WCA 10th Annual What’s Hot (and What’s Not) in Mobility 2009 - part I

On November 18, I attended the The Wireless Communications Alliance's (WCA) annual investor panel discussion on "What’s Hot (and What’s Not) in Mobility 2009". WCA is a non-profit organization bringing together companies and organizations in Silicon Valley that have an interest in wireless technologies.

The Panel:
Moderator: Scott Ellison, VP Mobility Wireless, IDC

Panelists:
Eric Zimits, Managing Director, Granite Ventures
Dev Khare, Vice President, Venrock
Tim Chang, Principal, Norwest Venture Partners
Scott Raney, Partner, Redpoint Ventures

I began live-tweeting the event, but TweetDeck on my iPhone informed me that I had no network connection, asking if I wanted to work in the background. (I did have several bars showing, implying a good signal, but no 3G, Edge or WiFi). Pretty ironic not having cell phone connectivity at a WIRELESS COMMUNICATIONS event, which was held at Silicon Valley Bank (in a meeting room in the front of the building by the way). Hey AT&T... got a map for that?

Bottom line: I lost all my early comments thinking they were being cached, before I realized I was tweeting into a black hole. What follows are my recollections from the remaining notes that I took in the iPhone notepad app.

A wide-ranging number of topics were covered, and the panel of VCs were certainly not shy about their opinions. Here they are, along with my own comments.

Multiple OS standards are a good thing. "CDMA made wireless less boring"

I believe that this comment referred to the emergence of Android as a smartphone operating system. The same can be said regarding the discussion of LTE and WiMAX that followed. Obviously, there is a big difference between user-interfaces and radio network standards, but if competition is good... it's good everywhere.

IP strategies are critical

This discussion referred to the value of patents and intellectual property for wireless startup companies. A comment was made that the value of IP is more for use in bargaining during business negotiations, such as a potential M&A, than in outright value.

What's changed in venture capital?

"The semiconductor segment (for startups) is about as dead as you can get.The Chinese squeezed out all the value."

This is a reference to the large number of fabless IC design startups in China. I believe that a bigger issue is that leading edge digital design in advanced process nodes is just too expensive for a startup. So it was interesting to hear this follow-up comment from another panelist:

"RF and analog are much better startup opportunities than digital. They only require small teams. "Innovation in silicon is in RF and analog. These are critical technologies needed for femto-cells."

Ahhh.. yes. How great to hear a VC recognize the value of understanding that The World is Analog.

Panelist, referring to what happened to semiconductors: "Hauwei is doing to systems now. This is a problem for Cisco."

One of the VCs described how Chinese banks will backup Hauwei if there is any risk of losing a deal, flying bank execs to a customer site to promise full financing at 0% if necessary.

Venture Capital has become "Vulture capital" - late round.

VC panelists agreed there are no up rounds now. Seed investments are better, based (as always) on having "the right team". "Vulture capital" refers to waiting for later rounds to jump in at the lower price in a down round (since there are no up rounds occurring).

"Never been a better time to start mobile company"

This may seem totally contradictory to the "vulture capital" statement. In general the VCs were still bullish on the mobile space, saying that "now is the best time" (to start), advising entrepreneurs to "follow what happened on the internet". Entrepreneurs were advised to look for opportunities where there is "a hole in mobile". Not that entrepreneurs should get any irrational exuberance; the VCs agreed that the price Google paid for Admob ($750 million) is "obscene". (It should be noted the VCs on AdMobs board, Sequia Capital and Accel Partners, were not represented)

Opportunity areas: Software for mobile, but not consumer facing.

Although there was a comment that "maybe android changes" things, the panel's opinion on iPhone app businesses was that they are more suitable for "lifestyle" companies than for VC-funded startups. Something about needing to be in the top 5 apps for 3 months running to make "just $10M" in revenue.

Mobile-TV

Referring to Qualcomm's FLO TV initiatives, opinion was that "broadcast (mobile) TV never took off, and "personalized mobile video is what works in the U.S." In the U.S. smartphone users can take their content with them to do place/time shifting (as with iTunes), and consumers will use the "cheapest means available to access content". In the panelist's opinions live mobile TV is only for regions where there are a large number of mass-transit commuters (i.e. Japan). Panelists also stated that "in-car makes more sense".

I generally agree with this assessment, and Qualcomm's FLO TV strategy is one of the topics I cover in an upcoming report. Look for it at www.digdia.com

Two small semiconductor companies that are doing well in this space were highlighted: Maxlinear - which provides a tuner used for mobile TV in Japan, and Telegent - which has focused on chips for markets where free over-the-air analog TV is still available.

The impact of wireless in emerging markets

A lot has been written about the role of wireless technology in countries where many people will have a cellular handset as their first telephone. To gain a more accurate perspective on this topic, one of the panelists recommended the blog "future perfect" by Jan Chipchase, a Nokia researcher who has field experience observing firsthand the impact of wireless technology in emerging markets.

(check back for part II)