ICT Initiatives

WSJ writes on technology initiatives for the next markets and users:

The goal is…to dramatically broaden the spread of information technology to underdeveloped regions around the world. Companies and university researchers have launched a flurry of collaborative projects to design new computing and communications gadgets, some priced at $250 or less, to reach new users in India, China and other emerging economies.

The new brainstorming about the digital divide is partly inspired by technical breakthroughs in fields like wireless communications. But it also reflects a widening consensus that existing government and charitable efforts at technology transfer aren’t sufficient.

The efforts are based on a belief that technology developed for industrial countries doesn’t meet the needs of many poor regions, which grapple with problems such as power shortages and language differences.

Among the initiaties mentioned:
– UC, Berekeley’s ICT4B
– AMD’s 50×15 effort, which “takes its name from the goal of connecting 50% of the world’s population to the Internet by 2015, up from 10% today”
– Intel’s China Home Learning PC
– Raj Reddy’s PCtvt
– ITC’s e-Choupals

Cemex’s Energy Solution

WSJ writes about the innovative solution being used by Cemex of Mexico:

Mexico-based Cemex, the biggest cement producer in the U.S., has cut its energy bills by 17% in the past four years. The company is reaping the benefits of an ambitious decade-long effort to refit its cement plants so they can operate on cheap, little-used fuels such as an oil-industry residue called petroleum coke and industrial waste like oily rags.

Cemex’s success in reducing its energy expense offers an unusual lesson in global business, showing what a developing-world company can do when forced to deal with competition from the developed world. In some cases the difficult operating environments of emerging markets — economic turbulence, high borrowing costs, creaky infrastructure and corruption — can act as a rigorous corporate boot camp, breeding the kind of innovation that makes for lean competitors on the world stage.

Cemex’s biggest weapon in its war on energy costs has been petroleum coke, a blackened leftover from the oil refining process. It had long been used as an occasional energy supply in some cement plants around the world. It burns hotter than coal, the cement industry’s main fuel source, and is much cheaper. But burning pet coke creates its own problems and the difficulty of getting enough supply had prevented “pet coke” from becoming a primary fuel source for the cement industry.

After overcoming those hurdles, Cemex is using pet coke at most of its global plants. Pet coke now accounts for half of Cemex’s fuel needs. That has given Cemex a big competitive advantage, particularly in recent months as the price of coal soared to about twice that of pet coke.

Cemex has also been written about by CK Prahalad in his book “The Fortune at the Bottom of the Pyramid.”

Broadband Importance

Indian policymakers would do well to read what Om Malik has to say on the transformational potential on broadband in nurturing innovation: “the axis of technology world has moved to somewhere in South China Sea. I think we sit in our ivory towers with a myopic view of the world, getting excited about WiFi. Look when there are going to be a half-a-billion people in Asia using 50 megabits per second broadband connections, some of them – lets assume 0.0001% – will figure out a new use for the speed, will write applications and decide the direction of broadband. That will result in another 0.0001% figuring out how to build new hardware to make those networks work their way. You see where I am going with it.”

Ninad Mehta has some comments on what needs to be done in the US.

Moving to India, I think it takes genuine effort to make a mess of things at the policy-level. We seem to be getting quite good at it in India. Let’s just keep it simple: make broadband infrastructure buildout a national priority, get rid of every reuglation that gets in the way, and then stop and let the market decide.

AMD Bounces Back

AMD’s renaissance in the chips business has been somewhat of a surprise. InfoWorld asks if it is new Intel. “AMD has become known as the company that kept Intel honest, the Linux of the semiconductor world. Competition from AMD has reversed the trend of rising prices and stagnant innovation that characterize a controlled market. AMD is responsible for $500 desktops, $1,200 rack servers, and multigigahertz mainstream microprocessors, despite the fact that most of them have Intels logo on them.”

Another article discusses how it stayed in the game: “n 1999, while AMD was suffering through one of the darkest periods in its history, the financially strapped semiconductor maker needed to get the word out about its new Pentium II-compatible processor, Athlon. So it did what any serious company would do: It enlisted the aid of PC gamers, overclockers, and build-it-yourself enthusiasts.”

The Economics of Software

[via Tim Bray] Bryan Cantrill writes:

Software is like nothing else in the history of human endeavor:1 unlike everything else we have ever built, software costs nothing to manufacture, and it never wears out. Yet these magical properties are arguably overshadowed by the ugly truth that software remains incredibly expensive to build. This gives rise to some strange economic properties: software’s fixed costs are high (very high — too high), but its variable costs are zero. As strange as they are, these economic properties aren’t actually unique to software; they are also true (to varying degree) of the products that we have traditionally called “intellectual property.” But unlike books or paintings or movies, software is predominantly an industrial good — it is almost always used as a component in a larger, engineered system. When you take these together — software’s role as an industrial good, coupled with its high fixed costs and zero variable costs — you get all sorts of strange economic phenomena. For example, doesn’t it strike you as odd that your operating system is essentially free, but your database is still costing you forty grand per CPU? Is a database infinitely more difficult to write than an operating system? (Answer: no.) If not, why the enormous pricing discrepancy?

To come back to our initial question: why is the OS basically free while the database is costing you forty grand per CPU? The short answer is that the changes that have swept through the enterprise OS market are still ongoing in the database market. Yes, there have been traditional demand-side efforts like MySQL and research efforts like PostgreSQL, but neither of these “good enough” efforts has actually been good enough to compete with Informix, Oracle, DB/2 or Sybase in the enterprise market. In the last few years, however, we have seen serious supply-side movement, with MaxDB from SAP and Ingres from CA both becoming open source. Will either of these be able to start taking serious business away from Oracle and IBM? That is, will they be enough to lower the FYO point such that more customers say “FY, O”? The economics of software tells us that, in the long run, this is likely the case: either the demand-side will ultimately force sufficient improvements to the existing open source databases, or the supply-side will force the open sourcing of one of the viable competitors. And that software does not wear out and costs nothing to manufacture assures us that the open source databases will survive to stalk their competitors into the long run. Will this happen anytime soon? As Keynes famously pointed out, “in the long run, we are all dead” — so don’t count on any less sighing or groaning or check writing in the immediate future…

TECH TALK: An American Journey: Silicon Valley Observations

On this trip, I spent 8 days in the Silicon Valley the most since August 2000. The bulk of my meetings were there. I got to meet a wide cross-section of people and companies. So, I thought I would end this series with my impressions, especially against the backdrop of the news that Bangalore may soon have more techies than the place it seeks to emulate.

Silicon Valley consists of two types of companies the big, established giants of technology, and the start-ups who seek to overthrow their bigger brethren. Everyone has a choice of where they want to work the stable life of the biggies, or the risky road of the start-up. For those who prefer the latter, it is then a luck of the draw (as Atanu put it) most start-ups fail, but there are a few that make it big. It is this dream of making it big one day that keeps the fire in the belly for many entrepreneurs and those who join the freshly minted start-ups early in the game.

The Silicon Valley remains the hub of innovation. The freshest of ideas and work continues to happen there. In part, it is due to the ecosystem that is already in place the entrepreneurs who are on their second, third or even fourth venture, the angels who provide not just the seed capital but also the mentoring, the venture capitalists, the university backdrop (especially Stanford), and above all, the culture of risk. It is this mix that makes Silicon Valley unmatched. We may have more engineers in Bangalore, but the ecosystem needed for innovation and start-up entrepreneurship is missing and will take time to build.

Having said that, I found on this trip a kind-of stasis, a calm. The traffic jams on 101 always a good indicator of activity were non-existent. It seemed like both entrepreneurs and venture capitalists were in a holding pattern waiting for the next new thing. While funding levels are increasing, VCs are looking for companies with some traction in the marketplace. This is both good and bad. It is good because many of the stupid ideas that got funded during the late 1990s will not now get money. It is bad because out of some stupid ideas come some really smart ones!

Silicon Valley thrives on the culture of the next new thing. It has always been ahead of the pack thanks to its mix of having some of the smartest brains in the world, and a vibrant domestic market. This is where I believe that things may need to change in the future. Some of these brains are migrating away East, to China and India. It is still a small trickle, but give it some time, and it will start to tell. Also, the next markets for technology, according to me, are now in the East. The Asian countries are home to the next billion users of technology only, they dont know it as yet. It is here where technology can make a huge impact in improving peoples lives sort of do good and do well.

To get a sense of these markets, entrepreneurs in the Silicon Valley will need to travel and spend time in countries like China and India to get a sense of how utility commPuting can make a difference. This is where convergence is happening across various industries it is not as visible on the surface yet. The future is happening and these markets are going to be on the forefront of techs next revolution. For the first time, Silicon Valley needs to start reaching out to markets beyond its geography.

Continue reading