Ok, so I went to SXSW and downloaded the requisite apps to stalk and get stalked: Sonar, Highlight, Banjo, etc. The rationale behind most of these apps is: “I once was tweeting with X and then realized we were in the same airport terminal so we met up, that inspired me to build an app that shows you personal information about everyone in every location you’re ever in.” There’s something wrong with that logic.

This new crop of integrated location apps making a splash at SXSW 2012 alert you when you’re close to a whole range of “people you might know” be it your Facebook or Foursquare friends, Linkedin contacts or people that have similar interests on Twitter. Most of them also go one degree over to “friends of friends” in many of these networks. The problem here is that all of these networks represent different slices of our lives (acquaintances, close friends, work people, etc) and there is a reason we’re connected to different people in each of them. When suddenly all of these networks that we’ve carefully curated cross over each other and bleed into our friends’ networks as well, the creepy or annoying situations far outnumber the few cases where it actually does something useful for us, like telling us that our twitter buddy is also in Terminal B.

That’s not to say exploring our extended social graphs through background location is a bad idea, it just seems more like a feature than a product. There could be thousands of targeted use cases for this technology that would provide more relevant information to us by just adding a bit more context. A travel app could alert you when someone in your extended graph is visiting your city or when you’re traveling to the same place as someone else. An app that helps you search for apartments to rent, could let you know that 3 people you follow on twitter and 10 of your Facebook friends regularly check-in or tweet from the area around the apartment you’re visiting. The LinkedIn and Facebook mobile apps could alert you of people in your area, but just when you ask and only on those networks. Chat apps could tell you when you’re chatting with people in close proximity, because maybe you want to meet up. Groupon could tell you which friends are nearby when you purchase a Groupon Now!, because maybe you want to share it and go together. You get the idea.

There seems to be a much larger opportunity in this space to be the platform that powers all of this by letting users authenticate all their social networks securely and with flexible privacy controls and then letting other apps integrate into their data stream with a frictionless “connect with X” button that users understand is realeasing only relevant location information instead of the full access that we’re expected to give apps now in exchange for them getting a little social. In the meantime, I’ve deleted all of these background location apps from my phone and will happily have a coffee in the same place as a LinkedIn connection without realizing they’re there. And if I really want to know who else is there, maybe I’ll just look around.


Disclaimer: Quotidian Ventures is an investor in Nestio, an awesome solution for your apartment rental woes, and Tripl, an app that helps you connect with friends when you travel.


In the past year or so, there has been a lot of speculation on what exactly Apple ($AAPL) will do with the huge amount of cash (now over $76 billion) they have on their balance sheet. A good roundup of the more popular theories of what can happen with that cash can be found here at the GigaOM blog.

Steve Jobs has said that Apple is accumulating a lot of cash to ultimately be able to take “big, bold risks” that create substantial value for shareholders. Some of the riskier moves that are discussed in the link above – like acquiring Facebook – certainly fit the “bold” category but don’t really represent any real value to Apple’s core businesses.

A big, bold move that actually makes sense would be to use some of that cash to buy Clearwire’s ($CLWR) network assets and develop a nationwide wireless data network exclusively for their devices. 

Why does this make sense? Read on.

1. Wireless internet access is key to Apple’s product strategy (especially after iCloud launches) and it’s completely in the hands of third parties.

Steve Jobs is a control freak. Apple’s success in launching revolutionary products is due in no small part to a need inherited from its CEO to have direct control over most of the pieces that go into the “experience” of these products.

Every Apple device is part of a tightly managed ecosystem – from hardware and software to customer service and retail experience all the way to third party apps and accessories – that makes using them much more useful and entertaining than any gadget itself could ever achieve. When I buy an iPod I’m not only buying an mp3 player, I’m buying a key to the iPod experience, micromanaged by the folks at Apple.

This said, there’s an increasingly central piece of the puzzle that Apple has not been able to control yet. Most Apple devices depend on wireless internet connectivity to be able to deliver their full potential, and this will be even more so when iCloud (Apple’s new online backup platform) is finally rolled out with iOS 5 in the next couple of months. This is usually not a problem when we’re at home with our high bandwidth wifi connections, but as we venture into the cold broadband-less world we can almost feel Steve Jobs trembling at the thought that our carefully crafted Apple Experience is now in the merciless hands of the likes of AT&T, Verizon or our nearest Starbucks hotspot.

2. Not only is network quality at the mercy of third party providers, but carriers also decide the way our devices interact with their data networks.

Skype calling was exclusively available on WiFi for a very long while, and Apple took 4 years to come out with a feature as essential as iOS Messaging. It’s no coincidence that these two features directly compete with voice calling and SMS, the two main revenue sources for wireless carriers. FaceTime is also only available on WiFi because it takes up too much of the bandwidth that carriers need to offer voice, SMS and the myriad other services they provide alongside Apple’s data. As long as carriers filter the way Apple devices interact with their networks, Apple will never be able to offer their users a full internet experience wherever they are.

Furthermore, if Apple had full management of their own wireless network, they could offer innovative pricing and usage models that would benefit their developers and end users. Users wouldn’t need to pay for a monthly data plan if they don’t need the full internet experience on the go, yet they could still download songs and apps from iTunes remotely through the network. Developers could also bake bandwidth costs into their business models and offer online content and features in their apps while the users don’t feel they’re overpaying for a costly mobile internet connection. The internet would be deeply integrated into the iOS experience, like it should be, and Apple would provide a truly revolutionary online experience.

3. Clearwire was a costly mistake and its shareholders, especially Sprint, need an exit. Fast. 

Clearwire was formed in 2004 as a data-only wireless service provider by visionary cell phone pioneer Craig McCaw. He correctly predicted that cell phone companies would ultimately have to evolve into data providers and decided to build Clearwire to get there first and with the optimal network for this task. At the time, a wireless technology called WiMax seemed to be the frontrunner to become the standard for 4G wireless data delivery, so Clearwire made a hard bet on it and build their entire business around the 802.16 WiMax standard.

In the years since then however, another technology called LTE overshadowed WiMax and became the true standard for next generation wireless data networks. The only other wireless carrier who bet on WiMax, Sprint, merged their network with Clearwire’s in 2006 and became the largest shareholder of the combined company. Sprint announced this year that they will be building out an LTE network despite their involvement in Clearwire. This spells bad news for the WiMax standard as it seems their last major supporter in the US is hedging their bet and going with the competition. It also leaves Sprint in the uncomfortable position of supporting two very expensive networks built on competing standards. The cost of building out their new LTE network is estimated at around $20 billion in the next 15 years.

4. Apple is the white knight that Sprint needs, and if it moves quickly it will be getting Clearwire’s assets at a bargain basement price. 

Clearwire’s market cap is currently hovering around $2.5 billion (and dropping fast), which gives it a total enterprise value of around $12 billion when you include liabilities and minority interests. If Apple made an offer of $15 billion for the entire company (including liabilities), shareholders would receive a 40% premium on current market value. As the share price only seems to be headed downward, this would be a very hard offer to refuse.

Sprint would also be very happy with a deal like this because it would receive some much needed cash that it can put towards building out its new LTE network. Also, since Apple doesn’t need the 9.5 million subscribers that Clearwire is expected to have at the end of 2011, I’m sure they would be more than happy to let Sprint transition them over to their new network whenever it’s ready. This deal would probably reduce the price Apple would ultimately pay for Clearwire to about $10 billion, which is less than thebook value of Clearwire’s assets.

At a generous $10 billion price tag, Apple would be acquiring spectrum that has been valued at $20 billion, plus an operational high-speed wireless data network that reaches 126 million people in the US, for LESS than it would cost them to build it from scratch. Even if they spent another $5 billion TODAY to make the service available to the entire US population with the highest service quality possible, they would still be getting an absolute bargain. Plus they would still be left with around $61 billion in the bank.

5. Apple’s adoption of WiMax in the US would finally give the technology the scale it needs to become a viable alternative globally. 

If Apple buys Clearwire’s assets and adopts WiMax as its standard wide-area wireless networking technology, it would need to put WiMax chips into the approximately 150 million devices it sells every year. This kind of scale would bring chip and equipment prices down for everyone using WiMax globally and make it a more attractive option for device manufacturers to integrate into their products.

Intel ($INTC), who is one of the most prominent members of the non-profit WiMax Forum and one of the leading manufacturers of integrated WiMax chipsets, would also be very interested in a deal like this happening. Analysts have recently reported that Intel is pursuing a partnership with Apple to manufacture the chips for their iPods, iPads,  and iPhones. If all of these devices now needed an embedded WiMax chip, Intel would begin to look much more attractive as a manufacturing partner.

What do you think? Should Apple buy Clearwire’s assets and become a wireless internet provider for its own devices? 

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