Business

Changes to business digitisation brings

Apple To Use Intel Chips
The rumours have been floating around the Internet for weeks, but it now seems certain that Apple will announce later today that it will be switching its computers to Intel’s.
The move, certain to get some Mac diehards crying into their single button mouses, means the end of Apple’s partnership with IBM, whose PowerPC processors have powered Macs since 1994.
Insiders report that there will be a phased transition to Intel’s chips, with Apple planning to move lower-end computers like the Mac Mini to Intel chips in mid-2006 with beefier models like the Power Mac moving over in mid-2007.
The story first surfaced last month in the Wall Street Journal, but many analysts laughed it off saying that the move would be both difficult and risky.
But the rumours persisted, fuelled by comments by Anand Chandrasekher, VP and GM of Intel’s Mobile Platforms Group at the Computex trade show in Taipei last week.
When asked about the deal he said that the company has long pursued a deal with Apple, adding, “We always talk to Apple. Apple is a design win that we’ve coveted for 20 years and we continue to covet them as a design win. We will never give up on Apple.”
This isn’t the first time that Apple have shifted processors, with the company successfully changing over from Motorola’s 680×0 line of processors to the Power line (jointly made by IBM and Motorola) in the 1990s.
The switch seems to be have been prompted by several factors. IBM had previously been publicly slapped down by Apple for their chip delivery problems, and Apple’s plans for a wide variety of PowerPC processors wasn’t going down well with the Big Blue, who harboured doubts about the profitability of a low-volume business.
Although the loss of the Mac businesses is something of a slap in the face with a wet fish to IBM, shareholders can be consoled by the fact that the Power family processors will be used in future gaming consoles from Microsoft, Sony and Nintendo.
Intel remains the Big Cheese of the PC processor business, hogging an 81.7 percent market share in the first quarter of 2005, compared with 16.9 percent for Advanced Micro Devices, according to recent research.
PowerPC processors aren’t included in these numbers, but Apple only have around 1.8 percent of the worldwide PC market.
Steve Jobs will be making his announcement at Apple’s Worldwide Developer Conference later today.
Apple’s Worldwide Developer Conference
Apple
Intel
6 June, 2005
EU To Unify Wireless And Broadcast Rules
The European Commission has announced plans to create a single set of European Union rules on broadcasting and the wireless spectrum.
The proposals are aimed at easing restrictions on advertising and encouraging Internet and mobile phone media to do their thang. The proposals will also allow telecommunications companies to trade their expensive third generation mobile licenses.
At the moment it’s a bit of a free for all in Europe, with each country free to set its own broadcasting rules. The fact that the last EU guidelines were penned way back in 1989 – before mobile telephones and the Internet hit the mainstream – has added to the confusion.
“It would be unfair if traditional broadcasting were to be regulated very heavily, and new broadcasters on mobile phones and the Internet were subject to no rules,” observed Commission spokesman Martin Selmayr.
The new proposals form part of a five-year strategy to turbo-charge the European digital economy, although they’ll still have to circumnavigate acres of EU red tape, with all changes needing to be formally proposed and approved by the European Parliament and national governments.
The main thrust of the proposal by the Commission involves loosening advertising rules for traditional TV broadcasters, letting them foist more than the current advertising limit of 20% a day on hapless viewers.
The proposal will also see the end of enforced ‘ceilings’ on commercial breaks.
“These rules should be more flexible. It should be up to the programmer to decide when to interrupt a football match or a soap opera,” said Selmayr.
Currently, Internet and mobile phone broadcasters are compelled to respect diverging national rules, which could cover anything from security to anti-racist legislation. The new proposals would mean that they would only have to comply with their own country’s domestic broadcasting rules.
Europe is also looking to free up the highly lucrative wireless spectrum – currently worth something like €9 billion (~US$11bn ~£6bn) a year – and hopes that digital frequencies used by services such as mobile phone operators, police radar and radio will be brought under centralised EU control by the end of 2005.
“Such a policy is required if we want to make efficient and cross-border use of this very valuable economic resource,” insisted Information Society and Media Commissioner Viviane Reding said.
EU officials have stated that by centralising control of the use and trading of spectrum and frequencies, the trading of third-generation mobile licenses could be sped up.
Most national regulators have made 3G license trading verboten, with many telecoms companies being forced to take on an almighty pile of debt to buy the licenses.
The proposals were welcomed by ETNO, a lobby group for Europe’s telecommunications networks operators, while adding that “one of the main challenges of the initiative will be to develop a set of policies that continue to foster competition whilst at the same time creating incentives to innovate.”
European Commission
i2010 – A European Information Society for growth and employment
2 June, 2005
.xxx Porno Domain Approved
Saucy sensation seekers and sleazy surfers will be rewarded with their very own porn-friendly set of .xxx domains before the end of the year.
The Web’s virtual red-light district has been approved by ICANN, the non-profit organization responsible for Internet addresses.
ICANN has announced that it is working with the ICM Registry to finalise the new top-level domain details (other top-level domains awaiting a decision from ICANN are .asia, .mail, and .tel)
In an interview last year, Stuart Lawley, chairman of the ICM Registry, stated that .xxx domain names would cost around US$60 (~£32 ~€47.8) and have no restrictions on content, so long as sexually explicit material only featured adults.
“Apart from child pornography, which is completely illegal, we’re really not in the content-monitoring business,” he said.
It is hoped that pornsters will voluntarily shift from their current .com addresses, thus making it easier for parents to filter out adult material, but in an industry not exactly renowned for its high moral stance, we anticipate that not all will be wiling to switch from their lucrative, high profile domains.
Moreover, with the $60 price tag being around ten times higher than the cost of many dot-com names, we suspect that many porno kings will stick with the cheapest option. The wannabe-Bonking Baron’s that don’t currently have established sites with prize domain names are bound to pile into the .xxx domains – either to use them or with the hope of selling them on.
It’s common knowledge that the ‘right’ porn domain can bring a near guaranteed financial fortune. The long disputed sex.com domain is widely thought to have brought in up to $1m/month, simply from banner ads.
The ICM Registry plans to handle the technical aspects of running the master database of .xxx sex sites, with the non-profit International Foundation For Online Responsibility (IFFOR) charged with setting the rules for the .xxx domain.
The IFFOR will have a seven-person board of directors, featuring a selection of bizarre job titles such as “child advocacy advocate” and “free-expression aficionado” along with some big-hatted, cheroot smoking, pink Chevvy-driving dude from the adult entertainment industry.
Unlike the milk-snatcher Margaret Thatcher, the ICANN’s decision proves that they are definitely for turning – in November 2000, the ICANN staff rejected ICM Registry’s first application after objecting to domains such as .kids and .xxx.
An outrage of politicians were quick to deride the decision with the Republican Fred Upton demanding to know why ICANN didn’t approve the .xxx domain “as a means of protecting our kids from the awful, awful filth, which is sometimes widespread on the Internet”.
With a little less hand-wringing, Sen Joseph Lieberman complained to a federal commission that the domain would be an essential means to force adult Webmasters to “abide by the same standard as the proprietor of an X-rated movie theatre”.
The American Civil Liberties Union has expressed its concerns about .xxx domains, suggesting that some uptight nations may force sites dealing with sensitive topics such as gay rights, homosexuality or birth control into the easily blocked .xxx zone.
ICM Registry – Sponsored Voluntary Adult TLD Application
Internet Corporation for Assigned Names and Numbers (ICANN)
International Foundation for Online Responsibility
2 June, 2005
Men Remain Moguls Of The Mobile:Cingular Wireless
A survey by Cingular Wireless has revealed that men spend more time yakking on mobiles than women.
For the fifth year on the trot, the annual survey has men coming out on top of the blabber’s league, with the fellas talking 35 percent more on their wireless phones than women – more than double the 16 percent lead men held in 2004.
“The results are undisputable, and after five consecutive years, men are definitely the top wireless talkers,” said Jennifer Bowcock, Director of Consumer Media Relations, Cingular Wireless.
It may seem at odds with the experience of some blokes, but the survey concluded that men communicate, grunt, leer, mumble or beerily chortle down their phones for an average of 571 minutes a month, compared to an average of 424 wireless minutes a month for women.
Traditionally, the home phone has been the favoured instrument of choice for women keen to sit down with a cup of tea and hog the phone forever, and this is reflected by the study which shows that women natter for 491 minutes each month against the 321 minutes per month for men.
The gap is narrowing though, down from 62 percent in 2004 to 53 percent in 2005.
Even when it comes to the traditional male domain of gadget owning, women still lead the way, with 25 percent of women owning a camera-capable cell phone in 2005, against only 21 percent of men.
Women aren’t afraid to get snapping either, with 60 percent using their camera feature frequently or occasionally against 40 percent of men using it as often.
The survey also discovered that men and women use wireless phones for different purposes, with 82 percent of the lay-dees using their phones to talk to family and friends, while only 62 percent of blokes use their phones for that purpose.
However, figures revealed that men spend twice as much time using their cell phones for business than women.
The survey concluded that convenience still remains the numero uno reason for both sexes using their mobile phones, with 62 percent indicating they primarily use their wireless phones for convenience purposes. Safety comes in second at 19 percent.
Cingular Wireless
1 June, 2005
Does Anyone Understand The Ringtone Business?
It’s OK to say you don’t understand the ringtones business.
I know there are people who initially claim they do, but not one of the many people that I’ve spoken to about the ringtones business can explain its workings to me. I’m not talking about how the downloads work, but why it’s so big.
Anyone in the UK will be able to tell you at some length about the Crazy Frog ringtone – it’s been a cultural phenomenon.
When they make I Love May 2005 (inevitable), some sardonic fellow (they normally are fellow, those sardonic ones) will make a witticism about it, that’s just long enough to fit perfectly into the edit between the clips. Then those watching will be able to delight in hearing the hallowed tones again.
Reasons for this started with an incessant TV advertising[*1] campaign.
This lead to three possible reactions – the haters, the lovers and the not-bovered.
I’d imagine that lots of the UK viewing public hate it to the point of distraction, despising the ‘music’ and being irritated at their generally bafflement at ringtones. In fact 60 people chose to voice their disapproval to the UK’s Advertising Standards Authority (ASA), other chose to complain about other parts of the frog, which quite honestly I can’t say I’ve been looking for. As quoted from the ASA Website.
“It wasn’t long before complaints were flooding into the Advertising Standards Authority (ASA). Some viewers complained that the commercial was annoying and broadcast far too frequently. However, the main crux of the complaints related to a far more unusual and surprising subject matter. Frog genitalia.
Viewers had noticed that Crazy Frog was very definitely male due to a protrusion that stuck out from his cartoon body. The complainants found this inappropriate. Some were worried about children seeing this kind of advertising material whilst a few parents had felt embarrassed by some of the questions their children had asked them.”
The Crazy Frog was investigated and exonerated on all counts.
As to the regularity of the adverts, they said
“Lastly, though the ASA accepted that advertisements which are broadcast frequently can rankle with some viewers, it didn’t uphold the complaints, as it’s the advertiser and broadcaster who decide how often they show a commercial.”
So the ASA say it’s OK for them to continue spreading their joy among the nation – even if they don’t want it.
This has started a revolt from other advertisers who don’t want to be on the same slot as the Crazy Frog. On some channels this has lead to many Jamster ads[*2] being shown in the same break. In fact, this afternoon on E4, nearly all adverts were Jamster’s.
In the process of this it has become the first ringtone to reach number one in the charts since downloads have become included.
Popjournalism tells us
“Representatives from the UK Singles Chart said the novelty track sold 150,000 copies and was at one point outselling Coldplay’s new single “Speed of Sound” on a four-to-one basis.”
This stuff has been on the news and news quizzes. We’re told it’s sold over 11 million copies throughout Europe for goodness sake.
Ironically its popularity is the tragedy of its success.
How often do people who have chosen that as a ringtone incorrectly reach for their phone, when its played in a TV ad; on the news; a chart show on the radio; or as someone else’s ringtone? Conversely, how many have missed calls because when their phone was ringing, when they assumed it was from another source.
Its popularity defeats its main purpose – you can fail to be alerted when someone is try to contact you.
This comes to the core of my misunderstanding of ringtones.
The draw of ringtones is to individualise the phone handset. But with ringtones, there is no scarcity of supply. Everyone can have one, if they pay for it.
If a ringtone becomes well known enough, like Crazy Frog, the purchaser ends up paying for the privilege of advertising their product for them.
I can foresee the next wave of ringtone distribution will be quite different – generating the same kind of revenues (remember, 11m ringtones at £3) without the huge amount they’re spending on TV adverts.
I would mobilize their most powerful sales force – the ringtone user. By enabling each of the ringtone enthusiasts to act as sales people, they let them sell tunes directly to their friends, with a percentage of the sale to them for their trouble.
Unfortunately instant gratification for the keen purchaser is not currently possible due to the inadequacies of phone DRM, so direct transfer of music peer-to-peer is not allowed, due to the “fear of piracy”, or not trusting your customer as it’s otherwise known.
Perhaps a SMS/WAP passed token would work …
As to how do you judge what’s going to be a massive smash – I really have no idea
[*1 A sweet spot has been created. The downward pressure on the cost of advertising on the UK’s terrestrial channels, has crossed the rise in income generated by the ringtone business. This sweet spot, unfortuntley, creates very frequent TV adverts for ringtones.]
[*2 Jamster sell the Crazy Frog ringtone, other ringtones, wallpapers, etc]
An extensive history of the Crazy Frog birth is available from bloggerheads.
31 May, 2005
Ofcom R18 Ban: Comment
Following Ofcom publishing its new broadcasting code earlier this week, Russ Taylor of ofcomwatch outlines his reasons for disliking the R18 ban. He makes good points about the difference between IP delivered content and that which is broadcast. Simon
I’m going to stop banging-on about the Ofcom R18 ban (eventually), but I thought I would share a few thoughts about the decision:
1. The reaction to the R18 ban (or lack of reaction) says alot about the British system of content regulation. The decision–from an economic standpoint–is a significant and highly intrusive market intervention by Ofcom that creates winners (licensed sex shops, internet porn sites, future IPTV players) and losers (cable and Sky). Adult content flows through the UK. Ofcom’s decision has not stopped that flow–it has redirected the flow. So, while I use the term ‘ban’, that doesn’t quite capture the economic reality of what happened as a result of Ofcom’s decision.
2. The decision also has a social impact: There was straight, uncritical reporting of the ban in the trade press. Privately, some people have told me that they thought the Ofcom research was shoddy. In fact, one former content regulator told me he was ‘angry’ with the decision. But, there seems to be a general intellectual consensus that there is a difference between ‘freedom of expression’, championed by British academia and the likes of the Guardian, and ‘porn-campaigning’ which is some lower form of freedom.
3. Ofcom’s reputation was going to be damaged no matter what it did on this issue. If the regulator permitted R18 content, there would have been a firestorm. If the regulator banned it, the flimsy reasoning used for the ban would be attacked. One decision (a lift of the ban) would have been evidence-based, the contrary decision (maintaining the ban) would have been political. Ofcom is a utility-maximiser and went with the route with the least amount of pain. That’s how I see it. I’m willing to be convinced otherwise – by Ofcom or others… so feel free to write us and share an alternative opinion.
4. Speaking of flimsy reasoning, the ‘PIN protection’ argument advanced by Ofcom has been universally castigated–by those willing to speak out–as weak and illogical. Of course it is. Many adult activities, such as driving, voting and the viewing of adult content, are restricted to minors, and those restrictions are sometimes porous. Underage minors have always done things that they are not supposed to. That possibility, however, has never been used to restrict the freedom of adults. Until now.
5. In any case, minors will still access R18 over the internet or by raiding their parents DVD collection. God forbid, they will probably also create their own R18 content! So, the regulation is mostly ineffective. The regulation is also not platform or technology neutral. I suspect Ofcom will be successfully challenged on this extremely weak (and non-converged) justification for its decision. But going back to my point no. 3, above, it is a better political route for Ofcom to have a judge tell them the ban cannot stand. It is also a better political route for Ofcom to maintain a ban that is ineffective.
6. I’m concerned that the LSE research on R18 harms and the YORG research on PIN protection were held and not released until the day that the code was released. Matt Peacock of Ofcom previously posted on OfcomWatch and stridently indicated that Ofcom does not tactically time the release of documents. But I was told by LSE that there research was completed in early March. Why was it not made available to the public until May 25th — too late to attack the flimsy reasoning behind the R18 ban? Perhaps Ofcom can shed light on this.
Russ Taylor is a co-founder of ofcomwatch.
27 May, 2005
Vodafone Rakes in Record Revenues
Vodafone execs spent the morning cackling wildly to themselves, throwing wads of dollar bills in the air and rolling around silk-covered beds covered in cash as record revenues and profits for its full year results were announced to the world.
The mobile operator – the world’s numero uno by revenue – has raked in eye-wateringly large pre-tax profits of £13bn, before write-downs.
With revenues increasing 4.3 per cent year-on-year to £34.1bn, these are champagne cork-launching record figures for a UK company.
Vodafone’s subscriber base rose by 16.3 million to 154.8 million, and the company have announced that it will buy back £4.5bn worth of its own shares, and double its dividend payment to 4.07p.
“We have met or exceeded all of our stated targets and significantly increased returns to shareholders,” purred chief exec Arun Sarin, sounding like the cat who got the cream, the milk float and the dairy that made it.
But in-between triumphant licks of triple-thick Cornish clotted cream, Sarin sounded a cautious note, warning that competition was rising.
“Whilst competitive pressures are increasing, there is clear evidence that our global scale and scope is enabling us to deliver innovative customer propositions and to produce superior results,” he puffed.
The company have experienced organic customer growth of 12 per cent globally, with Vodafone live! active devices increasing to 30.9 million and adoption of 3G services rising to 2.4 million devices at the year end.
“Here in Europe, we are leading the parade on 3G,” Sarin air-punched.
Vodafone performed particularly well in strong markets such as the US and Spain, with revenues growing at more than 20% year on year.
The company also kicked ass in its core European markets, with Italy, Germany and the UK doing especially well, despite fierce competition.
Vodafone didn’t get it all their own way though, with disappointing figures from Japan prompting a business improvement plan in the year ahead (the company currently lags in third place with around 16 per cent market share behind NTT DoCoMo and KDDI.).
Vodafone
Vodafone Group Fiscal Year Pretax, Pre-Items Profit GBP10.3 Billion
25 May, 2005
WiFi Kit Revenues Hit Record Levels: Infonetics Research
Despite prices being pushed downwards by fierce price competition, worldwide wireless LAN equipment revenue rose 20% to US$767.6 million (~£420m ~€610m) between the fourth quarter of 2004 and the first quarter of 2005.
During that period, a grand total of 12.2 million units were shipped, the highest quarterly volume to date, according to a report from Infonetics Research.
With wireless LAN products continuing to grow in popularity across product categories and geographic regions, revenue is expected to rise another 2% to $779.6 million (£426m, €620m) by 1Q06, hitting $3.6 billion (~£173m~€251m) by 2008.
Wireless LAN switch ports have been shifting faster than a Ritalin-assisted rabbit, rising 44% to 112,000 as revenue grew 13% to $52.2 million (~£285m~€41.53m), with a leap to $699.2 million (~£381~€556) predicted for 2008.
As the world goes bonkers for broadband, the demand for wireless broadband routers has soared accordingly, registering a hefty 34% increase in revenue between 4Q04 and 1Q05 generating $328 million (~£173.8m~€253m).
That’s a thumping great 37% increase in unit shipments, representing not-to-be-scoffed-at sales of 6 million.
Naturally, the manufacturers want to keep the cash flowing in their direction, so have been busily slapping on new product features to generate replacement purchasing.
“The demand for wireless broadband routers continues unabated, driven by the possibilities of wireless home networking,” said Richard Webb, lead analyst of the Infonetics report.
“As more and more users explore the possibilities of media download and file sharing applications they are finding that this easy-to-use device uncovers the true potential of their broadband connection. And with 802.11n and even faster throughput speeds on the horizon, the wireless router segment will ride the crest of the global broadband wave.”
Cisco continues as the worldwide wireless LAN revenue leader, hogging 17% of the market share following four consecutive $100-million-plus (~£53.7m~€79.5m) quarters.
D-Link barged ahead of Cisco-Linksys to grab second place, with NETGEAR in fourth position.
Just in case you, dear reader, haven’t had quite enough facts yet, allow me to inform you that the report revealed that access points account for 71% of wireless LAN equipment revenue, NICs account for 13%, and infrastructure products, including wireless LAN switches, appliances, controllers, and mesh networking gear, account for 16%
SOHOs and consumers make up just over half of wireless LAN equipment revenue (51%), down from 53% in 4Q04 while service providers and enterprises make up the rest.
Finally, a little geographic fact flurry to end with: North America accounts for 45% of wireless LAN equipment revenue; Europe, Middle East and Africa for 30%, Asia Pacific for 21%, and Central America / Latin America for 4%.
So now you know.
WiFi Hit Record Volume in 1Q05; Revenue Up 20%
24 May, 2005
Music Fans To SMS Bands Onstage
Back in the old days when Glastonbury was a field of medieval mud occupied by confused hippies and LSD travellers, the customary way to show your appreciation of the band was to flash the occasional peace sign or waft a spliff skywards.
Come the punk revolution, and there was no better way to show your love for a band than by propelling copious amounts of phlegm in their direction.
By the 80s, over-excited fans felt the best way to express a heartfelt love for a band was to clamber onstage and then stage dive back into the audience, while the E’d up 90s rave generation couldn’t get it together to work out where the stage was so just swirled fluoro things around their person instead.
In America, it was a somewhat different story, with concert goers traditionally expressing a curious penchant for holding lighters aloft, a craze that never really caught on in Blighty because, frankly, it looks really daft.
For today’s hi-tech toy generation, new ways of bigging up a band have developed.
Mobile phones have ensured that lighters have been replaced by the blue glow of mobile phones, with forests of camera phones springing up and down at concerts like demented flamingos.
Not surprisingly, this swaying sea of interactive technology soon caught the attention of The Man, who quickly saw an opportunity to coin in it from the captive crowd.
Step forward Boomerang Mobile Media who, in partnership with Strategic Artists Management, have come up with the idea of allowing fans to send SMS messages to the band and then see their words appear on a big onstage screen. For a price, naturally.
Fans don’t even have to be at the gig, with sofa loafers stoned at home watching the gig on TV also able to ‘enjoy’ the thrill of seeing their texted mumblings appear onstage.
The concept’s already been tested out on a promotional tour for Anastacia in Europe, where around ten percent of the attendees were happy to hand over 1 euro each (~£0.68 ~US$1.26) for the privilege of blasting inane messages onstage for all to see.
We’re not sure what the remaining 90% of the crowd thought of this pointless onscreen nonsense, but we’d be reaching for our phone zappers in double quick time.
Call us old fashioned if you will, but when we go to gigs we want to see the band and not be distracted by an endless stream of “KT LUVS THE KLRZ 4EVER” and “WIL U MARRY ME THOM?” beaming in our faces.
Simon Renshaw, of Strategic Artists Management, soaked up every cash-till ringing minute of the show: “Fans loved the concept and were sending multiple text messages to our stage front screens in an effort to see their names, talk to their friends, tell Anastacia how much they love her and win prizes.”
“Fans were so excited about it that marriage proposals were proffered onscreen,” he gushed.
But the real profit may come from turning the band’s backdrop into a giant size virtual mall, with audiences able to call in and buy merchandise advertised throughout the gig.
Boomerang Mobile Media founder and CEO Glenn Field rubbed his hands and explained the scheme: “You see something you like, and we deliver it to your home.”
As Sid Vicious and the ghost of Rock’n’Roll reached maximum RPM in their graves, he continued, “These are exclusive items purchased through the security of your phone, and the day it should have arrived you’ll get a follow-up phone call to confirm you received it.”
Boomerang Mobile Media and Strategic Artists Management are already dreaming up additional e-commerce opportunities, including the ability to allow fans to send camera-phone pictures to the venue screens along with their text messages
No interactive stone is being left unturned in their attempts to fleece, sorry, offer maximum interactive retail opportunities, to the hapless punter.
The first time a consumer buys from Boomerang via a mobile, a live operator will jump into action and invite the user to register a personal PIN for future purchases and other products.
This can then be used to milk fans dry with subsequent mobile-only ‘exclusive’ offers, pre-orders and a myriad of other pocket-draining merchandising discounts.
Boomerang are applying the marketing experience they gained last year when working with Def Jam Recordings artist Ghostface on a festival bill.
“We allowed Ghostface to connect with fans who either were fans or who heard his music that day and became fans,” Field enthused.
“We projected a number inviting people to interact – to meet him, visit him on the tour bus, things like that – and when you called you heard a recorded message from Ghostface. People got to hear their favourite artist talk to them on their most personal device.”
Cash from chaos, anyone?
Boomerang Mobile Media
24 May, 2005
Time Warner Ponders AOL float
Time Warner is considering “spinning off” its AOL division to help finance acquisitions in the future, said chief executive Richard D. Parsons on Friday.
“If we get to the point where consolidation is happening in the Internet space…the possibility of an IPO is out there,” he commented, with the Wall Street Journal citing sources as saying that Time Warner would continue to hold a majority stake in the Internet company.
Parsons told investors at the company’s annual meeting in New York that Time Warner had discussed the possibility of selling AOL shares in an initial public offering but had decided not to go ahead with such a plan “at this point.”
Critical to the spin-off decision will be the success of AOL chief executive Jonathan Miller’s strategy which aims to attract more Internet users and advertisers to AOL’s site to compensate for the slump in dial-up subscribers.
Time Warner acquired AOL for US$112bn (~£61.2bn ~€89bn) in January 2001 just as the dotcom bubble began to wobble like a dancing jelly on three wheeled roller skates.
The acquisition led to a record US$98.7 billion (~£54bn~€78.6) loss in 2002, plunging shares into catastrophic freefall as the promised cash-fest and sales growth never emerged.
With Time Warner’s pockets already considerably lightened, transatlantic regulators then accused them of overstating advertising and subscriber numbers from mid-2000, with the company settling all charges with thumping great payments of US$510 million (~£279m ~€406.6m) in the States and US$300m (~£164~€239m) in the EU.
Time Warner has announced that it plans to start paying the company’s first dividend since the America Online merger four years ago, representing “the beginning of a commitment we hope will grow over time,” according to Parsons.
The upturn in the company’s profitability has been engineered by Parsons, who has slashed debt, driven sales growth, settled government investigations into the AOL unit and shelled out for cable-television assets from Adelphia Communications – the company’s biggest deal since the merger.
“The turnaround is complete. We are moving forward and picking up speed,” purred a pleased Parsons.
AOL is now trying to find new revenue sources to compensate for the loss of U.S. subscribers to its dial-up Web access service, which has declined by 5 million users in three years, to 21.7 million.
In response, Miller has unveiled a series of customer-attracting new Web products, including a local search engine, a travel site, a free e-mail service and the first upgrade to AOL’s Netscape browser for five years.
And he’s not finished yet, with a revamped version of the Aol.com site in the bag that that promises to look like a mix of the phenomenally successful Yahoo and Google sites.
Miller aims to attract more heavyweight advertisers and regain a bigger share of the US$9.6 billion U.S. online ad market, currently hogged by Google.
So far, things are looking rosy for Miller with ad sales zippily moving up 45 percent to US$311 million, although he’s still miles short of compensating for the loss in subscriber revenue, with AOL first-quarter revenue falling 3 percent to US$2.13 billion (~£1.16bn~€1.69bn).
Time Warner May Consider AOL Spinoff
Time Warner
23 May, 2005