Carriers, standalone CDNs squeeze one another

from telephonyonline.com:

>>Telecom carriers are beginning to radically shake up the market for content delivery networking (CDN) now crowded with standalone players, according to Yankee Group senior analyst David Vorhaus, who predicts the current pricing pressure in the CDN sector will accelerate carrier participation in the space, either through acquisitions or partnerships they may or may not be preludes to acquisition.

...

In a recent assessment of CDN players, the Yankee Group already ranked AT&T (NYSE: T) and Level 3 Communications (NASDAQ: LVLT) in fourth and fifth place, respectively, in terms of the quality of their offerings. But in talking about carrier participation in the CDN space today, Vorhaus said, “What we’ve seen thus far is only the tip of the iceberg.”

Carriers are inexorably moving into the CDN space not just because it’s becoming an increasingly vital part of their business but because they have certain innate competitive advantages there. During the company’s second-quarter earnings call, Level 3 executives, while reporting pricing pressure in their CDN business, argued that it will be remedied eventually by the cost structure they enjoy as a carrier. Jim Crowe, the company’s chief executive officer, emphasized the advantage that carriers wield over standalone CDNs simply by owning their own underlying transport infrastructure. “Over time, if you're not a carrier with your own low-cost source of bandwidth, you're going to end up as a reseller,” Crowe said. “Resellers can grow to a certain size, but then because they don't control such a large portion of their cost, they get squeezed.”

Vorhaus agreed in general that CDNs have already begun to squeeze. CDN market leader Akamai Technologies has significantly dropped its typically premium prices lately for existing big-name customers, something Crowe hinted at in the earnings call as a tactic of incumbents trying to keep their market share. And Akamai’s biggest competitor, Limelight Technologies, which reported sequentially flat second-quarter revenue, is expecting third-quarter revenue to be sequentially flat as well.

Internap conference call in a cloud - one year ago...

excluding names and common words (quarter, etc.). More talk about growth than churn. CDN was said 58 times (and Vitalstream three times). Every one minute, CDN was mentioned...

Internap conference call in a cloud

excluding names and common words (quarter, etc.). More talk about churn than growth.

Maxim Integrated Products - touch-interface systems with haptic controller drivers

not an Immersion partner, however a confirmation haptic is becoming a "must have":

SUNNYVALE, CA—July 30, 2009—Maxim Integrated Products (NASDAQ: MXIM) introduces the MAX11810* and MAX11811*, the first touch-interface systems with integrated 4-wire touch-screen controllers, haptic controller drivers, and infrared-based proximity sensing. Designed for applications flexibility, these devices can drive a DC motor directly or piezo elements using an external piezo driver. The MAX11800 and MAX11801 are register-map-compatible versions without haptic controller drivers and proximity sensing.

Through simple register programming, the MAX11810/MAX11811 generates greater than 50,000 different haptic patterns with a built-in haptic waveform generator. Programmable registers eliminate the need for a dedicated interface on the application processor or system microcontroller. This programmability simplifies the addition of haptic feedback to any end equipment with a touch screen.

Ideal applications include cell phones, MP3 players, portable media players, digital photo frames, multifunction printers, point-of-sale and financial terminals, bar code-scanners, card readers, and other industrial equipment. Automotive-qualified part versions exist for use in car GPS, entertainment head units, and rear-seat entertainment systems.

Traditional Haptic Feedback System

The current market solution for haptic feedback using motors requires the application processor/system microcontroller to drive the motor. The applications processor/microcontroller needs to generate the haptic waveforms and send them to the motor through a dedicated interface. This adds latency and engages the application processor/microcontroller continuously, not allowing it to perform other duties.

Simplified Haptic Feedback System

The MAX11810/MAX11811 has a built-in waveform generator that creates the various haptic patterns and provides a direct interface to the motors. This approach eliminates the need for a dedicated interface on the application processor/microcontroller. With an integrated H-bridge driver, the MAX11810/MAX11811 eliminates the need for an external amplifier when haptic feedback is implemented using a DC motor. Alternatively, if piezo elements are used to implement haptics, the MAX11810/MAX11811's haptic-feedback output drives an external high-voltage amplification circuit to which the piezo actuators are connected.

Automatic Validation of Touch Responses Reduces Data Transfer and Saves Power

Unlike existing touch-screen controllers, the MAX11810/MAX11811 and MAX11800/MAX11801 reduce system power by offering additional, digital, on-chip processing to validate touch events before they are sent to the application processor. This automatic validation reduces interrupt servicing of false or redundant touch events and lowers total system power. This capability is crucial for battery-powered end equipment.

The MAX11800/MAX11801 and MAX11810/MAX11811 support a built in dynamic aperture feature (position hysteresis) and on-chip FIFO. This automatic function reduces latency in the touch response and unnecessary data transfer between the devices and application processor or microcontroller.

Two other touch-screen controllers are part of this device family, the MAX11802/MAX11803. These devices are register-map-compatible versions of the MAX11800/01 but without the position hysteresis and on-chip FIFO. MAX11802/11803 provides standard resistive, touch-screen controller functionality.

Available in high-speed (25MHz) SPI™ and fast (400kHz) I²C versions, all these devices guarantee compatibility with virtually any system or application processor. A wide, 1.7V to 3.6V, single-supply operating range eliminates the need for external supply-voltage regulators and level translators on the data bus. The parts are offered in extended temperature range (-40°C to +85°C). A variant up to +105°C is currently being qualified for use in automotive applications.

The MAX11800–MAX11803 are available in 1.6mm x 2.1mm, 12-pin TQFN and 12-pin WLP packages. The MAX11810/MAX11811 are available in 2.1mm x 2.1mm, 20-pin TQFN and 16-pin WLP packages. These small package footprints facilitate the miniaturization of end equipment. To speed design-in, EV (evaluation) kits are available. To enable full system emulation, the EV kits come with a resistive touch panel. The EV kits for the MAX11810/MAX11811 add a DC motor for evaluating the tactile feedback capability of these devices. The recommended price for the MAX11810 is $1.81 (1000-up, FOB, USA) and $1.76 (1000-up, FOB, USA) for the MAX11811. The recommended prices for the other devices in this controller family are: MAX11800, $1.51 (1000-up, FOB, USA); MAX11801, $1.46 (1000-up, FOB, USA); MAX11802, $1.31 (1000-up, FOB, USA); and MAX11803, $1.26 (1000-up, FOB, USA). All part versions are available now. Please contact the factory for ordering and sampling information. For further information please visit www.maxim-ic.com/Touch-Screen-Controllers (MAX11800-MAX11803) and www.maxim-ic.com/Haptics (MAX11810/MAX11811).

Maxim Integrated Products is a publicly traded company that designs, manufactures, and sells high-performance semiconductor products. The Company reported revenue in excess of $2 billion for fiscal 2008. Maxim was founded over 25 years ago with the mission to deliver innovative analog and mixed-signal engineering solutions that add value to its customers' products. To date, it has developed over 6000 products serving the industrial, communications, consumer, and computing markets. For more information, go to www.maxim-ic.com.

http://www.maxim-ic.com/view_press_release.cfm/release_id/1605#hires

Netriplex Extends Fiber Network to Washington DC and the Northeast

Netriplex, LLC today announced plans to extend its high-capacity fiber connectivity from its Asheville, NC, datacenter to the Washington, DC, area and the Northeast United States. The initial phase of this expansion will be a leased OC-192 optical fiber circuit to the network-neutral Equinix facility in Ashburn, Virginia with peering to hundreds of major transit providers.

Asheville, NC (PRWEB) August 12, 2009 -- Netriplex, LLC (http://www.netriplex.com) today announced plans to extend its high-capacity fiber connectivity from its Asheville, NC, datacenter to the Washington, DC, area and the Northeast United States. The initial phase of this expansion will be a leased OC-192 optical fiber circuit to the network-neutral Equinix facility in Ashburn, Virginia with peering to hundreds of major transit providers.

Immersion new patent: Physically realistic computer simulation of medical procedures

United States Patent	7,573,461
Rosenberg	August 11, 2009

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Physically realistic computer simulation of medical procedures

Abstract

An apparatus for interfacing the movement of a shaft with a computer includes a support, a gimbal mechanism having two degrees of freedom, and three electromechanical transducers. When a shaft is engaged with the gimbal mechanism, it can move with three degrees of freedom in a spherical coordinate space, where each degree of freedom is sensed by one of the three transducers. A fourth transducer can be used to sense rotation of the shaft around an axis.

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Inventors:	Rosenberg; Louis B. (Mountain View, CA)
Assignee:	Immersion Corporation (San Jose, CA)
Appl. No.:	11/725,958
Filed:	March 19, 2007

Smartphone boom eases handset sales pain -Gartner

from Reuters:

>>Smartphone boom eases handset sales pain -Gartner

* Handset sales down 6 pct yr/yr in Q2, vs 9 pct fall in Q1

* Research firm says phone demand stabilising

* Smartphone sales grew 27 pct year-on-year in Q2

* Nokia Q2 smartphone market share 45 pct, vs 41.2 pct in Q1

HELSINKI, Aug 12 (Reuters) - Global cellphone sales continued to fall in April-June, but at a slower pace than in the previous three months as falling prices boosted demand for advanced smartphones, research firm Gartner said on Wednesday.

NOKIA, APPLE WIN SMARTPHONE SHARE

Bucking the slowdown in the wider market, smartphone sales grew 27 percent year-on-year in the quarter, boosted by cheaply priced phones like Nokia's first touch-screen model, the 5800, which make advanced functions available at a 200-300 euro price range.

Gartner said top handset maker Nokia (NOK1V.HE) increased its smartphone market share -- a major issue for investors -- to 45 percent, boosted by demand for its cheaper models after its flagship high-end N97 smartphone met with little enthusiasm.

Nokia shipped just 500,000 N97s in June, compared to Apple's iPhone 3G S, which sold 1 million units in its first weekend in the same month, Gartner said.

AccuStream Research: CDN Account Growth at 23.3% in 2009, Revenue up by 16.4%

SALINAS, Calif.--(BUSINESS WIRE)--CDNs (Content Delivery Networks) are achieving another year of double-digit growth in 2009, writing new contracts at a 23.3% pace above 2008, powering top line revenue forecasts up 16.4% to $1.37 billion across the segment.

The U.S. market currently generates an estimated 55.8% of the global CDN total, though international traffic is now increasing at a faster rate than its domestic counterpart, according to an industry report by AccuStream Research.

The report, CDN 2010: Revenue, R & D, Cap Ex and Operational Analytics provides comprehensive market performance metrics for each CDN, including MRR, total accounts, revenue, servers, cap ex, R & D initiatives, share of and penetration into video content verticals (pro video views by site and category), video advertising, Internet radio and UGV.

...

Of the 22.5 billion professional video views served in 2009, Akamai delivered 31.9%, Limelight Networks 12% and Level 3 11.2%.

KDDI, Immersion join wireless Linux group LiMo

Panasonic, NEC unveil 9 new Linux phones

* KDDI, Immersion join wireless Linux group LiMo

* LiMo still lacks support from top telephone makers

HELSINKI, Aug 11 (Reuters) - Panasonic Corp (6752.T) and NEC Corp (6701.T) unveiled nine new cellphone models on Tuesday that run the open-source LiMo operating system, wireless Linux group LiMo said.

...

LiMo also said Japanese mobile carrier KDDI Corp (9433.T) and touch screen company Immersion Corp (IMMR.O) had joined the not-for-profit foundation. But LiMo has been missing support from the largest cellphone vendors. So far smaller phone makers NEC, Panasonic and Motorola Inc (MOT.N) have unveiled in total 42 phones using its software. At the same time, all the top handset vendors, except Nokia, have promised to produce phone models running Android software.

The world's second- and third-largest cellphone vendors, Samsung Electronics Co Ltd (005930.KS) and LG Electronics Inc(066570.KS), are members of LiMo, but have not unveiled commercial models.

LiMo hopes to benefit from its focus on giving greater say over software development to telecommunications operators. Its key members -- Vodafone Group Plc (VOD.L), France Telecom SA's (FTE.PA) Orange, Japan's NTT DoCoMo Inc (9437.T), South Korea's SK Telecom Co Ltd (017670.KS), Telefonica SA (TEF.MC) and U.S. operator Verizon Wireless, a venture between Verizon Communications In (VZ.N) and Vodafone -- have pledged to introduce LiMo phones in 2009.

from Reuters

Non-Reliance on Previously Issued Financial Statements

NOTIFICATION OF LATE FILING

Immersion Corporation (“ Immersion ”) is unable to timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (the “ Form 10-Q ”) by the prescribed due date due to the fact that the previously announced Audit Committee internal investigation has not yet been completed, which has delayed the completion of the financial statements for the second quarter of fiscal year 2009 and related disclosures.

The Form 10-Q will not be filed on or before the fifth calendar day following the prescribed due date. Although Immersion cannot at this time estimate when it will be in a position to file its Form 10-Q, it is diligently pursuing these matters and intends to make the filing as soon as reasonably practicable after the conclusion of the investigation and analysis.

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Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

On August 10, 2009, the Audit Committee of the Board of Directors of Immersion Corporation (“Immersion”), after consultation with management concluded that its previously issued consolidated financial statements as of and for the year ended December 31, 2008 and auditor’s report thereon, and previously issued unaudited financial statements as of and for the periods ended March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and March 31, 2008, should no longer be relied upon because of one or more errors in such financial statements.

This determination was based on the ongoing previously announced investigation, undertaken by the Audit Committee of the Board of Directors, of certain revenue transactions in Immersion’s Medical line of business for which accounting errors have been identified. Immersion is currently neither in a position to fully quantify the restatement adjustments nor in a position to determine the magnitude of revenue and accounts receivable overstatements during the above periods; however, the correction of these errors would affect the amount and timing of revenue recognized for the respective periods. The resulting changes will require restatement of Immersion’s financial statements for such periods. While Immersion will not be able to evaluate the full impact of the aforementioned matters until the investigation and analysis are completed, Immersion does not currently anticipate any changes to its cash flows from operations for these periods or the results of its Touch line or other historic lines of business. Similarly, related press releases, annual report and stockholder communications describing Immersion’s financial statements for these periods should no longer be relied upon.

Immersion has also discussed this matter with its independent registered public account Deloitte & Touche LLP.

Although Immersion cannot at this time estimate when it will be in a position to file its restated financial statements and its Second Quarter 2009 Form 10-Q, it is diligently pursuing these matters and intends to make the filing as soon as reasonably practicable after the conclusion of the investigation and analysis.

As a result of these matters, Immersion is also in the process of reassessing the effectiveness of its internal control over financial reporting.

Internap's announced expansion in colocation: smoke in investors' eyes?

Internap (INAP) reported 2Q 2009 results on August, 5.

A few highlights worth reporting:

• Revenues were slightly above expectation ($64.4 million), and Internap succeeded in showing a small sequential and Y/Y increase, driven by strength in colocation services;
• the Company revised its segment reporting, with CDN services now part of IP Services (and managed servers, about 25% of revenues, allocated to the Colo segment);
• due to this new, simplified approach, Internap took another restructuring charge of $55.6 million primarily attributable to CDN (after a roughly $100 million one taken a few quarters ago – now almost ¾ of the acquisition cost of Vitalstream has been written off);
• the Company announced a $50 million expansion plan for more Company owned data centers, to be executed in the following 18 months.

As Rob Powell noted at Telecom Rumblings, finally a realistic approach to CDN:

• Internap will now be reporting revenue for only the IP and colocation segments, absorbing the CDN activities and no longer treating them independently. That doesn’t mean that the company is abandoning the CDN market entirely, but it does strongly imply a change in focus away from that market. In other words, Internap probably isn’t going to be a major CDN player any time soon and certainly wishes the Vitalstream acquisition never happened.

The Company itself is quite skeptical about the possibility to grow the IP services segment in the close future, as it is explained in its latest 10Q (emphasis added):

• IP services revenue decreased 7% over the same period last year. The rate of total revenue growth in the quarter was impacted due to higher customer churn, particularly in our data center services segment. Our IP services revenue continues to be more affected by pricing pressure and the ongoing negative economic conditions.
• IP traffic increased approximately 27% from the three months ended June 30, 2008 to the three months ended June 30, 2009. The increase in IP traffic resulted from customers requiring greater overall capacity due to growth in the usage of their applications, as well as in the nature of applications consuming greater amounts of bandwidth. However, as we focus on more profitable growth in IP services, we do not expect to see significant growth in total IP services revenue in the near future.

Given the general scenario described by Internap, the announcement of further expansion of Company-controlled data centers seems the most interesting development to analyze.

About five months ago, we wrote an article about Internap and the previous $40 million investment, announced in June 2007, and executed mainly in 2008, to increase Company-owned data centers: InterNAP's Colocation Expansion: Better Late than Never?

To cut a long story short, we noticed that the expansion plan took about 7 quarters to be completed, rather than the 3 to 4 quarters forecasted. At that time, we were inclined to blame bad execution for the delay.

This time, Internap is giving itself 6 quarters to grow its data center presence in key markets – which, by the way, have not been announced.

A closer look at some numbers, and a quick Q/Q comparison - quotes from Seeking Alpha conference call transcripts, emphasis added:

• 1Q 2009 conference call
• George Kilguss - CFO
• Since the first quarter of 2008, the company has deployed 40,000 of company-controlled build-outs square footage and 17,000 square feet in partner sites. Historically, approximately 80% of company-controlled and 90% of partner sites build-out space is available to sale to customers.
• In the first quarter, off the 99,000 square feet of build-out space at partner sites, 86,000 was occupied. In company-controlled sites 87,000 square feet was occupied compared with 144,000 square feet build-out. Our Boston and Seattle markets have been among our strongest company-controlled facilities from the demand perspective.

• 2Q 2009 conference call
• George Kilguss
• So, in our partner data centers, in the second quarter, we had approximately 106,000 built out square feet, of which 90,000 square feet was occupied and our company controlled data centers we had approximately 144,000 square feet of built out and about 86,000 occupied.

(you may click on the image for a larger picture)

Occupation in Company controlled data centers is actually decreasing, even if slightly. High churn is generally blamed for this poor result:

• Eric Cooney - CEO
• Data center services revenue increased 17% over the second quarter of 2008. Our data center expansions and increased occupancy along with stable pricing benefited revenue growth and offset significant churn from a couple of large customers during the quarter.
• George Kilguss
• Higher churn experienced in our data center services segment was the primary driver of the total increase, which I’ll provide some additional comments on in a moment.
• While new revenue in this segment remained solid, we experienced higher data center revenue churn in the quarter. Data center churn totaled 2.9% in the quarter up from 1.3% a year ago. We had several customers consolidate their data center footprint in the second quarter as the economy impacted end user demand.

It's also interesting that margins are decreasing Q/Q in this segment – having all the fixed costs of the new centers without growing occupancy/revenues doesn't certainly help improving this metric. It has to be reminded that Internap is generally experiencing lower margins than the other pure players in the colocation sector, also because it's using partner sites in many key locations.

• George Kilguss
• Data center services segment gross margin as the second quarter, were 25.1%, down 150 basis points both compared with the first quarter and the same period last year as the initial addition of square footage increased expense during the quarter without an associated increase in data center revenue.

A look at a larger time frame confirms that Internap is actually growing faster in partner sites, and adding occupancy in its own data centers quite slowly (data from conference calls or Company filings - click to enlarge):

While adding about 40.000 sq.ft. of Company-controlled data center in 2008/beginning 2009, Internap has been able to fill up only 5.350 sq.ft. in one year - and partner sites are growing at a much faster pace, in the same time frame (almost twice as much, 9.500 sq.ft.).

We obviously hope that the Company enjoys a very strong pipeline, and these numbers do not reflect its trend for the future, as it might not justify adding another 50,000 sq.ft. of data center space. It must be noted that management has announced its intention to reduce the number of partner sites and consolidate customers in its own center, but we remain skeptical this strategy will work in all cases (location is very important in this business, and Internap does not cover the major Tier 1 markets. We also believe some customers will not move out of, say, Equinix (EQIX) easily and will probably opt for trying to stay in the same data center while continuing to buy Internap's IP services).

We should also remember that Internap recently suffered a 28 hour outage in its Seattle data center, that certainly upset many of its customers. This event will both cost the Company money in refunds due to customers, and might also lead to a higher that expected churn in that specific location, even if, luckily, Internap can offer an alternative data center in the same market.

Internap itself is describing the situation as follows (from Techflash.com):

• Earlier this week, Internap told tenants that the plan is to build a new switchgear room. Internap said Fisher Plaza officials believed it would be "several months" before a permanent solution is in place.

Bottom line, unless the Company starts executing better, showing higher occupancy rates in its own centers, we feel that this announcement is more a distraction to investors that a sign of a real growth driver for Internap going forward.

Internap data center occupancy: 1 year view

data from conference calls or Company filings:

(click to enlarge)
While adding about 40.000 sq.ft. of Company-controlled data center in 2008, Internap has been able to fill up only 5.350 sq.ft. - and partner sites are growing at a much faster pace, in the same time frame (almost twice as much, 9.500 sq.ft.).

Internap Company-controlled data center data

Internap has just announced (without any detail on the locations...) its intention to invest an additional $ 50 million in its own Company-controlled data centers.

A quick look at a Q/Q comparison - quotes from Seeking Alpha conference call transcripts, emphasis added:

• 1Q 2009 conference call
  
• George Kilguss - CFO
• Since the first quarter of 2008, the company has deployed 40,000 of company-controlled build-outs square footage and 17,000 square feet in partner sites. Historically, approximately 80% of company-controlled and 90% of partner sites build-out space is available to sale to customers.
• In the first quarter, off the 99,000 square feet of build-out space at partner sites, 86,000 was occupied. In company-controlled sites 87,000 square feet was occupied compared with 144,000 square feet build-out. Our Boston and Seattle markets have been among our strongest company-controlled facilities from the demand perspective.

• 2Q 2009 conference call
• George Kilguss
• So, in our partner data centers, in the second quarter, we had approximately 106,000 built out square feet, of which 90,000 square feet was occupied and our company controlled data centers we had approximately 144,000 square feet of built out and about 86,000 occupied.

(you may click on the image for a larger picture)