Sun’s Rise and Fall

Kuro5hin has a fascinating and detailed discussion on Sun: “Sun began the 1990s in an unenviable position. Back then, Sun was mainly a manufacturer of Unix workstations for scientific and technical computing. This market was both crowded, and widely expected to decline as workstation users migrated away from Unix to cheaper commodity machines. It’s surprising, therefore, that within 5 years Sun would be catapulted to become the most successful company in the enterprise computing space, multiplying its value by 30 times, and surpassing its formerly much larger rivals like HP. It’s also surprising that, within a few more years, Sun would decline just as rapidly as it had risen. How could a middling manufacturer of workstations so rapidly become the darling of IT, only then to become the orphan stepchild?”

So, will Sun rise again? The author’s conclusion (to which I broadly agree):

The three factors underlying Sun’s prevoius ascent are permanently gone. The tech economy won’t likely boom again like it did in the late 1990s; Sun’s competitors won’t likely try to kill off their own platforms; and Intel and Microsoft won’t likely release entirely novel, untested versions of NT or Itanium. So, a repeat of the ascent similar to the one in the late 1990s is unlikely.

Furthermore, it’s unlikely that Sun’s low-end boxes will be able to compete on price/performance with the offerings from research-lean organizations like Dell. And it’s unlikely that Sun’s high-end boxes will be able to compete with offerings from massive, well-funded, technologically sophisticated companies like IBM and HP.

These facts have led some industry watchers to predict that in the long term, Sun is doomed. But if there’s any lesson to be learned from Sun’s history, it’s this: extrapolating from current trends is not a good way of predicting the future. Sun is a master of pulling tricks out of its hat. Sun has been written off before, and it prevailed.

Desktop Security

AlwaysOn Network has an article by Jonathan Schwartz, Sun’s EVP of software:

With the MSBlast worm wending its way across corporate America, one view, seemingly held by intelligence agencies and military units around the world, is that the lack of genetic diversity on the desktop is a threat to national security. A single virus could not only cripple the operation of desktops across the country – but in so doing, it could leave those in a position to study and resolve such problems incapable of providing a remedy. If the doctors have a virus, they’re not much good to the patients. In the instance of MSBlast, if the virus itself attacks the target’s ability to be patched or vaccinated – look no further, we just found Saddam’s weapons of mass
destruction.

For the most part, the industry has ignored this issue – it’s been a running joke. Sure, Microsoft Windows has some issues, but it’s a lot easier to continue deploying it than worry about genetic diversity. Forgive and forget. If you move to a new model, you might have to train the user that a home directory named “My Computer” on Windows has been renamed “This Computer” on the alternative. But now it’s not so funny. The cost of patching, upgrading, and managing the complexity of MSBlast, alone, exceeds any potential cost of retraining a user to expect a new color scheme.

This is the ideal argument for Linux and the thin-client computing paradigm. In our company, wehave been completely free of viruses for the past 15 months since we’ve been using our own Linux thin client solution (Emergic Freedom). To counter spam, we use SpamAssassin. Administration of the entire network is also easier, since only the server needs to be managed. This is the concept we are trying to propagate among companies in India, but its been an uphill struggle. Most desktop software is pirated so we are still seen as more expensive and there is a mental block against anything non-Windows. That is the challenge for us – how to make our solution win in this context.

Outsourcing Economics Tutorial

Brad DeLong has explanations for all those worried about the US outsourcing away its future:

First of all, the number of jobs in the United States is not set by what happens on the sea lanes–on what exports and imports the container ships carry from port to port. The number of jobs is set in the Eccles Building, by the Federal Reserve, which tries to hit the sweet spot: high enough demand to produce effective full employment, without so much demand that vacancies become so abundant as to lead inflation to run away. Sometimes the Federal Reserve does a good job and is lucky, and we have full employment with price stability. Other times the Federal Reserve is unskillful or unlucky, and we have accelerating inflation or high unemployment. It is certainly true that what happens in international trade affects employment in America. But the Federal Reserve can and does offset and neutralize impacts of trade that push employment away from where the Federal Reserve thinks the sweet spot of full employment is.

So what, then, is the impact on the American economy when Singapore educates its people to become competent network developers, or India educates its people to become competent help-center technicians? It’s not that jobs leak away. Remember: trade balances. Indians want rupees, not dollars: they will only sell us as much as we can pay for in rupees, and the only way we get rupees is by selling things to Indians. The things we sell to Indians are either goods and services exports, or capital exports–Indians buying financial assets or real property in America, the sale of which is used to finance domestic investment spending. Either way (if the Federal Reserve does its job) Americans’ demand for imports made in other countries is recycled into foreign demand that employs Americans in industries that export goods, export services, make producers equipment, or build structures. This is a consequence of Say’s law–an economic principle which is usually true, sometimes false, but which it is the Federal Reserve’s business to make as true as possible as much of the time as possible. This means that nightmare scenarios–3.3 million high-tech jobs moving overseas–are beyond the bounds of short-run probability. The current account plus the capital account must balance: if the work that used to be done here by 3.3 million people is to be done there, that means that our export industries here must employ an extra 3.3 million people as well.

When foreign countries acquire the capability to make stuff, there are two impacts on the American economy. First, we can no longer sell the stuff we make abroad for such high prices as we did before: our exporters face more competition as they try to sell abroad. Second, our consumers and domestic businesses can buy things made abroad more cheaply: producers of import-competing goods and services find that they face more competition and must lower their prices, but other businesses find that their costs fall, and households find that their incomes buy more good stuff.

There is an article in the Economist on the same outsourcing to India theme discussing the twin challenges facing Indian BPO companies – growing resentment in the countries doing the outsourcing (as they face job losses) and the attrition rates among their own staff. As the Economist summarises: “These are all symptoms of a maturing industry now competing for market share against the global giants of IT consultancy on quality rather than just price. The challenge facing the rest of the outsourcing industry is to reach a similar plateau. Best-placed are those firms that have already moved upmarket: away from call-centres and towards the outsourcing of more sophisticated business processes.”

Ram’s comments on NRI article

I got quite a lot of feedback on the Dear NRI article that I had written. Among those who wrote back with a detailed and eloquent commentary was a friend, Ram (himself an NRI, and current based in Atlanta). Since Ram does not yet have a blog, I have reproduced his views in their entirety here. Be warned: they are strong views, and are likely to touch a chord.

Your article [Dear NRI] was very interesting. Let’s the look at an average US-based NRI.

There are certain problems for every first-generation immigrant here, particularly, an Indian, due to the vast cultural difference. These differences affect their life more, beyond their 40s, than at a younger age. So, when it really starts affecting them, they usually have kids who are nearing their adolescence, and may be another reaching 10. By then, it becomes too late for many. You may wonder why? Well, let me explain…

Usually, many Indians don’t visit their relatives and friends on an annual basis, after they have a couple of kids. So, the kids don’t really know what their origins are. The things that an ABCD (you probably know what it is) knows at his/her teenage is, rigid cultural enforcements from their parents, and American stereotypes about the country (which is not very pleasant, to put it mildly). The parents (first-generation NRIs) are also out-of-touch with India, and slowly believe (including me) that they have become unfit for India. And of course, some think that India is unfit for them. Some even grossly exaggerate that how horrible a country India has become, in terms of corruption, goondaism, lack of sanitation, and other known things, like pollution, water problem, and poor ethics. And many (if not most) NRIs believe that they need to be minimum a millionaire when they return, if they need to feel that they are a success in their own eyes, and the eyes of their friends and family.

There are many of these NRIs, who are passionate about India, and are willing to contribute their time, money and efforts, but, are still unwilling to move back. Well, they cite that their kids cannot adjust back to Indian life (and of course, there are several cases, where the NRI-return has just failed, because the kids did become psychologically affected, and they eventually moved back to US).

I have personally discussed/debated with so many people, and have understood this subject to be very sensitive. I understood that most NRIs are caught between the two countries, and are unable to make a firm decision. And I also understood, unless the problem strikes them right on their face (which usually happens when they cross 40) they are unwilling to make any decision (commonly known as the x+1 syndrome or n+1 syndrome). And if you wonder what I mean by “strikes on their face”…Let me elaborate.

The first problem usually comes in the form of an ailing parent or an under-disciplined kid, most likely, the latter. The kid doesn’t follow the “Indian” norms, even to a mild extent (say 30%). In US, the parents play a bigger role (time wise) with their kids, because, they don’t have anyone to share their burden of raising the kids (though in the earlier years, the grandparents help…). Also, once material wealth is sufficiently reached, their focus is shifted so strongly on the kids. So, after all the effort, when the kid doesn’t behave closely to their expectation, it is a total shock, beyond, what they can handle.

They start wondering how much better their life may have been if they were in India, raising their kids and leading a normal life (even if they weren’t as financially rewarded). Well, when the kids seek “independence”, and then “total liberation”, it becomes very lonely for the parents (they reach upper 50s). In the in-between fifteen years (right from the kid becoming 10, to reaching an age of 25) the parents go through ENORMOUS anguish, anxieties, that most of them, see a cycle of turbulence and normalcy, alternating. Even if the kid turns fine, the lost years of pain can never return.

So, the question is why don’t they see it coming? …Well, good question…From my experience, I have realized only a few in life have a plan, goal and a direction. The rest just follow the crowd. The NRI is always in denial, saying that their kid has been brought up “very well”, and will not indulge in culturally unaccepted things. The problem is, such rigid enforcement, if successful, will steal the entire social behavior of the kid, and their youth itself. It’s like saying an Indian kid, not to watch TV, movies or play outside.

For those who do plan, think long-term, they do give a serious thought of returning back to India, before it is too late. And now, things are moving in a very good direction in India, they don’t need to fear about either their comforts, or living conditions. If you can put in an honest day’s work, you are more likely to get an honest day’s pay now. This belief will seep in slowly in an NRI’s mind, and when that happens, he/she will definitely return.

And is it really that important or beneficial that an NRI return to India…Well, the answer is yes and no. An NRI who has lived and worked/done business for several years, can bring in certain things that are valuable for the country. And coming from a capitalistic country like US, they are more likely to be entrepreneurs, and can improve India. If they are good leaders, they can contribute quite well.

But, those who are more “a face in the crowd” may not be very useful for the country. They may bring in the contributions in the form of foreign exchange, which is also welcome.

Technology with Social Skills

Business Week writes:

One-third of the world’s population — 2.4 billion people — burn wood, agricultural residues, or dung for cooking and heating, according to ITDG. Illnesses caused by the smoke from these fires kill 1.6 million people each year, an average of more than three people per minute. Some 1.6 billion of the world’s people have no access to electricity and, in the absence of new policies, 1.4 billion will still lack it in 2030.

And so, just as corporations now focus on implementation costs and return on investment, development organizations are zeroing in on smart ways to use technology to solve the world’s most pressing social problems.

Perhaps the greatest leap forward has to do with innovative ways to target and distribute technology. Across the globe, so-called social entrepreneurs are finding ways to bring technology to disadvantaged groups that otherwise might be left behind, including the poor, the sick, and the disabled.

No technology, no matter how advanced, can solve world poverty or social justice. But putting the right tools in the right hands at the right price is a start. “I’m not so optimistic to believe that Martus will reduce the number of human-rights violations,” says the Asia Foundation’s Steve Rood. “But with increased sharing of information, we believe we can improve communication and maybe bring people to justice.” And that adds a whole new dimension to the meaning of technology revolution.

This story is a reminder of the fact that technology can play a crucial role in bridging the digital divide. Specifically, my interest is in two segments – SMEs and rural areas, in the emerging markets of the world.

TECH TALK: IT’s Future: Affordable Tech Utilities

Nicholas Carrs points have, not surprisingly, got a hostile reception from the tech community, with CEOs of various IT companies (including Intel and Microsoft) being very critical of the comments. Tech companies feel they are being hit by Carr when many are down for the count. The recession in the industry has now lasted for over three years, and there is only a slim ray of hope for revival in the second half of the year. So, what should tech companies do?

The key to looking at ITs future is to think about it as a sustaining innovation in the developed markets and a disruptive innovation in the emerging markets. The developed markets will have flat-to-limited growth in the coming years, but the emerging markets are where the next set of opportunities are materialising. Technology priced in dollars has been largely out of the reach of all but the elitist enterprises and families. There is now an opportunity to make technology affordable to open up markets that are 10X larger than the markets that have been served so far.

The next set of opportunities will therefore be driven by the twin themes of Utility and Affordability. IT is a utility, but at the same time it needs to be affordable for people and organisations to use. This requires thinking and solutions that are very different from the ones which the current set of users in the developed markets have been using. These non-consumers of IT have limited legacy and limited money. Taken together, if the right technology at the right price comes along, adoption will take place rapidly. The next IT revolution will, therefore, start from technologys new markets todays have-nots and then make its way up the pyramid.

So, what are these new technologies which can create the foundation for Affordable Tech Utilities? These are what UBS Warbug has called cold technologies. According to me, the key building blocks are technology solutions like server-centric computing (thin clients-thick servers) with remote server management, open-source software, WiFi and Ultrawideband, voice-over-IP, web services, weblogs, RSS-enabled information aggregators and marketplaces. Individually, they have been around for a few years, so they are well-known. Taken together, they create a new, pervasive technology infrastructure that can facilitate the mass adoption of technology across emerging markets.

The two large, untapped, and presently invisible markets that technology companies should look at in the emerging markets are the small-and-medium enterprises (SMEs) and the rural markets. Both these markets are very similar in the sense that they suffer from large-scale inefficiencies because a co-ordination failure among the solution providers has ensured that they have been largely ignored. Their numbers are large. In India, there are over 30 million employees working in 3 million SMEs, and nearly 700 million people living in 600,000 villages. They are waiting for affordable tech utilities to transform their futures. Anyone interested?

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