*why dependence on the undersea cable business is not seen as good by the analysts*. Because analysts, in general are not good businessmen. They are parrots, trying to make a buck with a similarly oriented mind as would a parrot. The stories are many about businesses that needed to outsource their attendant revenue generating operations, but just could not give up the sexy sides of their businesses, and worse yet, did not have the overview to determine what sexy sides to give up, fearing to give up what they might really wish to have kept. DoCoMo is an example, they are giving up nothing in the way of content for their wireless enterprise. Look at AOL in the early days, same story. Captive, non-open markets is what drives this business model. Throw in competition, and the odds are likely they will fail. If analysts could run a business, they would go do an IPO or two for themselves, pronto. If "content" were such a good idea, take a look-see at ATHM....or ATT....only AOL with its captive browser market makes a go of it. How have the subscriber numbers grown at AOL over the past couple of years? Once the competition was brought forward, AOL went sideways. When I left AOL at 150+ it had over 19,000,000+ subs, about 21,000,000 I believe. Last I checked, it is still at ~21,000,000......competition does something to the mixing of access//portal//bandwidth sales models. Without competition, all goes well (ala cable TV). Put in the satellites to compete with cable (cable is by its nature a local monopoly, just like all of Japan is a local monopoly) and instant disruption of the model. Analysts are calling what is safe. Buy side, not sell side, analysts are more conservative about risking their voices on an unproven model. Proven models, however, yield about the same as a smokestack such as PG, and are just as innovative.....and still get whacked like a tech stock.
As far as this thought Rupert:
*Isn't that what GBLX said when they acquired GlobalCenter...syngeries with their business, etc...before selling it off to EXDS?* Please bear in mind precisely what was said is what was delivered, after selling off the business. Remember the traffic-clause in the EXDS deal? That clause was for EXDS combined with GCTR traffic, not simply GCTR traffic. And the cross-marketing of EXDS goods (which were better than GCTR goods) to GBLX customers is the perfect fit for development of GCTR, IMO. Analysts? When I question their comments, I first question their perspective. If their vision of the situation is different
than mine, I try to work out the differences. When I see someone touting "content", I think back to the business models delivering content....strictly retail stuff, IMO. To sell bandwidth, any attendant services to sell the bandwidth ought to be farmed out, locked in to the bandwidth sales, and focus on core competencies, not context. The days of vertical integration are going the same way as small fiefdoms and rotary telephones. There are other opinions on this issue of course. But it is my money, so I must make my own decision if I wish to risk losing that money without recrimination or blame. Some feel that to maintain a small profile of additional services to maintain high margin revenues is a good idea. In some areas this may be so, but when dealing in the ballpark where EXDS is playing to the size of customers we are speaking about, those customers will go for the top of the line provider, which GCTR was not, nor could it ever be in the face of an EXDS. Market realities changed much faster, crystallized much earlier than anyone else was prepared to deal with. WCOM? Show me their strength against this downdraft in telecom. (I also feel they(WCOM) are overplaying their inability to generate revenue, BTW, just to be on the safe side they are taking the hit now rather than later...i.e. WCOM is getting intentionally undervalued to prevent downside surprise in a rising market, soon to begin, but for telecoms not quite yet...)
WCOM bought DIGX to get into value adds....and now they restructure? I think we can all get the drift of what we are looking at...GBLX is a wholesaler of bandwidth to the end user...deeper into the local network on a limited basis, perhaps wireless connectivity will soon enable better penetration without the expense of fiber for a short haul scenario...little overhead to feed the bandwidth-generating attendant businesses, let them feed on the bandwidth sales pitch of the best bandwidth for less cost, and sell bandwidth, day and night.
Martin Thomas |
