Re: "The Internet Bubble" & 3G Wireless Ramblings (from a European perspective) from RedHerring
Borrowed from a "chirodoc" post on the Nokia thread
THE RED EYE: WIRELESS IN EUROPE
By Tony Perkins
Redherring.com, April 18, 2000
Just when we finished penning the following Red Eye, the market concluded its three-week roller coaster ride with the largest single-day drop in history. Before I could embark on my red-eye flight to Amsterdam, I had been interviewed by eight newspapers, from the Boston Herald to the Orange County Register. My popularity, unfortunately, is because of my recent book, The Internet Bubble, and perhaps my predictions' coming true made me the only happy fellow on Friday. Obviously we expected the valuation reckoning to arrive, but we were smart enough never to predict when that time would come. Up until three weeks ago, had you taken our advice, you would have left some serious profits on the table -- especially if you stuck with the Internet winners like Yahoo (Nasdaq: YHOO), whose stock has been on a continuous rise. If you did ride this coaster the way down, we're sorry for your pain. Going forward, we still recommend focusing on technology blue chips like Sun Microsystems (Nasdaq: SUNW), Intel (Nasdaq: INTC), Cisco (Nasdaq: CSCO), and Apple Computer (Nasdaq: AAPL). And as to whether we'll see a major tech rally in the near future, your guess is as good as ours. We'll stick with the tradition of not predicting specific surges and retreats. We will, however, supply you with technology happenings here and abroad to keep you informed and educated. We hope you enjoy the following, more positive story on the state of wireless technology in Europe and how the United States will fare moving forward.
Few would argue that Europe is the undisputed leader in the wireless space. Take a walk around Paris, London, or, the most impressive, Stockholm, and you'll see most natives with a phone up to their ears. Because of the Global System for Mobile Communications (GSM) standard that has been adopted continentwide for wireless communication, Europe has surpassed the United States in wireless adoption. Cell phone penetration is more than 60 percent in the Scandinavian nations and more than 40 percent in Italy and Austria, compared with less than 30 percent in the United States, according to the April special report on European wireless in Red Herring magazine. That said, however, there is no guarantee that the dominance will continue. Faster, more stable technologies are emerging onto the global market, and while Europe has to wait for government approval for adoption, U.S. companies have the independence to innovate without government restriction.
The Red Eye discussed the state of European wireless with Benoit Faucon, a French journalist and a freelance writer for Red Herring. Below are some of his interesting nuggets of information tied in with a brief picture of European wireless. Please read on to learn more. As always, I welcome your feedback.
CELLULAR SOARING OVERSEAS
SAN FRANCISCO -- Benoit Faucon compares the take-off of cellular devices in Europe to the proliferation of Internet sites around the world. "For the same reason the Web took off the day Tim Berners-Lee posted the source code of his invention on the Internet, wireless in Europe is hot. It's the use of open standards," said Benoit. He is referring to the wireless standard GSM that has allowed Europeans to roam freely between countries while using the same standard across the board, and has enabled the local wireless telcos to subsidize heavily the cost of cell phones through subscription fees, offering phones to consumers for as little as twenty cents. In fact, penetration of wireless services is so great that there are more wireless accounts than fixed phone lines in Austria, Italy, and Finland.
Europe has the wireless handset penetration, it has the adoption of mobile data services, and it has the best wireless equipment and infrastructure manufacturers, including Nokia (NYSE: NOK), Ericsson (Nasdaq: ERICY), and Psion (OTC: PSIOF). But moving forward, there is a lot up for grabs, and it mostly revolves around standards.
3G ON THE WAY
Within the next five years a third-generation (3G) standard is likely to replace GSM in Europe, called UMTS for Universal Mobile Telecommunications System. UMTS promises data transmission of 384 Kbps in its first iteration and 2 Mbps soon after. That far bypasses the GSM standard, which only offers 14 Kbps today, and when modified to the second-generation GPRS standard at the end of the year will offer between 64 Kbps and 384 Kbps. As well, the 3G standard will enable users to roam worldwide with a single, dual-mode handset that will eventually allow the world to enjoy the same advantages the European market has experienced.
That said, new technologies such as CDMAOne (Code Division Multiple Access), developed by San Diego's Qualcomm (Nasdaq: QCOM), and Europe's version of the technology, WCDMA, are competing against UMTS as the best technology for the 3G standard. According to Benoit, Qualcomm's CDMAOne should give the United States a leg up moving forward, but the billion dollar question is, which technology will prevail overall -- CDMAOne or WCDMA? Motorola (NYSE: MOT) is testing second-generation GSM in Europe and Qualcomm's CDMA in Asia, so competition is still open in many ways.
MORE THAN A WIRELESS ISSUE
However, the question of dominance in the wireless space is no longer just a wireless issue, since so much Internet content is converging with wireless devices. Although U.S-based Phone.com (Nasdaq: PHCM) developed the Wireless Application Protocol (WAP), the technology used for scaling the Web down to small screens and slow speeds, the European market has taken the technology and run with it. WAP is very big in Scandinavia, France, and the United Kingdom, with startups luring executives away from large companies. And with a venture capital infusion from U.S. firms such as Kleiner Perkins Caufield & Byers and Benchmark Capital, the entrepreneurial spirit is growing.
According to Benoit, setting up your own small company in Europe was not looked at favorably and was definitely not encouraged for graduates of elite schools. European society values being cultured over being rich, and money is not talked about nearly as openly as it is in the United States. "Now with both European and foreign companies massively funding entrepreneurs, there is much less risk," said Benoit. "This means the entrepreneurial spirit is now part of the culture, even though a lot of economical interests and personal connections work through elite school- and large corporation-based networks."
With all that said, the future of wireless will be very interesting. Europe has won the race thus far, but as Internet and wireless converge even more, the first-place trophy is up for grabs. What it will come down to is who has the best technology, the greatest adoption of standards, and the best capitalization. It will be a tough race -- but don't count Europe out of the running.
= Eric = |
