If you want some time off and want to try out some challenging brain teasers, check this.
Tim Oren writes:
It should be clear that timesharing has been reborn in new clothes. Now we call it ‘salesforce.com’ and ‘Google’. The 3270 of old is now an HTML or XML browser. This interface has absorbed most of the new values of the communications function: Web, blogs, increasingly e-mail. The genre of the Internet are evolving to fit the limits of the browser, for better or worse. The business models are subscription, fee for service, or advertising. With the foundational layers of server software increasingly commoditized, investment flows towards value added services, and once again toward complex calculations – analytics, ad targeting, etc.
The rich client is struggling. In retrospect, the attempt to introduce 3D to the browsing interface in the mid-90s looks like a prelude to its descent. In the end, users wanted simplified access to information more than a ‘richer’ tool that introduced its own set of problems. The same fate has met most attempts to create ‘rich’ client dependencies, often in the service of advertisers. The only domain in which the full client platform is exploited and pushed is gaming. A growing business, but not one on which to balance the whole Windows franchise.
Elsewhere, the client side is stagnant and investment stays away. Though Microsoft apparently recognizes many of the information management problems that the combination of PC and Internet has created for users, its solution – Longhorn – keeps slipping out in time and losing relevance. GMail and other net-borne palliatives are already arriving.
I am not forecasting the death of the PC. Larry Ellison already tried that once. It will be with us for a long time to come, due to its overwhelming scale economies. It will still run all of the tools that we use to create information: Word, Photoshop, Powerpoint and the rest. It will be a terminal for the new timesharing, and a conduit for the Internet as medium. But it is no longer the location of new investment and innovation, and Microsoft’s ability to extract revenue, margins, and strategic advantage must fade accordingly. Joel’s right: The heart of the Windows franchise is rotting.
Red Herring has an interesting point about Newsgator’s VC funding by Mobius Venture:
It seems, based on conversation with [Newsgator CEO] Greg Reinacker, that the key to his company’s success in winning funding is not the $29 client software it has developed over the last 18 months. Rather, the recent introduction of a Web-based aggregator service that feeds RSS content into email clients has captured the imagination of VCs. This suggests that a new form of portal is evolving, a collection point for information that is delivered to the customer’s computer in a “personalized” stream.
Newsgator’s Web service is priced for significant margins. From $5.95 a month for individual users who want to track a few RSS feeds up to a $49.95-a-month service for business users who wants to track up to 50 keywords on in the universe of RSS feeds and receive up to 50 “premium” RSS feeds. Presumably, if customers want more tracking capabilities there is a price plan for that, too.
Dana Blankenhorn writes about Toshiba’s small fuel cell:
Fuel cells last longer between charges than batteries, and they can be recharged with new fuel rather than new batteries, fuel that might be available where batteries are not.
Now Toshiba has entered the technology side of this market. That is the most promising point of the story, not the specifics of what they’re offering.
The fact is this is Toshiba, this is a big company that doesn’t do things halfway. They see opportunity here. So should you.
Toshiba’s play is with a direct methanol fuel cell. The fuel is a form of alcohol, and the cell right now is replaced rather than being recharged. Samsung and NEC are also in the piece of the market Toshiba is targeting. That’s fine.
The point is that the fuel cell market will have many niches, many fuels, many standards and many opportunities. It’s going to evolve very, very rapidly.
Forbes writes about MTI MicroFuel Cells, a division of Mechanical Technology:
[The company] announced plans to push a fuel-cell concept it calls Mobion that can be used in handheld electronic devices like PDAs and smartphones. The result, the company says, will extend the length of time such devices can run on a single charge by three to ten times, compared with a battery of equivalent size.
The basic idea behind a fuel cell is fundamentally different from that of a battery. Batteries store energy using chemicals. Fuel cells instead use chemical reactions to create electricity. MTI builds a type of fuel cell called a direct methanol fuel cell, or DMFC, which mixes methanol and water on one side and air on the other, separated by a membrane.
The problem is the water. In most cases, the water in the process must take a circuitous route in order to be circulated around the power cell where it is mixed with methanol. Moving the water around requires using some complicated pumps that increase the overall size of the power cell and hobble its overall efficiency. MTI’s approach, dubbed Mobian, uses a proprietary method that internally manages the flow and entirely dispenses with the need for pumps.
When the DMFC runs out of power, instead of plugging it in to recharge, you’ll replace it much like you would typical batteries, only less often.
Tim O’Reilly has an excellent overview of the change and opportunity that the new world of open-source software is bringing. He discusses three key trends:
– The commoditization of software
– Network-enabled collaboration
– Software customizability (software as a service)
He writes: “I like to say that we’re entering the stage where we are going to treat the Internet as if it were a single virtual computer. To do that, we’ll need to create an Internet operating system.” This is what we need to think of in India to make computing a utility.
Om Malik visited India recently. His article in Business 2.0 captures his views on the changing country and the opportunities: “Thanks to low interest> rates, deregulation, and an influx of 785,000 new jobs at call centers and programming houses, Indian consumers are buying up everything from imported computers and software to cell phones and clothes. According to some estimates, 487 million middle-class Indians will spend an additional $420 billion during the next four years. There are other tantalizing hints that India will become even more attractive as an emerging market for U.S. businesses.”
As spending on IT has increased in enterprises, there has been an increasing attention being paid to the total cost of ownership (TCO) of technology. It is not longer just the upfront cost paid for hardware and software that needs to be taken into account, but the overall cost that goes into administration of the systems deployed. As growth has slowed, increasing attention is being paid to the TCO of technology in organisations.
The four primary costs are hardware, desktop and infrastructure software, business applications and management overheads. This is where three developments can play a significant role:
While open-source applications have done very well on the server, attention is now turning to the desktop. A recent story in the Wall Street Journal wrote:
Open-source software not only is relatively inexpensive, it may require less-powerful PCs for some applications. Frederick Berenstein is chairman and chief technology officer of Xandros Inc., a New York company that sells open-source desktop software. He says one hotel customer installed his company’s desktop software on 150 reservation clerks’ aged PCs at a cost of $5,100. He says the hotel estimated it would have had to spend more than $20,000 to upgrade to Windows XP software and $115,000 for new hardware that could handle it. He declines to name the customer.
Michael Silver, a desktop software analyst at Stamford, Conn.-based research and consulting firm Gartner Inc., says that some of his company’s large corporate clients think Linux desktops could save them substantial money and work fine for certain classes of users who don’t need the full range of desktop applications. For example, he says, Linux desktops can serve as a cheap alternative for employees who only need PCs for functions like e-mail and for checking their company’s Web sites — workers in call centers, say, who need to check product information and communicate online in-house, but who don’t create documents, spreadsheets or presentations. For these employees, compatibility issues are minimal.
Linux also has gotten a boost over the past year from some large computer and software sellers that initially viewed it as suitable only for the back office. Among them are HP, which is starting to install Linux instead of Windows on some of the PCs it builds, IBM, and software makers Novell and Red Hat Inc., which have set themselves up recently as providers of Linux desktop programs.
Companies and independent programmers that work on improving Linux desktop applications have made big strides in making the software look more like Microsoft’s applications, as well as in improving compatibility. With some open-source software, for example, a user has a choice between saving files in an Open Office format or saving in a Microsoft format with the familiar .doc or .xls file extension. That feature means that a Microsoft Word or Excel user can open a file created on open-source software without trouble.
If anything, the use of open-source software across the organisation is only going to grow, especially in emerging markets where piracy and non-consumption have been the solutions so far.
Tomorrow: Utility Computing
Brad Feld lists questions by Chris Wand that entrepreneurs seeking venture capital should answer:
1) WHAT IS YOUR VISION?
– What is your big vision?
– What problem are you solving and for whom?
– Where do you want to be in the future?
2) WHAT IS YOUR MARKET OPPORTUNITY AND HOW BIG IS IT?
– How big is the market opportunity you are pursuing and how fast is it growing?
– How established (or nascent) is the market?
– Do you have a credible claim on being one of the top two or three players in the market?
3) DESCRIBE YOUR PRODUCT/SERVICE
– What is your product/service?
– How does it solve your customers problem?
– What is unique about your product/service?
4) WHO IS YOUR CUSTOMER?
– Who are your existing customers?
– Who is your target customer?
– What defines an “ideal” customer prospect?
– Who actually writes you the check?
– Use specific customer examples where possible.
5) WHAT IS YOUR VALUE PROPOSITION?
– What is your value proposition to the customer?
– What kind of ROI can your customer expect by using buying your product/service?
– What pain are you eliminating?
– Are you selling vitamins, aspirin or antibiotics? (I.e. a luxury, a nice-to-have, or a need-to-have)
6) HOW ARE YOU SELLING?
– What does the sales process look like and how long is the sales cycle?
– How will you reach the target customer? What does it cost to “acquire” a customer?
– What is your sales, marketing and distribution strategy?
– What is the current sales pipeline?
7) HOW DO YOU ACQUIRE CUSTOMERS?
– What is your cost to acquire a customer?
– How will this acquisition cost change over time and why?
– What is the lifetime value of a customer?
8) WHO IS YOUR MANAGEMENT TEAM?
– Who is the management team?
– What is their experience?
– What pieces are missing and what is the plan for filling them?
9) WHAT IS YOUR REVENUE MODEL?
– How do you make money?
– What is your revenue model?
– What is required to become profitable?
10) WHAT STAGE OF DEVELOPMENT ARE YOU AT?
– What is your stage of development? Technology/product? Team? Financial metrics/revenue?
– What has been the progress to date (make reality and future clear)?
– What are your future milestones?
11) WHAT ARE YOUR PLANS FOR FUND RAISING?
– What funds have already been raised?
– How much money are you raising and at what valuation?
– How will the money be spent?
– How long will it last and where will the company “be” on its milestones progress at that time?
– How much additional funding do you anticipate raising & when?
12) WHO IS YOUR COMPETITION?
– Who is your existing & likely competition?
– Who is adjacent to you (in the market) that could enter your market (and compete) or could be a co-opted partner?
– What are their strengths/weaknesses?
– Why are you different?
13) WHAT PARTNERSHIPS DO YOU HAVE?
– Who are your key distribution and technology partners (current & future)?
– How dependent are you on these partners?
14) HOW DO YOU FIT WITH THE PROSPECTIVE INVESTOR?
– How does this fit w/ the investors portfolio and expertise?
– What synergies, competition exist with the investors existing portfolio?
– What assumptions are key to the success of the business?
– What “gotchas” could change the business overnight? New technologies, new market entrants, change in standards or regulations?
– What are your companys weak links?
Fast Company blogs a talk by Thomas Malone at Supernova:
Decentralization is the next stage in a progression of human organization that’s been going on for thousands of years.
New technologies allow us to have the economic benefits of large organizations as well as the human benefits of small organizations. The reason that’s possible is that technology is reducing the cost of communication to such a level that everyone in even huge organizations can have all the information they need about the big picture to make decisions without waiting for someone above them to tell them what to do. What will change things, though, is not the technology. It’s what people want. We need to think more deeply about what we humans really want.
Let me give you a couple of examples. The first example is the Wikipedia, an open content encyclopedia that anyone in the world can look at for free. But anyone in the world can also change it. How could that possibly work? The way it works is that there’s a list of recent changes, and frequent contributors are always watching that list. If people think a change is wrong or questionable, they immediately flag that page. Over time, it gets better and better. It’s probably not as good as the Encyclopedia Britannica, but it’s very, very good. This illustrates the themes of freedom and scale. Freedom because anyone in the world can contribute, but there’s also global scale in the pool of people contributors can draw upon.
You may be thinking, what does this strange little encyclopedia that’s not a business and doesn’t make money have to do with business? Let’s look at another example: Ebay. What most people don’t know is that 150,000 of its sellers make their full-time living on Ebay. If those people were employees of Ebay, it’d be one of the largest employers and retailers in the world. But they’re not employees. They’re independent store owners, and they have all the freedom independent store owners have. Coupled with that, they also have global scale.
Why do these examples mean this is going to happen in more places? This is the next logical stage in a very common pattern in the evolution of human organizations. This pattern happened first in the ways humans organized their societies. People made their living hunting and gathering, and they lived in small, decentralized, egalitarian groups called bands. Then we saw the rise of larger and larger human societies ruled by centralized leaders called emperors and kings. Then, 200 years ago, with the American Revolution and the French Revolution, we saw the emergence of democracy.
What explains this change? There are lots of factors involved, but surprisingly, a single factor can explain all three stages: the declining cost of communication. When communication was expensive, the only thing you could do was have small, face-to-face decision making groups. With the development of the first information technology, writing, it became possible to organize people in larger groups. It took another information technology, the printing press, to make the third way of organizing societies feasible.
There are three main ways large groups of people can make decentralized decisions: loose hierarchies, democracies, and markets.
Kevin Werbach adds: “We need to get back so people are in the center. The challenge of technology is to get to this end point, where people feel like they’re in the center but they are always connected. Specifically, layers might be a model. They explain the deep structure of the content of this conference. At the bottom, you’ve got the communications infrastructure. Then there’s a logical layer of directories and identity. Above that is software. Then an interface layer, the APIs and semantics. And then there’s the content itself: Media and information. All of these layers are facing decentralization.”
Fast Company blogs a speech by Niklas Zennstrom, CEO and co-founder of Skype:
One key factor is that when telephony becomes a software application, it will live on the edges of a network. There will be no centralized control. Telephony development cycles are still very long. But their carriers’ services are very much commodities, and there isn’t much differentiation.
When we can change telephony to an application, we’ll be able to change the economics of it. That will increase software innovation, new products, services, features. And that will be in the hand of small, nimble, software development companies. There will be higher competition, and the services will live on the Internet.
Another issue is peer-to-peer vs. client-server-client. What you will see is that virtually all voice over IP systems will look alike. And there will be incremental costs for managing the networks. Computing will move to the users, and we will see several benefits. We will see different economic models. If we look at ourselves as software developers rather than carriers, our marginal costs will be close to zero and we can provide these services for free. In the future, we will not be able to charge for telephony over the Internet. You will have to find other revenue sources. That could be anything: value-added services or advertisement.
There will also be increased robustness. If you have a switch go down or a gatekeeper, that’s not a problem to the end user. They can go to the Internet and find another route of communication. That will not be a problem for a decentralized network. A third benefit will be increased quality. If I can to call Germany using an American provider, it would go to a server in America and then one in Germany. That means there would be latency. If it’s a decentralized system, the call would go a shorter path between end points.
And another benefit would be privacy. End users will feel more safe. If you call them up using a decentralized server, who provides the service will not be able to record the conversation or calling patterns for any reason.
What are the implications for the telecommunications market? Before, services were integrated in the network. Now they become a software application. Before, we have an “intelligent network” even though it’s not that intelligent. After, the network would be dumb and all intelligence would be at the end points. In the telephony world, because services define the network, it becomes a commodity. Telecom companies acquiring customers need to spend a lot of money to convince people their services are better or cheaper. Decentralized systems bring low or no acquisition cost. It’s very easy for users to recommend services to their friends. We don’t spend anything on marketing.
In the old network, voice is the main traffic voice. Now, voice can be marginalized in terms of volume. There will be other kinds of traffic. Now, we have regional players. With a global network, there will be truly global competition. The players don’t need to be like AT&T. They can be very companies with very few people. And the last thing, which is most important, is that it will move from a provider-driven market to a customer-driven market.
Economically, value will shift to more productive areas. Disruptive innovation has to be good for the economy. That does not mean that the segment you’re operating in will grow. The market may shrink, but there may be other opportunities. Today, voice represents about half of the revenue. As voice becomes free, it could be good for telecom operators because we could grow broadband penetration. As a telco, you can provide new services. There are other segments that will develop. On top of all that, there is the voice over Internet segment, which is not part of the voice segment. You don’t make money on minutes. Voice over IP will be significantly smaller. It has to be, or the innovation did not serve any purpose.
I want to talk a little about regulation. Decentralized voice over IP has an implication on regulation. The regulators have been trying to regulate this saying it’s the same service, but it’s not. You regulate a market that is subject to monopoly. You want to make sure consumers are protected. There is no such monopolist in voice over IP. Traditional telecom regulations will not help the market grow, will not help consumers, and will not drive regulation. You should not and you cannot apply regulations designed for network operators to software providers.
Steve Gillmor writes:
Where is an effective filter that will bubble useful information to the top of the RSS queue, where it has a chance to be read?
To begin with, we need to harness the information we already possess about who and what we read. Rather than relying on content creators to signal already consumed material, let’s let the RSS aggregator (offline or online) filter out the links, but not the supporting commentary, to already consumed posts. Instrumenting the browser to record what is read, in what order, and for how long is trivial, says Adam Bosworth, in the context of his Alchemy caching architecture.
Next, let’s incent that cache, mirrored on both server and client, to save posts that appear of interest or import not just to me but my peers on the network, as represented by the RSS feeds that I and they are subscribed to. If Jon Udell, Dave Winer, Doc Searls and 70% of their subscribers find the RSS BitTorrent thread compelling, then please send a message to my cache engine not to throw that post away, no matter whether I have ever heard of the poster or the horse they rode in on, the idea he or she is promoting.
Next, compare all the posts and posters and produce a weighted priority list that takes into account variables such as author, subject, updates, Technorati cosmos tracking, the amount of time I have before the next meeting on my calendar, and so on, producing a post rank based not just on my attention but the attention dynamics of those I choose to do my filtering with and for me.
It’s at this point in the conversation where someone usually brings up the privacy problem. Let me be perfectly clear: I don’t want to invade your privacy. I am completely uninterested in what you personally think about me or my ideas, or whether you are a Republican or a Vegan, or how much money you have or spend on what. In fact, I am adamant about not wanting any personal information of any kind.
Luckily, it’s easy to filter that stuff out of the conversation. Remember, I am really only interested in the aggregated data, the attention metadata that models the group of like-minded people who are interested in some or many of the same things I am. There’s safety, and power, in numbers. If I can identify the characteristics of a group of people who are interested in something, the chances improve that, if an investment were made to produce a solution to that need, the resulting product or service would prove successful if the affinity group were made aware of its existence.
Notice that I don’t need to know anything about you personally–you could even insulate yourself through RSS brokers from identifying yourself as the purchaser of a product derived from this ecosystem, as a condition of your willingness to provide the attention data in the first place. Why would that benefit you and the seller? Because the company could save millions on image marketing and broadcast advertising, passing the savings along to you.
In essence, the contract is between the affinity group and the marketplace. The customer opts in to the RSS feed, and out if the relationship is abused. Privacy becomes a feature of the service, not a bug in the system. Trust becomes the coin of the realm in the RSS for Food ecosystem.
Fred Wilson writes about Metacritic: “The Internet is a great place to check out what people think of music, movies, books, DVDs, videogames, restaurants, hotels, etc. The best place I’ve found to do this kind of work is metacritic. They take real reviews, apply a numerical value to them, and then aggregate them into a single score that they call a metascore. They also show a short summary of the reviews sorted by the metascores. It’s brilliant. You want to see the worst review. Just go read the review with the lowest metascore.”
Would to good to build in this kind of feature into Contentrix, the next-generation content platform that we are thinking about.
India can be a big beneficiary from the commodisiting of IT. A combination of technologies has the potential to bring down the cost of computing down to Rs 700 ($15) or so a month for hardware, software, support and connectivity. This is the key to opening up access to tens of millions of Indian families, students and employees.
Investing in the Internet and broadband is as important as investments in roads, ports and airports. The digital infrastructure needs to be built to complement the physical infrastructure in India. One of the biggest missing factors in India is the availability of broadband. A recent TRAI report on recommendation for increasing the penetrating of the Internet and accelerating deployment of broadband in India says: While internet growth rates in India have been flat, and at times declining over the past three years, other countries like Korea, China and Malaysia have been doubling and tripling the size of their internet and broadband subscriber base. India currently has 0.4 internet connections and 0.02 broadband connections per 100 persons, while Korea has 25 and China has 1.4 broadband connections per 100 persons, with its current level 50% higher than what it was just six months ago. Korea has achieved its success story in a span of less than five years, going from less than 1 broadband subscriber per 100 persons in 1999 to the levels it has reached today. By 2002, nearly 30% of their GDP was transacted on broadband. The lessons that India learns from these examples can be applied to our current situation to realize the same explosive success.
India needs competition and investment in the newest broadband technologies to bring down the artificially high tariffs estimated to be 1200 times more expensive as compared to South Korea on a GDP per capita comparison. A mix of technologies like DSL, wireless, cable and satellite can help in building out the broadband infrastructure in India. Having an affordable always-on connection will transform the way people use computers. This will provide the necessary fillip for the creation of local and relevant content and software.
As the broadband infrastructure comes into place, enterprises in India need to start thinking of 1:1 computing a connected computer for every employee. This also necessitates rethinking of their business: how would workflows and processes be different with a computer on every desktop? Answering this question and putting in the right solutions internally will help boost productivity in Indias industrial sector, especially among the small- and medium-sized enterprises. Today, even email is not considered as a mission-critical application in many enterprises. This is the mindset that needs to change with the commoditisation of IT.
Tomorrow: TCO Focus
I think one of the big stories in the coming years is going to be software-defined radios. Fast Company blogs what Vanu Bose had to say at Supernova:
Today’s wireless devices are hardware based. If you have a CDMA cell phone, it can’t be a GSM cell phone. The hardware determines the device. Software radio solves that problem. We want to move so devices become generic transmission and reception devices. The software can determine what the signal becomes. Currently, our business is focused on the military because of the wide range of non-interoperable radios. The challenge getting to a cell phone-like device is limited by battery life — it does take more energy to do this — and is probably five years away.
Technology development moves very quickly. Let’s look at wireless. That’s developed at the rate of one new standard every decade. That’s not because it’s evolving slowly. It’s because they don’t make it out to widespread deployment. That’s not technical. It’s financial. For one recent AT&T build out, they had to add entirely new base stations. With that kind of investment, it can take 7-10 years to make good on that investment. That’s why we’re trying to make our innovation a software change.
There’s also an interesting comment by Tren Griffin on rural connectivity: “Spectrum is like invisible money. It’s just lying on the ground. In these rural countries, if you have some money and you have some spectrum, you can create a network. In rural Montana, there’s a lot of spectrum, but there are no devices that can use it. We want two-way connectivity anywhere in the world. We need base stations that cost less than $10,000. We need chips that cost less than $5. We need cheap spectrum that will go through mud, adobe, and brick walls.”
David Gristwood presents 21 rules of thumb, based on an article by Jim McCarthy. “As someone who has been involved with software development for over two decades, the whole area of how you actually bring together a team and get them to successfully deliver a project on time, is one worthy of a lot of attention, if only because it is so hard to do.”
The Asian edition of Business Week had a cover story by Manjeet Kripalani on the use of technology to benefit India’s poor:
Now, the entrepreneurs are starting to discover one another: India has this year been host to three conferences on the use of technology for development in rural societies. So far, most of these ventures have been funded with entrepreneurs’ savings because venture capitalists see few prospects of early returns. With the number of success stories growing, though, Nasscom and the World Bank are planning a fund of up to $1 billion to support promising ideas. And other developing nations such as South Africa, Brazil, and Sri Lanka are closely watching India’s progress to see whether the projects can be successfully replicated. “India could lead the world in creating the grassroots social experiments that could teach both India and other nations how to use technology for the common good,” says Kenneth Keniston, a professor at the Massachusetts Institute of Technology who follows such experiments globally.
Computer kiosks are at the center of all this. These are typically in the front room of an entrepreneur’s home, with one or two pcs linked to the Internet via a satellite, phone, or wireless link. The country already has some 7,000 such kiosks, and more than 100 new ones pop up each week. By 2007 there could be as many as 300,000, estimates Nasscom. The giant Indian Tobacco Co. has taken the lead in this movement: The company has funded more than 4,000 kiosks so far, giving them to farmers in a bid to boost sales of everything from seeds to soap via its Web site, e-Choupal. But new players are emerging, offering eager entrepreneurs a chance to open kiosks as a business. N-Logue Communications, for instance, has adopted something of a franchise model. The company arranges a low-interest loan of $1,000 to buy a computer and install a wireless link to the Internet. Then it teaches the kiosk owner its possibilities: Net-based education, computer training for local children, videoconferencing, photo work, and more…These kiosks often become the hub of village activity.
Can these projects transform India? Not by themselves. But if, bit by bit, they can make India’s poor a little healthier, a little richer, and a little more literate, the cumulative effect on the country’s fortunes could be enormous. The poor are eager for a wave of digital change. Young people across the country — even in many villages — are familiar with computers and keen to learn how to use them. These days, education and computers are primary items in every rural family’s budget. In the poor, dusty village of Shahpur in Uttar Pradesh, for instance, impoverished farmers save their rupees to send their children to school in the neighboring town of Barabanki. There they can study English and computers, which are considered key to prosperity. Among India’s poor, there’s no shortage of ambition to learn them both. And no shortage of ideas on how to harness technology to give the poor a fighting chance to improve themselves.
News.com has a special report on how it is becoming a powerhouse in technology.
With 13 million of the country’s 48 million citizens living in the high-rise forests of this dense metropolis, people are constantly spying on what their neighbors or fellow subway commuters are buying. As a result, South Korea has become something of an open-air focus group for technology manufacturers, accelerating replacement cycles and a plethora of new product uses.
The local embrace of technology along with an active national government, export-driven local industries, and extensive use of broadband are the key factors permitting the country to wedge its way toward the forefront of the digital revolution. While other national economies rose and fell with the personal computer industry, South Korea is shaping up as a technology powerhouse through consumer electronics.
Look at the vision outlined by the Ministry of Information and Communication:
The South Korean government has outlined ambitious goals for eight services, three infrastructure technologies and nine product categories.
Under this so-called 8-3-9 initiative, the country’s Ministry of Information and Communication has identified specific technologies that it will encourage by funding research or providing other incentives.
Ultimately, the goal is to raise the sagging per capita gross domestic product from around $11,000 (11,595,042 won) to $20,000 by 2010.
One 8-3-9 focus is digital multimedia broadcasting, which allows people to get broadband Internet and entertainment channels remotely. It is still primarily in development in the United States, but it powers flat-screen televisions in upscale Hyundais and Acuras stuck in Seoul’s relentless traffic jams.
Some other goals are:
Digital homes: 500,000 networked households by 2004; 10 million by 2007
RFID: tiniest and cheapest radio frequency technology by 2007
W-CDMA: countrywide network based on the Wideband Code Division Multiple Access standard by 2006
Digital TV: national network set up by 2005
VoIP: 4 million users of voice over Internet Protocol by 2006
Broadband convergence network: 20 million users by 2010 Sensor networks: commonplace by 2010 IPv6: convert to Internet Protocol version 6 by 2010
System on a chip: become one of top three countries in this market by 2007
Next-generation PC: introduce wearable PC by 2007
Embedded software: become second-largest producer of embedded software by 2007
Robots: global presence by 2007
This is the kind of vision and action India needs.
Fans say that RFID technology promises to revolutionize the supply chain through real-time item tracking. Its goal is to keep goods on the shelves, garner more efficiency through better inventory management, enhance safety through smart recalls and cut theft, known as “shrink” among retailers. This is made possible by the fact that when RFID tags emit radio waves, that information is absorbed by a reader, which can then compile and share it with a company’s enterprise software. Suppliers can benefit from real-time inventory management that keeps goods on the shelf. Consumers may not immediately see a lot of major changes, but they would certainly benefit from better in-stock levels.
Here are a few scenarios that Wal-Mart says it would like to see beginning in 2005 as it implements RFID on a wide scale. A case of a product leaves a manufacturer and is tracked and instantly routed when it reaches a Wal-Mart distribution center. There’s no need to rip open a case and inspect the contents because the RFID reader has already identified the item. At the store, the goods are monitored in real-time so there’s no need for inventory. When the shelves are empty, RFID readers alert workers to restock the shelves. If Wal-Mart’s inventory is depleted, a replenishment message is automatically sent to the supplier.
“RFID could put more goods on the shelf,” says William Cody, managing director of Wharton’s J.H. Baker Retailing Initiative. “It would certainly be better than having a skeleton crew walking around filling empty shelves. You could eliminate goods being lost in the back room.”
Today, inventory processing requires line of sight for bar code scanning. Bar codes aren’t going to disappear, but they do have disadvantages compared with RFID. Notably, bar codes introduce human errors, can only encode limited and static information, don’t offer read/write capability and cannot read multiple codes.
Cohen explains the difference between current inventory management and RFID enabled systems this way: In current systems, you may know there are 10 items on the shelf, and that information is compiled in an enterprise planning software system. With RFID, you know there are 10 items, their age, lot number, expiration date and warehouse origin. Its like knowing there are 1,000 people in a city, says Cohen. With RFID, you know their names.
Most of the benefits from RFID at present will be tied to the supply chain and within three- to five-years electronic tags carrying product specific codes should be common, according to EPCglobal, the organization creating standards for the electronic product codes carried on RFID tags.
When it comes to information consumption, IT journalists and IT managers aren’t all that different. We both plow through Web sites, articles, reports, vendor pitches, conference presentations — and, most important, conversations with IT managers — and then we try to make sense of it all. In the process of doing that sort of data mining for this special report, Computerworld identified the following megatrends:
* Information democracy. Companies are putting business intelligence tools and dashboards in the hands of hundreds of white-collar employees, not just a few marketing or financial analysts.
Unstructured data. Tomorrow’s data warehouses will have free-form text — like notes from the call center agent about why the customer hated your product — and even images. Predictive analytics. Tools that can predict what your customers are likely to buy, and when they’re likely to defect, will be extremely powerful Integration. BI software will be blended into regular operations to the point where managers will be able to monitor business activity throughout the day and some business decisions will be automated.
This all sounds great, but there are some cautionary notes. BI requires continuous, aggressive efforts to clean and standardize the underlying data. Plus, the hordes of newly empowered BI end users need to be trained so they don’t make costly mistakes with these powerful tools. (Otherwise, they’ll be empowered to make bad decisions very fast.) And we still need people in the loop to make sense of it all.
Nicholas Carr has written a book, Does IT Matter?, following his article in Harvard Business Review last year which created a huge debate across the industry. Carr says in Wired and an interview to CIO magazine: The IT industry is looking more and more like a traditional, mature manufacturing business. Plagued by undifferentiated products, global overcapacity, and falling prices, hardware and software companies are consolidating, shifting production offshore, and making money on maintenance and other fee-based services. They’re competing on cost rather than innovation and features As IT has become more standardizedcheaper, more ubiquitousit has become harder and harder to use the technology itself as a competitive barrier because it becomes easier for competitors to replicate your systems IT matters enormously as an essential component of business today. You can’t run a business without it. But does it matter strategically? Is it going to set your company apart from your competitors? The answer increasingly is no, and it’s counterproductive at this point to think of IT in that way and to invest in IT with that kind of hope.
In a rejoinder to Carr, Don Tapscott argues that the best companies have the best business models because they have the best IT strategies:
Superior IT enables superior informationa resource that rivals superior talent in competitive differentiation. High-performing business models are also based on superior informationAt the cusp of each wave of tech innovation, market leaders seize advantage, whether as early adopters or fast followers. They grab positional advantage through a combination of IT and business design, and then others have no choice but to follow in their wake. This happens anytime there are new waves of tech innovation.
IT and business models are not discrete factors in strategy; increasingly, they are inseparable. IT is leading to profound changes in business designnot just to new business processes but to the deep structures of the corporation. Because IT and networks radically reduce internal transaction costs, companies can conduct business in real-time. My research shows that smart companies can speed up their metabolism and build high performance into their business designs.
Most important, IT is slashing transaction and interaction costs between companies. The upshot is that partnering is becoming more cost-effective than performing many business functions internally. The vertically integrated corporation is unbundling, and companies can now focus on what they do best and partner to do the rest in what I’ve called “business webs.” Leading companies grow by focusing on their corethat cluster of activities where they have unique capabilities and where they create true barriers to replication. The evidence is clear: Companies that forge high-performance business webs tend to have better products, lower cost structures and better profitability than their vertically integrated counterparts.
It is true that as the Net becomes a powerful infrastructure, and as new standards enable rapid deployment of applications, some technology innovations can be brought to market and replicated faster. However, it’s not so easy to do all the really hard work that makes a system advantageous to a company such as changing business processes, organizational structures, culture and human behavior. The corporate graveyard is strewn with the bodies of those who naively thought it was easy to change a culture. Launch a business innovation or new business design based on IT, and the biggest challenge for your competitors to replicate will be the changes you made to your business, not the technology that inspired them. Companies that successfully alter their business around IT can achieve a significant window of competitive advantage.
Those in the business of selling IT solutions would like to believe that IT has not and cannot be commoditised. For those leveraging IT, it may not matter as much technology has to become part of the DNA of business and if commoditisation helps in lowering investments, so be it.
Tomorrow: India Action: Invest in Broadband and the Internet