Is Yahoo really changing?

At first, the initiatives Yahoo Inc. announced this past week, including new email product offerings and mobile deals in Asia, paint the company as a Web giant bravely regrouping for future battles. But rebel shareholders looking for a proxy battle, top executives heading for the exits and a reported major reorganization may only create even more trouble in an already sinking ship.

Right now, the company has an air of confusion about all of this. First, it's not surprising that Yahoo is reorganizing to try to accelerate growth. However, if the growth doesn't happen, the reorganization won't matter. A reshuffling of product organization could be made public in coming days, with the company centralizing several product groups, including its mail, search and home-page units. But, be careful with reorganizations since sometimes companies focus on looking busy instead of actually working on the company look better.

Secondly, Yahoo pointed to recent acquisitions such as RightMedia and Maven Networks, the expansion of its newspaper consortium and its new search outsourcing deal with Google Inc.

Thirdly, the expansion of email domains it currently offers. Yahoo says its user base of 260 million worldwide can start fresh with an address of their choosing by setting up an account that has ymail.com or rocketmail.com domains as their new email identity. Also, the company has signed deals to be the preferred search service with five more mobile-telecommunications companies in Asia, thus totaling 23 such relationships, increasing its share of the market for mobile-search queries. The focus on e-mail and mobility makes sense because these have traditionally been among Yahoo strengths.

Shareholders do not look happy either. Especially, the public attacks from billionaire investor Carl Icahn, who has repeatedly accused the board of stopping merger talks with Microsoft, and has pressured to replace CEO Jerry Yang if he wins in the upcoming board elections. Further, some senior executives have announced that they are leaving, including Jeff Weiner, executive vice president of the company's network division and Flickr founders Caterina Fake and Stewart Butterfield.

Even before the Microsoft bid went public last February, the company's reputation had been taking a beating for some years. Yahoo has struggled over the troubled introduction of Panama, the delayed technology meant to help Yahoo compete head-to-head with Google in search. To complicate things even more, Microsoft is actively recruiting in Sunnyvale and Yahoo's prestige as a Silicon Valley pioneer has been diminished as a result of recent struggles to regain a competitive edge.

Internet traffic to increase for online video

Cisco Systems Inc. is projecting that traffic on the world’s networks will jump 46% a year from 2007 to 2012. In 2012, Cisco claims Internet video traffic will be a stunning 400x carried on the U.S. Internet backbone in 2000. Video-on-demand, IP-TV, P2P and Internet video will account for 90% of all consumer IP traffic in 2012.

The networking-equipment maker, as part of a study called the Cisco Visual Networking Index, predicts that Internet video, which accounted for 5% of data traffic in 2005, will represent 30% of total data transfers by the end of this year. That will swell to 50% by 2012. Behind the trend is the surging popularity of Web sites such as Google Inc.'s YouTube, where users go to watch and share videos. Video already accounts for more traffic than the entire Internet generated in 2000, according to the study.

Cisco developed the study to help communications carriers make such plans. In recent years, the rapid growth of traffic has worried some Internet providers, which fear that the torrent of data could block their networks. Cisco prepared the study by collecting data from phone and cable customers as well as market researchers and internal experts. Web-based video is projected to overtake file-sharing as a percentage of Internet traffic in two years.

The study also found that Internet traffic is growing fastest in Latin America, followed by Western Europe and the Asia-Pacific region. The upswing in Internet penetration and the increasing number of universities and businesses with high-speed Internet connections will result in Latin America having the highest growth rate through 2012, according to the report.




Cisco Visual Networking Index

Sprint Nextel Bets on WiMax

Today, Sprint Nextel Corp. announced a move that would change the business model of its wireless operations. On top of selling traditional wireless service to subscribers, the wireless carrier is seeking to give access to the network to other type of products, such as digital cameras and billboards. The early WiMax revenue generated by Sprint will probably come from the subscription model. Longer term, though, the company hopes to make money from advertising. For example, it has a deal with Google Inc. in which more than half of the mobile-advertising revenue from the WiMax network goes to Sprint. It expects to post revenue of $2 billion to $2.5 billion from the network in 2010.

WiMax is a wider-ranging form of Internet access similar to Wi-Fi, but it uses licensed spectrum and is considered more dependable. The company has teamed with Intel Corp., Motorola Inc., Samsung Electronics Co. and Nokia Corp. to release 50 million WiMax products over the next three years, which would boost demand for WiMax services. For instance, Sprint could sell service, either as a one-time fee or regular subscription, that would allow consumers to send photos to their home computer from the camera through the WiMax connection. Nevertheless, the 50 million devices expected over the next three years still are light in comparison to Wi-Fi-enabled devices. Roughly 200 million consumer-electronic devices are expected to carry Wi-Fi chips by 2010, according to ABI Research.

Sprint’s bet will be expensive, about $5 billion through 2010. Its WiMax network, which it calls 4G technology, would pay off by winning new customers. The network won't just benefit Sprint. Fred Wright, who heads up cellular-network products and WiMax for Motorola, said he sees revenue opportunity in providing consumer devices, modems and networking equipment to support WiMax. In the 2010 to 2012 time frame, the market will be worth "billions of billions of dollars," he said.

There is no question that Sprint Nextel needs the help. The wireless carrier has been steadily losing customers over the past several quarters, and only in the recent quarter did it turn itself around. They hope the new brand for the business, Xohm, be powerful enough to put them back on track to compete with AT&T and Verizon Wireless.

AT&T Brings Video Competition to the State of Nevada

AT&T Inc. has announced plans to invest about $100 million over the next several years in fiber network upgrades, further broadband deployment and Internet-based technologies to bring new services, including television, to Nevada consumers.

So first, let’s take a look at politics. The investment commitment is the result of the enactment of Nevada Assembly Bill 526, which reforms video-franchising regulations. We congratulate and welcome the decision. The bill brings the benefits of video competition to Nevada consumers by establishing statewide uniform standards that restructure the video-provider authorization process and encourage competition and new investment.

"Today's announcement by AT&T indicates that when we create a pro-business culture in Nevada, companies will want to come here not only to do business but to plant the seeds or create investments that will allow them to grow in our communities," said Gov. Jim Gibbons. Ok, enough politics.

How about technology? AT&T will be able to deliver competitive video offers and bring several options to consumers. In part, AT&T's new technology upgrades will support Internet Protocol (IP)-based television, high speed Internet access and, in the future, Voice over Internet Protocol (VoIP) services. The infrastructure and investment will be part of a new set of communications and entertainment through the much advertised AT&T U-verse(SM) service. New services, more competition, that’s all good news for customers in Nevada.