Elections: Early Impressions

So, almost everyone has been proved wrong! The BJP-led NDA has suffered heavy losses, with the gains being made by the Congress-led alliance and the Left parties. It looks increasingly likely that the next government in India will be a Congress-led government, with participation from the Left parties and some smaller, regional parties.

There will be plenty of post-mortem done on the election results, but in a nutshell, this has been a vote for a change. Everyone underestimated this sentiment which seems to have run across the board. At one-level, it is easy to say that the performance of the NDA in Tamil Nadu and Andhra Pradesh cost it the elections. But at a deeper level, there is a lot more that the voters are saying. This was, after all, an election that just 3 months ago, seemed like a cakewalk for the BJP and a rout for the Congress. How things have changed! In politics, even a month is an eternity.

What is very clear, though, is that alliance politics will continue in India, as has been the case for the past 8 years. Both the BJP and the Congress are likely to get about 150 seats each in the 543-member Parliament. The hope going ahead is that we will have a stable government which will continue reforms and have a progressive outlook. India and Indians (albeit still a very small segment) have seen a different, optimistic and “shining” future. The challenge now is to make the country develop as a whole. That is the only secret to winning elections.

India’s Hardware Industry

Business Week writes:

Thanks to reduced tariffs, a surging economy, and all those software writers and outsourcers setting up shop, sales of electronics gear such as PCs, cell phones, and servers last year surged by 19%, to $5 billion. By 2010 the local industry could see $62 billion in sales, including $25 billion in exports, according to a report by consultants Ernst & Young and the Manufacturers’ Association for Information Technology (MAIT), a hardware industry group. Spurring the growth: a January decree cutting tariffs on electronic components from 20% to zero, and halving levies on finished products, to 19%. The cuts are “leading to substantial growth in local consumption,” says Vinnie Mehta, executive director of MAIT. Another stimulus: a continuing $3 billion project to computerize nearly every corner of the government bureaucracy, from pension funds and state-owned banks to tax offices and driver’s license bureaus.

Falling prices are fueling demand for PCs. The average price of a computer has dropped to $500, down from $1,100 in 1997, according to MAIT. Last year, Indians bought 3 million PCs, up 50% from 2002, and MAIT predicts another 50% jump this year. A top-seller has been HCL Infosystems Ltd.’s Linux-based EzeeBee, a robust $300 machine that has sold nearly 25,000 units since its launch in January. “I dream of a computer in every home, and with the tariff cuts it’s possible,” says Ajai Chowdhry, chairman of HCL, India’s No. 2 PC maker.

The surging demand for PCs has given a boost to component and peripheral makers. Consumer-electronics giant Samsung Electronics Co. is upping production of PC monitors in India this year by 20%, to 1.8 million units. TVS Electronics, a Madras maker of PC power supplies, expects its sales to grow by 40% this year and plans to double its workforce, to 800. Singapore’s Kobian Pte. Ltd, a maker of motherboards and graphics cards, two years ago opened an assembly plant north of Bombay. And contract manufacturer Flextronics International Ltd. is expanding its Indian operations, which make set-top boxes for local cable companies and is adding facilities for making cell-phone components. “After China, India is one of the most exciting markets for us,” says Anurag Bhardwaj, Flextronics’ vice-president for business development.

Even some big PC makers are stepping in. Virtually all the PCs sold in India by market leader Hewlett-Packard Co., for instance, are made in the country. After seeing sales surge 75% last year, to 261,000 units, the company is planning to add a third shift at its Bangalore plant. And No. 3 IBM made the 169,000 PCs it sold in India last year at a recently expanded plant in Pondicherry.

One thing that’s not likely to take off anytime soon, though, is exports. Despite the expansion at the component makers, India still lacks the critical mass of suppliers that PC manufacturers typically prefer. And India’s lousy roads and ports don’t come close to those of archrival China.

VoIP Data: Phone Calls like Emails

Fred Wilson writes:

One of the most interesting data elements about a business is the activity on the phones. Corporations have been mining information about contacts and relationships via SFA and CRM systems for awhile now. But the most important activity, the phone calls, has not been easily captured.

VOIP changes that. Now phone calls are like emails. They can be captured, recorded, analyzed, and mined for interesting data.

It seems to me that VOIP is rapidly taking share from PBX systems in small, medium, and large businesses. I don’t see many ways to play that from an infrastructure perspective, but I think there may be some really interesting software, services, and data opportunities resulting from this shift from analog to digital in the telephone business.

HP vs Dell

WSJ writes how HP is willing to sell PCs at almost no margin:

“We think the PC business is strategic,” says Chief Executive Carly Fiorina. She says she is willing to allow the company’s $22 billion computer division to do little more than break even because PC sales help H-P make money on printers, consulting and consumer electronics. The company is content to sell PCs at “a very modest profit for now,” says H-P Chief Financial Officer Bob Wayman.

The result is the biggest threat yet to Dell, the PC industry’s most profitable company. Having acquired Compaq in 2002, H-P is using its size to slash prices, in an attempt to undercut Dell’s formula for gleaning profits in one of the nation’s most competitive markets. The challenge puts pressure on Dell’s earnings just as the tech industry is emerging from its prolonged slump and consumers are beginning to invest more in computers.

Still, for H-P, the strategy is a serious gamble. By cutting prices, the company earns less on each sale, leaving it with less of a cushion to absorb the inevitable shocks that roil competitive markets. H-P’s profit margins in its PC division haven’t exceeded 1% since the merger.

Dell continues to post solid profits; its operating profit margins of more than 8% are the widest in the industry. But its executives are complaining that H-P is subsidizing its PC business with earnings from other divisions, which to some suggests Dell is beginning to feel H-P’s heat.

There are only three companies that make big profits directly from PCs: Intel, Microsoft and Dell.

As I see it, the opportunity going ahead lies in providing software for a monthly subscription fee with thin clients available at costs-plus to drive consumption in the emerging markets.

eBay’s Future Growth

Wired interviewed eBay’s CEO Meg Whitman. Excerpts:

In just the first quarter of this year, our users traded $8 billion. So annualized, they’re on track to trade $32 billion dollars. Our revenues this year will be just over $3 billion, so we’re a very large company. We think that the growth potential for the company is still very significant, and we look at it in three ways.

First is the U.S. business, which continues to grow at a 30 to 75 percent compound annual growth rate. And we believe that we have a big opportunity left here. In every category in which we have sellers, we have less than 5 percent of the total sales in that category. Collectibles — our most mature and oldest category — is still only about 5 percent of the collectibles business in the United States. So we should be able to move that up somewhat across all categories.

Second is international expansion. International is the fastest-growing segment of our business, and that’s because in virtually every country in the world, eBay is nascent. We’ve been there one, two, three, four years maximum. So we think we have a lot of growth potential, and this concept is as relative in Germany as it is in France, as it is in Korea, as it is in China. It’s universal. Trading is in the human DNA, and entrepreneurs like to be successful doing what they love.

The third leg of our strategy is PayPal. We bought PayPal about 15 months ago because it had become the de facto payment standard on eBay.com. PayPal’s strategy is to continue to be the standard on eBay.com, and then secondarily follow eBay’s footprint around the world. And then finally of course, PayPal has an off-eBay opportunity. If you have a website and you just sell on the Web, regardless of your affiliation with eBay, you can use PayPal to accept credit cards and accept payment electronically.

Google’s Supercomputer

Steven Levy adds to the discussion that has been happening recently about Google’s distributed computing platform:

As Rich Skrenta, CEO of news aggregator Topix.net, wrote in a widely discussed blog posting last month: “Google is a company that has built a single, very large custom computer.” He’s among those who believe that Google’s sweeping search technology works within a complicated infrastructure, so speedy and efficient in handling unimaginably huge chunks of information that it’s a single, massive entity in 100,000 interconnected pieces. Think of the super-duper computer in the Isaac Asimov short story that ends with the machine saying, “Let there be light.” Google’s aggregate device, organized by a sophisticated proprietary file system, holds all of the Web and performs so seamlessly that the whole shebang becomes what geeks call a “platform”: a reliable underpinning on which people can build further innovations. (The classic example of a platform is Windows, software that provides the foundation for applications like spreadsheets and digital jukeboxes.) “I always thought of the Internet as a big, decentralized operating system,” says Tim O’Reilly, CEO of O’Reilly Media. “Google made me realize that it could be hosted by one player.”

Why is this crucial for the future of Google’s business? Because the firm’s success depends on its ability to withstand challenges from prime competitors like Yahoo and Microsoft. Both have weapons in their arsenals that Google can’t easily match. Yahoo is blessed with a base of registered customers; this will enable it to deliver personalized search results. And Microsoft currently makes the desktop and the applications that make your computer its computer. Eventually, Bill Gates and his crew hope to build search functions into their ubiquitous creations, Windows and Office, and push Google out of the picture.

Though Google’s cofounders aren’t commenting (they’re in the pre-IPO “quiet period”), their actions suggest a strategy to combat this structural disadvantage: move people’s activities away from Microsoft’s computer and onto Planet Google’s mega-search machine. “Our goal is to search the world’s information and organize it,” cofounder Larry Page once told me, and why wouldn’t that mission involve personal information that’s not on the Web?

Adds John Battelle:

So, what if Google becomes an application server cum platform for business innovation? I mean, a service, a platform service, that any business can build upon? In other words, an ecologic potentiality – “Hey guys, over here at Google Business Services Inc. we’ve got the entire web in RAM and the ability to mirror your data across the web to any location in real time. We’ve got plug in services like search, email, social networking, and commerce clearing, not to mention a shitload of bandwidth and storage, cheap. So…what do you want to build today?”

If I had that opportunity, I’d take a percentage of revs or profits on the businesses that got built, rather than just service fees. it’s Google as incubator to Web 2.0.

Yahoo is already doing this, though for a fee and in the SMB market. So is MSN. The traces are laid. Both of them were also doing mail. But neither of them have more than 100,000 servers and the GFS.

InfoWorld has more:

Centralization and decentralization are the yin and yang of computing. Witness Microsoft, a company whose dedication to the personal computer seems radically at odds with the idea of the Google supercomputer. Microsofts IT operation takes justifiable pride in running only Windows software on x86 PCs. But I was fascinated to learn, on a recent visit, that its entire worldwide business operation is serviced by a single instance of SAP R/3.

So should we say that the computer is the network, or that the network is the computer? Both statements are true. A supercomputer, operating at global or merely enterprise scale, creates its own internal network of services. But supercomputers also federate with their peers and converse with their myriad clients to enact computation on a grander scale. Theres no single right architecture or topology. Within and across enterprises, well deploy systems that embody all of these patterns.

Network theorists believe that all networks inevitably form hubs. The services fabric that enterprise architects are now weaving may sound egalitarian, but its not immune to this law. Googles supercomputer or supernode gives it a leg up on the competition. Yours, however you define it, will too.

Says Jon Udell on his blog: “”Echoes of the Google-as-supercomputer meme are everywhere lately. Sun’s new chief, Jonathan Schwartz, invoked it when we met with him recently. His take: Sure, Google runs its search and mail applications on Google, but it runs its business applications on Solaris. Coherent symmetric multiprocessing scales in a different direction, Schwartz said, and that’s where Solaris 10 is headed with its revamped and highly granular partitioning. The network is the computer. And the computer is the network. We live in interesting times!”

On a related note, News.com had an interview recently with Craig Silverstein, Google’s technology director and employee No. 1.

Steve Gillmor writes on how “Gmail would make a great container for an RSS information router”:

Gmail shifts the basis for organizing an in-box from metadata and hard-coded folders to interactive searches and virtual folders. You can attach multiple labels to messages and trigger rules that automatically apply those labels to similar incoming content. In addition, Brin has been talking to the Google development team about adding macro capabilities to run favorite searches.

Adding an API for macros would go a long way toward converting Gmail from a frontal attack on Yahoo and MSN mail offerings to a powerful enterprise platform. “We initially wanted to make sure we had something that was definitely better than all Web mail services,” Brin said. “And perhaps, just perhaps, it will also be good enough for a lot of people to use instead of a corporate mail service.”

By the time the Gmail beta period ends in three to six months, Brin and his team have promised to enable forwarding and POP3 access. However, more is required of a corporate mail service. Those capabilities must be extended to allow Gmail to provide disconnected operation and IDE for packaged applications. Even better would be a link between Gmail’s Conversation View, where threaded messages are collected and stacked together, and related RSS affinity groups.

In fact,

Another add-on. Search Engine Watch has a nice formula on the emerging era of search engine personalisation:

Search is hot — and even hotter is the idea of search personalization. This is where by knowing more about you, a search engine may potentially provide better results because it understands your preferences.

To date, the only released service I know of that’s actually actively doing serious search personalization is Eurekster, which I wrote about back in January. It’s a social networking service that lets who you know influence what you see in search results.

Social networking services are also hot. Now do the math:

social network
X
search
X
search personalization
=
super hot!

That equation means you can expect to hear more about social networking services combined with search. But be wary — this doesn’t mean that true search personalization is offered.

TECH TALK: Two Blog Years: Some To-Dos

There are times when I wonder what can be done around the blog that I have to create a more enriching experience both for me, and the readers. In the true spirit of the blogging world, here is some loud-thinking on three ideas:

Mind Map

The blogs chronological organisation (with the newest entries first) is excellent for regular readers. But it can get confusing for first-time visitors or for those who want to get the context of what I am writing. There is a need for an outline which lays out my mental models: the areas I am interested in, my key beliefs in each of these areas, and links to important posts which build on these ideas. This would then serve as a mini Table of Contents not as much for the blog, but for my thinking. It would give an overview to visitors of me, the person. This is very important because there is a lens through which I view the world, and if that lens were there for people to see, it would give a richer interpretation for all that I write.

Photos

So far, the weblog has been all-text. There are many occasions when a picture can say things much better than words. Somehow, I am not much of a photo-taking person I am one of that (rare?) breed of people who doesnt take pictures even while on vacation! From the point of view of the blog, I definitely believe that having photos can create for a better story-telling approach. They have a wonderful way of conveying ideas, and that is why they need to be part of the blog. So, this is something I am going to look at in the very near future.

Community

Perhaps the most important changes will be in how we can all interact together more. Right now, it is almost like a hub-and-spoke approach: I make the posts, there are some comments which come in, and I write back individually to the people who have commented. In some cases, for a few posts, mini-discussions have spawned in the comments area of the blog. What is very clear is that there needs to be better ways for people to interact with each other. Think of this as a community with the blog and its posts serving as the trigger for discussion. We need the right set of tools to create an integrated platform to foster this interaction.

I will be working on making these utilities a reality in the coming weeks. As always, I look forward to your comments. So, hopefully, as the ideas evolve, so will be the blog!

Tomorrow: The Blog and You

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