Charles River Partner Sees VC Shake Out

April 1, 2009

Charles River Ventures did the unexpected this week – it announced a new fund in a fundraising market that is perhaps the most difficult in memory.

The $320 million CRP XIV will enable the firm to invest in new startups at a time when many other venture partnerships are reining back and marshalling resources for their existing portfolios.

The fundraising environment is difficult, says George Zachary

The fundraising environment is difficult, says George Zachary

The investment opportunities are there, says Venture Partner George Zachary. Bandwidth demands to the home are growing as video spreads across the net – and corporate buyers, such as Cisco Systems, will need new hardware technologies to keep up.

Likewise, Web 2.0 continues to be interesting, as long as startups deliver utility to users and harness communities of members to hasten their development, says Zachary.

No one knows when the exits markets will improve. But young companies are showing they can become profitable on small amounts of money, says Zachary.

The reduced number of active venture firms may have another advantage. With the fundraising environment the “most difficult environment I’ve ever been involved with,” there could be a shakeout among VC firms, says Zachary. “There’s going to be a lot fewer people in the venture business.”

That means startups will face less competition.


Brocade Blasts Cisco’s Data Center Strategy

March 24, 2009

Inexperienced, proprietary and self-serving.

That’s how rivals describe Cisco System’s big push into the data center last week.

I think its gong to be a tough road, says Mike Klayko

"I think it's going to be a tough road," says Mike Klayko

With typical marketing aplomb, Cisco unveiled its Unified Computing System last Monday along with a promise to save customers 30 percent of their operating costs. The cost cuts come, it said, if they turned to Cisco for a broad range of their networking, storage and computing needs.

To make good on this last point, Cisco introduced its first blade servers.

Some rivals answered back almost immediately. “Would you let a plumber build your house?” asked Jim Ganthier, Hewlett-Packard’s vice president of infrastructure software and blades, according to eWeek.

On Monday, Brocade Communications Systems offered a pithy criticism of its own. And it boiled down to this: would you trust your infrastructure to unproven gear?

“I’m not sure the largest accounts in the world will put their most critical applications …on a version one product,” said Brocade CEO Mike Klayko in a video posted to You Tube. “I think it is going to be a tough road just because…they’re not a known expert in that space.”

Klayko argued that H-P, IBM and Dell are on version six and seven of their servers and that saving costs is not a secret known only to Cisco.

“We’re all going toward the same goal of taking cost out of the environment,” he said. “I just think we are better positioned.”

Of course, time will tell who is right.


M&A Shoot Out Seen For The Datacenter

March 23, 2009

Three broad-shouldered tech titan have their sites on the datacenter.

They all have plenty of money in their pockets. And they all have plenty of desire to capitalize on the big changes coming to way corporations manage and store the tons of digital data they create.

Cisco, IBM and H-P have the datacenter in their sights

Cisco, IBM and H-P have the datacenter in their sights

So it is not hard to imagine a coming acquisitions binge as they try to out-position each other.

The heated battle went public last week when Cisco Systems announced its data center strategy and the introduced a blade server, taking it directly into the path of IBM and Hewlett-Packard.

Cisco, more so, raised $4 billion in February, which analysts believe it will use for mergers and buyouts to supplement the partnerships it is forging to strengthen its product portfolio.

It may not  be alone. IBM is said to be considering an acquisition of Sun Microsystems, with its tape storage and other datacenter businesses.

Meanwhile, H-P last year acquired integration and consulting firm EDS, dramatically increasing its capabilities in corporate technology services.

So, which companies are most likely on the block? According to UBS analyst Nikos Theodosopoulos, possible candidates include Juniper Networks, Brocade Communications Systems, Netapp,, Accenture, EMC, VMware and BMC Software.

Cisco could easily be the most aggressive.

However, “we view the convergence of storage and networking in the data center as at least two years away,” says Theodosopoulos, with the recession “the lack of confidence on unified standards pushing out this market.”


Skype Targets Enterprise Telephony

March 23, 2009

Enterprise telephony is big business for Skype, potentially

Enterprise telephony is big business for Skype, potentially

In a blog post today, Skype announced the launch of the beta of “Skype For SIP,” a service geared to small and large businesses looking to reduce their telephony costs.

SIP is the leading voice over Internet protocol used in businesses telephony networks – there are millions of installations across the globe, says Peter Parks, a Skype’s spokersperson.

According to IDC, 438,000 IP PBXs were shipped worldwide in 2008.

With Skype for SIP, companies can use Skype’s VOIP network to make domestic and international calls using their existing telephone systems (PBXs and traditional phones) rather than their PCs.

Initially, Skype will charge about 2.1 cents per minute for calls to cellphones and fixed lines, but Skype-to-Skype calls will be free. Much cheaper than using a carrier. Now you’re talking!


Tables Turning In Telecom With Video Trumping Voice

March 20, 2009

It used to be telecommunications carriers made a living connecting phone calls.

But this year could be the first where the new video services offered by AT&T and Verizon grow faster than the telephone services cable companies are selling to their customers.

This year could be the first where new video customers at top telcos exceed new cable voice customers

This year could be the first where new video customers at top telcos exceed new cable voice customers

This analysis comes from the Wall Street firm of Stifel Nicholaus.

Up to now, the cables have made inroads into the teleco’s home turf, stealing voice customers faster than AT&T and Verizon could attract customers to their new fiber-optic networks, over which they deliver high-speed Internet connections and TV programming.

In 2008, for instance, two Baby Bells added 1.8 million video customers while the top four cable companies, such as Comcast, signed up nearly 4.8 million voice subscribers.

But the video programming has been popular with consumers, and both telecommunications carriers have received high marks for customer service.
In addition, voice signups at the cable companies have slowed, with new subscribers falling from 1.2 million in the third quarter of 2008 to 870,000 in the fourth quarter, says Stifel Nicolaus.

“We view telcos as the likely market-share winners over the course of the next couple of years, as cable’s core video product will continue to be stripped away by competitive telco offerings,” the firm said.


High Speed Gear To See Sales Boost Even As Networking Market Stumbles

March 20, 2009

Networking equipment sales to service providers and businesses will fall 10 percent in 2009.

But high-performance gear capable to 10 Gbps and 40 Gbps second speeds will buck the trend and rise, Dell’Oro Group says.

40 Gbps equipment is one bright spot

40 Gbps equipment is one bright spot

Switches and routers with 10 Gbps performance is seeing growing interest in businesses data centers and with high-demand servers.

The more potent 40 Gbps equipment is catching on with service providers in backbone router and optical transport networks.

The leaders in the market are as expected, according to Dell’Oro:

Cisco Systems hold the top spots in 10 Gbps switching and 40 Gbps routing. Nokia Siemens leads in 40 Gbps optical DWDM long-haul. And Broadcom is number one for 10 Gbps silicon controllers for servers.


Revolution In Interactive TV Viewing Coming Soon

March 16, 2009

The foundations are being laid for a dramatic change in television viewing that will take the passive out of couch potato.

Imagine social-networking features that allow people to chat with friends during a program. Messages would appear at the bottom of the television screen.

Social networking features may let friends message one another

Social networking features may let friends message one another

Or how about an interactive ad where a click will take a viewer to a Web site with more information or the option to purchase a product?

Home shopping channels might be so interactive that viewers could search through product lists and select the items they want displayed on their screens.

All this will be possible within the next 12 to 16 months, says Edgard Villalpando, senior vice president at ActiveVideo Networks, a private company developing software to make the television interactive. The San Jose company’s combination software and service works in conjunction with the set-top boxes consumers gets from their cable operators.

Already ActiveVideo has contracts with Oceanic Time Warner Cable in Hawaii and Grande Communications in Texas for home-shopping services.

“The big trick is how you monetize this,” says Villalpando. “The monetization all comes down to advertising.”

The shift in the television viewing might so dramatic that in two years programming itself could change. Production costs are likely to fall and some on-air segments could compress from 30 minutes to 15 minutes.

Producers also may choose to air some television series for four weeks instead of the typical 13 weeks, says Villalpando. With interactive television, audience feedback can be very fast.


Analyst: Cisco To Launch Densest Intel Blade Servers; Competes Head-To-Head With Dell, H-P, IBM, Sun

March 15, 2009

At an event Monday, Cisco Systems CEO, John Chambers, will unveil the company’s first ever servers, code-named “California”.

According to an IMEX Research report, Cisco’s blade servers will feature two Nehalem 5570 Xeons based on Intel’s Core i7 processors, with up to 384GB of memory, well above the maximum capacity of 128GB in today’s blades and allowing up to 100 virtual machines on a single server.

“Cisco will be entering the market with by far the densest and powerful blade servers and data center infrastructure than any existing on the market,” indicates the IMEX report.

The “California” blades will integrate VMware’s virtualization software, and embed a Nexus 5000 networking switch, putting computing and networking in a single box, thus removing bottlenecks at a memory and networking level.

The San Jose, Calif.-company’s latest servers will compete head-to-head with blade offerings from Dell, H-P, IBM and Sun.


Market For IPTV Bucks The Recession And Grows

March 11, 2009

Television delivered over the Internet – known as IPTV – is breaking ranks with the sour markets of the global downturn and growing despite the tough times.

And it has begun taking it out of the hide of cable and satellite TV services.

Subscribers to IPTV doubled in the past year to 23 million

Subscribers to IPTV doubled in the past year to 23 million

Vendors of IPTC, including Verizon and AT&T, added 3.2 million customers in the fourth quarter. That brings total subscribers to 23 million, double the figure from a year earlier, says Dell’Oro Group.

The region encompassing Europe, the Middle East and Africa remains the largest market place. But the fourth-quarter growth was due to rapid adoption in the North America, where AT&T and Verizon aggressively marketed the service.

Despite price declines, the market for IPTV set-top boxes is seeing growth, but the market for set-top boxes supporting cable and satellite services is shrinking, says Dell’Oro Vice President Greg Collins.

These dynamics are setting up an interesting tussle between Cisco Systems and Motorola, the top box makers. Cisco is gaining share in cable while Motorola is gaining share in IPTV, says Dell’Oro. With a new generation of high-definition box filtering into the market, well, let the games begin!


Feds Still Trying To Figure Out How To Spend Broadband Funds

March 10, 2009

How the broadband boost promised by the Obama Administration takes shape is still a vaguely defined work in progress.

FCC Chair Michael Copps is seeking public imput on where to spend broadband billions

FCC Chair Michael Copps is seeking public imput on where to spend broadband billions

The government plans to spend $7.2 billion to enhance broadband networks across the country and primarily in rural areas. On Tuesday, it kicked off its efforts by saying the money, contained in the economic stimulus bill, will be spent by October 2010.

But it acknowledged it has not decided how to define “underserved” and un-served” communities, those slated to receive the funds.

With the U.S. facing a two-pronged broadband deficit that dramatically worsened under the Bush Administration, the question is a complicated one. First of all, many rural communities in the U.S. don’t have broadband access.

Secondly, communities that do – rural or not – pay higher prices for slower speeds than many leading developed countries around the world, including Japan, Korea and France.

I have hoped that the government’s fund would address both issues. But it was unclear from Tuesday’s briefing whether this would be the case.

Here are excerpts from the stimulus bill that will guide policy makers: “1) provide broadband service to unserved areas of the United States: (2) improved broadband service to underserved U.S. areas;…(5) stimulate the demand for broadband, economic growth, and job creation.

“Provides for related grants to be used, among other things, to: (1) acquire equipment, networking capability, hardware and software, and infrastructure for broadband services; and (2) construct and deploy broadband infrastructure.”

I hope the Federal Communications Commission view its role in the broadest terms possible, addressing the speed deficit as well as rural access.


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