Sun's quest to help telcos

LAS VEGAS--Sun Microsystems co-founder and Chairman Scott McNealy wants to help phone companies become "destinations," he said during a speech at the NXTcomm trade show here Wednesday.

Scott McNealy, Sun Microsystems co-founder and chairman

(Credit: Marguerite Reardon/CNET Networks)

Specifically, he wants to help these companies develop their businesses around services and content rather than simply providing connectivity to other Web sites on the Net. Sun provides the server technology and data center management services necessary to distribute content on the Web.

As part of its ongoing effort to help phone companies evolve their businesses in the next generation of the Internet, Sun announced on Wednesday a new version of its MySQL Cluster product that is specifically designed for the telecom market.

In a discussion with a handful of reporters after his speech, McNealy elaborated on what he meant by making phone companies "destinations."

"Why aren't the big carriers doing what BlackBerry is doing with e-mail?" he asked. "I can get my e-mail in one click. Why don't they provide chat, public data storage, video sharing, or social networking? It's not hard to do."

McNealy said he doesn't expect phone companies to develop these services themselves, but he said as long as they can brand new services so that consumers want to use them instead of going off on other Web sites to find them, they can compete with the likes of companies such as Google, Amazon, and Yahoo.

Amazon in particular has become a potential competitive threat to cell phone companies with its new wireless e-reader product, the Kindle, McNealy noted. This device allows people to download books, newspapers, and magazines using Sprint Nextel's wireless network. Amazon has bought wholesale capacity on Sprint's network, which makes the online retailer look and act like a mobile virtual network operator, which competes directly with cell phone operators.

Of course, the notion of network service providers creating a portal or destination site for consumers is nothing new. That was AOL's strategy in the dial-up market. And cable operators have all tried to do this for their broadband services. Verizon and AT&T have each separately partnered with Yahoo to create portals for their broadband services highlighting special content and other services. But for the most part, these strategies have largely failed as savvy Internet users often bypass these portals for sites like Google to find what they need on the Web.

Still, McNealy believes that carriers must do something if they hope to compete and ultimately win the battle for users both on traditional broadband as well as in the emerging wireless Internet market.

"They don't have to out-YouTube YouTube," he said. "They just have to out last them. But the real question is do (the phone companies) have the attention span to make it work."

He said Verizon, which is one of Sun's largest customers, could leverage its huge retail presence to market services directly to its consumers much more easily than some of these Web-based companies.

While he acknowledged that most of the large phone companies have already been working toward becoming "destinations," he singled out Australia's Telstra as one in particular that has executed well on this concept.

"It's not like they've been sitting around doing nothing," he said. "But Sol (Trujillo, Telstra's CEO) gets it."

Telstra's BigPond Web site acts as the public face for Telstra's broadband and wireless service offering subscribers content and services directly from the Web site. Subscribers can rent or buy movies online and download music. They can read news or download other video content as well as access games or shop online.

BigPond has been a big success, Truijillo said during his keynote speech on Tuesday at NXTcomm. Specifically, he noted that in 2007 BigPond sports had a bigger audience than its next three biggest competitors in sports content.

"When you have the right content, and it's customized for customers, you get the usage," he said. "And you get it in ways that most people are not used to getting it."

[Maccess]

GOING AWAY FROM THE CORE.

The core business of Telcos is the billing infrastructure and systems.

Making them into content providers forces them to compete in non-core areas, where others have competitive advantage. Didn't Verizon arlready say it? making a walled garden with telco affiliated premium services won't work because consumers will shun the garden entirely.

[KC Cowan]

RE: Verizon and AT&T portals

I've seen this same theme in several different articles, yet I think it misses the point. There has to be a compelling value proposition to attract users, especially if you're asking users to change their default homepage. They also need sufficient marketing. For example, I'm a broadband subscriber, and I have no idea what value my operator's portal is supposed to provide me.

[Manhattan2]

If they have legitimate content they will come.