2003’s Top 10 Stories

From InfoWorld:

1. SCO rocks the Linux boat
2. Oracle, PeopleSoft, and JD Edwards star in merger drama of the year
3. Spam grows from annoyance to major political issue
4. Offshore outsourcing: One worker’s gain is another’s loss
5. Slammer, and other worms, continue to slam Net
6. The Wi-Fi revolution comes to a coffee shop near you
7. AMD pushes 64-bit computing into prime time
8. PC vendors see the future, and it is the Consumer
9. The PC market shows signs of life
10. The tech story that was not, and the search for the Next Big Thing

I will be doing my own 2003 review and 2004 preview starting next week.

Wharton India Economic Forum

Knowledge@Wharton has a report on the event. Some quotes:

Sam Pitroda: “There are great business success stories, especially in telecom, pharmaceuticals, and business process outsourcing. Indian business will transform the country in many ways. But there are challenges ahead…In the 1980s, I saw information technology as a great social leveler. Today, the world over, Indian IT talent is recognized and accepted, even expected. But until we create a global, national agenda thats in tune with a free market economy, its difficult to build a modern nation. We need massive administrative reforms. We have the politics of the 1940s still, in India. It sometimes takes 15 years to get a court case settled. Processes are obsolete. Everything the British Raj left is intact. We have perfected it, and now were trying to computerize it.

Akshaya Bhargava, managing director and CEO of Progeon, an Infosys-owned BPO company: We have taken a view of the future in our company which drives our investments and helps us say yes or no to certain customers. The future lies in the knowledge-intensive processes. When you go to a customer, the biggest challenge is dealing with the perception of risk. Its not price, technology, or attrition of people its whether the customer feels comfortable. So you have to come through with deep credibility.

Toy Story

WSJ writes about how the global supply chain helps a toy company, LeapFrog, meet the Christmas surge in demand:

Early in the morning of Monday, Aug. 11, toy executive Kevin Carlson checked his nationwide weekend sales numbers and got a surprising glimpse of Christmas future.

Stores had sold 360 of his company’s LittleTouch LeapPads in the product’s introductory weekend. Parents hunting for an educational toy for infants and toddlers were reaching for the new gadget, which makes noises when a child touches parts of an illustrated book.

That small number had huge implications. Forecasting software told Mr. Carlson that he would need about 700,000 units to meet projected holiday demand — twice as many as he had planned to ship.

So his company, LeapFrog Enterprises Inc., did something unusual. At a time when other toy companies were unloading their final Christmas shipments from cargo ships out of China, LeapFrog began placing what would turn into a huge new order for LeapPads. Its factory, privately held Capable Toys Ltd. of Zhongshan, China, scrambled for extra plastic molds, custom-designed electronics and scarce baby-drool-proof paper, and pumped out LeapPads around the clock.

The LeapPad’s frantic race against the holiday deadline shows how technology and global supply chains are transforming a great business challenge. For years, toy makers would place their entire holiday orders in January and February, blindly betting on demand for their products. By Christmas, they’d have shortages of their hit products and huge stockpiles of their duds.

The shift that let LeapFrog make its August forecast came just a few years ago with the Internet, as major retailers including Wal-Mart, Target, Kmart and Toys “R” Us — which sell two-thirds of LeapFrog’s toys — became less guarded about their market data and allowed suppliers real-time access to their sales databases. These days, a LittleTouch sale at any U.S. Wal-Mart appears in LeapFrog’s databases overnight. With new data-tracking systems, manufacturers know which stores sold the most products and the buyers’ demographics, including whether the shopper is more likely to speak English or Spanish.

With this data, Mr. Carlson can make various extrapolations even from sales as small as 360 units. In his small cubicle in LeapFrog’s California headquarters, Mr. Carlson crunched the LittleTouch sales numbers through four computer models. They are designed to weed out unusual explanations for sales spikes, everything from discounts and TV advertising to where in stores the product was displayed. In the case of LittleTouch, he couldn’t find an anomaly: It was a genuine hit.

This is an example of the intelligent, real-time enterprise in action.

VoIP as Future of Fixed Line Telephony

The Economist writes:

TELEPHONES, at least of the fixed-line variety, have been much the same for decades. Buttons replaced rotary dials; caller ID appeared; otherwise little has changed. But fixed-line phones are now about to be transformed, thanks to the internet. In a flurry of recent announcements, big telecoms firms in America have embraced a technology called voice over internet protocol (VoIP) as the future of mainstream telephony.

By plugging an ordinary phone into a broadband internet connection using a small adaptor box it is possible to make and receive calls in the usual way, though they are in fact being piped across the internet. That makes possible all sorts of new tricks: integration of voicemail with e-mail; global portability (the phone rings wherever it is in the world, provided it is plugged into a broadband link); web-based logging and billing. For conventional telecoms operators, this sounds like bad newsthe Napsterisation of telephony. But a tipping point has now been reached. As they cannot beat VoIP, they have chosen to embrace it.

Incumbent local network operators are in a tricky position. VoIP cannibalises their core businessconventional voice telephonybut, notes Blake Kirby, a telecoms analyst at Adventis, you’d rather have a VoIP customer than no customer at all. Hence the decisions by Verizon and Qwest to offer VoIP. It might even help them pick up new customers among cable-broadband subscribers. Britain’s incumbent, BT, has just launched a VoIP service for just this reason. As consumers do away with second lines for dial-up internet access in favour of broadband, says Dave Axam of BT, VoIP can provide a cheap alternative to a second line for use by teenagers.

the way forwardin which voice telephony is just another subscription-based internet service, delivered by a broadband linknow suddenly seems much clearer.

A couple more VoIP-related articles:

David Isenberg: “Because while VoIP will
probably be good in the long run for the tech sector as a whole, VoIP will hasten the end of telephony-classic…This, then, is the story under the VoIP story that the mainstream press is missing — the telephone companies as we know them are, barring some extremely regressive
shenannigans, on their way out. This departure will not be linear or smooth — nothing that big and well established disappears without a struggle, or without unintended consequences. But the telcos won’t cross this chasm by sauntering out over the edge at their accustomed pace, and they don’t have the innovative muscle to make the jump.”

Aswath: “The Telco-centric versions of VoIP they are peddling now are not the Internet-style VoIP that will ultimately develop.”

India too needs to leapfrog and embrace the VoIP future.

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A Tale of Two Worlds

Today morning, in between waking up and going for my walk, I was thinking of the two worlds I inhabit – the one world is that of the future with all the technology innovations that I want to create, and the other is the present with its challenges of the nitty-gritty of running a business. The first world is one of vision and imagination, the second world needs operational excellence and execution. How much ever I’d like to build the first world, it cannot be done without getting the second world right. The second is the foundation for the first.

This is the challenge I face – as do many entrepreneurs. Many times, the dreams get ahead of the reality. One has to execute well today to survive and be ready for the battle of the tomorrow. It becomes especially harder when one has an existing business model and culture which needs rectification – things have to be fixed in place since there is no luxury of an eraser to start with a clean slate. The hidden promise is that if one can do things well in the near-term, then one has a good opportunity to build out the future ideas.

This is also the story of India. The first world dream is that of a developed, modern India. The second world is our reality today. We need to get the details, the small things right, else we will not get to the promised future.

Salesforce IPO and Numbers

The poster-child of the ASP business is getting ready to do its IPO. WSJ reports on its numbers: USD 66 million in revenue for the the months ending Oct 31, a USD 4.7 million profit, 400+ employees, over 8,000 customers and more than 110,000 paying subscribers. Writes WSJ: “Salesforce makes software for tracking customer accounts and automating the sales process. Unlike most business-software makers, however, the company, founded in 1999, doesn’t sell its software as a product. Rather, it manages the technology in its own data centers. Subscribers pay a monthly subscription fee, and connect to their data through the Internet.”

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TECH TALK: My Mental Model: The Road Ahead

So, here is the model I have outlined and discussed so far: Creating disruptive innovations for the bottom of the pyramid requires ecosystems of integrated solutions with local distribution to bridge divides.

It has taken me some time to get a wider and fuller perspective of the challenges that need to be addressed. This period has not been easy, since I am also trying to ensure that we run a profitable business, and that hasnt always been the case. Balancing the short-term and the long-term is what business is about.

What I am convinced about is that the essence of this model is now reasonably complete and can be applied to the two markets that are of interest to me: SMEs and rural India. This is what I have been doing for the past few months. For example, in the SME segment, I have realised the need that we have to coalesce many innovations together to build an integrated solution:

  • An integrated server-software solution to provide the backend infrastructure
  • A thin client for Rs 2,500, which can be the foundation for a Rs 5,000 computer (including a refurbished monitor)
  • Server-centric computing which uses a new desktop as a server and does all the processing and storage for the client computers
  • Use of open-source software to make computing affordable legally, and not via piracy
  • Remote management of the IT infrastructure, thus obviating the need for a local support engineer
  • Business applications which can be easily customized to the needs of the business, along with best process libraries
  • A website that is easy to update and provides an RSS feed for others to syndicate
  • An information marketplace which can help SMEs connect with each other
  • A physical presence in the form of a Tech 7-11 for local distribution
  • End-user education on technology and business, and support by leveraging college students
  • Solutions for the credit constraint in the form of monthly rental payments for the IT infrastructure, bank financing as an option, and SME Credits for diffusion of products and services from other SMEs

    I call this framework 1:1 Computing to enable the 1:1 Enterprise one employee, one computer; one customer, one view; one business, one server.

    Now, the challenge is to take these ideas and solutions to market, and build the complete ecosystem in the coming months. Easier said than done! But at least the theoretical foundation on which the solution is built seems to make sense to me.

    Similarly, on the rural side, our goal is to set up one pilot RISC centre in the next few month, and then the experience gained therein to raise capital to build 8-10 prototypes later. Our belief is that there is business to be done in rural India, and there is money to be made by removing inefficiencies and capturing a part of the increased wealth in the area. As with the SMEs, it is now show time: the theories need to be tested on the ground.

    For me, the mental model helps in testing ideas and making sure that we stay on the right path. Writing it out in these columns helps me clarify my own thinking. The icing on the cake is the feedback that I get from you, my readers.

    As Tech Talk enters its fourth year, I will continue to chronicle my thinking and also write more generally on entrepreneurial opportunities in the emerging markets of the world by applying technology suitably for doing good and doing well.

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