India v China

I made a second trip to China recently in 6 months. My first one was to Shanghai in March for 3 days [see Tech Talk: An Indian in China]. This time, I was in Beijing for 4 days.

In the Shanghai trip, I walked around the city and spoke to just one person in 3 days. In the Bejing trip, I met with quite a few people, had a few business meetings and also did some sight-seeing. A few quick impressions:

– China’s strengths lie in its infrastructure (partly fueled by the rising foreign direct investment and its huge USD 200+ billion in reserves), work ethic and the size of its domestic market.

– India’s strengths lie in English and Software, compared to China. English is still not well understood or spoken in China, and there are very few signs to guide tourists in English. By contrast, English is visible all over India. Software is the other area where India has an advantage. I don’t think we’ve leveraged our advantages well in both these areas.

– China has the magnetic pull. It has remained an enigma through history and it continues to remain one even now. Perhaps that is its attraction. There is always an element of the unknown. India, by contrast, has been much more open. That is an important difference which also is reflected in the two societies.

Can India catch up? I don’t think so. China is at least a decade ahead of India. The point really is: can India leverage some of its unique advantages to change the rules of the game? Software – and software products, not juust services – are what we should be focusing on a big way to target the billions of dollars that India needs for its infrastructure development. At the lower-end, IT-enabled services can take care of the bread-and-butter business.

Above all, I think India still lacks the Will and Vision to play and win at the global stage. And when I say India, I mean Indians. A global mindset is needed – the market is not just our local city or India. This has to come across at multiple levels in India. The next decade is very important if India has to become an economic force the world respects and fears) – and technology has to play an important part in making it happen. Its a chance we may not get for a long, long time to come. Its tough – but China has shown that change can happen in a decade. That’s what India needs to learn – and do.

A Utility Approach

The more I think about it, the more I think that in Emergic we will need to go to customers with a solution which (a) integrates hardware and software, and (b) offers computing on a subscription basis.

Companies want a solution – they don’t want to think of Thin Clients and Thick Servers. We need to be able to go and provide them the complete computing infrastructure, not parts and labour. Also, the market we are targeting is not a “rich” market – for them, paying monthly also will enable them to see tangible benefits (and returns) in terms of productivity and the investment they are making on technology.

So, we need to think of what we are doing in terms of the following groups:
– Software Factory: the software development group
– Integrators: create a solution by combining hardware and software
– Services: the value-added development that some clients may need
– Financing: directly or indirectly, since the end-users will pay monthly

As of now, we know that with some work, the software for the Thin Client-Thick Server can be a disruptive innovation. But that’s as far as the tech goes. What is needed is also creativity in terms of how we are going to integrate and sell the solution. We need to get 100 out of 100 things right to succeed!

That’s the part I like best about a start-up. One is, at times, competing with oneself in coming up with new ideas. There are no establish pathways to walk on. One has to imagine the future and then build it. This blog is helping me document some of these decisions and the thinking that is going behind each of them. A year later, I’ll be able to reflect on what we did right and where we went wrong. That’s a great way to learn. Hopefully, by thinking aloud, we minimise the possibility of making mistakes.

The canvas that we want to build is large, very large. It is in creating the computing platform for the next 500 million users. We’ve just taken a few baby steps towards where we want to go. But its exciting enough already. I know we can make a big difference in the world of computing in the developing markets. We can be a disruptive force, a positive one. The game is for us to play and win.

Legend’s Next Moves

News.com writes on Legend and its future plans as it seeks to expand beyond China and PCs:

The Legend Group, which once existed only as a wholesale distributor for U.S. and European brands, has transformed itself into one of the world’s fastest-growing technology conglomerates, with its hands on everything from desktops and servers to cell phones, retail franchises and information technology services.

Legend grew shipments by 24.2 percent in 2001, Gartner analyst Charles Smulders said, and the company pulled in $2.7 billion (HK$20.9 billion) in revenue and $134 million (HK$1.045 billion) in profit for the fiscal year ended March 2002. Only Sony at 25.2 percent grew faster, he noted, while Dell grew by 18 percent, “and everybody else was negative” in 2001.

Ozzie on Blogs

Writes Ozzie:

What has struck me over the past few weeks is the fact that blogs represent a radical new approach to public discussion – one that, in essence, completely and naturally “solves” the signal:noise problem, and does so through creative exploitation of a unique architecture based upon decentralized representation of discussion threads. Let me elaborate.

In traditional discussion, topics and their responses are contained and organized within a centralized database. The relationship between topics and responses is generally maintained in a manner specific to the nature of the database – that is, in newsgroups the messages might be related by Message-ID hyperlinks or crudely by title, in Notes they are related by the $REF hyperlink, and so on. Summary-level “views” are generated through database queries. And that has been the general architectural design pattern of public discussions for quite some time.

But blogs accomplish public discussion through a far different architectural design pattern. In the Well’s terminology, taken to its extreme, you own your own words. If someone on a blog “posts a topic”, others can respond, but generally do so in their own blogs, hyperlinked back to the topic’s permalink. This goes on and on, back and forth. In essence, it’s the same hyperlinking mechanism as the traditional discussion design pattern, except that the topics and responses are spread out all over the Web. And the reason that it “solves” the signal:noise problem is that nobody bothers to link to the “flamers” or “spammers”, and thus they remain out of the loop, or form their own loops away from the mainstream discussion. A pure architectural solution to a nagging social issue that crops up online.

The downside? Well, part of why people like getting together is that unintended consequences can be quite rewarding. And there’s a danger that the self-selecting environment of a given blogging community might limit unintended outcomes. But, then again, I could argue quite the opposite: in a traditional public discussion, a good idea might get lost in the noise.

The bottom line: architecture matters, and we’ve yet to discover the limits of where this fascinating medium will take us.

Beautifully expressed. For blogs to work, they need to be like email: everyone should use them. There will be some who will write much more, but others also need to read and contribute. Blogging is “writing in one’s own space”, so it means that people can be a lot more open. It is a fundamental change – writing does not come naturally for most. But thinking and doing does. Think of blogging as writing about what is doing and thinking – that makes it easier to get started.

Toys as Proxy for Tech’s Future

Another of the Business Week Ideas deals with Toys: “The cutting edge for such technology exists not in the labs of Silicon Valley but in the electronic games and toys strewn about the rooms of 10-year-olds everywhere…Toy inventors are pushing the boundaries of artificial intelligence, speech synthesis, wireless communications, and networked virtual reality. What’s more, they are figuring out how to cram huge chunks of realistic graphics, dialogue, and sensory cues onto tiny, inexpensive computer chips.”

The Market at the Bottom of the Pyramid

One of the 25 Ideas for a Changing World is the focus on the bottom of the pyramid, writes Business Week, as part of its story Small Is Profitable:

Companies such as Unilever, Philips, Coca-Cola, and Motorola are finding that a focus on low prices, miniature sizes, and simple-to-use products may be the secrets to business success in developing nations, where most of the world’s population dwells. In finance, banks specializing in micro-loans of as little as $100 are the rage as a means of spurring sustainable, grass-roots development. The approach is drawing praise from U.S. Treasury Secretary Paul O’Neill and the World Bank, and is starting to win the attention of heavyweights such as Citibank (C ) and Standard Chartered Bank. Engineers in research labs from Bangalore to Boston are scrambling to develop cheap wireless phones and computers simple enough to be used by illiterates.

All these efforts are aimed at what could well be the biggest source of economic growth in the coming decades: the two-thirds of the global population now making $1,500 or less annually. Companies like Amul hope to prove it is economically viable to employ the rural poor in a multinational enterprise without destroying their traditional lifestyles. Others see the “bottom of the pyramid” of the global population as future consumers.

The article quotes CK Prahalad: “The challenge will be to create large, virtual organizations in developing economies that have the benefits of scale, but the uniqueness of small size.”

TECH TALK: Tech’s 10X Tsunamis: PCs for USD 100: Computers for the Masses

The billionth PC was sold in April, according to Gartner. It also projects that the sale of the next billion PCs will only take 6-7 years more. Considering that there are about 500 million users who can be expected to upgrade once in 3-4 years, Gartners project seems to make sense. Or does it?

Computers have now gotten ahead of what capabilities we need. With processor speeds exceeding 2 Ghz and Moores law still driving a doubling every 18 months, computers are at a point wherein we are using barely a fraction of their power. The Internets protocols and bandwidth has also made server-based computing much more practical. A browser on a PC is now good enough for most people to do all their daily tasks.

What this means is that the existing set of 500 users are unlikely to upgrade their computer more than once in the next 6-7 years. The worlds computer industry is yet to face this impending reality. Yes, a billion PCs can still be sold but this means the industry needs to get 500 million new users. These users are not going to come from the worlds developed markets there, everyone who needs a PC at home or in office already has one. It is countries like India and China which are the new growth markets for the PCs.

But look at Indias statistics from MAIT for the year ended March 2002:

PC sales: 1.67 million (down 11% year-on-year)
Of these: 1.3 million were bought by businesses, of which 47% by SMEs
First-time buyers: 71%
Top 4 metros account for 56% (down from 68%), next 4 for 14% (vs 20%)
Projected PC sales for 2002-03: 1.9 million (up 12%)

Notebooks: 45K, Servers: 51K
Printers 836K, of which: Dotmatrix 345K, Inkjet 428K, Laserjet 61K
Network cards: 1 million, Hubs: 206K, Modems: 470K

All of India (a population of over a billion) bought 1.67 million PCs. This is less than 1.5% of the world PC market. More importantly, PC sales fell compared to the previous year. Is India the future of the worlds PC market? Not with these kind of numbers.

And yet, India has the potential to provide a hundred million new users in the coming years. A clue to the future comes from the Posted in Tech Talk