Tech Industry Consolidation

News.com (from McKinsey Quarterly) writes about the coming M&A boom (of which we are already starting to see examples – eg. Juniper buying NetScreen):

Technology is a huge sector composed of many industries and markets. The pressures on companies are mounting fast, though the ghost of consolidation won’t haunt each of them equally. Indeed, some segments have already consolidated. Where once there were a fair number of operating systems for PCs, midrange computers and mainframes, for instance, now there are only a few. The database software industry has gone the same way. But other industries, by the very nature of the value propositions their niche companies provide, will probably remain fragmented. Vertical-specific applications are an example.

We found strong signs of impending restructuring in 11 of the industries we analyzed . These hot spots account for more than two-thirds of the sector’s revenue-a fact that speaks volumes about its ripeness for consolidation. In IT services, for example, professional and outsourcing services seem to be poised for an across-the-board restructuring. Software is vulnerable in particular areas, such as enterprise applications; storage; network and systems management and security; middleware; and software for application servers. In hardware the targets are PCs and notebook computers, networking gear and storage systems; in semiconductors they are logic, memory and semiconductor equipment.

While economic forces take effect, companies will jockey for increased scale, scope or some combination of both. As in any sector, scale-driven mergers, to streamline fixed costs over greater volumes and to satisfy the demand for bigger and more stable suppliers, will mostly take place between companies competing in the same industry.

Customers’ needs will also influence mergers undertaken for advantages of scope. Indeed, deals of this nature have already been done: in response to financial pressures and to the clamor of capital markets, companies that manufacture technology products have been acquiring service firms. We expect such mergers to proliferate as companies expand their breadth of product or service offerings to position themselves as preferred suppliers for big customers, to chase new profit streams, and to hunt for cross-selling and multichannel synergies.

Conference Blogging

With eTech underway, Ross Mayfield describes the various types of blogging that takes place at conferences:
– Dedicated Transcription — word for word
– Impressionistic Transcription
– Running Commentary — paraphrase with opinion
– Poignant Reflection — pure commentary
– Coverage — producing a report
– Backchannel — chat without content
– Remote Participation — fact check and amplify.
– Refactor Me — group voice.

A point to note: “My 7th grade biology teacher suggested an approach to note taking. Its the first year where most kids take notes, or are told to without teaching them how. Most kids went straight to transcription, but that obviously can impede learning for most. His suggestion was to write down the things you DON’T know.”

Trend Watching

WSJ has a special report on the top 10 trends in each of 10 industries: Travel, Internet, Sports, Aviation, TV, Commercial Real Estate, Telecom, Banking, Oil and Pharma. From the introduction: “Talk to the experts on how they spot trends, and you’re likely to get as many ideas as there are experts. What they look for, whom they talk to, what they read — there are no easy answers. Some rely on obscure journals, others on key groups of people they think are ahead of the curve. Some pore over data, others follow the money. But if there’s one common denominator, it’s this: The best way to find out what’s around the corner is to keep your mind — and your eyes — open.”

Making a Better Presentation

Jeffrey Veen has some excellent suggestions:
– Tell stories
– Show pictures
– Don’t apologize
– Start strong
– End strong too
– Stand
– Pause

As he says: “The problem isn’t Powerpoint, of course. The problem is bad content delivered poorly.”

Sony’s Battles

The world of consumer electronics is set for an upheaval with the arrival of the computer companies. How will the likes of Sony respond to competition from the brigade led by Dell? NYTimes writes:

A few years ago, Sony would have sniffed at a low-cost computer maker like Dell producing flat-panel television monitors or a cellphone manufacturer like Nokia making hand-held video games. Not anymore. Sony executives know that these newcomers to the home-entertainment business can produce what they say they will, and do it for less than any company in Japan. Apple Computer’s success with iPod, the digital music recorder, is also a reminder that Sony no longer has a monopoly on tech cool.

Sony, of course, has been under attack before, and often has rebounded in ways that few analysts had expected. Rarely, though, have so many competitors joined the home-entertainment market at once. Thanks to the commodification of the electronics industry, companies can buy components easily from suppliers in Taiwan, South Korea, China and even Japan. Having honed their cost-cutting skills, these companies can often produce products faster and more profitably than Sony can.

Having been upstaged by Apple, Samsung and others in certain product categories, Sony is taking action. Mr. Ando is one-half of a two-man team heading the company’s ambitious, multipronged strategy, called Transformation 60. It is an effort to bolster profits, revamp the company’s product lineup and repair what many critics see as a damaged reputation. To be completed by Sony’s 60th anniversary, in 2006, the plan includes eliminating 20,000 jobs, cutting billions of dollars in expenses and quadrupling operating margins, to 10 percent.

The other major pillar of the plan is to design a new generation of products that will allow Sony to fend off challenges from Hewlett-Packard, Intel and others that are trying to put personal computers, not the television, at the center of home entertainment. Ken Kutaragi, whose is best known for creating the PlayStation video game console, is spearheading the development of these products.

To vault past the competition, Sony is joining hands with outsiders in some product areas. The company will spend $2 billion to produce next-generation liquid crystal displays with the Samsung Corporation of South Korea. Sony is also working with the Toshiba Corporation and I.B.M. to develop CELL, a high-powered chip that will become the centerpiece of an array of new digital gadgets. Last week, Sony said it would spend 120 billion yen ($1.14 billion) this year alone on building these chips. In other areas, most notably video games, Sony will try to blend its electronics and content businesses to produce the long-sought-after “digital convergence,” the integration of software and hardware.

TECH TALK: Technology and the Indian Elections: Counting

One of the big steps forward in India in recent years has been the increasing usage of electronic voting machines for the polling. A decade ago, another project put voting cards in the hands of Indians. Taken together, these two have made voting less prone to malpractice.

Opinion Polls conducted by multiple entities will give us a flavour of the verdict even as the votes are cast. Given the diversity of India and an electorate which is more intelligent than the pollsters give credit for, the opinion polls of the past have had a mixed history. So, come the actual counting day, there is still expected to be significant interest in the results.

The first port of call to know the latest status will undoubtedly be television. The multitude of news channels will provide round-the-clock coverage and analysis, as they have done in the past. But there are some limitations that TV has since it is a broadcast medium with a single stream, it is hard to provide details at the state- and constituency-level on demand for surfers. This is where the Internet can shine.

Traditionally, there have been a few websites which have provided detailed coverage of the election results, providing an update on the votes for each candidate as the feed comes in. The source for all is the data from the Election Commission, which will also maintain its own site. From past experience, traffic on these sites is very high for the 24-36 hours that counting lasts, and it is hard to get access. From the websites point of view, it is also difficult to prepare and plan for traffic which can 10-20 times higher than normal.

In 2004, it is possible to do things differently to ensure that surfers can timely, personalised data:

  • The Election Commission should make available a data stream as the updates come in from various constituencies. This is akin to the feed that stock exchanges provide of trading.
  • Websites should update their pages and databases with the feed. In addition, they should make available RSS feeds at a constituency, state, party and national level. This will let individual users subscribe to just the content they need, and also reduce the traffic on the websites.
  • Users should be able to create their own customised dashboards, with visualisation software, to focus on just the information they want. In addition, it should be possible to provide alerts on cellphones via SMS.

    To provide the coverage will cost money for the websites. By working to personalise and localise the information provide, they will be able to match advertisers and surfers better, and thus be able to create a win-win situation: the websites will be able tocreate the technological platforms for delivery of the coverage with sponsorships and ads from organizations interested in reaching viewers who are able to get just the information they want.

    The counting process in the elections thus offers a platform to showcase innovative technologies. Enterprise software companies should jump at this opportunity to build the right platforms and demonstrate the value of access to real-time, event-driven information.

    Tomorrow: Governance

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