoo a broken company that is ripe for a 2009 takeover at a fraction of the price Microsoft was willing to pay for it. Maybe Microsoft can use Yahoo in its browser deal with Verizon Wireless.Story 3: Qualcomm versus everyone else. It should not matter whether you support Qualcomm or not. This company’s year long stories of winning and losing patent infringement suits has been a quiet disaster for valuing intellectual property portfolios, raising money for technology companies, and establishing corporate valuations for technology companies. Recession aside, Qualcomm’s losses have impacted all technology companies. Investors are getting smarter and asking questions like: Has the patent been granted? What country has the patent been granted? Is this a provisional patent? What other patents have been referenced in the claims?Qualcomm’s battles go right to the very heart of how technology companies establish and create value. Technology companies have always promoted their intellectual property portfolios as part of the value of the company. Patent portfolios establish clear lines of ownership and value for a technology company. When such ownership is unclear so is the value the portfolio has for the company.However, in the last couple of years, especially the first half of 2008, we saw major victories and settlements all involving Qualcomm versus some other company. Qualcomm turned patent portfolio valuation into a science and art. The patent portfolio became an integral part of establishing corporate valuation. Qualcomm knows how to take 100 patents and build a business. Qualcomm’s losses have had an impact on how startup technology companies will raise money and establish value. The recession has just made the situation even worse. Owning a patent will not mean a thing unless the patent has been challenged and defended in court – and that is a tragedy. Technology investors will no longer view a granted patent as a sign for market dominance or market leadership unless the patent has been challenged in court. With this recession, the patent infringement lawsuits will probably grow. Patents being filed today are mostly about incremental improvements/changes in the way a technology is implemented. It has become increasingly difficult for patent filers to define their unique invention(s) and given the increasing frequency of patent challenges, it is also becoming difficult for patent examiners to define those inventions. I am not blaming anyone. It is what it is. This is going to become a cancer to technology companies seeking investment dollars.After the recession ends next year, technology companies are going to have a rough road ahead raising money from now on. Corporate valuations for technology companies will get less help from their own patent portfolios.Story 2: The downfall of the last American telecom giant, Motorola. This year saw the collapse of a giant. Motorola the wireless technology company of all wireless technology companies cratered in 2008. I grew up in a world where wireless was synonymous with Motorola and this is why the downfall of Motorola is my Number 1. Motorola was key to creating the wireless technology we enjoy today. Unfortunately, Motorola did not change fast enough with the times and has been spiraling out of control for the last 4 years.Even with two co-CEO’s – Greg Brown and Sanjay Jha; running Motorola is tough. Jha is running the mobile devices division. Brown has the rest of the company. Frankly I don’t know how you can run a company with two minds. Further, just when you thought things may actually turnaround for this company; wham we get hit with the worse recession in decades. Before the recession, the company seemed to have a plan on how to resurrect itself. Part of its plan was to divest itself of its money losing handset unit. Then the recession came along and killed off that idea.This company cannot get a break. There has not been an exciting product out of Motorola’s doors since the original RAZR. The RAZR was the handset design that set off the race on innovative handset designs. The RAZR caused a paradigm shift in the way the industry viewed the handset; the handset was now a fashion accessory.This company is in trouble and needs a serious contract win. Let us hope China is a haven of opportunity for this American company. Story 1: The rise of Chinese telecom giants Huawei and ZTE. Huawei and ZTE are the next 8,000 pound technology gorillas in the telecom technology business. Both companies, cover the gamut of telecom both wireless and landline technology products and solutions. They are global equipment suppliers and are giving the likes of Nortel, Ericsson, Siemens, Alcatel-Lucent, etc., a run for their money; need I say more. An advantage both companies have over the other technology players is the fact that China is a huge trading partner of Africa. Africa is untapped territory for most of the major telecom technology companies. I predict both companies will be major forces in LTE and even WiMAX