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Some Thoughts on Effective Social Networking

I feel that, as a blogger and an active member of LinkedIn, Facebook and Twitter, I can’t end 2009 without providing some perspective on social networking. Throughout the past year, social networking continued to gain popularity and became one of the hottest topics both at private parties and at communications industry events and forums. Along with mobile communications, video and maybe a couple other technologies, it is likely to become one of the most powerful trends straddling the consumer and business worlds – creating opportunities as well as challenges.

A lot has been said about social networking, so I will focus on just three issues: growing variety of social networking site members; increasing networking overload, and integration of communications with social networking. First of all, I think we need to remember that, as the name suggests, this is a “social” phenomenon. Therefore, we should expect to see the same kind of variety in social networking as we see in society in general, and should not expect members of a particular social network to act the same way or have the same interests and preferences. As social networking becomes increasingly popular and further penetrates the masses, member variety is also likely to increase. This trend will have implications for marketers, recruiters and everyone looking to leverage social networks for business purposes.

On one hand, the growing pool of participants will create a larger audience for disseminating various types of company or product information, recruiting, or soliciting feedback on specific topics or issues. On the other hand, unless members are properly segmented into sub-groups based on interests or other profile characteristics, there will be quite a bit of “noise” and “clutter” on these sites and limited opportunities for targeted messages.
In my opinion, Twitter will be much more appealing if one could more effectively segment its following or the people he/she follows and have the possibility to view and broadcast messages in a more targeted way. Similarly, although Facebook allows members to become “fans” of this or “members” of that, this feature has a limited impact on how status updates or postings are disseminated and viewed by others. I personally like LinkedIn and the possibility to join various interest groups with their own discussion boards, news and recruiting sections, etc.

Here follow a couple of charts from a survey we recently conducted at Frost & Sullivan that illustrate how the demographic profile of our respondents correlates with their use of different social networking sites. What seems obvious is that Facebook has one of the most varied user demographics and, I believe, this fact is strongly correlated with the size of its membership (as well as its structure and nature of its applications).

Social networking survey respondents by location
Social networking survey respondents by location

Social networking survey respondents by ethnicity
Social networking survey respondents by ethnicity

Social networking survey respondents by income
Social networking survey respondents by income

I believe that, eventually, some consolidation will be needed in the social networking space, especially as social networking sites’ membership grows. I am already experiencing some networking overload with friends and business contacts trying to connect with me on more than 3 sites. While I see different value in Facebook (mostly for connecting with friends), LinkedIn (mostly used for business purposes), and Twitter (a completely different value proposition, altogether), I do not seem to be able to also maintain a presence on Hi5 and have not even explored other sites like MySpace or Bebo, for example.

Another issue I wish to touch upon is the idea of integrating communications and presence with social networking sites. It seems like a no-brainer that people who wish to socialize with others, would also wish to communicate with them more directly and/or using different media (in addition to the direct messaging service available on most sites). It is interesting to see the results of our survey in the charts below.

Integration of communications with social networking
Integration of communications with social networking

These results seem to prove that some people would, indeed, greatly appreciate the opportunity to communicate with their social networking contacts via chat, voice, video or conferencing, but the fact that some are not interested in having any new communication capabilities available to them is significant as well. Over a quarter of Facebook members, for example, are not interested in conferencing, telephony or video, which, in my opinion, is again due to the greater variety of members, some of which obviously prefer to share opinions, pictures, etc., without engaging in direct interactions. Similarly, the majority of survey respondents seem to value instant messaging and chat the most. My interpretation is that it is the least invasive, maybe also the fastest and most convenient of the suggested communication tools. Surprisingly, voice and video appear to have a very similar appeal to our respondents, which may be due to the growing popularity of video and the fact that those willing to engage in a live conversation are equally willing to see the other party.

I believe that, in 2010, we will witness some very interesting developments in social networking. One of the most significant ones will be the increasing adoption of social networking tools in the enterprise space. Business social networking tools will need to have some different capabilities in order to be effective. Obviously, security will be key. Further membership segmentation and ability to target messages and postings to specific user groups will be important as well. Finally, integration of advanced communications and collaboration capabilities will eventually turn business social networking platforms into major productivity enhancement tools.

While I do expect to see a movement from outside in – either consumer social networking platforms becoming transformed and adopted in the business space or business platforms being created in a way imitating consumer ones, I also expect to see a lot of business applications integrating with consumer social networking sites from inside out – through mashups of enterprise UC interfaces with social networking ones, for example, for more effective communications and collaboration with individuals outside the organization.

WebRTC

Is this a Good Time for an IPO in the Communications Market?

On December 22, Mitel announced it had filed for what seems to be a record (Ottawa’s largest) $230 million IPO. The filing was somewhat surprising (at least, to me) because I typically assume a recessionary economy is not the best time to go for an IPO. The communications industry does not seem to be in any better shape than the rest of the market either. However, I can see some reasons why Mitel would wish to do it right now.

Firstly, Mitel has been determined to raise more equity for some time now. It filed for an IPO back in 2006 but then withdrew its application as it chose to pursue the acquisition of Inter-Tel. It then had to streamline its portfolio and organization before it could file again.

Secondly, Mitel has a significant amount of debt and the large interest payments are hurting its profitability and ability to re-invest capital into the business. As it states in Form F-1, Registration Statement Under the Securities Act of 1933, it intends to use the proceeds generated through the IPO primarily to pay off its debt:

 “We intend to use the net proceeds of this offering as follows:

  • to repay $30.0 million of borrowings outstanding under our revolving credit facility. As of October 31, 2009, the principal amount outstanding under this credit facility was $30.0 million. This credit facility currently has an interest rate equal to the London Interbank Offered Rate, or LIBOR, plus 3.25% and has a maturity date of August 16, 2012; 
  • to repay $             million of borrowings outstanding under our first lien term loan. As of October 31, 2009, the principal amount outstanding under this loan was $289.0 million. This loan has an interest rate equal to LIBOR plus 3.25% and has a maturity date of August 16, 2014; and
  • to fund working capital and for general corporate purposes, which may include acquisitions. 

While we currently anticipate that we will use the net proceeds of this offering as described above, we may reallocate the net proceeds from time to time depending upon market and other conditions in effect at the time. Although we occasionally evaluate potential acquisition and investment opportunities, we have no current arrangements or commitments with respect to any particular transaction. In addition, to the extent the net proceeds of this offering are greater or less than the estimated amount, because either the offering does not price at the midpoint of the estimated price range or the size of the offering changes, the difference will increase or decrease the amount of net proceeds available for general corporate purposes. Pending their application, we intend to invest the net proceeds in short-term, interest-bearing, investment grade securities.”  

While Mitel’s net income of $12.6 million in FY 2008 and net loss of $193 million in FY 2009 (its Fiscal year ends in March), seem to paint a gloomy picture, a couple of factors need to be taken into consideration when evaluating its performance. In FY 2009, Mitel reported an Impairment of Goodwill charge in the amount of $284.5 million, which is not likely to impact its profitability in future years. Further, its adjusted EBITDA ($50.2 million in FY 2008 and $78.7 million in FY 2009) shows that, should Mitel be able to eliminate a portion of its debt, it will be able to generate a healthy return for its shareholders.

Thirdly, in spite of the bad economy and the dismal state of the communications market today, there appear to be signs of an imminent recovery. The U.S. department of Labor just announced that the number of unemployment claims dropped to 452,000 for the week ending on December 19, 2009, which is 28,000 less than the previous week. Further, most communications and technology vendor are now reporting stabilizing of demand, which remains weak compared to a year ago but is the same or better compared to the first half of 2009. Some industry pundits are suggesting the stock market is in a new bubble, which could be creating a beneficial environment for IPOs and other investment opportunities.

Fourthly, Mitel has made some significant investments in technology development to position itself more competitively in the evolving unified communication and collaboration marketplace. In addition to greatly enhancing its applications portfolio, it has also virtualized certain elements of its architecture looking to deliver further cost-efficiencies to its customers. As virtualization and cloud computing appear to be among the top 2010 priorities for technology executives, solutions addressing these customer needs are likely to generate growing revenues over the next few years.

Finally, Mitel continues to be one of the strongest SMB vendors worldwide, and especially in North America. In 2008, Mitel held about 9.6% market share of North American telephony revenues, placing it in fourth position along with NEC. In the highly fragmented SMB marketplace, Mitel is probably the largest market participant with a portfolio of software, devices and services that are targeted specifically at this customer segment. This is a significant competitive advantage given that customers are likely to have some concerns about the portfolio roadmap of the newly merged Avaya-Nortel and maybe shy away from getting locked in an end-to-end Cisco environment. Certainly, Mitel faces competition from some other agile SMB vendors including open-source providers (e.g. Digium), consumer solutions (e.g. Skype), ShoreTel, Interactive Intelligence, etc., but their current market shares are significantly lower.

We will have to wait a few months to see the outcome of the IPO. I am personally hoping to see Mitel emerge financially healthier in 2010 in order to be able to continue to provide its customers with the value of its advanced communications technologies.

Misc

Wind Mobile wins over CRTC Ruling. Canada to see first new independent mobile operator in more than 10 years.

Woot! Well it’s a happy day in Canada. This is good news for all Canadians, except maybe the few carriers making up the communications oligopoly of today.

Wind Mobile received the green light from the Canadian Minister of Industry today after making some changes to their share structure and foreign ownership within the company.

From their website (and over the wire) this morning

Globalive Welcomes Gov’t of Canada Decision and Prepares to Bring WIND Mobile to Market

TORONTO – December 11, 2009 – WIND Mobile declared a new day for wireless in Canada today, in response to an announcement made by the Honourable Tony Clement, Minister of Industry, to vary a recent decision of the Canadian Radio-Television and Telecommunications Commission (CRTC).

The Government of Canada variance is effective immediately and provides a clear path for WIND Mobile to enter the Canadian wireless market and to become Canada’s first national wireless alternative in over a decade.

“This is a new day for wireless in Canada. This holiday season we will start to provide Canadians with the competitive choice that they want and deserve,” said Anthony Lacavera, Chairman of Globalive and WIND Mobile. “We thank the Government of Canada for a decision that will serve the best interests of Canadian consumers.”

In its decision today, the Government of Canada concluded that Globalive is a Canadian company that meets the Canadian ownership and control requirements under the Telecommunications Act by varying an October 29 CRTC decision (Telecom Decision CRTC 2009-678).

“For too long, Canadians have suffered from higher prices and an underwhelming customer experience,” said Ken Campbell, CEO of WIND Mobile. “We look forward to offering the most unforgettably positive mobile experience in Canada. In return, we’re asking Canadians to make a new choice in wireless and sign up on WINDmobile.ca today.”

A national survey found that 60 per cent of Canadians are frustrated when dealing with service providers due to factors like a lack of unbiased advice, inability to change their service plans, and in particular, hidden service fees. In addition, Canadians pay an average of 60 per cent more for wireless than Americans.

“For over a year, we’ve been engaged in conversation with Canadians who have been telling us they want more from their mobile experience,” said Lacavera. “But the conversation isn’t over – it’s just beginning. We will always be listening, always inviting thoughts, comments and opinions about how to make things better.”

About Globalive and WIND Mobile

Globalive provides voice, text and data services to Canadians under the brand name WIND on a next-generation wireless network and is committed to offering a level of wireless service presently not available in Canada. WIND is built on actual conversations that are happening with Canadians who are passionate about wireless and creating a better mobile offering nationally. For more information about WIND Mobile, visit our About Us page.

For more information, please contact:

Rick Byun
Narrative Advocacy Media
416.644.4124 or rick.byun@narrativeadvocacy.com

The CRTC – Canadian Radio-Television and Telecommunications Commission, had put the kibosh on Wind Mobile’s progress. This action was prompted by the other mobile operators (surprise surprise) who argued against globalive’s entrance due to the company not adhering to the the Canadian foreign ownership rules. Globalive had invested 442 million dollars to buy spectrum in the last auction.

There is at least one question to ask, were there any changes made to the foreign ownership rules to accommodate this ruling? If so does that leave the door open for the other carriers to by swallowed up by even larger carriers elsewhere?

Interesting times.

Vonage Mobile iPhone and iPod apps built by Truphone

There were a few rumblings related to this in the comments on CNET’s coverage of the Vonage Mobile VoIP service back in October.

by davismitch October 5, 2009 7:18 PM PDT
Does anyone notice that this is the same GUI (on the website and for the iPhone app) as Truphone…did they buy the Truphone app and re brand it? And yes…why is this app okay but not Google Voice…come on Apple and AT&T, what gives!

Hmm, I think this might shed some light on things…

Here is a screenshot I took today while trying to sign into the Vonage iPod Touch app with my Vonage Mobile user info. The same credentials I used to create an account via the Vonage Mobile iPhone app. It’s also the same error I get with Truphone iPod app under the same circumstances, no surprise there.

I can’t find any details regarding the relationship between Vonage and Truphone. My guess is that Vonage did a private label deal with Truphone and this screen snuck by the QA/Testing group(s).

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