Brad DeLong has a thought-provoking quote from a forthcoming book by Steven Weber on open-source software: “Ever since the invention of agriculture, human beings have had only three social-engineering tools for organizing any large-scale division of labor: markets (and the carrots of material benefits they offer), hierarchies (and the sticks of punishment they impose), and charisma (and the promises of rapture they offer). Now there is the possibility of a fourth mode of effective social organization–one that we perhaps see in embryo in the creation and maintenance of open-source software.”
Textually lists out some examples:
– Women have been taking shots of clothing items in stores, then e-mailing them to friends for instant advice on whether they should buy.
– At concerts, instead of using lighters, fans raise their cell phones, and snap away – despite the standard ban on cameras – and hold them up so their buddy at home can hear, something referred to as a “cellcert”.
– People have been taking pictures of washing machines or plumbing fixtures that need repairing, then sending them off to the repairman so he’ll bring the right parts.
– Camera phones have been used by real estate agents enabling them to forward pictures to prospective buyers, giving a speedy edge in a competite market.
One can see a new culture emerging…
Atanu Dey explains what Dutch Disease is (quoting from a website):
In 1959 a large reservoir of natural gas was discovered in the Netherlands, which by 1976 earned that country revenues of some $2 billion in addition to an estimated $3.5 billion of savings in imports. By the mid 1970s, gross corporate investment had fallen by 15% since the start of the decade, while employment in manufacturing had declined by 16%. The total level of unemployment had risen from a modest 1.1% to 5.1%, while the share of profits in national income which had averaged 16.8% in the 1960s had fallen to 3.5% in the first half of the 1970s. While the first oil crisis had a devastating effect on most of the western industrial base, why did The Netherlands, with its new-found fortune in natural gas, fare worse than most?
This process of de-industrialisation of the existing manufacturing base was attributed to the upward pressure that the energy discovery placed on the Guilder and the wage rate, and was dubbed the Dutch Disease. Since then, the term’s use has widened considerably to encompass any situation whereby a country’s apparent good economic fortune ultimately proves to have a net detrimental effect.
..and wonders if India could suffer from it: “India is a two-sector economy: the urban educated sector and the rural uneducated sector. The latter forms the base of the huge pyramid and toils away at a subsistence existence. The urban sector is seeing a boom what with BPO and ITES and all sorts of stuff. Policy makers, politicians, journalists, management gurus, TV reporters, and everyone and his brother are totally wrapped up in this incredible phenomenon. India, they all scream, has arrived. Having convinced themselves of that, they focus entirely on that part of the urban sector that is involved in the boom. This leads to a shocking neglect of the larger rural sector. Then when the boom runs out of steam, the country is worse off than what it would have been without the boom at all.”
I would tend to agree with Atanu. The boom that we are seeing is in pockets of India. That is a good start, but we cannot forget the 70% of India that is largely unimpacted. India needs balanced, all-round growth. Maybe in the coming year, India’s politicians will think about the rural populace since they will be voting.
Wired (Chris Anderson) looks at the trends driving the broadband home of the future, and the market opportunities it is creating:
The first is the rise of digital media. What started with the audio CD has suddenly become a clean sweep: DVD players now outsell VHS players, digital camcorders outsell analog versions, digital cameras outsell film cameras, and both digital cable and digital TV are poised to pass their analog counterparts in the next few years. Except for radio (Sirius or XM users notwithstanding), odds are increasing that the entertainment media you consume is 100 percent digital.
The second trend is a natural outgrowth of digital media: the home theater phenomenon. With the arrival of the DVD and its high-quality video and sound, consumers finally had good reasons to upgrade the rest of their home entertainment system. The result is a tsunami of wide-screen TVs, surround sound audio systems, and digital media devices. Today, 30 percent of US homes have a home theater, defined by the Consumer Electronics Association as at least four-speaker surround sound and a 27-inch or bigger screen. More than 2 million projection TVs with screen sizes ranging from 40 to 80 inches (6.5 feet!) were sold in the US last year. Nearly half of American homes now have DVD players. And sales of all-in-one surround-sound systems are about to surpass even stereo audio systems.
Finally, broadband has reached critical mass in the home. With a high-speed, always-on connection came a fundamental change in the way people listen to music, play games, and watch the news. Broadcast TV viewership is in decline; young people – the all-important 18 to 34 demographic – are looking to the Internet for their entertainment. What they first consumed on their PCs in a home office or bedroom they increasingly want everywhere, from the living room to the front pocket.
Which means the wired home is emerging in any number of ways. In one house, it might be a connection from the computer to the stereo – and suddenly all those MP3 files have rendered your CD collection obsolete. In another, perhaps a PlayStation 2 or Xbox in the living room holds the lure for online play; in comes the Cat-6 Ethernet cable or the Wi-Fi network, and the foundations of a broadband entertainment center are suddenly in place. Or in a third home, TiVo passion poses an obvious question: Why can’t I watch what I’ve recorded on any TV in the house? Install a home network and you can.
This impulse, played out in millions of homes, is creating a brand-new market unlike any other.
Eric Sink writes about lessons learnt as an ISV (Independent Software Vendor):
– Be careful about fixed-bid projects.
– Be careful about using bleeding-edge technologies.
– Small ISVs should do software and stay out of real estate.
– Investors don’t like low-margin business models.
– A market with no competition ain’t.
– The negative connotations of the word “middleman” are often deserved.
– All contracts must be reviewed by an attorney. No exceptions.
– Cash is supposed to flow from your customers to you, never the other way around.
– Small ISVs should build apps, not platforms.
10. Blogs and RSS
Weblogs continued to thrive in 2003 as more people found that publishing just become easier. While it is still not clear that there is anything more than pocket money to be made by writing for niche audiences, that has not stopped people from writing on the web. We all feel the deep desire to communicate and share, and weblogs are a natural manifestation of that. Of course, what also become clear is that it is easier to start a blog than to maintain it over time.
The real disruptive innovation, though, is that being brought about by RSS and news readers and aggregators. RSS is an XML-based syndication format that allows microcontent to be made available by software that can automatically pick it up, parse it and make it available without us having to go probing different sites for updates. RSS is laying the foundation for the Publish-Subscribe Web.
2004: Blogs will continue to be an important, parallel mechanism for us to get information and analyses from people we trust and experts in specific areas. Expect blogs and RSS to make their way into enterprises. Blogs have the potential to work as a bottom-up mechanism to extract and distribute tacit knowledge in employees. RSS will be used for syndicating enterprise events to our desktops and cellphones, and for creating information marketplaces which can connect publishers and consumers of information.
India in 2003
There are three key trends defining what we have seen in India in 2003: cellphones, BPO and affordability. Reliance Infocomm began on the wrong foot but quickly got its act together to unleash what has become the fastest adoption of any technology that India has ever seen. Indians are grabbing cellphones at a rate nearing 2 million a month as entry barriers in terms of upfront payments have fallen. Price wars unleashed by the various providers have brought down pricing of telecom all around. Watching Indians with cellphones is like watching a populace that was long suppressed of one of the most fundamental human needs communicating with friends and family.
IT-enabled services now go by a new moniker: Business Process Outsourcing. As the world hires educated Indians to do their work, it is unleashing a construction and spending boom across Indian cities. What started in the year as a trickle has now become a flood, with every day bringing forth announcements of new recruitments by global companies in India. The work is not just the low-end type; Google recently announced plans to set up an India development centre with 100 employees.
Affordability is the theme underlying technology adoption across India. The cellphone boom has showed that if a product is priced right, it can tap into an increasingly affluent middle-class in India. Computer prices are also falling. Acer recently launched laptops at the Rs 40,000 price point in India. Be it a Barista or a Big Bazaar, everyones joining the game Wal-mart pioneered worldwide: everyday low prices. Increasing competition thanks to the opening up of many closed markets and technology in the form of better supply chain management are helping reduce inefficiencies in Indian supply chains.
All of this is making the world stand up and take notice of India: both as a provider of low-cost services and a large market. Incomes in urban India are rising, and so is the confidence among Indians. For the first time in recent memory, there is a definite feeling that Indias best years lie ahead.
Tomorrow: The World in 2004