B4 tht I rly wnt 2 tlk 2U abt txtng. K? =)

That wasn’t a series of typos, of course. It’s a less-obscure example of a new variant of written English. Called “Weblish” by some, it portends enormous profit potential as it sweeps the world via mobile phones.

Enabled by exponential improvements in semiconductor manufacturing, the mobile phone has the distinction of being the most rapidly adopted new technology in human history. Growth has been faster than for the land phone, the television and the Internet itself. Mobile telephony has surpassed even the dissemination of Jonas Salk’s polio vaccine in the 1950s.

Remarkably, it’s been less than 30 years since the appearance of the first commercially available mobile phone in the U.S. — Motorola’s DynaTAC 8000 “brick” phone. In 2009, subscriptions passed the 4 billion mark. Today, more than half the world’s population pays to use mobile phones. Cell phone ringtones are routinely heard in remote villages of developing nations without running water or modern sanitation. In fact, two-thirds of the mobile phones in use are in developing nations. There, they are bringing many their first access to modern banking, real-time commodity prices, severe weather alerts and other important services.

Mobile phone innovators and their investors have been rewarded with fantastic returns, but the opportunities for transformational profits are far from over. There are still untapped markets in mobile computing, with enormous wealth-creating potential for those that invest with a long view. The mobile phone as a data platform, in particular, is still in its infancy.

While originally a purely voice-based technology, mobile telephony has become primarily a data platform. This capability first became commercially available in 1993 with the creation of short messaging service (SMS), also known as text messaging. This data service, in turn, has grown wildly popular. Today, nearly 80% of all mobile phone subscriptions include SMS text messaging. In 2009, a whopping 1.5 trillion text messages were sent worldwide, on pace to hit 1.8 trillion messages in 2010.

In March 2010, data surpassed voice on mobile carrier networks for the first time. SMS has more users than any other data application in history. This transformation of the phone into a wildly successful data platform represents an enormous opportunity both for entrepreneurial firms and the investors who back them.

The financial media overlook SMS as a growth area, probably because smartphones are inherently sexier. SMS, however, has real advantages. Not only is it far less expensive, its functionality is being steadily improved. Take, for example, Twitter’s recent acquisition of the latest blockbuster killer app, Cloudhopper. This startup’s founders, now incredibly wealthy, developed the means to send, receive and organize Twitter messages using simple SMS phone texts.

In many respects, however, mobile texting parallels the state of the Internet in its formative days. I remember well because back then, I was consulting for the company that broke open the Web, Netscape. As then, vast amounts of data are being transferred. Beyond simple usage fees, however, no one has monetized that enormous sea of information texting represents.

We know, however, that there is a need and a market for parental and corporate controls over messaging and content. We know this because profitable businesses provide those services in the realm of e-mail and the Web. Similarly, we know that mobile texts could be mined for information, just as Google and others mine e-mail sent through their systems. Nobody, however, has emerged capable of exploiting the opportunities presented by the enormous SMS market — but that’s about to change.

I’ve just come across one tiny OTC company that has the potential to bring intelligence and control to vast portions of the SMS market. And because of its tiny size, its growth could make meaningful moves for the investors who get in during the next few weeks.

Obviously, any OTC stock is too small to talk about to 400,000 Sleuth readers, but I think it would be wrong not to give you the opportunity to get into this stock at a still-low valuation. I’ll keep you filled in when things change.

For Transformational Profits,
Patrick Cox

Profit From Small-Cap Mobile Phone Stocks was originally featured in the Penny Sleuth.

Investors who realize this fact early could cash in on a brand new tech boom that could produce a new generation of high-tech millionaires not seen since the 1990s.

Comcast, Verizon and other government-protected duopolies won’t be around for your grandchildren to enjoy — at least not in their current forms. You see, companies like these are selling outdated services. And they’re more than reluctant to change their business models.

First, consider the home telephone. This beast is becoming scarcer by the day. In fact, mobile phone-only households are becoming the norm. Yet despite huge increases in wireless sales by traditional telecoms, it’s the wireline segment that keeps these blue chips in the black. More than half of Verizon and AT&T’s revenue comes directly from wireline sales.

For the old-school telecom giants, it’s all about infrastructure. They want to milk the cable and phone lines for all they’re worth. After all, it took decades — and millions upon millions of dollars—to create these vast systems that pump TV and telephone service into our homes.

But the communications landscape has changed. We don’t need separate wires to connect our homes to world. Now, it all comes back to bandwidth.

The technology is ready. Wireless dominates the landscape, and the old-fashioned telecoms and cable providers can only desperately hang on to their antiquated services. Even the government—which normally favors any out-of-date and/or irrational business model — is coming around.

We’ve said before that the Federal Communication Commission’s stranglehold on our nation’s airwaves is not only hopelessly out of date — it’s downright counterproductive to the agency’s goals.

However, the FCC is slowly stumbling toward opening up the airwaves once and for all.

Earlier this year, the president dedicated billions of dollars toward rural broadband development in the economic stimulus package. There’s also a mandate that requires the FCC to create a national plan to bring broadband to everyone in the country.

The FCC has also approved proposals to use white space devices to provide broadband access. These devices would utilize analogue television frequencies recently freed up during the digital television conversion.

Of course, telecom giants aren’t going down without a fight. The National Association of Broadcasters has already filed suit in federal court regarding the white space decision, claiming it could interfere with television signals.

It’s a desperate move to save its empire. But in the end, it won’t work. Technology will win, and media convergence will open the door to new data service packages for customers that will provide phone, television, gaming and internet service through lightening-fast, reliable wireless connections.

It will be the beginning of a new tech boom. Companies such as Limelight Networks Inc. (NASDAQ: LLNW), a content delivery network (CDN) provider provides a variety of services, including live Internet video feeds for major events such as the U.S. Open, Oprah’s book tour and the Beijing Olympics, will thrive.  In fact, Limelight’s lucrative contracts with heavy hitters like MSNBC have helped the company grow its revenue more than 500% over the past three years.

More small companies like Limelight will surely emerge in the near future, providing ample opportunities for early investors to cash in on a new age of content convergence.

Best,
Greg Guenthner

September 22, 2009

How the Death of Big Telecom Will Reignite the Tech Boom was originally featured in the Penny Sleuth.

Most of the time, backdoor plays offer the largest profits in growth industries like this one. Sometimes, however, a straightforward approach is your best chance at the quickest gains. This is one of those times.

Take China Mobile, for instance. This telecom behemoth is the most obvious play in the region. In the last three years, the company doubled the number of subscribers and grew its bottom line 107%. That’s a rare feat for a $230 billion company.

China Mobile’s growth is impressive, but it’s nothing compared with what a small-cap player can do in this field. And with the telecom industry in Asia predicted to almost double by 2013, there’s plenty of room for other players to grow too.

That’s why we’ve been looking for under-the-radar Internet providers in Asia. And we just we found the only place worth looking at…

The Forgotten Power in Asia: Investing in Hong Kong

Most people think of China, India and Japan when you bring up Asia. The place most often left out of the conversation is Hong Kong — a Chinese territory that in 1997 ended 156 years of British rule.

Other than the small island nation of Brunei, Hong Kong has the largest GDP per capita in the entire region. In fact, the small territory is No. 14 in the whole world, and it’s only four spots behind the U.S.

Most are writing Hong Kong off these days, however. With the recent global financial collapse, Hong Kong’s large financial services industry was slaughtered. Even so, the world can’t just forget about this tiny-but-affluent region.

The Hong Kong Stock Exchange, for instance, is host to companies worth a total $2.7 trillion. That’s 10 times larger than the American Stock Exchange!

Another surprising tidbit about Hong Kong is the resilience of its tourism industry. While nearly every country in the world saw a decline in number of tourists, as well as income from its tourism industry, Hong Kong actually saw its tourism grow. Last year, the number of visitors to Hong Kong grew 5%, and average spending per overnight visitor grew 6.2%.

Needless to say, this is an overlooked region, but it shouldn’t be. Hong Kong is very capable of producing winners.

Right now, there is a small handful of exciting Hong Kong telecom plays that are worth looking at, but unfortunately, at this stage, it’s a case of look but don’t touch. Many of them are too speculative to mention here right now.

Watch the region — we’ll let you know when that changes.

Sincerely,
Jim Nelson

August 14, 2009

How to Profit from the Asian Internet Boom was originally featured in the Penny Sleuth.