TECH TALK: TechnoWonders of the Modern World: TechnoWonder 7: Streaming

Streaming as a TechnoWonder is perhaps a surprise selection. Streaming enables audio and video to be broadcast on the Net such that the end user does not have to wait for the entire file to be downloaded; instead it provides for a steady flow of information. Of the many technologies which are disruptive, Streaming is perhaps one.

What Streaming does is to convert the Web from a text and graphics one to a rich, multimedia wonder – by making audio and video available to everyone across the world. We experience the world through sight and hearing – why then should our web world be any different. Taken with the developments in optics, Streaming has the potential to make the web come alive to the mass market, constrained by literacy and language.

Many of the enabling developments that have and will continue to make Streaming popular on the Net are falling in place: media streaming software, broadband distribution, faster processors, caching companies, last-mile technologies like cable and DSL, data centres, and multimedia content.

The biggest users of Streaming technologies will be corporates. According to the Red Herring, “corporate Webcasts that facilitate employer-to-employee communication and investor relations are going to drive the streaming media industry out of its infancy and into maturity.”

For example, Microsoft has successfully used Webcasts to keep its employees up-to-date on the company’s well-publicised court battle with the Department of Justice.

In India, some of the innovative uses of Streaming would be: online education, to provide interactive teaching in corporates and rural areas; broadcasting, to allow users to create their customised TV channels independent of geography; and digital radio, to provide music on demand. There will also be demand for video email to link the people who have emigrated from villages to cities with their families. As broadband connectivity improves, Streaming will bridge the gab between the digital haves and have-nots.

The Streaming revolution has just begun. Says Rob Glaser of RealNetworks of the future:

In five years, is it possible the quality experience will be equivalent to television? That’s a very high bar, but I think we can get damn close. That we’ve gone from zero users to 160 million unique users is remarkable based on the fact that people starting out have no frame of reference. Today we have frames of reference — DVD for video quality and CD for audio quality. We’re not there yet. It will depend on bandwidth. Consumers probably need 200 to 300 kilobits per second to have a good experience.

TECH TALK: TechnoWonders of the Modern World: TechnoWonder 6: Fibre Optics

The world is getting hungrier for bandwidth. Gilder’s Law says that bandwidth grows at least three times faster than computer power. So, while computer power doubles every 18 months (Moore’s law), communications power doubles every six months. This is a growth of 10x every year. What has driven the growth of the Internet in the past 5 years has been the deployment of photonics at the core of the networks.

Says Business Week, “Internet traffic is doubling every three months, and optical technology is the only practical way to carry it all With the latest optical technology, a single strand of fiber thinner than a human hair can now carry every phone call, e-mail, and Web page used by every person in the world.”

Feeding the bandwidth demand frenzy are developments in fibre optics. Technologies like Dense Wavelength Division Multiplexing (DWDM) and optical components and switching are causing a dramatic overhaul of telecommunications networks worldwide. Even in India, a race is on among various companies to deploy fibre networks within cities and across the country.

To give an indication of the capacity of optical fibres, here’s George Gilder in “Telecosm: How Infinite Bandwidth will Revolutionize our World”:

It is now practical to put a thousand wavelengths on a fibre, ten billion bits per second on each wavelength, and as many as 864 fibres in each fibre cable. This adds up to a total of 8.6 petabits (10 raised to the power of 15) per second in a single fibre sheatheight petabits per second is a thousand times the total telecommunications traffic across the entire global infrastructure as recently as 1997.

What are the drivers for this bandwidth? In countries like India and China, it is the growing Internet user base. For consumers and corporates who have been using the narrowband Net, fibre optics opens up the world to a whole gamut of applications like video, streaming, digital music, voice-over-IP, online education and remote services. In India, where IT-enabled services are seen to have a promising future, the raw materials for creating the next generation of enterprises will be people and bandwidth. The limiting factor for us as we move from a kilobit to petabit network will only be our imagination!

TECH TALK: TechnoWonders of the Modern World: TechnoWonder 5: Cable TV

It is hard to imagine that less than 10 years ago that TV viewers in India could only watch Doordarshan. Today, there are over 75 channels in nearly language. The TV has become the focal point of our lives at home, and the media batteground for the future. India now has over 30 million cable-TV connected homes. The entrepreneurial spirit of the cable operators has wired up India and provided entertainment for as little as Rs 120 (USD 3) a month.

For many years, live cricket coverage of India matches was the big attractor on television. Today, it is a mix of cricket from around the world (nearly every international match is now shown on TV), live stock market news and interviews, riveting coverage of breaking international stories, family dramas, a plethora of new movies and big-money game shows.

The monies are coming in big – Star TV’s Kain Banega Crorepati (KBC) raked in Rs 100 crore (USD 22 million) in advertising in the first 4 months. Current advertising rates have shot up to Rs 13 lakhs (USD 30,000) for 30 seconds on KBC. Where TV once divided, programmes like KBC now unite the family (not to talk about generally increasingly IQ levels)!

Just as the cellphone and the Internet converge, so also with TV and the Internet.

Net access through TV and set-top boxes is now becoming available in many cities, bringing affordability and prospects of the mass market Internet. The cable modem is offering always-on Internet access to many corporates in business districts in India. Interactive TV of tomorrow also promises to bring about a change in our lives. An excerpt from the Wall Street Journal:

For the past quarter century, cable-TV companies, telephone companies and media companies have racked up billions of dollars in losses, trying in vain to give couch potatoes a reason to engage with the tube and control programming in ways never before possible. Perhaps no other technology has been so relentlessly pursued. Why not just stick to improving the Internet experience on a computer? Because consumers spend 3.5 billion hours per week in front of the TV, compared to 1.2 billion hours in front of the PC.

The computer leads to what some executives call a “lean in” experience, in which users are actively engaged only 14 inches from their screens. TV is “lean back,” passively enjoyed from eight feet. As the Web hosts more entertainment programming, many feel it could be better suited to a TV set than a computer screen.

TECH TALK: TechnoWonders of the Modern World: TechnoWonder 4: Cellphone

There are about 700,000 new mobile phone subscribers each day and currently about 650 million cell phone owners worldwide. In 2001, an incredible 550 million cellphones are expected to be bought by people worldwide. In Europe, USD 225 billion has been committed towards building the next generation wireless telecommunications infrastructure, with more than half going towards licence fees.

In Japan, over 15 million access the Net regularly through their cellphones. In India, the number of cellphone users has nearly doubled this year to about 3 million. In some Latin American countries, wireless subscribers now outnumber customers of traditional fixed-line telephone companies. Wireless customers, for instance, account for almost 60 percent of phone subscribers in Paraguay.

Part of the appeal of the cellphone is in that it is both mobile and personal. It makes us always-connected to the voice world, and it is our very own. Companies like Nokia and Ericsson have made cellphones a status symbol, a lifestyle product. But, cellphones are increasingly becoming the lifeline for the people in developing countries. An excerpt from a recent article in the New York Times entitled, “Cell Phone surge among the world’s poor”:

With financially distressed governments often unable to provide adequate public services, including telephones, people are turning to privately built wireless networks as a way to communicate over extended distances.

Poor countries, where perhaps four-fifths of the world’s people live, had about 40 percent of mobile phone lines in 1999, up from 20 percent in 1995. But those same countries had only about 5 percent of the hub computers of the Internet, according to Emmanuel Forestier, an economist at the World Bank.

“It’s undisputed that wireless technology has had a far greater impact on people’s lives in developing countries than the Internet,” Mr. Forestier said.

Tomorrow’s devices will combine the two most important developments of the past decade – the Internet and the cellphone. Writes the Financial Times, “Handsets of tomorrow will become more intelligentThe mobile phone will start to become a computer. You will be able to download and save a game on the handset: it will work even without a network connection. Or you could display the price of a stock and a graph of its performance, or an interactive road map.” Or the latest commodity prices, and the weather.

TECH TALK: TechnoWonders of the Modern World: TechnoWonder 3: Email

Even more than web browsing or the phone, the application which has perhaps changed the way we communicate and interact in the last few years has been email. According to a recent study, executives are spending an average of two hours daily on their email, and this figure is likely to double in the next 2 years. Email came as the perfect antidote for phone-tag (leaving messages for one another on voice mail, since we were all “not available on the desk right now”). Email has also made geography irrelevant. For the first time in history, the cost of near-instantaneous communications is down to nearly zero.

Email has dramatically increased the parallel conversations and relationships we are all managing. With phone, fax and letters, we could only interact with so many people. But, one look at our address books will show that email has perhaps increased the number of conversation threads and our circle of friends/associates by perhaps a factor of 5, if not more. All this in a kind of non-intruding manner – the asynchronous nature of email, its ability to give the user the control on reading and responding is one of the factors which has made I for many the preferred form of communications.

There are challenges going ahead for messaging. Today’s messaging systems are still not up to the mark. For example, many times when I send an email, I assume some things: (a) the other person will have got it, (b) the other person will have read it, and (c) the other person will do the action required in the email. So, this means once I send, the onus goes on the transportation system (the Internet) for delivery and the other person for the action. This is too loose a system. I need alerts if an action has not happened, or if the other person has not read or received it.

We need greater reliability, quality of service guarantees, the equivalent of the “mailtone”.

How can we ensure reachability in a manner convenient to the end user wherever the person is? We now have global networks which make reachability possible. As the pace of business increases, the need to be reached and the need for greater communications is going to exponentially increase. It will also mean that the number of messages we will each be handling will go up quite dramatically. We also need to think on the language of communications. English is going to be a minority for the people on the Net in the next 2-3 years. Supporting email in multiple languages is going to be critical going ahead.

Another key issue is security. How can I ensure that only the person at the other end reads the message I have written for him? Also, the next generation of people getting on the Net may not be as comfortable typing. What can we do to make typing easier? Or we can we use some other form of input (eg. voice?)

Instant Messaging too has become popular — what started off for chatter between friends and family is now becoming an application increasingly used by corporates. What is now being looked forward to is Unified Messaging – the ability to combine all messages (text, fax, voice, email) into a single number/address, accessible from anywhere. For most of us, the Net is less about content and commerce, it is about communications. Email remains the killer app on the Internet.

TECH TALK: TechnoWonders of the Modern World: TechnoWonder 2: Internet

Today, sitting in Bombay, I am able to get access to news, information and services from across the world which just a few years ago would have been unthinkable. For many of us, the Internet has, in the space of five years, become a critical part of both personal and business life. And this is just the beginning. Says John Doerr of venture capital firm Kleiner Perkins, “I think we’re now quite early in the building of the Evernet, this always-on, high-speed, broadband, ubiquitous, multiformat Web.”

For corporates, the Internet is helping cut costs, generate revenues from new market opportunities, build closer relationships with customers, help in product design by linking together teams of engineers and optimize supply chains. In the future, according to Geoffrey Nairn (Financial Times), “every controller and piece of factory equipment will have a unique IP address and can thus be linked directly into an internet-based supply chain management system that adjust supply to demand in real-time.”

The so-called Old Economy companies will find the biggest use of the Internet: they have customers and they have the money. The Internet becomes a powerful strategic tool for these organisations to bring about improvements in their core business processes. This is where Indian companies also need to focus on – leveraging the Internet to be able to compete effectively globally.

For us in our personal lives, the Internet will bring convenience and personalized services, through multiple devices. In the past few years, the novelty of email, chat, instant messaging have spurred usage, building on our desire to communicate. Voice, Wireless, Broadband will in the next few years create a Net very different from the narrow-band one that we are used to now. We will see an always-on, high-speed connected Internet.

According to Steve Mills of IBM:

As the Internet becomes a pervasive part of our life, our biggest challenge will not be technology itself, but agreeing to the rules and standards that ensure it provides a common ground for everyoneWhen that happens, the Net will become the kind of public launching pad for global innovation the lines of which we have never seen.

In countries like India, the Internet offers an opportunity to leapfrog many intervening generations of technology and for the first time, make a genuine difference in enhancing quality of life and raising standards of living for the mass market. We need to make the Internet a utility in people’s lives, and in doing so, close the digital divide and bridge the gap between the haves and the have-nots.

TECH TALK: TechnoWonders of the Modern World: TechnoWonder 1 – Computer

“The PC is dead – long live the PC”, says a headline in one of the recent issues of the Economist. There has also been talk of the post-PC era – a world of cellphones, PDAs and other function-specific devices. Combine this with the hammering that technology stocks have taken worldwide and it may easy to forget the impact computers have had (and continue to have) on our lives.

As the processing power of computers has grown and prices have fallen, it has created a force which continues to revolutionise the lives of individuals and businesses. Even if the US market may be saturated, another generation in emerging markets like China, India, Mexico and Brazil is only now waking up to the power of the computer. In many of these markets, rather than the computer being owned by a family, it is likely to become a shared resource – for use by the community.

The PC revolution is by no means over. With bandwidth now becoming a commodity in many parts of the world and growing faster than processing power, the LAN-WAN speed disconnect will go away. With a Gigabit Ethernet and fibre to the desktop (or doorstep), a world of distributed computing and peer-to-peer applications promises to unleash a new era of innovation in software applications.

In India, a base of 4-5 million computers is still too insignificant (1 computer for every 200-250 people). But it is the computer software era which has made a force to reckon with worldwide. The software boom is now fueling the dreams of the next generation – a world of IT-enabled services, powered by India.

Summarises the Economist:

Nothing else can keep up with the pace of innovation on the Internet. What was once text, graphics and simple interactivity has become rich media: music, video, animation, instant messaging, net telephony, radio and more, in many different formats. Only the PC, with its horsepower and flexibility, can (just about) evolve fast enough to accommodate these changes.

Here’s a crazy thought: in my house, we have 2 PCs, 3 TVs, 4 telephone lines and 8 telephone instruments. What we probably need is a PC server (an “information furnace”) to tie these various devices together over an IP network so I can have access to the Net from the kitchen, or store my favourite TV programmes on a disk, and perhaps have the server control various other appliances in the house. Indeed, the PC will live on!

TECH TALK: TechnoWonders of the Modern World: TechnoWonders of the Modern World

Technology has and continues to make a big impact on our lives – at home and at the workplace. In the last few years, the pace of change has accelerated dramatically, in part fueled by the easy availability of lots of venture capital. Which are the technological wonders of life in the last decade or so which have made a big impact on our lives? What’s the future like for these modern-day wonders?

I have picked 7 TechnoWonders which have made a big difference in the past ten years. They were not necessarily invented or created in the past decade, but they have made a big impact on how we live and do business. And, hopefully, will continue to do so. I will explain each of my choices in an article over the next 7 editions. I would also like to hear from you about your selections.

Before I talk about my choices, I’d like to talk about seven other TechnoWonders which I did not pick, but which nevertheless have made a positive impact and continue to hold great promise going ahead.

  • Gaming Consoles from Sony, Nintendo and Sega have captured the imagination of millions worldwide. In the years to come, online gaming (Everquest, Ultima Online) promises to revolutionise interactive entertainment.
  • Satellites, have been the communications bridge for long. Only of late, are they being replaced by undersea optical fibre cables. But, satellites still hold potential for rural communications for much of the developing world.
  • Databases: The ability to store and remember everything about an individual offers personalization and recommendations hitherto considered impossible. The 1:1 world is coming!
  • Search Engines: they still remain the best way to find stuff on the Net. Just when people thought search engines could not get better, along came Google.
  • MS-Office: besides the browser and the email application, what we still probably spend most of the time on the desktop is in Microsoft’s Office suite, which came from behind to demolish all competition.
  • Linux: the harbinger of the open-source revolution is no longer just a niche OS. In countries like Mexico and China, it is increasingly being preferred for the mass market.
  • ECommerce: Okay, so ecommerce companies have been panned this year. But the fact remains that this has the ability to make a difference to people’s lives – either from a convenience and time-saving point of view, or by offering access to a variety of products which was not possible earlier, by cutting across geographical boundaries.

Here, then, are my choices for the 7 TechnoWonders of the Modern World: Computer, Internet, Email, Cellphone, Cable TV, Fibre Optics and Streaming.

TECH TALK: 10 Trends for the Indian Internet 2001: Trend 10: Government

The Government can become a major positive factor for the Indian Internet by doing two things: one, staying away from regulating or policing it, and second, by ensuring that every government department should in GE-style report back with a plan within 60 days to see how the Internet can make people’s lives better.

On the first count, so far, the government has done a reasonable job, though the historical telecom mess has ensured a poor infrastructure in terms of bandwidth – both domestically and internationally. In today’s world, telecom and the Internet need to completely freed up, including allowing voice on the Internet. The government should do what is in the best interest of the consumers, and then stay out.

eGovernance in India is still far away. This is where change needs to be wrought. One of the biggest daily pains is where the citizens and corporates have to interact with the government. This is where the government has the potential, more than any other application, to dramatically increase usage of the Internet at the mass level across India. The various government departments can actually ensure that the Internet becomes a utility in people’s lives.

Indian technology companies complain of a lack of domestic market. If the government can ensure that interacting with it can be done electronically, this will lead to not only the creation of a large domestic market with a waterfall effect to small and medium enterprises, but also spur the creation of local and relevant technology solutions (eg. voice-recognition and text-to-speech solutions, and browsers in local Indian languages). This innovation is then what we can sell to the other 3 billion people like us around the world.

India needs bureaucrats and ministers willing to put aside ego and the desire to set aside vote banks to see how technology can raise standards of living and remove pains from the lives of people. Chandrababu Naidu in Andhra Pradesh and Digvijay Singh in Madhya Pradesh have shown that if there is a will at the top, a lot can be accomplished and elections can be won. India needs speed to ensure that 2001 can truly become the Year of the Internet for the masses in India.

TECH TALK: 10 Trends for the Indian Internet 2001: Trend 9: Wireless

The last-mile connectivity problem in India is severe. With the telecom policy mired in confusion, it is time to look at technology to overcome this hurdle. We need bandwidth – international, domestic and local (last-mile). While the first two can be solved with optical fibre, the only practical last-mile solution is wireless. The next year will see a lot of action on both fronts. Because of the lack of widespread wireline infrastructure, India has a great opportunity to leapfrog into the wireless age.

Let us start with cellphones and the mobile Internet. Many of the cellcos are planning to roll out 2.5G (GPRS) networks. These networks will offer connectivity of 64 Kbps. The driver for these networks has to be data (current networks are quite adequate for voice). The connected consumer will create new marketing opportunities for companies. A key application could be stock-trading, from anywhere, and at anytime. Electronic coupons, alerts, real-time messaging will be the other drivers.

For corporates, wireless broadband solutions like LMDS and MMDS offer opportunities to get multi-megabit bandwidth to the office LAN – quickly and reliably. 2001 will see pilots and perhaps the first of these services offered in selected areas of some cities in India.

Uptake should be rapid from corporates long-deprived of high-speed bandwidth. Short-distance wireless technologies like Bluetooth and 802.11b (wireless LAN) can help transform the office environment, and do away with the bane of wires. This will be the starting point for the intelligent enterprise.

India also offers interesting options for creative peer-to-peer communications networks. Imagine if there were the wireless relays available at multiple places in an area, like post offices, railway stations, petrol pumps, banks, or even STD booths. A Big, People’s Network in every city, in some ways. You are walking around your own wireless handheld device (for which you are paying a rental of Rs 200 a month). You would connect to one of those relays which could route the packets among themselves, till one of them is in a position to send it to the Net. This means, one of the relays in that neighbourhood needs to be connected say over a telephone line or a cable to the Net. The hybrid of last-mile wireless (LAN protocol) and wireline (infrastructure already in place) could help create a very low-cost network, a communications-equivalent of Linux!

TECH TALK: 10 Trends for the Indian Internet 2001: Trend 8: Education

Education holds the key to realising India’s future dreams. India must target 100% literacy in the next few years. A critical ally in enabling this can be the Internet. The coming year should see both consumer and corporate education flower on the Internet in a big way, thanks to enhancements in streaming technologies and the availability of sufficient bandwidth.

On the consumer side, India needs to produce more English and software trained professionals. An educated and disciplined workforce can serve the needs of a global marketplace hungry for lower-cost back office work. Over time, we can develop specific domain expertise and skillsets, which will it make harder for us to be replaced by others simply on cost. Take software for example. Just in the first half of this year, Infosys and Satyam recruited 4,000 people. It is now clear that India’s production of 125,000 engineers a year is simply not enough. The Internet must be used for providing continuing training, and re-training in a world of fast-moving technology developments. The Internet Community Centres across India can be a excellent distribution system for various technical and language courses.

Continuing Adult Education is, according to Peter Drucker (Forbes, May 15, 2000), the killer application on the Internet. Writes Drucker:

In simplest terms, people who are already highly educated and high achievers increasingly sense that they are not keeping up. We live in an economy where knowledge, not buildings and machinery, is the chief resource, and where knowledge workers make up the biggest part of the work force. The interactivity of online education, its facility for blending graphics and pictures with the spoken word, give it an advantage over the typical classroom. With the interactivity of the Internet, we get the equivalent of a one-to-one teacher-student ratio. The means are finally at hand to improve productivity in education.

The Web allows for constant upgradation of skills and knowledge. Many times, it is difficult for employees and managers to take days or weeks off for new courses. This is where the Internet comes in: they can take the courses on an ongoing basis whenever time is available with minimal disruption to their existing schedules. This e-learning would also allow for customised teaching, based on the existing knowledge of the individual and the pace of learning. Corporate Training is another big area – as technologies change rapidly, this needs to be communicated to the people in the organisation.

The opportunities for India are many – from train people in India, to creating content for the global companies seeking to train their staff. But before that happens, we need to create an infrastructure to make education possible for all – from the doorstep (home) to the desktop (office).

TECH TALK: 10 Trends for the Indian Internet 2001: Trend 7: Mass Market Internet

The Internet in India is still growing too slowly. Some of the earlier columns [] have addressed the issue of how we can impact 100 million Indians via the Internet in the next 3 years. In 2001, many of the components are expected to fall in place: low-cost access devices (email-only devices, PDAs, cellphones, set-top boxes connected to TVs), access networks (cable connectivity, GPRS networks), and cybercafes and Internet community centres. Access costs have now fallen to less than Rs 5 per hour (excluding telecom costs of Rs 25 per hour). 2001 should therefore see a dramatic growth in the Internet usage in India.

We are also seeing applications which can truly make a difference to people’s lives and remove pain from their daily life. Bill Payments are now being offered in many cities by telephone and electricity companies. Many government departments make available forms for downloading. Video mail can bridge the people who come to the cities to work with their families in the villages.

A killer combination in India would be Linux, Language and Localisation – using Linux as the operating system and other open source software to cut down software costs, providing information in the local language, and offering services of relevance to the local community.

As access becomes more ubiquitous and cheaper, the Internet will start becoming more and more a part of people’s lives. Look at what has happened in Korea: a third of the 48 million population has Internet access and over half of the people use cellphones. Broadband penetration has reached 3 million homes, second only to the US. Here’s how it came about (TIME, December 11 issue —

In the past few years, Korea has done a lot of things right. The government put the building blocks in place, laying high-speed lines and encouraging foreign investment in information technology industries. It slashed red tape for Internet start-ups and deregulated the telecom industry with impressive foresight. The result: Internet access rates in Korea were dirt cheap just as the Net started to take off.

The wiring of rural India is critical for the creation of the true mass market Internet. This is now starting to happen in pockets. India Today recently wrote ( about the Information Village Research Project, being implemented in and around Pondicherry by the MS Swaminathan Research Foundation.

A few months ago, the New York Times (May 28, 2000) carried an excellent article on “Connecting Rural India To the World” by Celia Dugger, stating “a well-placed computer, like a communal well or an irrigation pump, may become another tool for development. At a time of growing unease about the global gap between technology knows and know-nots, India is fast becoming a laboratory for small experiments like the one at the temple that aim to link isolated rural pockets to the borderless world of knowledge. Local governments and nonprofit groups are testing new approaches to provide villages where barely anyone can afford a telephone with computer centers that are accessible to all.”

TECH TALK: 10 Trends for the Indian Internet 2001: Trend 6: Consolidation

Indian Software companies need to achieve scale and rapid growth, and Internet companies need to survive. These disparate objectives will drive consolidation in the coming year.

For software services, the leaders need to keep growing – there doesn’t seem to any obvious bottleneck other than the ability to recruit people. Infosys is adding over a thousand people each quarter. Beyond a certain time, the supply of quality people will become scarce. This is because they get split – too many companies wanting them. What India needs are 3-4 gigantic software companies – companies like TCS, Infosys, Wipro and Satyam have got excellent marketing and execution skills, what they need is a near continuous and inexhaustible supply of the raw material (people). Recruiting one-by-one is one way, but I expect that in the next year, these companies will drive consolidation by acquiring some of the smaller companies. All of them (except TCS) have or will shortly have currencies (market listings) in both India and the US for stock-based acquisitions.

For Internet dotcoms, it is another story. Almost all are fighting to survive in a small, finite market (as of now). Supply of external capital has run out and their critical resource – people – are now heading for the exits. India does not need so many dotcoms.

What we need are perhaps 3 horizontals and 1-2 portals for 8-10 of the major verticals. What we have in India today is about a thousand of these portals. So, most of them will either die or will get rolled up (acquired) by one the larger portals. The winners in India in the horizontal portal market are quite evident – Yahoo because of its global brand is already the most popular site in India, and Rediff and Satyam Infoway, because both have cash and a currency for acquisition of virtue of their Nasdaq listings. Profits from the core business (excluding interest and other income) are still quite distant for most of the companies in the Internet space in India.

In the Internet space, the drivers for consolidation will be venture capitalists and private investors who have sunk in over USD 200 mm. There is no doubt that the Internet is the future, and that the winners will win big (as has been evidenced in the US). But there will be very few winners. Entrepreneurs and investors need to be practical and will do well to remember the truth in this business: we consistently underestimate the winners, but for weak companies, no valuation is cheap.

TECH TALK: 10 Trends for the Indian Internet 2001: Trend 5: IT-Enabled Services

What for many decades has been India’s biggest problem may actually turn out to be its biggest strength. The legacy of 200+ years of foreign rule may finally turn India into the Back Office for the world. This powerful combination of India’s people and their English-speaking abilities have a potential to make India an economic superpower in the next decade.

The missing links to enable IT services from India are now falling in place: the Internet as an enabler, Bandwidth as the connector, Entrepreneurship as the intiator, Venture Capital as the Glue to make it all happen. In the next 10 years, as estimated by Michael Dertouzos, these services can offer opportunities for 50 million Indians, each capable of earning USD 10 per hour (USD 20,000 per annum) to make this a trillion-dollar economy.

So far, the boom has been limited to areas like software services, call centres, and medical transcription services. In software, India has done exceptionally well with its output of 125,000 trained engineers each year. So much so, that the demand is now global. Emerging areas for services now are Customer Relationship Management (CRM) and Network Management. This is just the start. As connectivity improves, geography (from India’s context) can start becoming irrelevant and the promise of the Internet can be used to generate valuable foreign exchange through her people.

Internationally, the shift is happening from packaged software products to solutions and services. Most of the large software companies are generating more and more revenues from an army of consultants to help customers in implementation and support. This suits India well, and plays to her strengths.

The danger is the following: as demand for good people at reasonable prices grows, a scenario is possible that the only people left in India may be of two types – the very low-end ones who are near unemployable, and the very high-end ones who are getting dollar-denominated salaries comparable to the best in the world, and have chosen India as a destination of their own free will. As demand for people grows, so will salaries and hopefully, the standard of living.

To make the vision of IT-enabled services come true, investments in infrastructure like airports, roads, bandwidth and education are critical. People will also need greater discipline. We could not make “Made in India” a byline for quality, but our generation has the opportunity to make “Serviced in India” a global phenomenon.

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TECH TALK: 10 Trends for the Indian Internet 2001: Trend 4: Venture Capital

Conservative estimates put the venture capital available in India at USD 1 billion. In the early part of 2000, over USD 100 mm was invested into dotcoms. Today, most of it is worthless. As a result, venture capitalists in India have become extra cautious. In many ways, it has been a good and quick learning. To succeed in India, VCs will need to think differently in 2001.

There are four major differences in the Indian market compared to the US:

  • Most entrepreneurs are on their first venture. This means they need a lot more guidance and hand-holding in the process of building out companies. They are dealing with large sums of money (the investment which has come in). Managing hyper-growth is not way of life in most Indian companies and for most Indian managers!
  • India also lacks an effective angel funds market. TIE has been making efforts in this, but it will probably still take another year or so before this becomes a viable alternative to start companies. Since VCs prefer to make slightly larger investments, India needs angels (successful entrepreneurs) who can spend time with the founders in the early days.
  • Since India is not a large market, companies and their management teams need to think international. This is where companies need help. VCs can through their networks help open doors for many of their portfolio companies. In fact, in the ideal scenario, part of the management team needs to be stationed outside of India and this adds another dimension to the initial stages of company formation – living with geographical diversity.
  • Exit in India is not easy. IPOs are possible, but only for profitable companies. Many software and media companies have been listed in recent times in India. Technology plays still do not have a route to list. Without an IPO, the exit route is MA, not a lot of which has been happening so far. So, VCs need to be patient. Hopefully, the vision for the OTC exchange in India can still be realised.

The approach that VCs in India need to take is to fund fewer companies, invest larger amounts, and work more closely with the founders in the early stages. They also need to act as marketing and HR managers for these companies in the initial weeks. Rather than taking the approach that a few of their investments may succeed, they need to work towards making each of the investments pay off, since exits will be available only to a limited number of companies. What will work as the perfect tonic is for a couple Indian VC success stories in the next year.

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TECH TALK: 10 Trends for the Indian Internet 2001: Trend 3: eBusiness

The Indian Internet market is caught between b2b and b2c – b2b is still confusing and only happening in pockets, while b2c which only a year ago was the Great Hope for the Indian consumer is not taking off. The wonder that is the Internet has at best been hype for most Indian companies and consumers. But as we said earlier, this is the beginning. As cost-effective bandwidth options become available, Indian businesses will do well to adopt the Net as part of all their processes.

How can Indian companies leverage the Net? Let us start with the killer app: Messaging. Even today, most Indian companies do not have proper and reliable email systems. Email-for-all can help bring down the cost of communications dramatically in companies. Email does not mean one account per location, but one account per individual in the company. Email needs to be accessible from anywhere. For many companies, this also means a cultural change – to openness and sharing, which in many cases is harder. Messaging can be put in place within weeks in most companies, the attitude change to using it and replying to messages quickly takes longer. But this is the first pre-requisite of eBusiness.

What eBusiness software solutions will do is cut to the heart of the questions that every manager needs to answer, according to Mary Meeker from MSDW:

  • Who are my best customers? Who are the Most Loyal, Most Profitable and Fastest Growing?
  • How will customers behave and why?
  • Why do they buy from me?
  • How will they buy in the future?
  • Would my customers behave differently with more info?
  • Who are by best partners / suppliers?
  • How does my business handle orders of One?

Some of the questions Indian companies will need to answer this year include:

  • Strategy: what do I do on the Internet?
  • Structure: is it a part of current biz or separate?
  • Management: where do I get the right people?
  • Money: do I fund it or go outside for finance?
  • Model: will it scavenge my existing biz?
  • Technology: do I build it or do I buy?
  • Partnerships: do I do it on my own or do I partner?
  • Rollout: how can I get it out in 90 days?

The pieces of the puzzle are now falling in place for 2001 to be the year Indian companies take to eBusiness. It is their game – to win or to lose.

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TECH TALK: 10 Trends for the Indian Internet 2001: Trend 2: Bandwidth

In India today, a bandwidth of 64 Kbps is a very big deal. It is also very expensive. George Gilder and his Telecosm have not yet touched us! While the commercial Internet has been around now for 5+ years, access speeds from home continue to be better for most of us than the shared connections at the workplace. India has kept pace with development on the LAN (local area network) front, but we are many years behind on the WAN (wide area network) front. This is about to change.

Many companies are now rolling out infrastructure to provide high-speed fibre and wireless connectivity to the corporate desktop. Reliance in 115 cities, Spectranet in Delhi, BSES in Mumbai, Satyam Infoway, MTNL, VSNL, the cable companies – everyone’s getting into the act. Even the cellphone companies are now talking of rolling out their packet-switched 2.5G (GPRS) networks in the next year. Broadband is coming to India. Hopefully, at an affordable price.

Bandwidth is critical if India has to keep up its growth in the IT sector. The next generation of IT-enabled services (call centres, eCRM, medical transcription, etc.) are bandwidth-hungry, and could rapidly eclipse the software companies in their demand for bandwidth. Unless a lot of bandwidth is available at very cheap prices, India’s cost advantages will be frittered away. It is very difficult to be entrepreneurial in one’s thinking when sending and receiving email becomes a daily chore!

The bandwidth bottlenecks in India are at each stage: last-mile, within the country and internationally. Different companies are working on solutions to eliminate these hurdles. 2001 will be the year when all of these solutions will dovetail nicely to provide a much superior end-user experience. This will further spur creativity and innovation – its difficult to dream up streaming applications when all you have is a 64 Kbps connection to the Net.

As bandwidth becomes less of a challenge, India can also become a hotbed for prototyping other mass market Internet ideas. Video mail, wireless data devices, voice-over-IP can all become possibilities, and change people’s lives for the better. India’s roads may not be the best in the world, but if our communications networks can be the best, then distance and geography will finally become irrelevant. This will open up opportunities for Indians and Indian businesses in ways we cannot imagine.

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TECH TALK: 10 Trends for the Indian Internet 2001: Trend 1: Entrepreneurship

For the first time in India, it is possible to build businesses with ideas. No longer does one need government licences, bank loans or inheritances. So far, most of the success stories of idea-driven Indian entrepreneurship have been outside India. This will change, and 2001 will be the year which will see the start of this. Indians tasted a flavour (albeit a bitter one) of entrepreneurship with the dotcom boom earlier in 2000. Once people are out on their own, success and failure are but two sides of the same coin. Out of these failures will emerge the success and the inspirations for tomorrow. The new generation of Indian entrepreneurs who begin life with a dream in their eyes and little in their pockets is here to stay.

In retrospect, so many people setting up portals was perhaps not the best way to utilise our talent and resources. The market was just not there. But look at it in another way: so many people have now tasted blood – they want to be on their own giving up the security of a job, they want the freedom to make things happen, driven by a passion to change the world. This is perhaps the best thing to have happened in India over the past year. On this will be built a firmer set of start-ups, companies in which rapid growth and profits will be blended together, and risk is concomitant with practicality.

India’s strengths lie in the knowledge and service industries. It is not just about ideas or putting a set of people together. There’s a lot more to building an organisation which can grow, and stand the test of time. Entrepreneurs in India should look at combining service and product models – start with services to get insights into what the market needs are and to create a steady revenue stream, and then build on the platforms and products that the marketplace needs. This is where companies will need to take risks and place bets on the future. Few Indian companies have grown beyond the dollar-based services model. This must change – we need to innovate and be leaders, not just followers.

For Indian entrepreneurs, a presence outside of India will be critical for success – India is still not a large marketplace for many products and services. Engineering-in-India and marketing-outside-India should be the mantra for startups. This will entail creating management teams which are cross-border. This is where organizations like TIE can play a valuable role. Indian entrepreneurship will not be just about funding companies in India, but about taking Indian start-ups global.

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TECH TALK: 10 Trends for the Indian Internet 2001: 10 Trends for the Indian Internet 2001

The Red Herring recently came up with a Tech Trends for 2001. Its 10 Trends were: Computing, Intellectual Property, Venture Capital, Wireless, Communications, International, Government, Energy and Biotech. So, I decided to take a look ahead to what would be the 10 Indian Internet trends for 2001. My choices: Entrepreneurship, Bandwidth, eBusiness, Venture Capital, IT-enabled Services, Consolidation, Education, Mass Market, Wireless and Government. We will cover each of these in columns over the next 2 weeks. But first, let us take a look back at the last 12 months.

2000 began with a frenzy – a land-grab on the Indian Internet. Dotcoms launched, private capital and venture capital money flowed, a people exodus to the “new economy” began – it was like there was no tomorrow. First-to-market, eyeballs and Nasdaq were the only things that mattered. So, within a few months, we had 15 cricket sites, 20 personal finance sites, 10 horizontal portals. Advertising hoardings sold out, newspapers had website ads by the dozen. It all seemed like a perfect formula: raise money, spend it, raise more money at a higher valuation, spend that also and so on. Somewhere there, one would either get acquired or IPO – whichever fetched more money. The Internet had arrived in India. Finally. Or so it seemed.

The Golden era of the Indian Internet lasted less than 6 months. As the Nasdaq fell, so did the hopes of Indian entrepreneurs. What everyone forgot was that the user base was still only 2-3 million, and they were mainly interested in email, chat and cricket. The only audience generating any real value was the one outside India, and no one was really targeting them. As revenues became scarce, reality started dawning. This was not a short-term game. It actually consisted of creating an organisation, building a brand, and doing it all profitably. It is perhaps worth remembering that the two Indian Internet companies that did IPO on Nasdaq (Satyam Infoway and Rediff) were launched 5 years ago.

Sanity has finally returned. But it has been an expensive, and in some cases, a painful learning process — for entrepreneurs, for employees, for investors, for everyone. As the year nears its end, business is back to fundamentals: revenues, gross margins, profits and growth. The Internet is for real, dreams aren’t. Despair not – the Internet is having a profound impact on us, our businesses and our interactions with others. We have seen an end, but it is only the end of the beginning.

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TECH TALK: Opportunities in Tomorrow’s World: What Indian companies can do

Software for creating the Intelligent Enterprise is an emerging area. There is an opportunity for Indian companies to create Enterprise Application. We need to create factories which can construct this new class of software:

  • Begin by identifying verticals in the e-business space which are likely to have a USD 1 billion plus market in 3 years. Also, create a process for development and marketing which can be leveraged from one vertical to another.
  • Put together teams of engineers in each vertical to create these products: the 80-20 rule (80% of the functionality at 20% or less of the cost in resources, people and time).
  • Leverage new technology like Java, XML to speed up development: many of the current applications have been written with legacy and may not be the most efficient from a software point of view. Companies should also use a common core software platform which goes across multiple verticals for speedy development – like databases, messaging, etc. XML should be used for enabling exchange of information allowing us to integrate with other applications, like pieces of a jigsaw puzzle.
  • Build a marketing keiretsu internationally. A company selling one single vertical application may find it hard to build scale from India. What is needed is to aggregate the entire set of applications in one suite to give scale and clout in marketing. This is what Microsoft did with its Office suite, and what Infospace did with content and merchants.
  • Leverage India’s service capabilities: Most applications require ongoing maintenance and management, and this is where India’s strength is services can be used to our advantage.

To become the software fab for enterprise applications and services, we can imagine how Japan began in the 1950s or for that what how Taiwan would have started. We may begin as “functionality replicators” but over time we must aim to be the leaders in innovation.

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