OPINION

For Analysts, It’s Deja Vu All Over Again

Recently I read in The New York Times that the phenomenon of the “star analyst” is coming back into fashion. If Wall Street analysts, tech analsyts and telecom industry analysts are getting hot once again, how can you get good advice and good reviews from the analyst community? Let’s discuss.

Then in my Pick of the Week, I want to tell you about AT&T Mobility offering their 4G LTE service in an initial five markets. This is finally great news for AT&T.

Remember the old saying, “you don’t want the tail to wag the dog?” In the case of analysts, the best time to start is now. It’s important to start out on the right foot. Don’t wait till you have to put out fires. You would rather drive the race car around the track, rather than being dragged behind it. It’s your choice whether you drive, or get dragged. Let me explain.

Analysts simply share their thinking and opinion. They follow the news, companies, technologies, investments and the competition. They either follow certain companies and dig deep, or they follow the entire industry looking for the good, the bad and the ugly, in Clint Eastwood terms.

Just like the sequel of a favorite movie, there is another sequel starting in our industry as well.

Personal Experience

I am writing about this because starting in the mid ’90s, for better or worse, I became one of those so-called star analysts.

It seemed that as a telecom industry analyst, I was called by the media for a comment every day. I wrote columns, attended meetings, gave speeches, wrote reports and books. Many of the companies I followed were also consulting clients, which meant I could offer deeper comments.

Let me explain how this works. The noise was growing during the ’90s. Everything got very loud and very crazy. So many companies from the young Internet world, to older and more established firms in industries like telephone, wireless and cable television found that getting noticed, being heard and followed accurately was increasingly difficult. Actually, that sounds a lot like today, doesn’t it?

There was so much to follow. And everyone seemed to be a winner in those golden years of the late ’90s.

Then the early 2000s showed up, and the Internet bubble burst. Several newspapers started to fold. Special tech sections dried up. Many new Internet companies and websites seemed to disappear. Poof. Just like that.

Mainstream companies continued to grow, but the spark of imagination was gone, for a while anyway. IPOs, which were so numerous in the late 90s, dried up as well. Executives went on trial. Money was lost in the stock market. It was a troubling time.

We watched the amazing rise followed by the agonizing fall. It was out of control.

In that crazy world, a few of us analysts kept getting busier — kept getting new clients and new calls from the media. To tell you the truth, my business kept growing larger than ever through all the dry times in the industry in the mid 2000s, which always amazed me.

I was a telecom industry analyst, but I have since expanded my practice as a tech analyst. I simply follow the changes in the marketplace, and there is plenty to comment on in this noisy industry.

Reporters still call daily to discuss stories they are writing. I share my opinion and try and keep them on track. I even get quoted now and then, which is still a kick after all these years.

The industry has tried several times to re-boot itself. If you recall a few years ago, the Google IPO was one of those attempts. Then it got quiet again.

A Reawakening?

Suddenly things are waking up. Will it last this time? Companies are going public again. Major industry changes are reshaping the services and devices and competition.

Just look at how two non-cellular companies, Apple and Google, are transforming the wireless space. Incredible.

The marketing and public relations and advertising are just as important as always, but they look very different today.

Suddenly there are so many new websites and Internet companies who are doing exceptionally well. Social media is exploding. My phone is ringing, and the media is writing more and more about this amazing phenomenon every day.

There are so many really interesting companies to keep an eye on today that didn’t even exist a few short years ago, companies like LinkedIn, Facebook. GroupOn and Pandora. And there are plenty more we will be discussing that are not even on the radar yet.

Some win and others lose. Just look at Netflix, a company who shot itself in the foot. They went from winner to loser in a split-second. Will they recover? Do they understand what they did wrong?

The telephone business is reshaping itself, again. It’s not going away, but it is changing. It used to be seven baby bells. Then, after mergers, three. New companies are joining the fold. Today the leaders are Verizon, AT&T, CenturyLink and Windstream.

Cable television companies like Comcast, Time Warner and Cox are now offering phone service with VoIP and competing with baby bells offering IPTV.

The wireless world is just as crazy. Instead of dozens of smaller competitors, we see fewer and larger companies like Verizon Wireless, AT&T Mobility and Sprint Nextel.

We also see smaller firms like T-Mobile, US Cellular, Cellular South, MetroPCS, Tracfone and many others. There are also several straight VoIP companies like Vonage and Skype.

All this new technology is causing the traditional baby bells like AT&T and Verizon to lose phone customers in mass. Ten years ago they hit their peak with local phone lines. The marketplace is reshaping itself, again.

Don’t Count Out the Old Guys

The wave has passed the traditional services, and a new wave has begun. Who will be the winners and losers? Who will change the direction of the industry like Google and Apple are doing in wireless? We are only in the early innings of this game.

There are also plenty of existing companies who can also do very well like IBM, Microsoft, Cisco and so many more. Plus all the computer and software makers. They are not part of this same IPO wave, but they are important drivers in the industry.

Follow the smaller and lesser known companies for the new ideas and innovation. Follow the larger and older and more established companies for direction of the industry.

In this atmosphere there is quite a bit of noise again, isn’t there? Getting heard by customers, investors and the media is more difficult than ever. It’s like deja vu all over again.

It is important for companies to break through the growing noise and chaos. They have to stand out snf explain why they are different and growing and healthy.

There is plenty of good and bad for each company to talk about. What will the focus be on your company?

Suddenly, star analysts are beginning to pop up on the radar once again. So buckle up, it looks like this could be the beginning of another wild ride.

How Do You Rate?

Here is an important question for you to think about. What are key analysts saying about your firm? How do you communicate with us? What are you doing to keep us up to date?

Do you even work with the analyst community? When will you get active with the analyst community? Early on when you can discuss ideas, or later on when you are trying to put out fires?

We are watching the next wave reboot with IPOs and new technology innovation. It looks pretty strong so far. All the ingredients are there. Are you ready for this next wave? Are you sure?

Just remember, the good times of the 1990s didn’t last forever, and the bad times we are living through today won’t last forever either. It’s a cycle.

It looks like we are starting the next upswing. Reporters are calling on a daily basis again for stories they are writing. That is usually accurate as a barometer of things to come. This is a good sign things are starting to heat up again.

Do you remember the late 1990s when the world was all about the magic and new technology and wealth? It was a time when everyone seemed to win. Investors, workers, customers and partners as companies grew and expanded.

Well, the starting gun has been fired again. Let’s hope this is a long-term wave and not just a short-term quickie.

Either way, sooner or later the good times will swing back into fashion. They always do. You can count on it. Are you ready?

Jeff Kagan's Pick of the Week

In my Pick of the Week I want to tell you about AT&T Mobility offering their 4G LTE service in an initial five markets. This is finally great news for AT&T.

Remember around the first of the year when AT&T Mobility CEO Ralph de la Vega suddenly said AT&T was entering the 4G marketplace? At that time he was simply trying to keep up with competitors like Verizon Wireless, Sprint Nextel and even T-Mobile.

AT&T felt uncomfortable not being in the 4G space yet, so they suddenly called their HSPA+ with enhanced backhaul “4G.” At that time it was just a change in the words they used. There was no real 4G service yet, and there wouldn’t be for months. Now they are starting.

AT&T just unveiled the first five markets, Houston, San Antonio, Dallas, Chicago and Atlanta, on Sunday morning. Don’t expect service everywhere in those markets yet. They have just started. AT&T says they will expand the LTE footprint in those markets in coming months as well as launch new service in 15 more markets by year end. Great start.

They have four devices that are compatible with the new service. No, don’t expect your older devices to work with the new network technology.

The good news is this new network will deliver faster speeds on the data side of the network. If you have a need for faster service, this is for you.

It will be interesting watching AT&T Mobility market this new service. Verizon Wireless has a long head start in this new technology.

So congratulations to AT&T Mobility. Welcome to the 4G world! We’re glad you are finally here.

Jeff Kagan

E-Commerce Times columnist Jeff Kagan is a tech analyst and consultant who enjoys sharing his colorful perspectives on the changing industry he's been watching for 25 years. Email him at jeff@jeffKAGAN.com.

1 Comment

  • No kidding there’s a new wave, and changes happening. Something JK neglected to mention, is that current economic mood of a flailing US economy, will play a major role in directing these changes. Smaller firm such as Tracfone, aren’t surging in the market because of their innovation, but merely because people can afford their product. Strangely enough there seems to be a bit of a mind block regarding our credit issues, and most firms (understandably in pursuit of more profit) still focus on high-end, gross consumption, rather than servicing the large numbers of fiscally constrained. Again; tracfone’s the only prepaid provider that makes being mobile affordable to seniors (SVC). I can only assume this is because of the small margins involved in that market…How many credit ‘hits’, must an economy take, before the populace realize the value of cheaper prepaid? Be sure, with a recession still fresh, and COL going up – there will be more major shifts in the wireless market. Where’s that affordable prepaid iPhone?

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