TECH TALK: Letter to Arun Shourie (Part 3)

3. Remove Anti-dumping duty on import of old PCs

There is a $200 anti-dumping duty on the import of old computers into India. Why? To protect a non-existent domestic manufacturing industry? India needs cheaper computers. If Intel and Microsoft, who between them control the processor and operating system for the computers, will not bring down their price points for the Indian market, we can at least ensure competition for them. Non-consumption and piracy are not solutions. While open-source software provides a possible alternative to Microsoft’s Windows and Office, the cost of hardware still remains an issue.

My suggestion: get rid of the $200 anti-dumping duty on the import of used computers. While a recent notification does exempt some categories, it needs to be extended to all imports of old computers. Or if the government does not want to lose revenue, levy the same duty on them as exists on other computer imports (25% or so). Of course, the ideal scenario would be to eliminate duties altogether on computers, but that’s a bigger decision.

What will this do for India? The world (primarily US, Europe and Japan) are disposing off tens of millions of computers every year. These PCs are hard to dispose off and have become an environment hazard for many countries. For the cost of just shipping (which will come to about $60-70 about Rs 3,200 – per computer if done in bulk), we can get these computers in India. Add Rs 800 as customs charges (rather than Rs 9,000 as it is now), and we have a computer for Rs 4,000. Even if only 4 in 5 work, the cost still does not exceed Rs 5,000. This is the 5KPC.

The key is to use this not as a standalone desktop but as a network device a thin client. This can be the foundation for deploying millions of computers for today’s non-consumers those users who cannot afford one because the current price of Rs 15-20,000 for a PC is way too expensive for them. Intel and others should back this move because it will spur sales of servers (thin clients needs thick servers). More importantly, it spurs a domestic industry where none exists by opening up new markets for technology.

4. Standardise Indian language computing efforts

There are too many overlapping and parallel projects going on across the country to get Indian language support in the computer operating systems. It would be nice if there can be a standardisation of these efforts. There are many elements which need to come together here: fonts, Unicode support in the character set, translations, keyboard design, application support. If the various efforts can be coordinated together, it will help spur the use of local language computing and content development in these languages. India has plenty of languages to go around for all!

Tomorrow: Letter to Arun Shourie (continued)

India as Global Health-care Provider

WSJ looks at another outsourcing which is taking place:

60,000 foreign patients who were treated at Apollo Hospitals over the past three years. Since its start as a single hospital in 1983, Apollo has grown to 37 hospitals with more than 6,400 beds, making it one of the largest private hospital chains in Asia. Apollo’s emergence as a global health-care provider in many ways tracks India’s economic trajectory over the past three decades. The company has capitalized on the high cost of health-care administration in the U.S. and demands of patients elsewhere, for fast, inexpensive treatment.

Hundreds of Apollo’s data processors work late-night shifts providing billing services and processing insurance claims for U.S. hospitals and insurers. Apollo laboratories perform clinical trials for Western drug companies, such as Pfizer Inc. and Eli Lilly & Co. Apollo even remotely evaluates X-rays and CAT scans.

Apollo’s range of medical services — from the back office to the operating room — highlights the contradictions of the global outsourcing debate. In seeking to provide a wide range of services at a large discount to Western competitors, Apollo is yet another Indian company threatening jobs in the U.S. and other countries. On the other hand, Apollo’s relatively inexpensive medical services have benefited patients from numerous countries. It also has helped India’s overburdened health-care system. India has fewer than one hospital bed per 1,000 people, compared with more than seven in developed countries.

“We’re showing that a field like medicine is very much a two-way street,” says Prathap C. Reddy, 72 years old, a physician who founded Apollo and now runs it with his four daughters from Madras, also known as Chennai. “We can all grow from each other’s strengths.”

Apollo and a half dozen other private Indian hospital companies are adding patient rooms, buying new equipment and installing modern telecommunications gear. Meanwhile they also are setting up marketing offices in cities such as London and Dubai to attract patients, many of whom remain wary of seeking health care in the developing world. Few of Apollo’s patients come from the U.S.

The Indian government sees health care as a growth industry. Public and private Indian universities are churning out 20,000 doctors and 30,000 nurses a year, some of them destined for jobs in western countries. That is roughly triple the pace at which nurses were trained during the 1990s.

In the so-called medical-tourism business, the focus is on big-ticket surgical procedures from face-lifts to liver transplants. Asian countries such as Thailand, Malaysia and Singapore have taken the lead in this field. Promoting health-care services alongside tourist destinations, the countries attracted more than 600,000 patients in 2003 alone, according to officials in Thailand and Malaysia.

Apollo offers cardiac surgery for about $4,000, compared with at least $30,000 in the U.S. Apollo’s orthopedic surgeries cost $4,500, less than one-fourth the U.S. price. Consulting firm McKinsey & Co. says medical tourism could become a $2 billion-a-year business in India alone by 2012; the category is so new it previously wasn’t measured.

Tibco’s BPM Buy

Tibco bought Staffware recently for $217 million. Phil Wainewright provides the context:

So what does Tibco gain from the acquisition? There are several elements that make this look like a good deal:

  • Growth: Tibco’s sales fell last year, Staffware’s grew. In addition, each company’s customers are likely prospects for the other’s products. As discussed above, there are geographic synergies as well as product synergies to exploit.

  • Momentum: Adding Staffware’s revenues will keep Tibco well ahead of its closest EAI rivals, webMethods and SeeBeyond, in the race to achieve 500lb-gorilla status. Tibco executives have made no secret of their desire to become a billion-dollar company. Being seen to lead the sector with a clear strategic direction is an essential ingredient in fulfilling that dream.

  • BPM credibility: When Loosely Coupled looked at EAI vendor strategies last year in Integration: Free at last?, it was evident that Tibco and its rivals saw business process management as their main opportunity for value-add in the future. Acquiring an acknowledged sector leader like Staffware brings Tibco instant BPM credibility that it previously lacked.

    But has Tibco chosen the right BPM specialist to link up with? Staffware’s workflow roots and veteran status lead many of its younger rivals to characterize it as something of a dinosaur, lumbered with the baggage of having had to engineer enterprise-class solutions before the advent of standards-based messaging and transformation technologies. That’s mostly unfair to a company that’s succeeded in keeping its product fresh through two decades of rapid innovation and change in enterprise application integration. But there can’t help but be an element of truth in the caricature, given the company’s background. That Staffware made the ability to define “skinny processes” a feature of its latest product release does suggest by implication that its default processes have tended to be more fat than thin.

    On the whole, Tibco’s acquisition of Staffware should play well with both companies’ enterprise customer base, and thus with investors. It may even make Tibco an interesting acquisition target for a company like IBM or Oracle. But it may leave the way open for a rival to make a smarter acquisition by buying into the disruptive-technology end of the BPM market.

  • VoIP, Skype and Hype

    Peter Cochrane looks at Skype:

    Could VoIP become a serious threat to the phone companies? Well against the one billion or so fixed lined telephones and over one billion mobiles, Skype has so far seen 10 million downloads and total VoIP service estimates see less than 100 million users. However, such is exponential growth that industry estimates forecast 40 per cent of all calls will use VoIP by 2007.

    Everywhere I go in the US I now see people with PDAs, laptops and headsets making VoIP calls. This has been compounded and supported by the rapid spread of Wi-Fi providing a very powerful platform for users on the move.

    The mode of operation spans the normal fixed/mobile phone behaviour, plus the use of email to establish contact and prompt the use of Skype, iChat, etc.. The more adventurous are also linking screens and working cross platform – with common applications and displays – in a manner forecast a decade ago but still seldom seen on corporate networks.

    I think it would be foolish for any telco to dismiss VoIP and especially Skype. It seems to me that DIY telephony is on the march and will soon be on the scale of Kazaa.

    But we should also remember that there are limitations to the performance of IP networks and thus to VoIP or indeed any real time service. The reality is the internet is fundamentally ill-conceived and ill-equipped for the support of real time services of any kind. If you try VoIP you will no doubt be pleased by the quality of the voice connection for at least some of the time. The snag is that for a significant proportion of the time you can find that the quality is extremely poor.

    When you make a traditional telephone call a direct and dedicated connection links two telephones for the transmission of those bits throughout the call. This is referred to as circuit switching. On the other hand, when you send an email message via the internet your bits are transmitted in discrete packets that are often routed very differently, packet by packet. So the arrival times of packets can be widely distributed and vary on a second-to-second basis.

    For the internet to rival the telephone network it has to have an over-capacity to ensure that communication between two fixed points can be nailed down and held reasonably stable for the duration of a real time service such as a telephony or videoconferencing.

    Is this possible? Yes. What is more, it is possible at about 10 per cent of the cost of the old telephone network. Bandwidth is the cheapest commodity we now manufacture and its provision in IP networks is trivial compared to the telco environment.

    Is there is a downer in all this? I think there is and it comes in the shape of the virus, Trojan horse, worm and spam. Over 50 per cent of todays in-use internet capacity is being consumed by these negative activities. For VoIP services to become universal we will have to see some constraint put on rogue activities. Alternatively, we will have to provide and waste bandwidth on a huge scale.

    Steve Stroh looks at the big picture:

    In an April 26, 2004 cover story in Forbes titled Into Thin Air, authors Scott Woolley and Quentin Hardy offer a refreshingly clueful (for the general business press) look at the grim prospects of the conventional telecommunications business, rehashing the now familiar story of how wireline carriers are facing severe competition to their conventional voice services from Voice Over Internet Protocol (VOIP).

    But the authors venture into new territory, spotting a nascent threat to the supposedly bright future of wireless telephony carriers… VOIP over Wi-Fi. Excerpt:

    Last year American home users bought 12.7 million Wi-Fi transmitters for their computers, says research firm In-Stat/MDR. That poses a ready audience for a second major threat confronting big carriers: Voice over Wi-Fi, which lets callers use free airwaves to gain wireless access to the Internet. A home or office Wi-Fi network for a laptop’s wireless Internet access provides a ready-made pathway for Wi-Fi-enabled phones. Voice over Wi-Fi threatens to steal traffic from the cellular business (with $88 billion in annual revenue in the U.S.), already a harshly competitive world where per-minute prices have fallen by half in the last three years. Few users now have Wi-Fi phones, since currently the phones only work in places like San Antonio Community Hospital that have thorough Wi-Fi coverage. (Leave the hospital, the phone stops working.)

    While the authors are to be applauded for having picked up on VOIP over Wi-Fi… they missed the larger trend entirely, that VOIP/WI-Fi phones used in enterprises and homes won’t stop working when leaving the “private” Wi-Fi coverage of an enterprise or home. In places like Dartmouth College in New Hampshire, the city of Cerritos, California, the Auckland, New Zealand metopolitan area, Spokane, Washington, and soon Silicon Valley, ubiquitous Wi-Fi coverage will be available. (Each of these examples are existing deployments of “Metro Wi-Fi” by different vendors.)

    Then again, I can’t really fault the Forbes editors for not “finishing the story”. The threat of VOIP over Wi-Fi potentially destroying tens of billions of dollars of market value of wireless telephony companies is plenty frightening to Forbes’ audience of corporate and investor readers… the idea that such value destruction is actually in progress is probably too terrifying to commit to the pages of Forbes.

    New Tech Areas

    NYTimes asks if technology can grow bigger and not just older. It also suggests some areas to look forward to:

    “Growth was synonymous with tech investing in the 1990’s,” said David Readerman, a senior analyst at Marsico Capital Management. “That relationship has been broken.”

    Which markets will prosper? Mr. Readerman, who began his career in 1983 as a personal computer software analyst, just returned from a trip to South Korea, where he studied the frontiers of wireless and broadband technology in a market far more advanced than the United States. Throughout Asia, as well as Europe, the market for high-end mobile phones with cameras, color screens and other features is booming.

    Such surging sales, Mr. Readerman noted, helped Motorola triple its quarterly profits, while Nokia reported disappointing results because it could not keep up with the demand for high-end phones. And he pointed to Qualcomm, the creator of one of the main digital cellphone technologies, which reported last week that its quarterly profits jumped more than fourfold. Qualcomm’s technology, known as CDMA, is used in cellphones to send and receive music, video and data services. “When you look beyond a PC-centric view of technology, there are some very interesting opportunities,” Mr. Readerman said.

    Other fundamental shifts are taking place. “There is potentially a huge transition from technology being sold as a product to technology being sold as a service,” said Roger B. McNamee, general partner of Integral Capital Partners.

    After all, he noted, the popular Web sites for shopping and search are services. The stellar quarterly earnings of Amazon.com, Yahoo and eBay show that the march of the Internet is continuing, despite the dot-com collapse. And the imminent initial public offering of Google is the most eagerly awaited I.P.O. since Netscape sold shares in 1995, touching off the Internet boom. The other notable Silicon Valley offering expected this year, Salesforce.com, also fits the technology-as-service theme. It markets sales-force automation as a utilitylike service over the Internet, instead of a software product.

    There is also a basic overhaul of computing under way in corporate data centers, according to Mark Stahlman, an analyst at Caris & Company. The trend involves building more powerful, efficient and secure data centers by lashing together swarms of computers using low-cost microprocessors and clever software that can divvy up work across hundreds or thousands of machines. That vision of virtual computing, Mr. Stahlman said, is being pursued by big companies like I.B.M., Hewlett-Packard and Sun Microsystems and little-known start-ups like Azul Systems, Vieo and Cassatt.

    “It represents a huge shift that will play out over the next 5 to 10 years,” Mr. Stahlman said. “Things are up for grabs in that market, and there is plenty of opportunity.”

    Sergey Brin, Steve Gillmor and Gmail

    Steve Gillmor in conversation with Google’s co-founder Sergey Brin in eWeek on Gmail:

    Gillmor: Obviously, there are privacy implications of Gmail that I do want to touch on, but I’m just as interested in the opportunities for programmability of this technology. If you could establish an API for this, that would be something really spectacular.

    Brin: That’s an interesting idea. I haven’t thought too much prior to your mentioning it now, but there are certainly a variety of processes that I have in the past done with Unix, because I can basically program it to do all kinds of things with my e-mailforward certain messages automatically, erase other ones automatically, trigger programsand it would be interesting to consider doing those here.

    G: Much in the same way that you’ve established keyboard shortcuts, you could establish macros, etc.

    B: Yeah, that’s a very good point. One thing I’ve been talking to the team about is to be able to save your searches and have easy access to them. For example, I have a search that I often useshow me the unread messages in my inbox that were sent to me directly rather than to a mailing list that I’m on. I use that one pretty often, but it would be nice to have it to save and maybe have it attach to a label or something like that.

    G: Going back to the notion of an API, something like 90 percent of all collaboration applications are actually running on e-mail.

    B: Yeah, I can definitely believe that.

    G: And that’s not necessarily such a good thing, of course

    B: Because it has lots of limitations

    G: Given some of the discussion about privacy and rights, if you could provide API access to those rightswho could read, write, etc. give that to the user, they could then turn around and use that as a way of arranging relationships between themselves and others, essentially bartering their rights, access to their information, in return for information that’s coming to them.

    B: I think that’s an interesting idea. We try to be as upfront as we can be, but obviously if their clients, or Web browsers and whatnot, could negotiate these things for them, then we could be even more upfront.

    G: It would take the conversation, if you will, away from whether it’s the cloud that’s making those decisions and put it in the hands of the user.

    B: That’s true, but to be fair, even as it is, we try to make the decision as clear to the user as possible.

    G: It also compares favorably to my corporate e-mail.

    B: Well, thank you. There are some things that it is currently missing as compared to corporate e-mailfor example, disconnected operationthough we do plan to provide things like POP3 and IMAP support, which should help that.

    But we initially wanted to make sure we have something that was definitely better than all Web mail services, and perhaps, just perhaps, it will also be good enough for a lot of people to use instead of a corporate mail service.

    Or they can use both, because they could just forward their messages to Gmail from their corporate e-mail, or the other way around. That way when they’re traveling and don’t have their computer with them, they can just use the Gmail version, and when they are at their desk, they can still use their corporate mail.

    Manufacturing Advances

    Business Week writes how the factory floor is changing: “Those manufacturers still standing are concentrating on ever-higher-quality products and processes, even if that means tearing up long-standing business practices and shedding workers to survive. And in the wings awaits a new generation of molecular manufacturers — which have more in common with chipmakers than carmakers — aiming to create self-assembling machines on a nanoscale. A focus on quality in the near term helps fuel innovation down the road.”

    TECH TALK: Letter to Arun Shourie (Part 2)

    Dear Sir,

    India stands on the cusp of a revolution. There is optimism all-round and in certain quarters, even fear of the growing prowess of India. This is a good start, but only the first step in what is a long journey. This is an opportunity for change and growth that we in India can simply not afford to lose. There are a billion dreams at stake.

    So, these are my suggestions to you. The goal is not to find fault with what is happening. Rather, it is to provide specific inputs so that you and your government can continue to catalyse the positive forces that have been unleashed in the marketplace.

    1. Develop a 5-year vision for India’s IT and Telecom Infrastructure

    Indias digital infrastructure is not going to be built with incremental policy changes. Over the past two years, the government did well to streamline the telecom policies. As a result, we are now seeing the world’s second largest growth with 2 million new users every month. A similar strategy needs to be taken to promote the use of access infrastructure technologies (wireless and broadband), access terminals, software and information.

    We need to set goals for building out India’s domestic market in infotech and telecom. This is not just for the benefit of these sectors. The real beneficiaries will be Indians as technology spreads to schools, colleges, homes, small- and medium-sized enterprises (SMEs) and rural areas markets which hitherto have had only limited adoption. While the market is expected to take care of providing the solutions, the right policies from the government can act as catalysts and the wrong ones (as I shall outline soon) can act as inhibitors.

    2. Promote use of server-based computing and open-source software platforms

    India is a country with little legacy when it comes to computing. Yes, we have an installed base of about 10 million computers, but that’s a fraction of what it should be. If India needs to rapidly adopt computing across the country, the government should give a boost to two platforms which can significantly reduce total cost of ownership server-based computing (using thin clients) and open-source software. Together, they can help bring down costs by more than 70%.

    As a by-product of the adoption of this new and affordable computing platform, India can also then become a showcase for other emerging markets on how to build out their digital infrastructure. This will also create opportunities for domestic product companies to grow globally.

    Will there be opposition? Absolutely! There are plenty of organisations which would not like to see a change in the status quo. But this is where we need to put our interests first. If India can bring down the cost of computing, we will make technology affordable to entire verticals and markets who otherwise will have to wait for many more years till either the cost comes within their reach or their incomes rise to meet the dollar-denominated prices. India does not have the time to wait we need to lead the way.

    Tomorrow: Letter to Arun Shourie (continued)

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    An Education for the Future

    [via Yuvaraj] From a paper by Howard Gardner presented in 2001 on the education of children and adolescents:

    I will argue that we should depend primarily on two foundations or bases: the science of learning, and our own values as human beings living in communities. Let me comment on both.

    First, the Science of Learning: Today I want to dwell on two major findings from the field of cognitive studies, findings with which I have been personally involved.

    First finding: As human beings we have many different ways of representing meaning, many kinds of intelligence. Since the beginning of the last century, psychologists have spoken about a Single Intelligence that can be measured by an IQ test; my research has defined 8 or 9 human intelligences (linguistic; logical-mathematical, spatial, musical, bodily-kinesthetic, interpersonal, intrapersonal, naturalist, possibly an existential intelligence). We all possess these several intelligences, but no two of us–not even identical twins–possess the same profile of intelligences at the same moment. In most countries throughout history, school has focussed almost exclusively on language and logic. Formal education has virtually ignored other forms of mental representation–artistic forms (musical), athletic (bodily), personal (knowledge of others and self); knowledge of natural world; knowledge of big questions. All of these “Frames of Mind” are there to be mobilized; if they are not, one could well call education “half-brained.”

    Second finding: Facts are easy to memorize, and some of us are good at remembering them–this facility can help us win money, in fact nowadays one can win millions of dollars, on a television quiz show in the U.S. But Disciplinary Understanding is much more elusive, much more difficult to bring about. Over the millenia, human beings have developed several powerful disciplines or ways of knowing the world–chief among them scientific, humanistic, historical, artistic, mathematical forms of thought. How desirable it would be if we could simply explain these to young people (“here are the three steps to think scientifically” or “this is what it takes to think historically”), even better if we could give youngsters a shot or a pill (“here, take this mathematics pill before you go to bed on Wednesday evening”), and the students would then have mastered the discipline. In fact, however, disciplinary learning proves difficult and takes many years of guided practice and apprenticeship.

    To begin with, disciplinary understanding is important–perhaps, in fact, it is the best justification for 10-15 years of school! (We could keep youngsters off the street for eight hours a day with much less money). Disciplinary understanding is also hard to achieve. Next, as human beings, we all have available different ways of representing the world, different intelligences, so to speak. The question is: Can educators build on this recently established knowledge about how human beings learn? In a word, I believe that the answer to this question is “yes” and shortly, I will try to justify my answer.

    Let me turn now to the second major foundation, complementing the science of learning–That is the sphere of Values:

    As a teacher or educational policy maker, you could know all of the scientific facts about learning, and it would still not tell you what to do in class on Monday morning. That is because such decisions about a course of action always involve value judgments. For example, let us say that you accept the claim that there are multiple intelligences. You could decide that you still want to make individuals as similar as possible, and so you would minimize or ignore the pluralism of intellect. Multiple intelligences are then seen as an obstacle. Many in the U.S. and the Netherlands would take that “uniform” position. To honor the finding about multiple intelligences, you could decide to teach every topic in seven or eight ways. You could decide to put together all the children who are strong in a given intelligence, or, for that matter, if you are a pessimist put together all of the children who are weak in a given intelligence. You could try to strengthen those intelligences that are weak, or ignore weaknesses and build instead on areas of strength. You could decide to learn about each child and personalize education as much as possible. That last option is what I personally favor-and in the age of the computer, it is at least feasible to personalize education for every child, and not just for those from wealthy families who can afford the latest hardware and software.

    my recommendations can be stated simply. First obtain the literacies; then study in depth key topics in the major disciplines; approach those topics in many ways; and give youngsters many chances to master and many vehicles to exhibit their understandings. Let them use their knowledge of evolution to evaluate the discovery of a new set of dinosaur bones or the spreading of a computer virus, as seems to happen each new week, at least on my machine. Various tasks can be left for the university: a specialization in one or another discipline; work that is explicitly multi- or interdisciplinary; and the mastery of facts that may be useful to know if you want to become an expert in, say, botany or medieval history.

    Business Innovation

    The Economist takes a look at innovation in big companies, suggesting that “rather than chasing wonder new products, [they]should focus on making lots of small improvements:”

    Blockbuster new products are harder and harder to come by, and big companies can do much better if they focus on making lots of small things better. Adrian Slywotzky of Mercer Management Consulting says that, in most industries, truly differentiating new-product breakthroughs are becoming increasingly rare.

    William Baumol, a professor at New York University, argues that big companies have been learning important lessons from the history of innovation. Consider, for example, that in general they have both cut back and re-directed their R&D spending in recent years. Gone are the droves of white-coated scientists surrounded by managers in suits anxiously awaiting the next cry of eureka.

    Indeed, says Mr Baumol, the record shows that small companies have dominated the introduction of new inventions and radical innovationsindependent inventors come up with most of tomorrow’s clever gizmos, often creating their own commercial ventures in the process.

    But big companies have shifted their efforts. Mr Baumol reckons they have been forced by competition to focus on innovation as part of normal corporate activity. Rather than trying to make money from science, companies have turned R&D into an internal, bureaucratically driven process. Innovation by big companies has become a matter of incremental improvements within the processes that constitute daily operations.

    Another factor to take into account is the fragmentation of markets. Once-uniform mass markets are breaking up into countless niches in which everything has to be customised for a small group of consumers. Looking for blockbusters in such a world is a daunting task.

    Marketing for Start-ups

    Steve Neiderhauser has suggestions on why and how engineers should interact with customers:

    Heres a couple ideas you may find yourself using during lunch and learn sessions.

  • Tell a demonstration story: In The Story Factor, author Annette Simmons tells us that a demo story is the next best thing to an actual demonstration. She writes about a trainer at a gym who has a tough product to sell: exercise. If everyone listened to facts, wouldnt our nation be in better physical shape? Instead of facts, the trainer tells a playful story to show the benefits of exercise. Story is a pull strategy that works.

  • Combine visual with metaphor: Gerald Zaltman, author of How Customers Think, refers to research indicating that the use of metaphor together with visual imagery lies at the heart of all major advances in science. He suggests listening to your customers to determine what metaphors they use for your product.

    During your presentation, use the pull of visual and metaphor to describe the benefits of your product. Not only will your customers remember your product (metaphor is at the core of memory), your engineers will likely start to think visually and create edges for your products.

    What do I think of engineers talking with customers? Im glad you asked. How could they not talk with your customers? If you allow narrow thinking to limit your employees, wouldnt that create a danger for your company–and a life-threating environment for start-ups? For narrow thinking is a broken-winged bird that cant fly past the first round of financing.

    How is this possible? In Seth Godins latest book, Free Prize Inside, he tells us that everyone works in marketing (yes, even engineers); that making your product remarkable causes customers to remark to others about your company.

  • Apple and Steve Jobs

    NYTimes has a profile:

    In just two and a half years, Mr. Jobs, Apple’s chief executive, has managed to take a well-designed hand-held gadget, add software connecting it to Macintoshes and Windows-based personal computers and convince the recording industry that he has found an elegant solution for ending its nightmare of digital piracy. In doing so, he has shifted the emphasis of Apple from what made it famous – hip, even lovable computers – to what he hopes will keep it relevant and profitable in the future: products for a digital way of life.

    With roots both in Silicon Valley’s digital culture and the 1960’s counterculture, Mr. Jobs has long been an arbiter of what is cool in technology, much like a real-world version of a trend-spotting character from “Pattern Recognition,” one of the cyberpunk novels by William Gibson.

    And, helped by his growing prominence in Hollywood through his second company, Pixar Animation Studios, Mr. Jobs has attained a level of influence over how life is lived in the digital age that is unmatched by even his most powerful computer industry rivals. “He is the Henry J. Kaiser or Walt Disney of this era,” said Kevin Starr, a culture historian and the California state librarian.

    The iPod’s success is also the clearest indication that Mr. Jobs, if he is to successfully revamp Apple, will ultimately win not by taking on PC rivals directly, but by changing the rules of the game.

    The Apple that is starting to emerge may be a harbinger. The company’s growth may no longer be defined by its PC market share, now a declining sliver of the PC industry, but instead by Mr. Jobs’s ability to create consumer markets.

    Mr. Jobs, who says he has a 70 percent share of the market for legal music downloads and a 45 percent share of the MP3 market, sees the shift as sweet vindication. “We’re getting a chance to see what Apple engineering and Apple design can really do once we get out from underneath the 5 percent Macintosh operating system share,” he said.

    for the first time the number of Macintosh computers it sold (749,000). At the same time, revenue for products other than Macintoshes reached 39 percent of the total of $1.91 billion for the quarter, more than double the percentage two years ago.

    In creating the iPod, the iTunes Macintosh and Windows software and the iTunes music store, Apple has not just designed products; it has also designed a business system. That may help explain why, almost three years into Mr. Jobs’s foray into digital music, his major competitors are still playing catch-up, or, as in the case of Hewlett-Packard and Time Warner, have decided to ally with him.

    Warren Buffett and Beyond

    Barron’s looks at Berkshire Hathway and likely successor to the “Great One”:

    Berkshire’s Class A shares have broken out of a three-year trading range and fetch $93,000, up 10% for the year to date. The company’s business prospects look better than ever. Operating earnings, a record $3,531 per share in 2003, could approach $4,000 in 2004. Book value may exceed $55,000 per share by year end. And Berkshire is sitting atop $31 billion of cash, a reflection of Buffett’s reluctance to make major new investments.

    Yet also on the minds of many attendees will be a less uplifting subject — the issue of succession. Buffett, who turns 74 in August, probably is the toughest act to follow in American business, due to his extraordinary talent and legendary success. He commands a company with $64 billion of annual revenue and $142 billion of market value, whose shares have risen 5,000-fold since he took control of what was then an ailing textile firm in 1965.

    It is entirely possible Buffett still will be running Berkshire a decade from now. But in the event life has other plans, he is leaving less and less to chance. In this year’s shareholder letter Buffett wrote more about the succession issue than he has in the past, noting the “primary job” of the company’s board of directors “is to select my successor, either upon my death or disability, or when I begin to lose my marbles.” He added that the 11-member board continues to evaluate the “strengths and weaknesses of the four internal candidates to replace me.”

    Who are these four candidates? The odds are Berkshire Hathaway’s next chief executive will be one of five top company executives: Joe Brandon, CEO of General Re, the largest insurance division within Berkshire; Ajit Jain, head of Berkshire’s lucrative specialty reinsurance operations; Tony Nicely, CEO of Geico, Berkshire’s fast-growing auto insurance division; Rich Santulli, CEO of NetJets, the leading provider of fractional ownership in corporate jets, and David Sokol, the CEO of MidAmerican Energy, an Iowa-based utility and the largest noninsurance division within Berkshire.

    Metaweb

    [via Prakash Swaminathan] Nova Spivack has a nice post on what he calls as the Metaweb – the web which connects Intelligence (also see the graphic):

    The Metaweb is the coming “intelligent Web” that is evolving from the convergence of the Web, Social Software and the Semantic Web. The Metaweb is starting to emerge as we shift from a Web focused on information to a Web focused on relationships between things — what I call “The Relationship Web” or the “Relationship Revolution.”

    We see early signs of this shift to a Web of relationships in the sudden growth of social networking systems. As the semantics of these relationships continue to evolve the richness of the “arcs” will begin to rival that of the “nodes” that make up the network.

    This is similar to the human brain — individual neurons are not particularly important or effective on their own, rather it is the vast networks of relationships that connect them that encode knowledge and ultimately enable intelligence. And like the human brain, in the future Metaweb, technologies will emerge to enable the equivalent of “spreading activation” to propagate across the network of nodes and arcs. This will provide a means of automatically growing links, weighting links, making recommendations, and learning across distributed graphs of nodes and links.

    As structures that provide virtual higher-order cognition and self-awareness to the network emerge, connect to one another, and gain sophistication, the Global Brain will self-organize into a Global Mind — the intelligence of the whole will begin to outpace the intelligence of any of its parts and thus it will cross the threshold from being just a “bunch of interacting parts” to “a new higher-order whole” in its own right — a global intelligent Metaweb for our planet.

    I think of this as the Memex.

    TECH TALK: Letter to Arun Shourie

    I was recently in Bangalore at IIIT-B at the invitation of Prof. Sadagopan to make a presentation to Mr Arun Shourie, Minister of IT and Telecom (and Disinvestment). Prof. Sadagopan had aggregated 14 companies to make 10-minute presentations as part of a session called Jewels of IT. Due to an unexpected development, Mr Shourie couldnt make it, but the session went ahead as scheduled a recording was sent to Mr Shourie.

    As part of my talk, I was planning to also make suggestions on what India needs to do in IT and Telecom. Since Mr Shourie was not physically present and in the interest of time, I skipped that segment of my talk, and thought why not elaborate on it and make it into a Tech Talk series. (I dont know if Mr Shourie will read it, but those fortunate enough to know him could perhaps email him a link!)

    Before I start my letter, a little about the person. Here is a profile of
    Shourie. I remember reading his articles, editorials and exposes in the Indian Express in the early 1980s. He topped a recent Economic Times poll of CEOs of the most admired politicians. The paper wrote:

    While most people are surprised at the ease with which Shourie has made the transition from being a journalist to an economic policy maker, they should not be. This Stephanian is one of the most qualified politicians in the business, with a PhD in economics (not a an honorary one but one he burnt the midnight oil for) from Syracuse University .

    He briefly worked with the Tata group for a period of three months before joining the World Banks young Professionals Programme in 1966. He then served as an economist with the World Bank for over a decade (1967-78) and during that stint he worked as a consultant to the Indian Planning Commission.

    And while Shourie may have traded in the pen that inked many a expose, he continues to be a firebrand, speaking out fearlessly against all that he perceives as wrong. Shouries professionalism can be seen in the speech he made while accepting the ET Business Leader of the year 2002:

    Everyone in society should be accountable. I believe theres much more accountability in business than in public life. When things go wrong in business, people have to answer, but politicians get away with it. And often persons in public life become immune to scandals. The man may be soft spoken but there is no mistaking the steely edge to his voice.

    The Economist recently wrote about Arun Shourie:

    [Shourie] boasts of a tenacity nurtured in his days as a crusading editor of a newspaper known for its dogged pursuit of scandals. I am a graduate of the Indian Express; we exhaust the other fellows. Victims of this persistence include not just civil servants and judges, but politicians. After about 20 parliamentary debates on privatisation in the past four years, the most recent were adjourned for want of a quorum.

    As this implies, Mr Shourie sees the politicians themselves as obstacles to getting things done. The quality of many who people our public lifethat is not democracy, it is disarray, it is free-fall. Yet he refuses to use India’s democratic system as an excuse for the country’s painfully slow pace of economic progress over the past 20 years compared with China. Governance, he argues, is not golf: that we are a democracy does not entitle us to a handicap.

    Tomorrow: Letter to Arun Shourie (continued)

    Business Week on Google

    As Google readies for a possible IPO which could value the company at between USD 20-25 billion and raise USD 1-2 billion in the coming week, Business Week has a cover story which discusses “why the world’s hottest tech company will struggle to keep its edge”:

    Google’s payday arrives just as the search phenom faces a withering battery of tests. The company’s spectacular success has lured brawny competitors such as Microsoft and Yahoo! Inc. into the arena. Those companies view search as a command center of the Internet, and they plan to wrest it from the upstart in Mountain View, Calif. The result will be a battle for the heart of the Net — one just as momentous as the browser war between Microsoft and Netscape Communications that took place a decade ago. Says Roger McNamee, managing partner at venture capitalist Silver Lake Partners, which has no stake in Google: “Search is the key to the kingdom.”

    And the battle is raging at Google’s ramparts. Yahoo is leading the assault. In February, the portal giant fired up a new search engine that analysts say nearly matches Google’s performance. More worrisome, Yahoo CEO Terry S. Semel is driving Yahoo to the next frontier, customized search. Instead of today’s one-size-fits-all searches, he wants to offer queries tailored for an individual’s tastes, interests, even location. Advertisers are ready to pay royally to reach this type of targeted audience. And Yahoo is off to a big head start in gathering the personal information necessary to deliver such customization. It has amassed 141 million customer profiles; Google next to none. “They’re quite vulnerable,” says Michael A. Cusumano, professor of management at Massachusetts Institute of Technology.

    Even if Google sidesteps that threat, it faces another, perhaps more daunting one. Microsoft is working to leverage every bit of its Windows monopoly in the effort to win the search market. Ballmer and Chairman William H. Gates III are working to embed search capabilities into nearly every aspect of future versions of the operating system. Have a question? Search the Web and the hard drive too from a Word document, an instant chat box, even an Excel spreadsheet. No need to pay a visit to a search site. If Microsoft makes good on this sweeping expansion, it could turn Googling into a quaint ramble down memory lane.

    To defend its market, Google must come up with a better model, one that establishes its search engine as a central platform for computing. This pushes Google to extend from its slender specialized base and venture into many of the same broad services the giants offer. To keep the big powers from feasting on its specialty, Google must stretch and become a sprawling power of its own.

    This is leading Google execs to weigh ideas that to some may seem dire in nature. For example, Jeffrey D. Ullman, a computer science professor at Stanford University and a member of Google’s four-person technology-advisory council, says he’s urged the company to acquire or team up with a Linux desktop company so Google can extend search to information stored on the computer. This means competing head-on with Microsoft’s dominant Windows operating system. “If Google doesn’t reach the desktop,” cautions Ullman, “Microsoft will eventually take Google’s business, just like it took Netscape’s.” Google execs say that they’ve discussed the possibility but aren’t poised to act.

    In time, search engines will feast on every bit of personal information we’re willing to share, and serve up links that fit our tastes and locales — maybe even fine-tuning them according to the time of day. It’s a market headed for dramatic growth and change. No wonder so many investors are grasping for a piece of the brand that has become synonymous with search. “Google represents the new era,” says Michael Moe, chief executive of boutique investment bank ThinkEquity Partners. But buyers beware: Google’s biggest tests are dead ahead.

    A related story has an interview with co-founder Larry Page. Excerpts:

    People have consistently underestimated the size and importance of search. It’s a very, very large space of technologies, usage, and information. We’ve gone from 30 million to over 3 billion documents in just a small number of years. There’s going to be a lot of commercial activity in this space, a lot of companies doing things that are going to be very valuable.

    It’s something people will care deeply about, because you want to trust your sources of information. If you’re doing a medical thing, wondering what’s wrong with you, or if you’re doing a commercial transaction, you’re really going to want unbiased, objective information that’s the best you can get.

    The ultimate search engine would basically understand everything in the world, and it would always give you the right thing. And we’re a long, long ways from that.

    Our mission is to organize the world’s information.

    Technology for the Poor

    Wired News reports from Africa:

    In Africa, there is a huge demand for simple technologies that can be used by people who lack access to banks, phone lines, credit cards and computers that Westerners take for granted. Living in the only country on this continent that has a modern infrastructure — even while most of its citizens remain firmly entrenched in poverty — South African entrepreneurs are in a unique position to develop and deliver these products to Africa’s poor, says Raven Naidoo, a founder of Radian, a small technology-consulting firm.

    “South Africa is a testing ground but also a huge market,” he says. “Typically in South Africa people have targeted the high end of the market, but it’s a small high end. At the lower level the return might be lower, but there’s a volume gain.”

    “That market out there is two-thirds of the world’s population,” says Alan Levin, Naidoo’s business partner. “No one else is capable of seeing it the way we do, or putting solutions together the way we do.”

    Whereas only 2 million Africans used cell phones in 1997, that number has exploded to 34.6 million users today, making Africa the world’s fastest-growing market for mobile communications, according to the International Telecommunications Union.

    After adopting technologies to make cell phones widely affordable to South Africans, MTN and Vodacom, South Africa’s two largest cellular providers, have been rolling out networks in Nigeria, Tanzania, Uganda, Swaziland, Rwanda and elsewhere. These networks are lifelines in places where communications technology of any kind has been scarce, and cellular providers are finding these markets unexpectedly profitable.

    In South Africa, a system of prepaid calling introduced in 1996 made cell phones available to the masses, allowing low-income subscribers without bank accounts and credit histories (about half the population) to pay for air time as needed. As a result, there are now 14.4 million subscribers in South Africa out of a population of 43 million, and 80 percent of them are on this prepaid system. Providers predict that upward of 90 percent of new subscribers on the continent will go with the prepaid model.

    In the Democratic Republic of Congo — a massive, war-ravaged country with almost no infrastructure and an estimated 1.6 phone lines per 1,000 people — Vodacom has installed a network of base stations powered by electric generators, and a system that connects calls via satellite.

    Given the infrastructure hurdles facing much of Africa, and the mobility of the country’s populace, wireless is increasingly seen as the preferred option, says Ronald Maina, a sub-Saharan regional enterprise manager for Microsoft. Cell phones have rapidly outstripped the number of land lines on the continent, and are now increasingly becoming the platform of choice for Internet access, banking and other transactions.

    Farmers use SMS to keep tabs on market prices. Taxi drivers in Mozambique keep in contact by cell phone to avoid police roadblocks. Runners in Kenya compare times via SMS, while South Africans check their bank balances the same way.

    One company, Fundamo, developed a system allowing people to make payments from their mobile phones. The company first tried to sell its technology in the developed world but, given the pervasiveness of credit cards, potential clients saw little point. Instead, the system has taken off in Zambia, where the demand for a cellular banking platform is high.

    Here’s how it works: To make a payment, a shopper enters information on the vendor and the transaction into a cell phone, and confirms the sale with a PIN. The system then checks that funds are available in the shopper’s bank or prepaid account, and sends a confirmation to both parties.

    Levin, of Radian, says the success of Fundamo in Zambia illustrates the changing mind-set among South African tech entrepreneurs, who in the past have struggled to sell their products in saturated Western markets instead of looking to their own backyards.

    “These new technologies are taking on very quickly in the developing world, and allowing for a kind of leapfrog effect,” he says. “While the First World countries are still in the credit card phase, this turns cell phone companies into banks.”

    India-China: Another View

    [via Reuben] The Daily Reckoning has an article by Lynn Carpenter presenting a different view of India in contrast to China (you need to scroll down on the page to read the article):

    I’ve been looking at both countries, and here’s what I think. India’s not the next China. Not yet. Both countries have many risks, but China’s emergence has a momentum and key support that India’s does not.

    So far, the major business model for the more highly touted Indian companies is: copy what’s done in the U.S., do it cheaper, and ship it back to us. Innovation and R&D spending are not robust. But journalists touting India seem to be unaware of a fatal flaw in that plan. Not only are the profits to be made selling cheap substitutes limited, but it’s a plan all India’s fellow emerging economies can copy. Taiwan and South Korea are already cutting into the world IT market.

    I’d rather find a sound business engaged in a more sustainable market: capitalizing on the boom at home. A good example of this is Sina.com or Sohu.com, the Chinese Internet companies. Or CHINA UNICOM, the telecommunications company that is gaining subscribers at home by the millions, not to mention subscribers in nearby countries. They’re not value investments today, but they are sound businesses.

    And Indian companies on these models? They’re in short supply, and overpriced, too. That’s because India’s internal progress still has far to go. India’s GDP may be rising on exports, but it is not advancing on consumer spending at home.

    Quite simply…India has been on the brink of ’emerging’ and becoming a world force about 40 times in the last 20 years. OK, I exaggerate, about once every two or three years. But it never quite sticks. It’s not trustworthy yet. India has not yet gathered China’s momentum. Or, as they say these days, it hasn’t reached the tipping point.

    India is still a story about billions of people hungering to advance. That’s a spurious argument. It applies to Africa as well. Wishes are not ability. What’s more, the problems facing India are just as large as, if not larger than, China’s.

    China has heavily indebted banks and high unemployment in its western provinces. India has high unemployment across the country, but a much more advanced banking culture, which would seem to give it an edge in the business world. But it hasn’t worked that way.

    China, as a communist country, set upon a course to educate and employ all its population. It came at too high a cost to sustain, but it left a country where everyone had a taste of success for a while and an entire generation of well-educated students.

    That never happened in India. Despite progress against poverty in the 1980s, the trend began reversing again during the early ’90s, when inflation hit India. In the 1991 census, 38% of India’s population was again below the poverty line. Not only are millions of adults illiterate, but so are millions of children.

    This creates a spiraling vicious cycle for India. It needs progress so that it can afford to aid its own people. But with so many of its people poor and untrainable, it is hard to make that progress. India’s largest industry is agriculture. Textiles come second. The vaunted IT sector we hear so much about is a mere 3% of the economy.

    The IMF recently warned that India’s GDP growth this year is likely to be less than last year…and that it will not meet its target 8% growth rate over the next several years without major repairs to the physical and social infrastructure. It needs roads, railroads, telecommunications, training and education to proceed. It must make daunting improvements within the country – in poverty, literacy, energy and free access to improvement for citizens below its small privileged class.

    But the government is strapped. Its deficit comes to 10% of the GDP (the United States’ current record deficit is roughly 5% of GDP). Its cumulative national debt equals 80% of annual GDP. But when it comes to privatization, the engine for progress and Western investment, India still has strong, powerful resistance from farmers and labor trade unions.

    India’s lack of buying power at the ground level where consumers live is astounding. Partly that’s the result of its attempt to leapfrog from an agricultural economy to a service economy – a model that excludes most of the population. The true path to successful development wends its way through industrialization first. It comes with higher rates of education, literacy and health. And it comes with heightened confidence on the part of large international investors – as represented by foreign direct investment.

    Until the big boys put their money down, it’s not safe for small retail investors to get in on the game. Foreign direct investment to India just barely nudged up to $6.7 billion last year. That’s about what flows to Poland or Portugal…though admittedly, it’s a great increase from the $2 billion or less of prior years.

    If you’re determined to catch a mainstream trend, catch the China wave rather than India’s. As an investment, I still much prefer China. An impressive portion of China’s growth is coming from industrialization and consumer products with both domestic and international appeal.

    Learning to Expect the Unexpected

    Edge has a talk by Nassim Nicholas Taleb on the Black Swan:

    A black swan is an outlier, an event that lies beyond the realm of normal expectations. Most people expect all swans to be white because that’s what their experience tells them; a black swan is by definition a surprise. Nevertheless, people tend to concoct explanations for them after the fact, which makes them appear more predictable, and less random, than they are. Our minds are designed to retain, for efficient storage, past information that fits into a compressed narrative. This distortion, called the hindsight bias, prevents us from adequately learning from the past.

    Black swans can have extreme effects: just a few explain almost everything, from the success of some ideas and religions to events in our personal lives. Moreover, their influence seems to have grown in the 20th century, while ordinary events the ones we study and discuss and learn about in history or from the news are becoming increasingly inconsequential.

    The puzzling question is why is it that we humans don’t realize that we don’t know anything about the significant brand of randomness? Why don’t we realize that we are not that capable of predicting? Why don’t we notice the bias that causes us not to realize that we’re not learning from our experiences? Why do we still keep going as if we understand them?

    Bus. Std: Constructing the Memex

    My latest column from Business Standard:

    In the past decade, the Internet has extended our world by making accessible a vast quantity of information that was unimaginable earlier in our lives. It started in the early days with bulletin boards and newsgroups, pooling together a collection of documents on a single server, and then the ease of hyperlinking combined with directories and search engines made the physical location of information irrelevant. If it was out there on the Internet, it could, in theory, be found.

    For many of us, our first Internet website memories are probably linked to Yahoo. Navigating through its hierarchy of categories or doing a search helped us get to what we were looking for. Altavista and Excite started providing search within pages, allowing us to type a word or a phrase and know that there were tens of thousands of matching documents. Google then came along and refined the process to perfection by using its PageRank algorithm, giving us results very much relevant to what we were looking for. In effect, Google became our other memory.

    In its efforts to provide uniformity and consistency, Google has become a mass-market search utility. But it is not good enough. What is missing is the context that each of us have this is embedded in the web we browse, the documents we chose to save (or email to ourselves), and the subject-matter experts we know (or would like to know).

    To begin thinking more deeply about this, we need to go back in time and learn more about a person called Vannevar Bush.

    According to Randall Packer and Ken Jordan [writing in their book Multimedia: From Wagner to Reality], Vannevar Bush rose to prominence during World War II as chief scientific advisor to Franklin Roosevelt and director of the governments Office of Scientific Research and Development, where he supervised the research that led to the creation of the atomic bomb and other military technologies. His contribution to the evolution of the computer ranges far and wide: from the invention in 1930 of the Differential Analyzer, one of the first automatic electronic computers.

    In 1945, Bush published a paper As We May Think, outlining a prototypical hypermedia machine. He called this mythical machine as the Memex meaning a Memory Extender.

    Adam Brates wrote in his book Technomanifestos: Visions from the Information Revolutionaries: Bushs immense administrative burden the daily strain of sorting, allocating, researching, analyzing, synthesizing, crosslinking, and filing spurred his idea for an invention that would perform this work for people. Bush popularized the idea that machines could solve the problem of information overload. Bush wondered whether all the sprigs of scientific wisdom, if not somehow preserved, would fall from the tree of knowledge. Information must somehow by connected to be relevant, lest it become forgotten. Knowledge accumulated and stored in massive filing cabinets under lock and key would languish. An idea developed today might not be relevant until some point in the future. What happens, though, if it is forgotten? Application of all new knowledge would require some means of keeping it available, accessible, and relevant.

    Vannevar Bush wrote in his paper: [The human mind] operates by association. With one item in its grasp, it snaps instantly to the next that is suggested by the association of thoughts, in accordance with some intricate web of trails carried by the cells of the brain. It has other characteristics, of course; trails that are not frequently followed are prone to fade, items are not fully permanent, memory is transitory. Yet the speed of action, the intricacy of trails, the detail of mental pictures, is awe-inspiring beyond all else in nature[Associative indexing is] the basic idea of which is a provision whereby any item may be caused at will to select immediately and automatically another. This is the essential feature of the memex.

    Vannevar Bush wrote his memex essay in 1945 before we had the computer, Internet, Web, Yahoo and Google. Even today, we struggle with information overload. The memex could be the solution, the silver bullet . So, the challenge before us is: can we leverage all the recent developments in technology to construct the memex?

    There are two interesting recent developments that need to be connected together. Search engines like Google allow us to search billions of documents in a fraction of a second, while weblogs have made publishing very simple with the result that there are millions of people writing regular journals on the Web. Both are significant in their own right, as a combination they herald something much more profound in the information space.

    (This will be continued in the next FutureTech column.)