Software as Service

Charles Cooper writes in News.com on the ASP resurgence:

The idea behind hosted applications, where customers essentially rent what they need, is enjoying a comeback in these times of failed expectations and reduced information technology budgets. For many companies, renting software is a lower-risk, attractive option than locking yourself into an expensive single vendor solution.

Salesforce and other like-minded practitioners of applications and content hosting can tell a no-bull story about the benefits they offer customers. Most notably:

– No up-front technology costs.
– Customers don’t need to reassign new IT resources from other projects.
– Chief information officers won’t need to wait months or years before seeing bottom-line benefits.

In an interconnected world, that’s huge. What could be easier than paying for bits zapped over the wires? When demand changes, so does cost. No fuss, no muss.

The optimism needs to be tempered, though: “Folks in the computer business tend to stick with what’s comfortable, even though a growing number of them are opting for the subscription model. How big all this will become boils down to a single question in these post-bubble times: Are IT buyers ready to take chances?”

What High Tech can learn from Low Tech

McKinsey Quarterly (via News.com) writes:

During high technology’s boom years in the late 1990s, companies across many sectors tried to emulate their high-tech counterparts. The business models, the creativity and innovation, the speedy decisions, the headlong growth in revenues, profits and shareholder value–slower-growth industries aspired to all these blessings.

But now, with no technology rebound in sight, high-tech vendors must look to the business practices of their former admirers in slower-growth industries such as retailing and banking. There they will find lessons about increasing productivity and using the improvement strategically to expand their market share and improve their financial performance. The challenge goes beyond simple cost cutting; it’s about changing the ratio of inputs to outputs–the value of what companies put into a production process compared with what they get out.

As technology vendors target productivity, they should take a cue from high-performing companies in slow revenue growth sectors such as retailing, whose 5 percent annual productivity growth from 1993 to 2000 was more than twice the rate for U.S. industry as a whole, and wholesaling, which also increased its productivity rapidly during the 1990s. In these sectors, where the demand environment is more mature, companies must perfect the art of raising productivity year after year–not as a one-time event–and exploit that growth for strategic gain. Although they also search for innovative next-generation products and services, they relentlessly identify and close gaps with industry best practices in process efficiency and pursue breakthrough productivity gains by investing in business innovations.

Rather than relying on a “silver bullet,” the productivity leaders have adopted an integrated, end-to-end approach–including process innovation and redesign, the targeted application of IT, carefully crafted outsourcing arrangements and offshoring. They generate gains from a combination of organizational change, targeted investment and the ability to measure the right things. In contrast, companies that bet the farm on major investments such as ERP systems without bothering to improve processes, organizations and strategies may be disappointed. The integrated approach is characterized by short-cycle, well-defined initiatives that are intended to realize year-on-year productivity gains.

Unicode

NYTimes writes about the Michael Everson, the person behind “computer age’s Rosetta stone” and his creation:

A more technical explanation of Unicode is this: When Mr. Everson sends e-mail in ogham, his computer isn’t sending ogham letters through the ether. Instead, strings of 0’s and 1’s are transmitted, and when they arrive on a friend’s computer, they generate on its screen the same ogham letters that Mr. Everson typed. Unicode is the master list that resides in both computers and translates individual letters and symbols into strings of 0’s and 1’s and back again. Most current software is Unicode-compliant, which means that this master list of all the world’s writing systems has been built into operating systems, browsers and software.

The code assigned to all 96,000 characters is handled only by programmers in its naked form, while computer users (and sometimes vendors) install the specific fonts that represent a specific alphabet. A font renders a language readable to humans; Unicode renders a font readable to computers.

Most people don’t even realize Unicode is at work. “Unicode is like plumbing,” said Rick McGowan, the vice president of the Unicode Consortium. “Yet it’s the most far-reaching and ambitious multilingual project in history.”

Last month the latest version of the standard, Unicode Standard Version 4.0, was published. It contains encodings (that is, unique strings of 0’s and 1’s) for some 96,000 letters and symbols. Approximately 70,000 of them are Chinese characters. Unicode also contains support for 54 other writing systems, from Mongolian to Thai to Gothic to Cyrillic.

Knowledge Flows

[via Phil Wolff] David J. Skyrme opines on 10 KM-related topics:

1. Knowledge Can’t Be Managed
2. Best Practices Aren’t Best Practices
3. Communities Don’t Practice
4. Storytelling Isn’t Just Telling Stories
5. Expertise Directories Locate Your Experts
6. A Portal is a Gateway to Knowledge
7. What You Can Measure You Can Manage
8. The Biggest Obstacle to Knowledge Sharing is Corporate Culture
9. E-learning and KM are Two Sides of the Same Coin
10. Increasing Creativity Will Increase Innovation

Who’s right – Ellison or Andressen?

Barron’s writes:

As part of his takeover dialogue of PeopleSoft, Oracle chief executive Larry Ellison has been verbally running roughshod over the debate about information technology, its relevance and its future innovation. “Best of breed is dead, except for dog shows,” he has said. For the most part, Ellison has been preaching that innovation doesn’t matter and that consolidation will rule the day.

[Opsware co-founder Marc] Andreesen respectfully — and quite understandably — disagrees. He contends that we are simply entering another era of computing, and for the first time in his career, Ellison is on the wrong side of the curve. “For 25 years, he has been on the right side of trends,” Andreesen says. “Now, he’s using consolidation as a self-serving prophecy.”

Andreesen argues that Oracle’s core database business has matured, and Ellison is desperately groping for growth and using Darwinian takeover tactics as a way to obfuscate his company’s potential irrelevance.

Andressen argues that we are entering a new cycle in computing, shifting from the client-server platform to Web-based architecture. The old client-server stuff is maturing, consolidating and in some cases dying, but the new Web architecture innovations are thriving. He points to the continued growth of Internet users, broadband subscribers and buyers of goods online as proof that purveyors of Web-enabling software, such as BEA, Veritas, Mercury Interactive and Opsware, have bright futures.

I think Andressen is right. Ellison also faces one more threat: open-source databases like MySQL and PostgreSQL which will nibble away at Oracle’s core business.

TECH TALK: An Entrepreneurs Early Days (Part 2)

I came across these thought-provoking lines by Tim Carvell in Fortune: Maybe your job provides its own daily doses of excitementperhaps not fighting-off-a-giant-squid excitement, but excitement nonetheless. Or maybe you’ve found something to do in your downtime that you’re passionate about. And if you’re really lucky, maybe your job and your passion are one and the same. That interplay between what we have to do and what we want to be doing is what this issue is all about. It’s about the dreams we have now that we have to work for a living.
When one decides that the job and passion are different, and one would like to make the passion the objective, that is the moment for the entrepreneur to be born.
Randy Komisar makes a similar point in his book The Monk and the Riddle. He calls it The Deferred Life Plan.

For the promise of full coverage under the plan, you must divide your life into two distinct paths:

Step one: Do what you have to do.

Then, eventually

Step two Do what you want to do.

We hear variations on this theme from childhood on: Walk before you run. No peas, no pie. Pay your dues. Or, perhaps in the case of Jack Dolan, work, then retire assuming you live long enough to retire and then devote your time to your passion.

Most people think getting rich fast provides the quickest way to get past the first.

Financial gain should not be a driving factor or even a consideration in becoming an entrepreneur. If that happens, it is good. What should be considered is the passion that one is willing to bear on what one wants to do. All other doors need to be closed, so one cannot run away mid-way only then will one make all the efforts to work towards achieving success. Entrepreneurship is not about parallel processing activities, it is about bringing complete focus to something the entrepreneur deeply believes in, even though as time goes on, these beliefs may be altered.

It is one of the great realities of business that every entrepreneur believes that he is the chosen one for super success. And yet, fewer than one in thousand find financial success. Hence, the goal for becoming an entrepreneur should not be measured only in monetary needs. If that is the case, then the priorities are not in the right place.

Entrepreneurship is also not about an escape from the drudgery of daily work in the corporate world. It is possible to think like an entrepreneur in any work that one does. Entrepreneurship is about a state of mind linked with the actions that one does where one is driven not just from the head, but also from the heart.

Tomorrow: An Entrepreneurs Early Days (continued)

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PlanetLab: Making a New Internet

[via Abhay Bhagat] Technology Review writes about “a grass-roots group of nearly 100 leading computer scientists, backed by heavyweight industrial sponsors, is working on replacing [the current Internet] with a new, vastly smarter model”, eventually enabling us to (among other things):

  • forget about hauling your laptop around. No matter where you go, youll be able to instantly recreate your entire private computer workspace, program for program and document for document, on any Internet terminal;

  • escape the disruption caused by Internet worms and viruseswhich inflicted an average of $81,000 in repair costs per company per incident in 2002because the network itself will detect and crush rogue data packets before they get a chance to spread to your office or home;

  • instantly retrieve video and other bandwidth-hogging data, no matter how many other users are competing for the same resources;

  • archive your tax returns, digital photographs, family videos, and all your other data across the Internet itself, securely and indestructibly, for decades, making hard disks and recordable CDs seem as quaint as 78 RPM records.

  • The focus is on making the network smarter.

    Syncato

    A new tool has surfaced – Syncato. From the Syncato introduction:

    Syncato is a weblog system designed to extract the maximum potential from the content of your posts. All posts in Syncato are stored as XML within a native XML database and are searchable using XPath queries. This includes the ability to execute XPath via a URL from within your browser.

    What this really means is that the limitations on how you use and reuse the content on your site is only determined by how you markup your posts. For minimal reuse you can just use standard XHTML, but the real power of Syncato comes when you go beyond that and add additional markup to increase the meaning of your content. What you want to do is up to you. The more information you add to your posts the more useful it will be to you and to others.

    In reality Syncato is much more then just a weblog system, it’s an XML fragment management system. Those fragments can represent weblog entries, comments about those entries or just about anything else. Using the facilities of the system you’re then free to combine those fragments together however you desire. And just as with your weblog entries, your XML fragments are available via XPath and HTTP.

    Richard MacManus writes: “Syncato can aggregate “XML fragments”, which includes comments on a weblog. So could I include in my blogroll several XPath queries to aggregate conversations I’m interested in? Instead of making an RSS feed out of a comments thread, which is what I originally suggested and which some people have already implemented on their blogs, I could run an XPath query from within my blogroll which would aggregate comments from that same thread. This process has the advantage of being driven by the weblog reader, rather than the writer. i.e. it’s not up to the weblog writer to produce an RSS feed, the reader can simply run some XPath queries to effectively create their own feed. The power to aggregate shifts to the subscriber rather than the producer, which is where it should be in the Two-Way Web. Of course this means that producers have to write their posts in valid XML, but that is where Syncato comes in – it’s a weblog authoring product that produces valid XML. Further, because each comment is a unique chunk of XML, you could aggregate more than just a single conversation thread (that is attached to a single weblog post). Using XPath and associated XML technologies, you could pick up comments on a particular theme or topic from the whole weblog – or extended further, the whole blogosphere. How rich would conversations be then!”

    WeblogsInc

    A new bloggin venture is launching – WeblogsInc. From their site:

    Weblogs, Inc. is a B2B Web site dedicated to creating niche Weblogs (a.k.a. blogs) across niche industries in which user participation is an essential component of the resulting product.

    Weblogs, Inc. is creating a new layer on top of the traditional business-to-business media that:

  • saves professionals the time associated with reading dozens of B2B publications by providing a non-stop, top-level summary of the news;
  • provides analytical tools that give readers the ability to sort and search stories by subtopics within an industry;
  • gives users the ability to participate by engaging in discussions, ranking stories and by submitting their own blogs (i.e., pointers and summaries of stories on other sites); and
  • promotes fairness and truth in reporting by acting as a public forum where industry professionals can participate.

  • The idea looks interesting. I wrote to them a few days ago asking for more information, and haven’t yet received a reply.

    Meanwhile, Wired News has more, quoting co-founder Jason Calacanis:

    Calacanis’ goal is to turn Weblogsinc into an umbrella for blogs, a for-profit center that dishes daily on as many as 300 topics and scores revenue from sources like advertising, events and classified listings. He expects the topics to fall under four main categories: media, finance, technology and life sciences.

    For now, Calacanis’ plans for Weblogsinc are unclear. He does say that before too long he plans to introduce some well-known members of the digerati to his fold. But once again, he’s not naming names.

    What he will say is that he expects Weblogsinc will have little problem bringing in revenue, especially since the more individual blogs it has, the more opportunities for ad sales and conference tie-ins it will spawn. And once the word gets out about Weblogsinc, he argues, the more bloggers will want to hop on board and share the wealth.

    “A thousand dollars a week in ad revenue (per blog) is not that hard if we can scale,” he says. “The architecture is already built, and it scales nicely. We can just add more weblogs.”

    Nick Denton has some advice on niche B2B vertical sites, and thinks that “Calacanis is making a few mistakes, and will have to alter course if he’s to be successful.” Nick’s two micro-sites (Gawker and Gizmodo) only do about USD 2,000 a month each in ad revenue, barely enough to cover costs.

    Intel into Telecom

    Barron’s writes about how Intel may be doing to telecom what it did to computing:

    To hasten the day that e-mail, voice and television converge over one network, Intel’s making a new push into telecom gear. Eric Mentzer, the head engineer from the Intel Communications Group, showed the developer’s meeting how Intel is pitching standard parts to telco suppliers that traditionally designed their own chips. “This is a megatrend that’s going to change the communications industry over the next ten years,” Mentzer told me. “It’s inevitable.”

    Historically, vendors like Lucent Technologies and Nortel Networks custom-built their hardware and software. Now, nearly 30 companies have designed products that hew to an industry standard, called ATCA, which allows gearmakers to mix and match their circuit boards in a chassis. By year end, a new version of the Linux system software should be ready to run on Intel processors and this Linux will be sufficiently failsafe to satisfy telecom carriers. Lucent and Nortel haven’t publicly joined in this movement toward modularity, but NEC announced a product for wireless phone carriers that’s made from off-the-shelf parts like Linux and the Intel Pentium chip.

    Mentzer thinks a new generation of network processor chips from Intel and other vendors will enable telecom vendors to build systems around programmable chips instead of custom chips dedicated to single networking chores, like encryption. Such data-packet processors are improving in the same way as the Pentium processors that power computers. Programmable packet processors would make telecom gear cheaper to build and upgrade, says Mentzer. The communications carriers are demanding these off-the-shelf economics, says the Intel engineer, to keep up with rising traffic at a time when revenues are flat. “Standing still is a death spiral,” he says.

    Will off-the-shelf economics mean PC-industry economics for networking gear? Ever since Dell Computer started selling its own networking gear, investors have fretted that switches would become a “hollowed-out” commodity like PCs. Cisco Systems has maintained its 20% profit margins by judiciously using proprietary chips and software. For his part, Intel’s Mentzer thinks that communications gear is a long way from standardization let alone, commoditization.

    Interesting: an Intel-Cisco battle seems to be in the offing.

    Continue reading

    Microsoft’s Project Green

    Information Week writes on “a little-known project involves hundreds of developers, writing a new set of business applications from scratch.” The focus is on SMEs. The key points:

    – Microsoft aims to write new financial, human-resources, distribution, and other enterprise-resource-planning modules, so as to, according to Paul Hamerman of Giga “integrate the entire Microsoft stack, from back-end systems and operating systems to the Office applications.”

    – “The rationale for Project Green is that, in order to get the kind of deep and wide integration that increasingly defines all Microsoft software, the company had to write applications using its own programming languages, development tools, and APIs.”

    – “A linchpin of Project Green is the Business Framework, middleware for connecting applications with Microsoft’s operating systems and server software. The Framework will handle object mapping, forms rendering, metadata descriptions, metadata services, and other core functions so that Business Solutions programmers and independent software vendors don’t have to do that work themselves.”

    – Microsoft CRM is a step in this direction.

    This is akin to what I like to think of as “Visual Biz-ic“.

    Map-based Information Visualisation

    Tim Bray helped define the XML standard. He is currently focussed on “the visual representation of data with his company, Antartica, which sells tools that display information from Web searches, corporate portals and other sources in an intuitive map-based format.” Some excerpts from a
    News.com interview:

    It’s Antarctica’s hypothesis that by putting a graphic interface somewhat in the spirit of the desktop metaphor on complex information spaces, we can open up the value in there. In our case, the metaphor isn’t a desktop–it’s a map.

    There are really two ways to get information: search and browse. And browse has a lot of potential. But to work, the drill down has to be intuitive. It cannot be stupid. You have to be really aggressive about bringing the relevant stuff to the top. You can’t force the person to go through multiple levels to get to what they want.

    It turns out that the display technique that returns the most amount of data per square inch is cartography. That’s why we’re using a map metaphor.

    TECH TALK: An Entrepreneurs Early Days

    An idea fertilises with a mind to give birth to an entrepreneur. The life of an entrepreneur is not an easy one. Extinction in the form of death is always lurking around the corner the first mistake can be the last. And yet, as the entrepreneur progresses from childhood to maturity, there is a thrill that nothing else can quite match. For adventure seekers, an entrepreneurial venture is the ultimate challenge. So, what are the challenges that entrepreneurs face during their early years? This is what we will examine in this series.

    Embryo

    The pre-birth stage of an entrepreneurs life has a key question that needs answering: to make the leap or not. Even as there is a day job, the mind roams free imagining various new worlds and ideas which can be created. At the same time, there are many concerns where will the capital come from, what if one fails, does one have the capability to become an entrepreneur. In many ways, at this time, it is better not to know how high the mountain that needs to climbed is because then the journey may not even start.

    For many, this stage is where the mind games never end. The infinite series of What-Ifs always scare. For many, the risks of being an entrepreneur are too high when the only guaranteed reward is the journey. There comes a time when one must make the decision to jump in, or forget about it. While opportunities are always there, there is always a crunch time for an entrepreneur-to-be. There is a wafer-thin margin which separates the two worlds one with its clear, laid-out path up the corporate ladder, and another with its glorious uncertainties. It is a mind game, and which only the prospective entrepreneur can play out.

    For me, the decision to become an entrepreneur was made very early in life. It is what my father had done, and it seemed the logical thing for me to do. The seed was sown at home in what I saw of my father. Even when I worked in the US for a couple years, I realised it was only a matter of time that one day, the calling would reach a crescendo, and I would have to heed its call. After two years of working, I finally called it quits and embarked on life as an entrepreneur. There were many ideas of what I wanted to do the primary one being to build a software products company out of India. It was a dream that would have to wait a decade before I got an opportunity to try to make it happen.

    I am now in my third innings as an entrepreneur. The first lasted two-and-a-half years and ended in failure. The second lasted five years and ended in my business being sold. The third began two years ago. How it will end I do not know. What I can say is that each of the experiences has been unique and challenging in its own right.

    Tomorrow: An Entrepreneurs Early Days (continued)

    Our Business Life

    I came across these wonderful, thought-provoking lines by Tim Carvell in Fortune:

    When we were small, we had dreams. Big dreams. We were going to be astronauts. We were going to be rock stars. We were going to win the Heisman. Our lives would be full of wonder and adventure: We would pull rabbits from hats, we would cure fancy diseases, we would marry royalty. Every night of the week we would don formal attire and go to yet another ceremony, at which we would win prizes and in our acceptance speeches make gracious yet pointed remarks about our childhood nemeses, who would seethe quietly with envy.

    Yes, well. So much for that. In fact, we grew up to become office workers. It’s probably for the best, really. Better benefits. Less risk. More reasonable hours.

    Still, just because you work in an office doesn’t mean you’ve forfeited the right to have fun. Maybe your job provides its own daily doses of excitementperhaps not fighting-off-a-giant-squid excitement, but excitement nonetheless. Or maybe you’ve found something to do in your downtime that you’re passionate about. And if you’re really lucky, maybe your job and your passion are one and the same. That interplay between what we have to do and what we want to be doing is what this issue is all about. It’s about the dreams we have now that we have to work for a living.

    India as Knowledge Power

    Rediff writes:

    Dr R A Mashelkar, director general of the Council of Scientific and Industrial Research, the largest chain of industrial research and development institutions in the world, with 38 laboratories and about 22,000 employees, believes that India is poised to become the largest ‘knowledge producer’ in the world.

    “Even if India does not do anything it is inevitable that we will emerge as the knowledge power in the next 5-10 years. If you look at our successes in the past and our emergence in the field of software technology, then this is fairly clear,” says Dr Mashelkar.

    Dr Mashelkar divides the post independence era successes into four major sectors: the green revolution (agriculture), the white revolution (milk), the blue revolution (space) and the grey revolution (software).

    “Indian science is at a crossroad. Despite the successes, science is not the first choice for young people in the country. The number of quality scientific publications in the country has also remained the same in the last two decades. The demand of science from the industry is also low,” adds Dr Mashelkar.

    Continue reading

    Out of the Box Thinking

    [via Veer and Anish] Ubiquity has an interview with Andrew Hargadon, the author of “How Breakthroughs Happen: The Surprising Truth about How Companies Innovate”. Andrew has some interesting things to say about how innovation happens:

    Innovation is the practical exploitation of any novel idea. Novel ideas can be inventions in the strict definition of the term, which means they didn’t exist before, but most often they’re not. Instead, they’re based on taking an idea that’s been developed somewhere else — or combining a number of existing ideas — and introducing them to a market that hasn’t seen those combinations before.

    By focusing on recombining existing ideas — rather than inventing new ones — we can better exploit the sources of innovation and, at the same time, increase the likelihood of their impact. It’s much easier to think of things that have already been done and, when you introduce those ideas into new markets, they are already well developed. The trick is putting yourself or your firm into position to be the first to see these opportunities. Highly successful firms have developed a set of innovation strategies, called Technology Brokering strategies, that enable them to move between different worlds, to see how ideas from one market’s past can be used in new ways in another market.

    [There are two critical two roles of brokering.] The first is to bridge different worlds by moving between industries, markets and knowledge domains and seeing the range of existing ideas that are already out there. The second role is to build a new community around the ideas to attract not only customers but also competitors and suppliers. Don’t focus on inventing and hoarding the rewards of that invention but instead on creating a community that wasn’t there before.

    It’s much easier to recognize the similarities between two things (analogy) rather than come up with something that you’ve never thought of (invention). Solving problems with analogies means having an open mind, it means having seen many different things, and it means admitting that, whatever problem you’re attempting to tackle right now, you’re likely neither the first to try nor the most qualified. Somebody somewhere else has already solved this problem. Find out what they did and build on what they created.

    Wiki to Annotate Book

    Why hasn’t someone thought about this before (or perhaps someone has)? A Wiki to complement – and annotate – a book. BoingBoing points to the Wiki for Quicksilver. Another example of how social software is helping enrich the web.

    From the author Neal Stephenson’s introduction:

    My own view of the Metaweb is pretty straightforward: I don’t think that the Internet, as it currently exists, does a very good job of explaining things to people. It is great for selling stuff, distributing news and dirty pictures, and a few other things. But when you need to get a good explanation of something, whether it is a scientific principle, a bit of gardening advice, or how to change a tire, you have to sift through a vast number of pages to find the one that gives you the explanation that is right for you. Generally this is not a problem with the explanations themselves. On the contrary, it seems as though a lot of people like to explain things on the Internet, and some of them are quite good at it. The problem lies in how these explanations are organized.

    We have been looking for a way to get an explanation system seeded for a long time, and it occurred to us that a set of annotations to my book might be one way to get it started. At first, the explanations here will be strongly tied to characters and situations in QUICKSILVER and so may be of only limited interest to those who have not read the book. However, with a few clicks we might move on to more general explanations. For example, Robert Hooke and Robert Boyle appear as characters in QUICKSILVER, and so early on we might see annotations concerning specific things that they are shown doing in the book. But later these might link to explanations of Boyle’s Law. Such an explanation need not refer to QUICKSILVER in any way, and so it could be useful to, say, a high school student who has never heard of me or my book but who needs to understand Boyle’s Law and why it is important.

    What it boils down to is this: if you have come here hoping to get an explanation of something that puzzles you about QUICKSILVER, then this site should serve that purpose. If you don’t find an existing annotation that answers your question, you can request that I or someone else write one and post it.

    India’s Growth

    [via Reuben] WSJ writes that India is posied for faster growth and “economists expect it to join China as a powerful Asian engine.”

    Government officials are predicting that India’s inflation-adjusted growth for the current fiscal year, which ends March 31, may “significantly exceed” New Delhi’s earlier forecast of 6% growth and could approach 8%. Private investment firms concur, estimating growth of as much as 7.5% and citing the potential for even faster expansion down the road.

    Indians increasingly feel that their country has chosen the right balance of growing its domestic economy and its export economy at the same time. And no country, many Indians feel, is better positioned to profit from the global boom in information-technology services than their own.

    Economists cite several cyclical factors as contributors to India’s growth this year. The country is enjoying an excellent monsoon season after last year’s drought, providing hundreds of millions of farmers with more cash to buy everything from cellular phones to motorcycles. Meanwhile, companies are again investing significantly in their new production facilities, after many suffered from overcapacity following an anticipated boom in the mid-1990s that never materialized. A July survey of business confidence by a leading Indian institute showed the most optimistic outlook since mid-1995.

    Important structural changes in the Indian economy are also driving consumption and investment patterns. Construction of everything from ports to telecommunications networks has accelerated and Prime Minister Atal Bihari Vajpayee’s support for a $10 billion nationwide road-construction program is expected to be a boon for cement and steel companies. Banks are reporting a 30% rise in loans to consumers and a 30%-35% increase in home mortgages, as they shift from focusing on corporate loans to the country’s growing middle class, an estimated 250 million Indians.

    As Indian companies reduce costs and focus on competing with foreign firms in India’s increasingly open economy, their earnings are also improving. Investment banks such as Citigroup’s Smith Barney are projecting earnings growth of 25% to 30% among top-tier Indian companies, as they benefit from cheaper credit and growing demand for their services and products from foreign companies. In addition to operating call-centers and back-office operations, Indian companies also are increasingly being tapped to produce high-end products such as auto components and pharmaceuticals.

    “In our opinion, the frontline Indian companies have never been in better shape since liberalization began in 1991,” declares a September report on the India economy by Smith Barney.

    Asian Century?

    Brad DeLong points to an article in Financial Times on Asia: “Asia’s rise is the economic event of our age. Should it proceed as it has over the last few decades, it will bring the two centuries of global domination by Europe and, subsequently, its giant North American offshoot to an end. Japan was but the harbinger of an Asian future. The country has proved too small and inward-looking to transform the world. What follows it – China, above all – will prove neither… ”

    A lengthy and skeptical response comes from Michael Gordon. Much of the discussion centres around China.

    I believe that China and India are emerging as the twin dynamos for the world economy – India more slowly than China. Both are piggybacking on the outsourcing-to-cut-costs trend and their emerging and increasingly prosperous middle class with money to spend. But for both, real and sustained growth will mean ensuring that the 70% of the populace in the rural areas also needs to be impacted. So far, there are few signs of that happening.