The Real Internet Revolution

Business Week has an article by Christopher Kenton:

Now that Internet hype and disaster have long since faded from the headlines, it’s interesting to watch the pattern of businesses making a play for the Web. You probably won’t see it on the cover of Fortune or Business 2.0, but there’s a surprisingly consistent profile of small businesses that are quietly picking up the pieces of the dot-com wreck. They’re not venture-backed technology firms or Global 2000 incubator projects, and they’re not eBay-style (EBAY ) entrepreneurs turning their living rooms into warehouses. These are small companies that have been around for a long time with steady sources of revenue. They didn’t make big investments during the Internet boom-and-bomb, but suddenly, they’re responding to an opportunity — and a need — to bring their businesses into the Internet Age. And their successes are built directly on the failures of the dotcoms.

Now, small businesses are benefiting from [the] lessons underwritten by the great VC bubble — not only by way of abstract business concepts, but in scooping up talented veterans who understand the pace and process of new ventures. For now, the bootstrapped businesses I’m seeing are making tentative grabs at the low-hanging fruit. They’re investing in their public Web sites — remarkably cheap these days — and in Internet marketing. They’re exploring simple programs to automate key bottlenecks in supply chains, sales channels, and customer support. They’re investing modestly in the technology infrastructure of their business offices. It’s not a transformation happening in what we used to know as “Internet time”, but that may be one of the fundamental lessons from this phase of the evolutionary cycle: Not every step is a revolution.

Vinod Khosla Talks

Excerpt from an AlwaysOn interview: “I think the IT world will change dramatically over the next five years, much more of the utility computing type models. I don’t think they’ll all be outside, like IBM’s on-demand, but the whole concept of much easier to manage for an IT department, some of the blade servers, the clustering, the utilization. That will cause significant changes in the next five years.”

What will be interesting is to apply the same utility computing concepts to small businesses in emerging markets – they have little legacy to worry about. The challenge is how to reach out to them and give them the benefits of technology without burdening them with its management.

TECH TALK: Transforming Rural India 2: Increasing Market Access

Expanding market access for agricultural and non-agricultural output of rural areas is important for releasing the income poverty constraint. ICT tools such as the internet and the world wide web are ideally suited to achieve this goal.

Much of rural India’s production is handcrafted goods, the market for which is normally restricted to the surrounding areas alone. The demand is consequently very limited and therefore the price obtained is low compared to the potential that could be realized if these goods were taken to a global marketplace. There are many instructive examples of small rural production fetching extremely high prices when exposed to international markets using the internet. (For instance, a small producer of mirror-work neckties in Gujarat was able to advertise her product on the world wide web. A buyer from a department store in London came across the product and placed a large (relative to what the producer normally sold) order. The producer realized a handsome profit, and it was all based on a small investment in cash for the advertisement and a large investment in imagination.)

The rural Indian economy, like that of all developing economies, is largely agriculture based. Increasing the efficiency of markets involved in the inputs for agriculture such as seed, fertilizer, pesticide, and fuel would have serious implications for the incomes of farmers. The use of ICT can remove information imperfections and barriers that account for the inefficiencies in the market. So also, ICT can remove information problems in the output market. Both the input and output markets can gain from the use of ICT tools. A partial list of the information requirement of the agricultural sector is:

  • Prices of inputs and outputs
  • Information on appropriate pesticide for specific pests
  • Fertilizer use and application
  • Weather information

    How TIC and RISC facilitate Market Access

    A RISC provides those services that are usually available in urban areas to a rural population by concentrating resources in a centralized location in a rural region. In effect, the model concentrates economic activity at a location which is accessible to a large rural population to achieve agglomeration economies. It also achieves economies of scope by co-locating a wide range of user services on a standardized platform that provides shared access to basic infrastructural services such as power, telecommunications, the physical plant (building), water, sanitation, and security. Finally, economies of scale are obtained at two distinct levels: at the level of the single RISC, by aggregating a large number of services, scale economies are obtained in the production and delivery of infrastructure; at the level of a large collection of RISC centers, scale economies are obtained by lower transaction costs and the sharing of large fixed design and development costs.

    The RISC is the primary information and transaction access point. It facilitates market access by providing the following services:

  • Market making, market access, market information Efficient markets depend on information. These essential services have the potential to remove current inefficiencies and to expand markets so as to increase incomes.
  • Banking, finance, and insurance Financial intermediation is critical to economic growth.
  • Agricultural extension Agriculture is the backbone of the rural economy. Immense opportunities for income generation exist.
  • Telecommunications, internet and web access To bring the benefits of the revolution in information and telecommunications revolution to rural India.
  • Marketing of consumer goods The supply of consumer goods to rural areas.

    Over time, as WiFi technology is able to provide linkages between the TICs and the RISC centre, the TIC will also become part of the network. This will ensure that technology comes as close to the people as possible, thus making it a utility in their lives.

    Tomorrow: Conclusion

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