A negative analysis of IBEM (not sure if I would trust a source like ipoisland, which spells satellite as "satillite"):
ipoisland.com
Analysis: At brief glance iBeam looks like a tremendous company and a tremendous IPO as well. Yet when you scratch beneath the surface there are some fundamental flaws in the company's business model. iBeam's business model is predicated upon the belief that much of the Internet congestion lies on the long haul Internet backbone. In a simplified manner the Internet is broken down into two main parts the long haul backbone and the local loop. The local loop consists of the, user, local transmission pipes, and the local switching station. The backbone is basically the miles of fiber run by companies such as UUNet, Qwest, AT&T, and others. While iBeam's belief that much of the congestion currently lies on the long haul side of things, is correct in the short-term, over the long haul the local loop will become the problem. Eventually the long haul Internet backbone will be an all optical network, that allows data to be instantly zapped via light from coast to coast. Once the data reaches the fringes of the long haul network it must be converted into electronic systems for the local loop. Why does it have to be converted? Because it is way to expensive to install optical technology within the local loop. This will be true for a long time. Once the Internet backbone becomes all optical, which it will be within 5 years, iBeam's satillite based solution will become obsolete and a detriment to performance. This is because in order for the iBeam solution to work now we simply transmit the data to space which takes a few seconds, and then beam it back down to the local loop. With an all-optical network, data transmission time will be measured in the nanoseconds, and by the time the data is transmitted in one direction to the satillite it could be sent back forth a few times over an optical network. Therefore we believe iBeam's business model is simply outdated. Yet despite all of the above we still believe iBeam's IPO may be a solid performer. For starters the company's corporate investors are top notch, Intel and Microsoft. Also the deal's underwriters are led by the best in the business in Morgan Stanley Dean Witter. But regardless of any opening day pop, we recommend that you stay away from this noble but flawed experiment, that is iBeam. |
