Every week the Opus team picks a news story or topic or idea that is relevant to the entrepreneurs and businesses we partner with.

RSS Feed

Archives

The Digital Wallet Wars

Ajit Deshpande - - 0 Comments

Last week, global payments technology leader Visa announced it had added Overstock.com, its biggest online retailer partner yet, as a user of its V.me digital wallet. With over $1 billion in annual online sales across a variety of categories, Overstock represents a significant addition to V.me’s current list of 34 retailers, which includes LivingSocial and 1-800-FLOWERS. In addition, Visa also announced last week that it would introduce a fee for ‘staged’ mobile and digital wallet operators such as Google, Intuit and PayPal.

So the digital and mobile wallet wars are in full swing as PayPal, Google, Mastercard, Square, Visa, Isis, LevelUp and others continue to jostle with each other for customer attention in what is clearly a fragmented market. In parallel, these wallet providers continue to build their two sided networks, consisting of online retailers on one hand and card issuing banks on the other hand. It is difficult to pick a clear winner here, since each participant has its own unique value proposition for customers and merchants. PayPal, MasterCard and Visa offer the experience of knowing the payments space for years. Isis represents the collective clout of AT&T, Verizon and T-Mobile. Square and LevelUp are the upstarts that seem to have cracked the SMB segment. And Google is, well, Google (plus Sprint plus Citigroup btw). So, as NFC adoption accelerates, we can expect the major banks and the major retailers to partner with all of these major wallet players, and at the same time try their own wallet offerings, resulting in one big free for all. And Visa’s fee surcharge announcement from last week might just be the beginning of all this…

So who might have a chance at benefiting from all this? It will probably be the arms dealers – current and next-gen Secure Element players such as Gemalto, NXP and ARM, and Trusted Service Manager players such as Opus portfolio company Sequent. But even more so, it could be the end customer, the one who now gets the opportunity to move towards a world with quicker transactions and fewer paper receipts and more actionable intelligence. And as long as that actually happens, this will be transition well done.

 

Continue Reading ...


Dropbox gets Mailbox

Ajit Deshpande - - 0 Comments

Last week, cloud-based file storage leader Dropbox announced its acquisition of Mailbox, an iOS email management app created by a 14-person startup named Orchestra. Orchestra was established in early 2011, raised a $5 million round in late 2011, and was acquired by Dropbox for approximately $100 million. Since its launch in early February’13, Mailbox has apparently had 1.3 million reservation requests to download the app, and processes more than 60 million emails per day at this time. The Mailbox app has been touted by some as one of the best email apps for user experience.

This is just such an intriguing acquisition. Is this a $100 million dollar acqui-hire for user experience expertise? Quite plausible, considering that simplicity has been Dropbox’s focus all through. Any chance Dropbox is mistaking early adopter interest in the app for broad-based user demand for an app like this? Also possible – a la Draw Something which Zynga acquired almost a year ago and which spiraled downward afterwards. On the flip side, could this turn out to be an Instagram type deal, which was questioned early on but now is hailed as a masterstroke by Facebook? Absolutely possible as well! Is Dropbox betting that email is here to stay for mobile devices? Not a stretch, at least for working professionals. And beyond these view-points on the standalone value of the acquisition, are there any competitive or product-level synergies that accrue to Dropbox? Quite likely yes to both – the Mailbox acquisition might in fact help Dropbox understand user experience needs in the mobile communication realm while at the same time positioning it better against the likes of Evernote (which for itself has already raised a quarter billion dollars). It will be interesting to see how this acquisition actually pans out for Dropbox.

With lots and lots of data in tow, Dropbox is starting to move into the application layer, which is where the real money probably is. Moving up the stack is Dropbox, so maybe it is time to gear up for such things as Dropbox email and Dropbox docs and so on!

Continue Reading ...


IBM all in with OpenStack

Ajit Deshpande - - 0 Comments

We discussed back in January about Open Compute, the Rackspace and Facebook driven open-source server initiative, and about how there was growing momentum for commoditization in hardware for the cloud. Well, last week brought news that signaled similar momentum for the OpenStack project, an open and scalable operating system for building private and public clouds, with IBM announcing that all of its cloud services and software will be based on the OpenStack architecture. Since joining the OpenStack Foundation in April’12, IBM apparently has been the number 3 code contributor to OpenStack, so last week’s announcement wasn’t completely earth-shattering, but even so, getting a services giant of IBM’s caliber gives OpenStack a huge fillip.

OpenStack as a cloud platform is part of a still-evolving competitive space. For private clouds, there are multiple players inclusive of OpenStack, with a variety of pricing models, features and interoperability constraints. Amongst these, OpenStack is differentiated in that it is the only one operated by a Foundation as opposed to a corporate entity. In the public cloud, AWS clearly leads the way, with OpenStack (pushed by Rackspace) and Google Compute Engine being the other key players. In this context, the IBM backing helps OpenStack significantly with customer outreach as well as with peer pressure on other IT services firms, both of which will spur distribution (in a way reminiscent of IBM’s backing of Linux in 1999). As mentioned in the public domain, OpenStack now becomes a legitimate challenger to AWS (especially for interoperability and for ease of instantiation) and could dent VMware’s dominance in server virtualization.

So what does this mean for entrepreneurs? Does a services giant like IBM entering this business mean that the potential for building standalone, highly successful startups in this domain has decreased? Probably so – wider adoption should reduce valuations and exit multiples, and so we should soon expect consolidation in this space. Mainstream cloud adoption has gotten a tailwind, but for innovators, the cloud might finally be nearing maturation!

Continue Reading ...


Unbundled Television – the new frontier?

Ajit Deshpande - - 0 Comments

For decades, the television industry had been driven by content from broadcast networks and advertising revenues from brands wanting to connect with a passive audience. Over time, digitization of TV content, deployment of broadband infrastructure, and development of IP TV technology have made it possible for television content to be delivered over IP, and as of today, smart TVs and Digital Media Receiver devices such as Roku and Apple TV enable network content streaming over IP to the TV screen. Multiple announcements from last week bring news of continued developments in this rapidly evolving segment: First, Roku teamed up with Broadcom to bring Miracast video streaming and desktop-mirroring capabilities over WiFi Direct from laptops and mobile devices to a Roku Device. Second, YouTube for iOS added a ‘Send to TV’ feature to control videos on Google TV, XBox 360 or PS3. And finally, Amazon Prime added content from Scripps, the owner of HGTV, Food Network and Travel Channel, to its streaming service.

Web video and interactive gaming sites today already dwarf what broadcast networks can offer in terms of content, and now with offerings such as Miracast, Send-to-TV, and AirPlay, this web and gaming content can be easily accessed on-demand (and maybe pay-per-view) on the TV screen. Add to that the precise outreach metrics possible with the internet, and we might have a pretty compelling argument for IP content delivery to the TV. In the face of such momentum, potentially the best approach for second and third tier content owners might be to participate in this move towards web-based pay-per-view delivery, and that’s what Scripps seems to be doing through Amazon Prime.

Going forward, a number of different factors will determine whether the larger content networks transition towards unbundled / on-demand IP-delivered content: the willingness to pay of the consumer base over time (which in turn might improve with the rise of the ‘digital natives’), the type of content being offered (live TV such as sports vs. relatively evergreen content such as soaps), current contractual obligations of existing media channels and so on. However this plays out, there is now a legitimate alternative business model for the television screen, and that is great news for the end consumer.

[Thanks to Corey Ford from Matter. for sharing his viewpoints as part of the research for this write-up]

Continue Reading ...