It doesn’t matter whether Steve Ballmer, Microsoft’s bombastic CEO, walked away from the negotiating table over the weekend, as Jerry Yang says he did.

The Yahoo! Inc. founder and CEO should’ve never let the talks get to that point. Yes it’s true Rule #1 of negotiations is to never take the first offer from a suitor. But Microsoft, by the software giant’s account at least, raised its offer by US$5-billion at least allowing Yahoo executives to save face. Everyone should’ve walked away happy.

So why wasn’t Yang willing or able to seal the deal? Greed, hubris, ego; Perhaps all the above. As founder of the company, he’s likely having a hard time imagining his beloved baby in the clutches of what has been a mortal enemy; a reaction that can be understood by anyone that has created anything.

The problem is Yang is the steward of a publicly-traded company and has a fiduciary duty to get the best deal possible for his shareholders. Who, after this weekend’s events, believe Yang is acting in the interests of Yahoo shareholders? Next to no one is the correct answer. In fact, shareholders are already organizing to withhold votes for the board members at Yahoo’s annual meeting in June.

“I am extremely angry at Jerry Yang and at the so-called independent board,” Gordon Crawford, portfolio manager for Capital Research Global Investors, told the New York Times. Capital Research Global owns 6 percent of Yahoo. The firm’s parent company owns a total of 16 percent of Yahoo, making it the largest shareholder.

Crawford and others are rightly annoyed at Yahoo’s management team as they’ve given Microsoft an opening to take over the company at a much cheaper price, in effect taking money out of the hands of long-suffering Yahoo shareholders.

Yahoo’s stock, for those whose heads were buried in the sand today, sank almost 15% as the reality of the weekend’s events set in for those that had hoped to make a quick buck by playing the Microsoft takeover attempt.

Assuming Yahoo’s stock stays at current levels (it closed at US$24.47 on the Nasdaq today), Microsoft will be able to swoop in at a later date with its initial offer of a 62% premium or a lower one for that matter, which will leave shareholders with less cash in their pockets on a per share basis.

It says here that Yahoo will be subsumed by Microsoft irrespective of the weekend’s event (or non-event). Microsoft will probably take over the company in three to six months time. Problem is Yahoo’s shareholders will be poorer (on paper) for the ordeal.

Technorati Tags: Microsoft, Yahoo, Jerry Yang, Steve Ballmer

Message to Microsoft chief executive officer Steve Ballmer: we don’t believe you.

A steadfast, hypercompetitive person such as yourself doesn’t give up on what could, will easily be the largest takeover in company history that easily.

Yet that’s exactly what Mr. Ballmer claims Microsoft did last night when the company said it has withdrawn its US$47-billion offer for Yahoo, after upping its initial offer by US$5-billion or US$33 a share. The previous offer was US$29 a share. Yahoo, apparently, wanted US$37 a share.

Microsoft, wisely, also said it doesn’t want to make a hostile offer for the company, a believable statement as such a move would result in mass departures and disruption at Yahoo.

“Clearly a deal is not to be,” Mr. Ballmer wrote in a letter to Yahoo CEO Jerry Yang yesterday.

Bollocks. This is one of the oldest negotiating tricks in the book of deal making. The popular opinion still holds that the parties will come together as Microsoft has determined it needs Yahoo to better compete against Google. The question is where the standoff ends of course.

Either way, it’s clear Yahoo has overplayed its hand. The company’s stock, which closed at US$28.67 on Friday, will tank tomorrow (Monday) the question is by how much. This may in fact, make Microsoft’s takeover attempt easier over the long term. Why? Obviously, the stock is going to drop which gives Microsoft a cheaper entry point with which it can buy the company. Henry Blodget, the former Wall. St. internet analyst, believes Yahoo’s shares will fall to low $20’s, which equates to a 30% drop. But price isn’t really a problem for Microsoft, as its coffers are overflowing with cash at any given moment.

There’s also the issue of shareholder pressure. Yahoo will now surely be hit with a series of shareholder lawsuits, which may not amount to a hill of beans but will give angry shareholders the opportunity to voice their collective discontent over the botching of the Microsoft deal.

Combined with a plummeting stock price, Yahoo will be under intense scrutiny and pressure to do something of substance. At that point in time, Microsoft’s interest level will rise and a deal will come to pass quickly.

Technorati Tags: Microsoft, Yahoo

Here at kevinrestivo.com, experimentation in the name of reader satisfaction and ultimately increased traffic is the name of the game. To that end, I’m going to begin a series of small experiments.

The first such trial begins today (Saturday) with a brief wrap of some of the major wireless news stories/events that happened in North America over the past week.

The format is simple: the news will be reviewed in a short paragraph followed by the impact on the industry, consumers and partners. Comments and questions always welcome. With that, here’s my first stab at it:

1) iPhone coming to Canada: Working and living in Canada we’ve got to start the week in review off with the news of the vague announcement by Rogers it will officially bring the iPhone to Canada at some point “later this year.”

Interpretation & Impact: Rogers will be able extend its subscriber lead over Bell and Telus once it adds the iPhone to its already impressive array of handsets later this year (whatever that means). As for Apple, the release of the iPhone in Canada will mark the seventh country - assuming the Great White North is next up - that cell phone aficionados will be able to purchase the much-loved iPhone. It’s doubtful the company will generate much, if any, contract revenue from Rogers though as Rogers is the sole operator of GSM networks in Canada giving it leverage with Apple. That’ll mark a departure of sorts for Apple, as the company has reportedly wrung as much as 30% of a customer’s monthly service fees out of some carriers.

2) The BlackBerry Kickstart, a purportedly new clamshell version of the popular smartphone from Canada’s Research In Motion, was leaked, er, appeared on a consumer blog called the Boy Genius Report. The report, undoubtedly leaked to the gadget blog, shows RIM is ready to release multiple versions of the BlackBerry for consumers.

Interpretation & Impact: The phone, assuming the image is indeed a photo of a forthcoming BlackBerry smartphone, will allow RIM to make further inroads into the lucrative consumer and prosumer segments where competition has intensified over the past 18 months with the entrance of Apple. The post is also further proof that (some) bloggers are influential as RIM stock jumped 7% after the product release speculation/rumour was disseminated.

3) AT&T, the exclusive network provider of the iPhone in the U.S., said it will give away free Wi-Fi access to its 71,000 iPhone owners.

Interpretation & Impact: the largest U.S. GSM network operator knows it has a winner on its hands and will go to great lengths to make its owners feel as though they are part of an elite group of people. Now THAT’S smart marketing; Good for you Randall Stephenson and co. It reinforces the value of the iPhone by showing that AT&T wants to make the wireless experience better for iPhone owners.

It also puts AT&T, which had been up until last year a dull undifferentiated provider of wireless services, into more of a Purple Cow marketing mindset and status.

Technorati Tags: BlackBerry, iPhone, Research In Motion, Apple, iPhone, AT&T, Wi-Fi, smartphone, Kickstart

So Rogers Communications can do no wrong. It’s easy to see why such an opinion is held by many cell phone users and investors at the moment.

The company is slowly pulling away from competitors Bell and Telus in the lucrative cell phone service game in Canada and the company’s stock is moving towards its 52-week high point.

Heck, people are actually fawning over the company now that Rogers has said it’ll bring Apple’s overhyped iPhone to Canada sometime this year. When’s the last time you heard people gush over Rogers or any service provider for that matter?

One has to wonder how long the party can last. Can relatively high margins, at least on the wireless side of the business, be sustained if Rogers is up against aggressive competitors that want to order cut rate service to gain market share? It’s a question worth pondering as the Canadian wireless market matures to the point where the most lucrative new customers become a rarer species.

New and possibly desperate wireless competitors won’t make things easier for Rogers, Bell or Telus for that matter - at least not over the short term. A slate of new wireless entrants are set to the hit market in the 12 to 18 months after Industry Canada auctions off valuable radio airwaves, which aspiring entrants need to enter the wireless services market.

New entrants matter to the health of Rogers because cell phone service is the profit engine of the company; New competition, in theory, could lead to slimmer bottom lines in future.

This is a worst-case scenario to be fair. Chances are spectrum, reserved or otherwise, will most likely be snapped up by the incumbents, say by MTS Allstream or the regional cablecos across the country. Those firms traditionally haven’t waged price wars to the best of my recollection, which means the wireless incumbents will be able to sustain, relatively speaking, the relatively high price points that make our jaws drop when we open our bills at the end of the month.

Still it’s a scenario or risk factor one needn’t forget when looking at the overall state of Rogers amid all the drooling over the iPhone and the stellar results released by Rogers earlier this week.

Furthermore, Rogers is in an enviable strategic position amongst Canadian service providers as it can offer a unique bundle of services. With little in-territory competition to mention outside of a hamstrung Bell Canada (which is being acquired by an Ontario Teachers Pension Plan-led private equity consortium) expect the stellar Rogers results to keep coming for at least the next year if not longer.

Technorati Tags: iPhone, Industry Canada, Apple, iPhone, smartphone, spectrum, Rogers, Bell Canada, MTS Allstream

Gadget geeks in the Great White North are rejoicing today after Rogers Communications said it will bring the much-anticipated iPhone to Canada later this year.

Rogers didn’t say when the device will be launched or provide other details such as pricing. Expect the iPhone to be released no earlier than July. (Note to readers: I predicted Apple and Rogers would launch the iPhone in Canada early next year so please take my predictions with a box of salt).

Regardless, the iPhone and Apple will soon challenge the BlackBerry for the title of the top-selling smartphone in Canada.

Here are 5 things I think I think (with apologies to the prolific Peter King of Sports Illustrated) about the impending launch of the iPhone.

1. I think the iPhone will help Rogers extend its already sizeable brand equity lead over rivals Telus and Bell. Rogers Wireless, by virtue of the fact its owns the GSM networks in Canada, has been able to offer leading-edge handsets before rivals for some time. Not so with CDMA operators Bell and Telus unfortunately. Watch for Rogers to extend its subscriber count lead over its competitors.

2. I think Apple and Rogers will sell more than 120,000 iPhone units in the first 12 months after its introduction.

3. I think the Toronto Star’s Chris Sorensen, a former colleague of mine at the National Post, broke the biggest tech story in Canada this year.

4. I think I’m going to avoid the Apple stores in Toronto, where I live, for the remainder of the year as I don’t want to be run over by the stampede of prospective iPhone buyers.

5. I think I feel sorry for Nokia Canada managers that are set to launch the underrated N95 device this Friday in conjunction with Rogers. You can count on a series of iPhone questions at the press conference. Sigh.

6. I think the first round of iPhone users (that Rogers knows about) are going to choke when they see their first bill. The wireless overage fees will make a grown man cry.

7. I think it’s highly doubtful Rogers is forking over a significant amount of revenue generated from an iPhone owner’s monthly service plan to Apple.

Technorati Tags: BlackBerry, iPhone, Research In Motion, Apple, iPhone, Nokia, n95, smartphone, Rogers

The New York Times published a borderline bizarre story today that seems to suggest RIM’s best days are days are behind it given increased competition.

The timing and content of the story is odd for a number of reasons. BusinessWeek and other publications have already beat its readers over the head with the topic.

The thesis is bollocks for a number of other reasons.

It is true that there is an additional layer of competitive intensity with Apple in the market. Nokia has introduced underrated devices such as the N95 over the past year while Microsoft and its handset partners also have an impressive array of offerings available.

The smartphone market, however, is growing by leaps and bounds, which mean that there is ample room for RIM to put BlackBerrys in the hands of consumers. Currently, 10% of consumers own a smartphone or converged mobile device in IDC speak in North America.

Lastly, the story makes RIM out to be the smartphone market leader. RIM is a leader to be sure but Nokia, in fact, is on top of the worldwide smartphone market (48.5% share) when measured by shipment.

RIM, however, is the poster boy for the smartphone/converged mobile device market in North America which makes it the focal point of reporters and competitors.

Having said that and continuing with my propensity to publish lists, here are 5 reasons why RIM will remain a leader in the smartphone market if not the top dog.

1. Brand equity, especially among enterprise users. RIM is the Kleenex of enterprise e-mail. The BlackBerry is to wireless e-mail as Google is to search. It is a verb. RIM’s brand equity is on the way up too.

2. Endpoint security. No IT manager who cares about his or her job will dare put an iPhone in the hands of a corporate user; RIM has no less than a two-year lead on Apple in this area. Security may not matter as much to consumers but it is a factor that will keep Apple out of the enterprise for the foreseeable future.

3. The keyboard. The iPhone has received a lot of attention because of the touchscreen. It may look good but the touchscreen is highly impractical for users that care more about messaging - they won’t to fiddle around with overly sensitive touchscreens.

4. The market. A rising tide lifts all ships. RIM will reach even higher peaks as it’s a leader in its field. This means the competition angle is overdone. Media have predicted the coming demise or decline of RIM for years now. Remember Good? How about Danger? Both companies, and others, were supposed to help sink RIM. It is true that smartphone competition is more intense than ever but RIM is taking the right steps to enter new markets and grow accordingly.

5. Design. Have you seen RIM’s forthcoming 9000 series of devices? If the images on the Web are accurate representations of the forthcoming consumer-oriented BlackBerry, people will snap them up. RIM is not Dell. It’s products are now fashionable. It has quickly turned what was an ugly, squat device into a fashionable accessory for consumers in a very short period of time.

Technorati Tags: BlackBerry, iPhone, Research In Motion, Apple, iPhone, Nokia, n95, smartphone

Poor overworked engineers buried deep within the confines of various cell phone manufacturer’s research and development arms have been trying for year to turn the simple cell phone into a full-fledged communications device without much success.

Despite best efforts, the traditional cell phone is still primarily used as a device to make voice calls, store calendar appointments and transmit text messages. (Yes I do know it’s used for different purposes in other parts of the world but I happen to live and work in Canada.)

Yet Spike Lee wants to make a short movie with the aid of a cell phone. Spike Lee has done some fantastic work, namely Do The Right Thing and Jungle Fever, but I wonder about the quality of his forthcoming short film given that shots are taken with cell phones.

Here are 5 other things that cell phones don’t do well. Admittedly this list stretches well beyond the technical limitations of a cell phone.

1. Take pictures. Ever shot someone with the cruddy 1.5 or 2 megapixel camera embedded in most phones? They are hilariously bad; not even suitable for Facebook.

2. Surf the Net. It’s truly amazing with the wireless throughput available that smartphone makers are still struggling with the mobile Web experience, Apple notwithstanding of course.

3. Make a person desirable. How many times have you wanted to politely tap someone on the shoulder - or scream at them for that matter - after being forced to listen to a one-sided conversation for a period of time? The answer for most, sadly, is many.

4. Maintain user privacy. I don’t mean that in the technical sense. With a cell phone, you’re always available especially if your employer foots the bill.

5. Play movies. Spike Lee may be able to shoot a short film or edit one taken with the aid of a cell phone but it is an awful experience trying to watch look at anything on a 1 x 1 screen other than a phone directory. I will never watch any film on a cell phone nor will a device of that size ever support such a format. Yet Bell Mobility at last check, sells what it calls Mobile Movies for $5.99 a pop.

Listening to one-sided cell phone conversations for extended periods of time will push even the most ardent tech aficionados to the brink of insanity.

So it’s easy to see why U.S. politician Peter DeFazio, a Democrat from Oregon, and other key House members have proposed the Hang Up act. The bill, if passed, would ban cell phone usage from planes permanently.

Congressman DeFazio and others may be trying to score cheap political points but he and other lovers of silence have reason to worry.

“The public doesn’t want to be subjected to people talking on their cell phones on an already over-packed airplane,” DeFazio said in a statement. “However, with Internet access just around the corner on U.S. flights, it won’t be long before the ban on voice communications on in-flight planes is lifted.”

Emirates Airlines already offers cell phone service on some flights; it is believed to be the first carrier in the world to do so. The European Union allows cellphone usage - Air France is testing cell phone use on some flights. No word from the Canadian carriers on possible cell phone usage on domestic flights. Fingers are crossed silence lovers.

Perhaps a bill banning cellphone usage on flights is pie in the sky idea; one can dream anyway!

In-flight cell phone usage will be a reality on most if not all flights in the foreseeable future - get used to the idea. However, one can take solace in the fact calls made from 35,000 feet are probably too expensive for the average chatty Cathy.

Technorati Tags: Air Canada, WestJet, Emirates, Air France, airlines

The forthcoming launch of the LG Vu cell phone in Canada likely means a domestic introduction of Apple’s iPhone is still months away.

What does LG’s iPhone look alike have to do with the real meal deal?

If an iPhone launch in Canada was imminent as many have suggested to this here blogger, Rogers wouldn’t bother launching a lower-cost device that contains many of the same features.

The LG Vu, which has a touchscreen and a QWERTY keyboard not unlike the iPhone, will be sold to the same target market Apple has targeted with its beloved iPhone.

While the carrier often offers multiple products to the same customer segment, Rogers prefers to offer a best-in-class and a device with fatter profit margins such as the BlackBerry or the iPhone first.

Rogers, which will offer LG’s cell phone beginning in May, prefers to promote a best-in-class product like the iPhone first before launching a lower-cost product such as the Vu.

But Apple and Rogers I imagine are locked in a staredown. Apple probably wants to extract a hefty portion of a Rogers iPhone customer contract, say in the 20% to 30% range per year.

Apple has reportedly extracted such terms and conditions out of AT&T in the United States and o2 and T-Mobile in Europe. Apple has leverage with carriers unlike many of its cell phone competitors during negotiations with some carriers as the iPhone has captured the imagination of cell phone lovers worldwide.

This means many carriers are willing to play ball with Apple.

Not Rogers. Rogers, the leading wireless carrier in Canada by subscriber, is pulling away from the pack without the help of Apple. Why change? More to the point, it owns the GSM networks in Canada. The iPhone only runs on GSM networks of course.

This means Apple isn’t likely to have its device introduced in Canada anytime soon. Not unless Apple wants to introduce the iPhone on Rogers terms, an unlikely scenario. So that leaves Apple to focus on larger markets such as Western Europe and Asia-Pacific next.

LG, in contrast, gets favoured nation status with Rogers (Bell & Telus too) of course because it has taken the path of least resistance. In other words, it knows how to play the Canadian carrier relations game - take the terms and conditions offered in order to gain access to the network and distribution channel of The Big Three carriers.

Meantime, Apple and Rogers don’t seem anywhere close to an agreement though only those on the 10th floor of 333 Bloor St. E. in Toronto really know what’s going on with the iPhone.

Skype’s unlimited calling plans, announced earlier today will surely prompt a price war against the independent VoIP service providers.

The question is: can either camp win?

The answer is no.

Here’s why. Beginning Tuesday, Skype users will be able to call landlines in 34 countries for $9.95 a month. Skype also offers unlimited calls for users in the U.S. and Canada for $2.95 a month.

The move thrusts Skype back into the limelight again and will likely spark a series of price cuts from competitors because the new offerings potentially gives eBay/Skype a small price advantage. That’s assuming of course users compare the plan to similar offerings from VoIP service providers such as Vonage.

By comparison, Vonage Canada users can call landlines in China or Argentina, for $0.02 a minute. As part of a $40 monthly package, Vonage Canada users can call anywhere in the U.S., Canada for free.

To my mind, that makes the plans from Vonage and other providers potentially more expensive packages though it depends on user calling patterns of course.

Regardless, if Skype is able to bring in new customers as a result of the new plans, competitors will have little choice but to slash prices.

That makes the VoIP consumer service game one of diminishing returns.

It’s already a tough slog for Internet phone companies trying to grow the top line; in recent years cable companies have introduced low-cost phone service as part of triple or quadruple-play telecom service packages.

Vonage has had a particularly rough go of it. The VoIP consumer services pioneer has lost patent lawsuits to Verizon and Vonage, which drained the company of roughly over US$200-million in cash and put it dangerously close to the point of bankruptcy.

So what happens to the likes of Skype, Vonage, Yak and the dozens of other pure play VoIP service providers operating in Canada and the U.S.? If eBay gets its way, it’ll pull a Niklas Zennstrom on someone and pawn the company off on some other unsuspecting firm for an outrageous sum of money. The more likely scenario will be that it’s sold for a modest sum at some point over the next two to three years.

Anyway, some VoIP service providers can survive as independent entities for the foreseeable future but most will either die on the vine or get snapped up if they’re lucky. The race to the bottom is on.

Technorati Tags: Skype, Vonage, VoIP, Niklas Zennstrom, eBay