EMC’s acquisition of VMware

News.com reports about “the move will help EMC reach further into the world of utility computing, a trend sweeping the industry as companies search for ways to make information technology easier to manage and more efficiently used.” VMware makes software to enable multiple operating systems to run on a single machine concurrently.

Adds NYTimes: “VMware is more of a departure. The private company, based in Palo Alto, Calif., makes software that allows a computer to run different operating systems at the same time, or several versions of the same operating system. This kind of software, known as a virtual machine, has been used since the 1960’s on mainframe computers. But VMware’s technology is tailored for lower-cost machines powered by chips from Intel or Advanced Micro Devices, running Microsoft’s Windows or Linux, an operating system distributed free…Such low-cost server computers are increasingly common in corporate data centers, and VMware’s software increases their efficiency, yielding further cost savings. The VMware purchase moves EMC into the market for server software at the heart of the data center.”

One of the ideas I have been thinking about is the need for a low-cost VMWare-like application to enable Linux and Windows (with terminal services enabled) to run in parallel on a server.

When Competition delivers More for Less

McKinsey Quarterly writes on how to respond to the challenge from value players:

To compete with value-based rivals, mainstream companies must reconsider the perennial routes to business success: keeping costs in line, finding sources of differentiation, managing prices effectively. Succeeding in value-based markets requires infusing these timeless strategies with greater intensity and focus and then executing them flawlessly. Differentiation, for example, becomes less about the abstract goal of rising above competitive clutter and more about identifying opportunities left open by the value players business models. Effective pricing means waging a transaction-by-transaction perception battle to win over consumers predisposed to believe that value-oriented competitors are always cheaper. Competitive outcomes will be determined, as always, on the groundin product aisles, merchandising displays, process rethinks, and pricing stickers. When it comes to value-based competition, traditional players cant afford to drop a stitch.

As competition becomes increasingly about differentiation and execution, CEOs will have to focus their organizations on rapid experimentation and innovation, the development of superior customer insights, effective pricing and promotions, and frontline efficiencies. The big challenges will be diagnosing where a companys capabilities fall short and then building these skills quickly. While spearheading change-management initiatives with relentless energy, senior managers should be prepared to think creatively about partnerships and alliances to acquire the needed talent.

Differentiation: To counter value-based players, it will be necessary to focus on areas where their business models give other companies room to maneuver. Finding and establishing a differentiated approach isnt easy and often requires trial and error. Competition in value-based markets will therefore be characterized by considerable experimentation in categories and formats to hit on a winning formula.

Execution: Value-based markets also place a premium on execution, particularly in prices and costs. There is no easy answer to this challenge, but its helpful to recognize that value players tend to price frequently purchased, easy-to-compare products and services aggressively and to make up for lost margins by charging more for higher-end offerings.

Bus. Std: Borrow a leaf from Rajiv Gandhis book

My technology column has started in the ICE World section of Business Standard. ICE World is published every other Wednesday as a technology supplement. The first in the series looks at the need for India Technology Missions.

India is in the news in the Western media finally, for the right reasons. Indias brainpower is attracting attention.

Could India be the services capital of the world, just as China is en route to becoming the worlds workshop?

The question is moot at this point India still has a long way to go. While a beginning has been made in the right direction, a lot still needs to be done.

Indias infrastructure is still pathetic, technology adoption by companies is still quite poor outside the export-oriented IT sector, education is still not universally available, rural areas remain frozen in time and governance still hinders rather than helps.

Can something be done about this?

The need of the hour is a focused national agenda in key areas that delivers results in a specified time period. There also needs to be co-ordination across different entities so that they are not working like scorpions in a pit.

The country must rise above individual and local self-interests. It is a kind of agenda that is ideally pushed by a centrally created team which decentralises execution and is able to get the best from different elements that have specific expertise. We need a few, focused missions.

My mind goes back to the mid-1980s when Rajiv Gandhi, the then prime minister, launched a mission under Sam Pitroda to create appropriate technologies for transforming Indias telecom sector.

The result was C-DoT (Centre for Development of Telematics), which created low-cost exchanges for rural India and began the first phase of Indiaa telecommunications revolution. Later, a few more missions were created. But after Gandhis death, the scenario changed.

A note on one of the websites of the Madhya Pradesh government offers an insight into the role and working of missions: The missions crafted a model that worked through participatory structures, which generated collective action as well as altered institutional arrangements within government to generate intersectoral action around identified mission goals. Missions gave time frames with milestones and fast-tracked procedures.

India needs a set of technology missions to build human capital and digital infrastructure in the country. The government (or a collective from the corporate and educational sectors) needs to initiate these missions, staff them with the best people it can find, give them the appropriate budgets, promise non-interference and let them run.

Indians are capable of doing things well not just when they are non-resident Indians. Look at some of the physical infrastructure projects that have been undertaken in recent times the Delhi Metro and the Golden Quadrilateral expressways project , for example. A lot more needs to be done. This is where the India Technology Missions (ITMs) come in.

A few ideas for the India Technology Missions:

  • Hardware – The Rs 5,000 computer: Imagine a PC-terminal a thin client which can connect to a central server for processing and storage. Given the high-speed networks within organisations, this can help dramatically reduce the total cost of computing. With keyboard, mouse and a refurbished monitor, the total cost of such a computer should not exceed Rs 5,000.

  • Software – Indian Language Desktop Applications: Local language support at the application level is critical for the growth of computing in India. What is required is to use an open-source software base and to translate the strings that make up the various applications, adding appropriate utilities (like a spell check for a word processor).

  • Business – Industry information and process maps: There is a need to create business process templates for applications used by small and medium enterprises (SMEs). This means mapping the information flows for various industry verticals and getting software developers to use these maps to develop their applications.

  • Connectivity – Fixed-price broadband bundles: For all the talk of the telecom revolution, bandwidth remains expensive in India. What does it take to offer always-on 500 Kbps connectivity for homes and 2 Mbps for enterprises at Rs 500 and Rs 1,000, respectively?

  • Content – Locally relevant information and services: The neighbourhood around our home and office is where we spend our lives. And yet there is no easy way for us to know what is happening in the vicinity and for the shops and service providers to notify us of whats new. Personalisable and localised information marketplaces are required.

    These are but a few ideas which can take computing to the next billion users in India to improve lives, increase incomes and spur domestic growth.

    In forthcoming columns, we will explore what disruptive innovations are needed to make these a reality and build Indias digital infrastructure not between two generations but between two elections.

  • TECH TALK: My Mental Model: with Local Distribution

    I have often underestimated the important of distribution. My belief in the past has been: build it and they will come. It is not always the case. For many years, I focused more on the technology that we were trying to aggregate on the Linux-based messaging front, rather than worrying about the distribution. This was a mistake. When one part of the chain is commoditised, the differentiating factor moves elsewhere.

    Look at what has happened in computing. As hardware has become standardized, the winner has been Dell, which has focused on distribution. Now, as software too becomes commoditised, the essence of building out a successful business will shift to distribution. After all, if we are all using the same open-source software components (no alternative there, since the proprietary software is way too expensive for our bottom of the pyramid markets), how we get the software across to the end-customers will become increasingly important given the fact that there is a significant nonconsumption segment.

    My belief is that for cracking open the SME technology market, even in this age of the Internet and virtual-everything, we will need a physical presence close to the customers. This is because we are trying to demonstrate the solutions to them, and also give them the confidence that we are there in the neighbourhood to help. This presence in the proximity of the customers is part of the integrated solution that we discussed earlier.

    In the case of the SMEs, this can be accomplished through the equivalent of Tech 7-11s, neighbourhood convenience stores which showcase technology and also provide local co-ordination for the channel, training and support. We underestimate the need to touch-and-feel things before they are purchased. In emerging markets like India, computers are not so ubiquitous that they will be bought over the Internet. Software is even more invisible, because few SMEs pay for it, and thus we have either non-usage or piracy of a few key applications. What the Tech 7-11 needs to do is to demonstrate how the complete IT solution can help in making SMEs more productive.

    The same is the case in rural markets, where the RISC becomes the distribution point for information and services. In fact, local distribution which we can also think of as the last mile bridge is more important than we give it credit for. As technology-driven entrepreneurs, the focus tends to be on creating the next new thing rather than thinking about how it can get to the intended customers.

    The same need for local distribution creates another interesting opportunity. What is needed is the equivalent of an information marketplace, organized by neighbourhood in a city. Currently, the bottom of the pyramid in the retailing value chain are the local shops. They have no easy way to publicise their offerings in a few kilometres radius of where they are. Their current options are flyers in newspapers and ads on local cable channels. If there was a way for them to notify the people in their vicinity of the new things they have in their shops or the sales they have on the weekend, they could grow their business. This is the opportunity for an information marketplace, built around weblogs and RSS-enabled syndication of microcontent. Information may be a commodity, but distributing it to the right people at the right time still presents an excellent business opportunity.

    Tomorrow: to Bridge Divides.

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