Nokia

Humus Manifesto and Shakshuka Reality

click to shareFacebooktwittergoogle_plusredditpinterestlinkedinmail
Shakshuka
Image by STML via Flickr

Michael Eisenberg, an Israeli VC, wrote two thought provoking posts about the way the government  invest properly in Israeli High Tech. From Microsoft and .Net monopoly through iPad banning, to poor distribution of CSO funds, our government neglects the important aspects of maintaining Israel’s technological leadership.
Though not a VC, I’ve worked in several industries, from mobile to internet to media, and I meet a lot of startups in different stages. And I think that though Michael is right in his claims, there is another angle to this story – the core competencies of the Israeli industry is not as important as in the past.

Origins of Israeli High Tech
Israel’s High Tech originated, broadly speaking, from 4 sources:
1. Technological army units such as 8200, Air force and Mamram
2. Universities such as Technion
3. Russian immigration
4. ECI/Comverse RAD group and other major companies, whose employees who jumped ship and opened their own startups.

The strong points of these sources were electrical engineering and telecom oriented know how.

The Best Beta Site
Israel has one of the highest mobile and broadband penetration rates. Therefore, a mobile startup could easily sign a deal with a local mobile operator and make it a beta site. The local mobile industry was at the same level as  European mobile markets, so Israeli companies could launch products in that huge market relatively easily, as it was close to what they had locally. I was a part of such process when working with Flash Networks. First we sold our product to Orange, and then to T-Mobile. We knew what was needed in order to build and deploy a product in such an environment.

Media and Internet are Winning. Pipes are losing.
However, the market changed. World wide innovation lies more and more in internet companies. Hulu is more innovative then Motorola. Google is more innovative (and profitable) then Nokia. Mobile operators are not as important in the value chain as they were before. And Apple is changing the game again and again with innovative hardware and software.

Failure in  Growing the Business
Most Israeli companies are just not big enough, or maybe not with the right culture and financial resources to win over the mobile and telecom market and create the next Nokia or even next iPhone. The last guys who tried it failed and closed shop, not to mention their founder’s financial trouble. Yes, I am talking about Else Mobile and Eli Reifman‘s troubles. So in that area we are basically, well, screwed.

No Longer a Beta Site
So let’s look at the Israeli internet industry. Unlike the mobile market, there is a huge difference between local internet industry to international or American one. While video is growing drastically in the US, and major media companies experimenting with new business models, our market is just too small, too centralized, to make companies feel their bread and butter is at risk. With 3-4 major media players (Hot, Yes, Reshet, Keshet), and two major portals (Walla, Ynet) no one has the incentive to innovate. They are making enough money as is, and digital cents are not even on their map, as no one buys content here.
We don’t have an Israeli iTunes. We don’t have an Israeli Hulu. We don’t have an Israeli Huffington Post. We don’t have an Israeli ereader market (Sorry E-vrit, not enough units sold yet). Come on, iPhone, one of the biggest media innovations, landed here less than a year ago.
Amazingly, there is a huge gap between Startup innovation and portals’ adoption of technology.
So the Israeli media and internet is like Shakshuka – some great cutting edge media technology (eggs) floating in a sea of not extremely innovative portals (tomato sauce).

Culture
With technology less of an issue and winning product is the focus in the online and media industry – culture and media consumption habits become the key for creating a winning company. And, we don’t have the visibility of neither. Cause our local market is so different.

Is This The End?
Is this the end of Israeli startup industry? No. There are several amazing content and media companies here in Israel such as Innovid, Outbrain and many more.
But we need to start think differently. It is not like 8200 will start to create cool video players so Israeli innovation won’t die. But it might be that in the future these units won’t be as important in Israeli High Tech as in the past.

Possible Solution
We need a simple plan – and do the so unIsraeli thing to do- actually follow it. We should encourage Hot, Yes and the major portals to invest in innovation. It might be through tax incentives or other ways, but we should give them a reason to do so, cause they don’t have one now.
We should create special incubators for media companies with international media veterans. I have couple of names in mind.
And we should take into consideration that the market is going to change to the worse for us. As Michael said, we are definitely not competitive in price. If the current situation will continue, we will lose our technological edge as well.

What’s Wrong with this  Post?
If you know me you know that I love well established facts. Unfortunately I don’t have the numbers to back the claims here. It is based on personal experience and being in the industry for 10 years.
Would love to hear your opinion.

Could Operators Change Digital Cents to Dollars?

click to shareFacebooktwittergoogle_plusredditpinterestlinkedinmail

 

Last week, the online video world rejoiced. For the first time, Hulu, the online premium video provider, had more viewers than Comcast subscribers. Pro online video folks all around gathered to support the revolution as it unfolds.
The only thing missing is, well, like in most cases, money. Hulu is making small time money compared to Comcast.
The paradigm of digital cents is very simple – services are much cheaper on the internet, and the value of goods is diminished when they are distributed or sold digitally. The full phrase states that the media industry is facing a challenge – as it transforms from analog dollars to digital cents. This issue is affecting advertisers who are asking agencies to shift dollars from expensive TV spots to cheaper online advertising, which in return hurts the media business.
Hulu, though delivering the same shows as TV channels, is not making as much money as the traditional providers. This is a eye challenge to the whole media industry. But they are not alone.
The slow demise of the walled garden adds another pressure, to a different section of the value chain – the operators. The mobile market is a great example how technology is threatening the old world order. Early in this decade, when GPRS launched all over Europe, operators believed that the answer of their declining voice ARPU would come from selling content, such as ringtones and wallpapers.
The basis of this strategy was the operators controlled the availability of content to users – whatever an operator put on its portal could be sold – but nothing else. This way, by creating scarcity, the operators could gain revenues and control the subscriber’s experience.
Then came Apple.
And Google.
And Nokia.
And all these companies decided to break operator’s hegemony and tear down the garden’s walls. Android, iPhone and Ovi challenge the mobile operator’s ability to control the content and customer experience.
While media companies such as NBC and HBO don’t have a choice but to be a part of the digital cents game, operators have some ways to leverage this market disruption to their advantage.
Services are, in my opinion, a key to change the cents to dollars. Some of them are clear but still not done well, such as three screen syncing – allowing users to start watching a show on their TV set and continue to watch it on their mobile phone.
Some are based on cutting deals with the devil – and tightly integrate web services with traditional TV content. Several companies unveiled such services, such as TV and Twitter integration.
And some are down right evil, such as disregarding net neutrality and providing differentiated quality of services to content providers, based on deals with preferred content providers.
If operators will succeed in finding the right services and implement them in the near future,  we might see that they will rise to play a more significant role in  the media industry.

Last week, the online video world rejoiced. For the first time, Hulu, the online premium video provider, had more viewers than Time Warner Cable subscribers. Pro online video folks all around gathered to support the revolution as it unfolds.

The only thing missing is, well, like in most cases, money. Hulu is making small time money compared to Time Warner Cable.

The paradigm of digital cents is very simple – services are much cheaper on the internet, and the value of goods is diminished when they are distributed or sold digitally. The full phrase states that the media industry is facing a challenge – as it transforms from analog dollars to digital cents. This issue is affecting advertisers who are asking agencies to shift dollars from expensive TV spots to cheaper online advertising, which in return hurts the media business.

Hulu, though delivering the same shows as TV channels, is not making as much money as the traditional providers. This is a major challenge to the whole media industry. But it is not alone.

More

First Days With Nokia E71 – Review

click to shareFacebooktwittergoogle_plusredditpinterestlinkedinmail
Image representing Nokia as depicted in CrunchBaseImage via CrunchBase

If you follow me on Twitter, you know that I just bought a shiny new Nokia E71, sometimes dubbed iPhone Killer. After several days using this device, I am very happy with it, though it could have been much better.

Keyboard: the keyboard is great though it is a little small for my fingers. The predictive text feature can be annoying, but in general it is helpful. I am not up to speed yet in writing long emails, but it is more convenient than the horrible HTC Tytn I had.

Email and messaging: good and bad at the same time. Some of the features are excellent – you can have your mailbox status on the home screen, and if there are unread messages you can see their subject and sender without opening the email application. Configuring an account on Gmail or private POP3 service was very easy, but it automatically set it to IMAP protocol. I am a POP3 kind of guy, and I found it very annoying. Also, there is no one click SMS sending – you need press some of the buttons several times in order to send a SMS. Email speed is ok – but data services might be expensive, which leads me to the next section.

Connection manager: huge disappointment. Though WiFi works great, there is no way to configure applications to choose the cheapest connection. For example, I’d like to configure the email client to use WiFi if possible, then to try to connect to a free APN, and only then to try to connect to the high cost APN of my operator. This basic requirement is not met by E71.

Menus: I am probably spoiled by Mac user experience but the menus are extremely confusing. It took me ages to understand how to change shortcuts in the home screen.

Stability: in this sense it is a very solid device. Didn’t crash too much (I managed to crash it once), responds quickly and the user experience is great.

Camera: definitely a weak point, which is a shame, cause Nokia integrated flickr sharing service in the camera application.

Video and audio quality: good enough for calls, you can watch some videos, and I listen to podcasts with it when I commute. However, the earphones are of low quality, so it is a cost effective replacement for iPod, but doesn’t match it. The podcasting software is very nice as well.

Synching with Mac: in order to sync E71 with Mac you need to install E71 Plugin for iSync. It took me several tries to make it work properly, and couldn’t sync using bluetooth. Nokia Multimedia Transfer is another application, that is used for, well, multimedia transfer from and to the device. After pairing the phone with the Mac it worked great.

Other applications: I am using Fring for IM, Opera Mini as a backup browser, testing Emoze for push email, but still looking for a good RSS reader and twitter application.

Is it an iPhone killer? No. it is not a media phone. The screen is great but no match to iPhone. the audio is pretty good but no match to iPod quality. If you are a businessman who is always connected, wants to use your phone as a modem, traveling a lot and looking for a strong, stable device, E71 is a great choice. But it is not as fancy nor friendly as an iPhone.

Overall – between 1 to 10 it certainly gets a 9.3 (mainly due to the connection manager).