E-Mailbag Monday: Sonus Networks, Digital Entertainment, M-Commerce
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What looks good in the IPO market this week?
Reply: There are some signs of life in the IPO market. This was evidenced by the impressive showing of New Focus last week. Apparently, investors still want infrastructure stocks - especially those focused on optics.
For this week, take a look at Sonus Networks. The company develops sophisticated products that allow for voice services to be transmitted over packet-based networks. A packet-based network delivers small amounts of data, which tends to be more cost-effective and flexible than circuit-based networks.
According to a study from Synergy Research Group, the market for voice infrastructure (for voice over IP and Net offload) is expected to soar to $19 billion by 2003. So far, Sonus has been able to snag an impressive list of customers, such as Global Crossing and Williams Communications.
In light of what's happened at Digital Entertainment Network (DEN), what do you think of online entertainment?
Reply: Apparently, DEN has run out of money and is on the verge of a bankruptcy filing. Although, DEN is somewhat of an exception for the online entertainment industry. The company spent money wildly and did not have a clear business model.
Inevitably, I think there will be convergence of the Web and Hollywood. However, it will likely be driven by the Big Studies, not Net start-ups. Producing high-end, movie-quality content is very expensive and high risk. In fact, a flop can severely hurt even a major Hollywood studio. So, for the most part, it would be a good idea to avoid the Net entertainment pure plays.
M-Commerce: The Wireless Alternative
What is m-commerce?
Reply: We will be hearing more about this. Basically, it is mobile commerce. That is, you can buy from a wireless device from anywhere, anytime. For example, the Palm Pilot VII allows you to do such m-commerce activities as buy stock and engage in online banking.