Kaaza and Skype Creators

Fortune has a story on the creators of Kaaza and Skype – Niklas Zennstrom and Janus Friis. It makes fascinating reading, following the travails of the duo after they created Kaaza, which is now on 300 million+ PCs. Since then, they’ve created Skype, a P2P VoIP service, essentially allowing free PC-to-PC phone calls. As Fortune puts it: “It costs the top provider of paid Internet telephony (Vonage) USD 400 to add a customer. It costs Skype USD 0.001.”

Reading the story, I couldn’t help thinking why we in India cannot create such innovative and disruptive services.

The Coming Search Wars

The drums have started sounding. The war is coming. NYTimes writes on what to expect in a battle that is likely to rival the Microsoft-Netscape one:

Today, nearly everyone in Silicon Valley, from venture capitalists and chip engineers to real estate agents and restaurateurs, has begun to ask: Will Google become the next Netscape?

[Google’s success] has ignited a three-way battle among Microsoft and its two Silicon Valley rivals: Yahoo, based in Sunnyvale, Calif., and Google, whose headquarters are nearby, in Mountain View. Underscoring the importance of search engines to Internet advertising, Yahoo recently said it planned to end its exclusive reliance on Google for search results and had established its own research lab to try to cut its new rival’s lead.

Google’s financial success is clear. In 2001, the company had virtually no revenue; in the past year, it recorded sales of almost $1 billion and profits of about $350 million, according to several executives familiar with the company’s private financial figures.

Later this year, Microsoft is expected to unveil its own search technology, which Mr. Gates says will help Microsoft catch up with Google. Last week, Microsoft released a test version of a special set of software buttons for its browser designed to direct users to its MSN search and related services. For Google, though, the greater threat is that Microsoft will decide that Internet search, like the Web browser before it, should be an integral part of future versions of the Windows operating system.

For all of Google’s hyperactivity, there is still a lingering sense among many Silicon Valley veterans that they have seen this movie before. The company may not have Netscape’s arrogance, but it is still not clear that all of its clever marketing, technology and brand identification can withstand Microsoft’s onslaught when it arrives.

Google has had plenty of time to learn the lessons. My feeling: it should not do an IPO for the next year. Instead, it should focus on its new technologies and the momentum that is has built. The IPO will shift focus, and that should not happen at such a critical juncture. Google is changing enough cash through its operations – it doesn’t really need the money.

TiVo’s Ambitions

Om Malik has been discussing [1 2] TiVo’s plans following its acquisition of Strangeberry. Given the interest in the digital home, TiVo is a nice, potential acquisition candidate. Writes Om:

TiVo is finally getting its digital hub act together. The purchase of Strangeberry is yet another proof that it is going to be competing with the likes of Microsoft in the digital hub sweepstakes…TiVo at present can save video and playback video easily. It can easily take music stream from your computer and play-it back through your music system. And now if Strangeberry can provide easy control and management through TiVo, you are talking big dollars.

Strangeberry has developed a software platform, where content providers such as magazines, television networks, advertisers, and others can send content directly to the Strangeberrys over the internet. In other words, the content providers have full control over the choices that show up on the screen, the user interface shown to the user, and can have data transmitted back to them over an Internet connection.In other words go to sleep, get up in the morning and have the latest Jenna Jameson video downloaded to your hard disk. Or pay $2 and get the top ten MTV tracks. Or simply, download the CNN headline news. Now, thats a killer app.

Adds Kevin Werbach: “Strangeberry is apparently made up of ex-Sun people, and the idea of universal zero-configuration networking was a big element of Sun co-founder Bill Joy’s Jini vision. Of course, all the major consumer PC vendors, most notably Gateway, Sony, and HP, have similar dreams, as do Apple, Microsoft, and your cable company. This probably makes Tivo interesting acquisiton bait. But for whom? Tivo is built on Linux, so it probably isn’t a fit for any of the Windows-centric companies. Or for Apple, which has its own Rendezvous networking technology.”

Why can’t we build these kinds of companies in India?

Green Money

Suhit Anantula has a series [1 2 3 4] on Money and alternative, community currencies in a series entitled “Green Money.” Writes Suhit: “The most important aspect of money and the more fundamental aspect is its usage as a medium of exchange. We have seen many examples of alternate currencies among closed groups already. Common examples can be ‘frequent flyer miles’ or Sodexho food coupons. These function as nothing but a medium of exchange. What was needed was a set of individuals/institutions who issued it (Airlines, hotels etc.), another set of individuals/insitutions who earned it (passengers) and a third set who accepted it (participating airlines, hotels). Its value increases if the closed group of issuers, earners, accepters was increased…A combination of a issuer, earner and acceptor is sufficient for creating a new currency.”

China-US Symbiotic Relationship

WSJ writes that “as China surges, it also proves a buttress to American strength…Beijing feeds a giant appetite in the US for low-cost goods and borrowed capital”:

China is slotting itself into the global economic order that America dominates and largely created. As a critical link in this capitalist chain, nominally communist China helps enrich companies. At the same time, it supports a central feature of America’s superpower status: its gargantuan appetite for foreign goods and capital.

Though America is sometimes loosely called an empire, it defies the imperial economic script described by Lenin (who called imperialism “the highest form of capitalism”). The U.S. doesn’t seek vassal states as outlets for surplus capital. In an anomaly for such a powerful nation, America sucks in money from abroad. With its large national debt and trade deficits, the U.S. binds not by lending but by borrowing and by importing.

Its status as a “hyper-debtor” makes this “hyper-power” oddly reliant on weaker partners, says Niall Ferguson, a professor at New York University and scholar of imperial history. “If you are dependent on the willingness of others to hold your assets, there is a limit to how unilaterally you can act.”

China’s emergence as a major economic power is beyond doubt. Its $1.2 trillion economy, while far smaller than the $10.4 trillion economy of America and Japan’s $4 trillion output, is on track to catch up with Japan inside of two decades. Already, China’s growing economic weight, including a voracious consumption of crude oil, is giving Beijing commensurate influence in geopolitics — another power center for America to contend with.

Also undeniable is a painful loss of U.S. manufacturing jobs to a country where the average plant worker earns around $80 a month, less than an American on minimum wage makes in two days. Cheap labor pushed China’s trade surplus with the U.S. to $123 billion in a recent 12-month period, five times the gap a decade ago.

Curbing Chinese imports through tariffs or a stronger yuan would only drive up imports from other countries, contends Stephen Roach, chief economist at Morgan Stanley. The only real alternative, he says, is for Americans to spend less and save more: “When Americans get frustrated with China, they should look in the mirror.”

TECH TALK: Technology and the Indian Elections: The Story So Far

Elections are imminent in India. The first general elections since 1999 also come to a time when India is increasingly connected via the Internet and cellphones. So, how can technology play a role in the elections? In a market where multiple TV channels will compete to provide saturation coverage of the elections, can the Internet really play a role? These are the questions we will discuss in this series. (A personal note: I was involved in the Internet coverage of the previous three elections in 1996, 1998 and 1999 via our IndiaWorld websites. Much of the traffic then was driven by Non-Resident Indians. What will be different about the 2004 elections is that much of the traffic will be from domestic India.)

First, let us look at the Internet coverage of the elections that happened in the past. There are two aspects of the coverage: pre-voting and the counting process. During the pre-voting part, various websites would offer detailed news and information on the various political parties and candidates, constituency-level information in the form of contesting candidates and results of the previous elections, state-level aggregated results, and closer to the polling date, opinion poll results. So, at this stage, the coverage was more focused on providing information. There were also some interactive elements, including mock stock exchanges.

The counting process was always marked with high traffic as surfers came to find out what was happening. Even though television provided the overall picture and the results, it was hard getting details of specific constituencies. One had to wait for the state-wise coverage or keep staring at the tickers. The Internet, on the other hand, had an advantage in enabling surfers to pull out the information of interest right down to the constituency-level and getting details on the exact votes received by each of the candidates.

The primary source for information is the data feed made available by the Election Commission (EC) of India. However, their information in the past has been made available in a format which can be taken by other websites and processed in the manner they chose, rather than looking at the static pages created by the EC and other websites.

Of course, one major problem during the counting process is that of accessibility of the websites. Traffic is 10-100 times higher during the counting process. It is not easy to build infrastructure for supporting this high, short-duration, free traffic. As a result, it becomes difficult to access most Internet websites during the critical counting process. The situation is similar to what still happens during tightly-contested cricket matches, especially towards the end.

Cut to 2004. Besides an increased user base of Internet users, better and more always-on connections, there is also a much larger population of cellphone users. (For the record, India had an installed base of about 10 million computers, 30 million cellphone users, a total of 70 million telephone lines and about 100 million TVs for a population base of over 1 billion.) So, the question is: what can be done differently during the 2004 elections? We will address this question in three stages: pre-polling, during the counting, and post-elections. But, first, let us take a look at why the coming elections are so important for India and its future.

Tomorrow: The New Indian Voter