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A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
September 8th, 2006

By Brent Holliday
Greenstone Venture Partners

Fun Facts, Part One

“But it wasn't because,
I didn't know enough,
I just knew too much…
Does that make me Crazy?” – Gnarls Barkley, Crazy

Newsfeeds are like candy to me.  The advent of RSS has fed my addiction to keeping on top of everything.  Or at least trying to keep up…  My Newsgator plug-in to Outlook gets up to 2000 unread messages if I go away for a few days.  While you may think I am trying to drink information from a firehose, I actually enjoy combing through the stuff and finding the relevance for my companies or for my columns.  Although I have a few feeds that are pure schadenfreude, like the USGS >2.5 magnitude earthquake feed.  I can tell you where the earth is shaking in the past 24 hours, which is really important info…  Can you imagine me in a bar trying to do small talk?  “Have you ever heard of the Rat Islands in the Aleutian chain near Alaska? Boy, that place literally rocks.” Then I push my glasses up my nose.  Fetching, huh?

The information flow is changing with bloggers.  Uber-newsfeed readers like Paul Kedrosky take the relevant news daily and make it easy for his readers to get just the salient bits.  Since I only come along every two weeks, I thought that this time I would turn the firehose on you and have some fun.  This is one of my more interesting feeds called IT Facts, which was bought up by ZDnet a year ago.  As you will see, it is a scanner of all announcements of market data, whether it be looking back at what just happened in a market segment or the famous “happy talk” prognosticators of market size going forward.

So here we go.  All of this is actual information.  I’m not making this up.

  • Wall Street Journal's Lee Gomes published various statistics regarding YouTube, the Internet's top video destination. 70% of YouTube's registered users are American and roughly half are under 20 years of age. YouTube videos take up an estimated 45 terabytes of storage. The total time the people of the world have spent watching YouTube is 9,305 years.
  • A Wall Street Journal analysis of the 5.1 mln videos uploaded to YouTube as of July 25, 2006, shows that the top 10% best-played of them made up 79% of the 7.56 bln total plays, with the top 20% making up 89%.

So if YouTube had only one visitor who had been watching videos, they would have started in the year 7299 BC, which pre-dates the first known human civilization at Catal Hoyuk by 1,000 years…  Cool.  It should be no surprise that some of the content makes up most of the viewing… it’s the same distribution for any media content.  The trick is to make the stuff that we all want to see.

The rumour on the blogs is that YouTube is trying to file for an IPO, which will up the ante for the media companies to buy them.  Look for a billion dollar plus price tag on them soon.

  • More than half of Internet users have watched or downloaded video. News clips were the most popular, seen by 72% of online video viewers, followed by short movie and TV clips, music videos, sports highlights and user-generated amateur videos, AOL/AP survey says. 7% of video users have paid to watch any video online. Nearly 75% of online video users prefer free videos with ads. 46% of video watchers with high-speed service view video at least once a week, compared with 22% of dial-up users. Dial-up users also were more likely to complain about download times.

Wow, dial-up users complain about slow video.  That’s news.  Oh, and people don’t like paying for content on-line… more breaking news, folks.

  • 17.0M households in the US have cable modems, 12.6M have DSL and 2.2M have fixed wireless access at of the end of 2005
  • 85% of US households have access to broadband, with 75% have access to both, according to industry sources (end of 2005)

Well, it seems that the dial-up people are really, really cheap or they live in the boonies.

  • The number of US households with a data network has increased from 2.5 mln in 1998 to more than 20 mln today. Worldwide, the number of households with a data network will jump from 80 mln in 2006 to close to 145 mln by 2010, Parks Associates reports.

How do you spell H-A-C-K-E-D?  That’s a lot of data with really unsophisticated IT people managing it.  You see why McAfee, Symantec and various start-ups like Pure Networks in Seattle are drooling over home networks?  What about the home storage market?  If PMC-Sierra is making hay in the data storage chip market for enterprise, will they see even more boost when we all have a terabyte media server in the closet at home?

Staying with the home market for a second:

  • LCD TV sales jumped 135% in Q2 2006 to 9.4 mln units, accounting for 22% of the global TV market in unit terms, DisplaySearch said.
  • Households with HDTV service, which are defined as homes with an HDTV set that receive and watch HD programming, are projected to grow from 15 mln in mid-2006 to 20.3 mln at the end of 2006, In-Stat reports. As of mid-2006, the US and Japan accounted for 91% of all worldwide HDTV households. Other countries with significant numbers of HDTV households include Canada, Australia, and South Korea. The number of worldwide HDTV households is expected to spike over the next few years as new markets for HD services, particularly in Europe, open up. By the end of 2009, In-Stat is projecting that the number of HDTV households will exceed 55 mln.
  • Worldwide subscriptions to Internet Protocol TV will rise from 3 mln in 2005 to almost 49 mln in 2010. Revenue will also grow rapidly, from $401 mln in 2005 to $13.2 bln by the end of the forecast period, Gartner reports.
  • The number of IPTV subscribers is expected to increase at a compound annual growth rate of 92.1% to 63.1 mln in 2010 from 2.4 mln in 2005, iSuppli said. The number of subscribers is expected to reach 5.3 mln in 2006.

Oops…I hate it when the “happy talk” guys get in a disagreement.  So which is it? 2.4M subscribers or 3M in 2005?  What is the market in 2010?  Is it 49M or 63M? 

Regardless of the disagreement, the TV has gone completely digital.  From delivery of the signal to viewing the content in new, higher resolution formats…  Telus looks like a winner if Gartner is right about IPTV.  I was alittle surprised by the “relatively” slow uptake of HDTV programming.  I was thinking that a critical mass will be hit in the next year or so in Japan, US and Canada and then the switch will flip to must-have status. So, sooner rather than later, everything will be filmed in HD.

  • In 2006, 14.2% of respondents could be considered likely adopters of mobile video. In-Stat forecasts that revenue from mobile video for entertainment purposes could grow to more than $6 bln per year by 2011.

TV is not the only place we will get video content.  I find this fact a little contradictory.  If only 14% of us will be likely users (and you add in the fact from the aforementioned video stats about not wanting to pay for video content) how do we get to $6B a year?  Ahhhh, the “happy talk” gang strikes again.

  • After an impressive Q1, worldwide mobile phone shipments fell just short of an all-time high in Q2 2006 with volume of 237.8 mln units. The robust quarter was enough to boast a 2.1% increase from Q1 2006, and 22.5% more than Q2 2005. According to IDC, 470.7 mln units have shipped so far in 2006, which suggests that the industry may be close to shipping 1 bln units for the full year. {Nokia is first with 31.3% share, Motorola is second with 17.5% share, Samsung is third with 12.5% share, although Motorola is growing faster than any of the top 5}
  • 89% of female wireless phone subscribers say their wireless phone is a time-saver and more than 50% make at least half of their calls from their wireless phone, Sprint Wireless found. Women are more likely to want their phone within reach 24 hours a day (37% to 30%). 70% of woman indicate they text message with family members, and 61% indicate they take pictures of their family with a camera phone.
  • Women are also more interested in ring tones than men (54% compared to 42%) and are more likely to use ring tones to personalize their phone (81% compared to 75%). More than two-thirds of women say they choose to personalize items because it's fun, and 45% do so to differentiate their items from others. The wireless phone is the number two item women want to personalize (56%), coming in just after computer screen (68%) and beating out hairstyle (32%). The style of mobile phone overwhelming preferred by women? The flip phone, garnering 72% of responses.

Mobile phones are increasingly more important to have with you than your wallet.  And the reason that sales continue to be astounding is that women and children are buying them now, whereas 5-6 years ago, it was mainly men.  People talked about the Internet being the communications revolution that would lift all people’s knowledge and awareness of the world because, unlike the TV or newspaper, it was harder to censor or otherwise foist propaganda.  Yes, the Internet is important, but the simple phone call, text message and access to information from a mobile phone might be much more important.  More people worldwide have a cell phone than have Internet access.  Small case in point… in Afghanistan last week, the Canadians captured a Taliban fighter (in one of the poorest countries with the most outlaw regions of the world) who produced a cell phone along with his AK-47.  An Afghani interpreter then faked out the caller on the other end and learned of all of their impending troop movements.  So, if I just start dialing numbers from Vancouver with Afghan exchanges, might I get the Taliban on the phone?  I could do reconnaissance for the Canadians from my office on Hastings!  It’s the mobile phone, people.  It is changing our world.  It is getting much, much smaller.

Aren’t facts fun?  I have thousands of others especially around enterprise IT markets.  I’ll go there next time. It is the interpretation of all of the facts and trends that helps your business.  It also helps you to see where business is going.  But be careful of the “happy talkers” and their predictions.  Don’t bet your business case on their numbers, but rather use it as evidence that others out there see a trend developing.

What Do You Think? Talk Back To Brent Holliday


Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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