December 24, 2004

China’s Tech Rise

WSJ writes:

China is more advanced in the use of technology than many people know. It passed Japan this year to become the second biggest consumer of PCs after the U.S. It’s closing in on 100 million Internet users, placing it second in that area, though it still has only half as many users as the U.S. And 15 million Chinese subscribe to broadband DSL service. That’s more than in the U.S., though many Americans get their high-speed connections from a cable company.

In cellphones, China’s 250 million users far surpass those of any other country. (Official statistics claim more than 325 million subscriptions, but they overcount business travelers, who get more than one subscription to avoid high roaming fees.) What’s more, those 250 million users are still only about one-fifth of China’s population.

The second big reason to pay attention to China’s technological rise is that it’s happening faster here than it did elsewhere in Asia. The transfer of marginal businesses from the U.S. and Europe to lower-cost operators in Asia has been going on for more than a generation, starting with Japan, then South Korea and Taiwan. China’s government, companies, partners and investors learned lessons from the country’s neighbors. They’re also all moving faster because the tools of the trade — manufacturing equipment, logistics systems and the like — are all better than ever.

Dell’s Efficiency

The New York Times writes:

at a time when economists and politicians fret over the future of American manufacturing as China emerges as the workshop of the world, Dell isn’t just defying a global trend; it’s helping to set the standard. “When everybody is outsourcing – when everybody is outsourcing – Dell continues to manufacture in the United States because over two decades of fine-tuning, they’ve figured out how to do it cheaper and smarter,” said Charles R. Wolf, an analyst at Needham & Company who has been following Dell since 1991.

Dell’s decision to expand its American manufacturing presence, however, has nothing to do with patriotism. Executives here say their decisions are based on the bottom line as well as on geography; it is simply more efficient to stamp out computer equipment closer to the customer. “The reason we continue to manufacture in the United States is that it’s the optimal place to do so, and we can do it most cost effectively,” said John Hamlin, who oversees Dell’s entire consumer line.

Technically, Dell does not take possession of a part until it is wheeled off a truck and into its factory, and yet that same part will be a component of a complete machine within a couple of hours. A minimum of inventory translates into huge savings on Dell’s books, and it also means that when the company switches, say, to standard 40-gigabyte hard drives, it doesn’t have to blow through weeks of outmoded 20-gig drives.

All of that places a huge burden on Dell’s suppliers, each of which Dell rates weekly for performance. “To many suppliers, Dell is like having Wal-Mart for a client,” said Mr. Eunice of Illuminata. “You love the volume, but not the constant grinding pressure on price, terms, conditions and timing.”

iPod Ecosystem

Barron’s writes that even as consumers buy iPod’s to stuff into Christmas stockings, there are many other companies benefiting:

About four million units, some fetching upward of $600 and holding up to 10,000 songs, are expected to sell this quarter, twice as many as in the prior three months. Indeed, iPods are driving the rapid growth in the $4.4 billion portable digital-audio market and firing up Apple’s stock, which has risen 200% this year.

Also on a tear are shares of several little-known outfits that supply components for the iPod and other portable digital audio devices, known generically as MP3 players. Among suppliers are Texas Instruments and Hitachi, though such work is a tiny part of those giants’ revenues. But the iPod is big business for smaller companies such as Synaptics, SigmaTel, PortalPlayer and Audible, whose stocks have shot up in the iPod frenzy.

Synaptics, a leader in touch-screen technology, and Audible, which provides audio content for MP3 players, look to profit long term. Semiconductor concerns SigmaTel and PortalPlayer, on the other hand, get upward of 90% of their revenue from the iPod and other MP3s, making them vulnerable as competition continues to grow.

Exploding PCs and Appliance Relationships

[via Abhijit Nandy] Steve Makofsky points to a series by Leslie Orchard on “the relationship between appliances and computers, and how homes will eventually have multiple task-specific embedded devices instead of a central computer.” Writes Leslie Orchard in one of the articles: “One thing Im really looking forward to is seeing the PC explode and turn inside out, like the Home Motor. The price of processors drops, while their power increases. So far in computing, the processor has been a pricey central resource, demanding to be shared between programs and peripherals. But soon, it wont be too far fetched to think of a processor as the least precious part. In fact, computers could get so cheap as to be given away, while well-built tools and appliancesmore than just software alonebecome the valuable thing…Theres a lot of work that would need to be done here to get the right balance between inter-appliance paranoia and end-user convenience, but I think that simpler task-focused devices isolated from each other but linked by task-centered agreements could go a long way toward killing the free-for-all playground environment spyware and virus authors have today.”

Safe Computing

Bruce Schneier has a series of recommendations for users. These include:

Operating systems
If possible, don’t use Microsoft Windows. Buy a Macintosh or use Linux. If you must use Windows, set up Automatic Update so that you automatically receive security patches. And delete the files “command.com” and “cmd.exe.”

Applications
Limit the number of applications on your machine. If you don’t need it, don’t install it. If you no longer need it, uninstall it. Look into one of the free office suites as an alternative to Microsoft Office. Regularly check for updates to the applications you use and install them. Keeping your applications patched is important, but don’t lose sleep over it.

Browsing
Don’t use Microsoft Internet Explorer, period. Limit use of cookies and applets to those few sites that provide services you need. Set your browser to regularly delete cookies. Don’t assume a Web site is what it claims to be, unless you’ve typed in the URL yourself. Make sure the address bar shows the exact address, not a near-miss.

TECH TALK: India Trends: Looking Ahead

Looking beyond technology, perhaps the most important event in 2004 in India took place in May with the loss of the ruling BJP government and the coming to power of a Congress government, supported by the Left parties. The shock was so great that the BSE Sensex fell sharply to a level just above 4,000. That was May. Now, the elections are long since forgotten, and the index has crossed the 6,000 mark. Politics has taken a back seat as India gets back to focusing on growth. There is a distinct pro-poor bias in talk but actions still leave a lot to be desired.

The greatest challenges for India remains the same moving a mass of many hundreds of millions of its people out of poverty and tackling the population growth in the face of finite resources. Even though the Budget did not have many measures which should help the poor, there is little indication that the implementation of the various programmes has been changed to plug leakages in the system. The feeling across state governments now seems to be that providing free power to farmers is a great idea for them to stay in power! So, we have a situation that even with a debt of Rs 1 lakh crore ($22 billion), the government of Maharashtra state has decided to implement its election promise of free power to the farmers.

Look south and the Bangalore dream is in danger. The Indian Express ran a series of front-page stories on the sad state of infrastructure in the city, a government which didnt care because it was elected by the poor, and a frustrated IT sector which can shout and scream but is not being heard. India will not get too many chances. The global herd is remarkably agile and can move its money and attention quickly. India has been the cynosure of eyes during 2004, but for it to continue we need to move fast on twin tracks: transforming rural India and upgrading infrastructure across urban India. We dont need lots of fresh ideas we are not the first country which needs to become developed. What we need is a mix of vision and will we have our chance, and we need to now grab it. Not for a few pockets for India, but for a nation. Technology can be a powerful enabler but it is just that. 2004 has seen many positives, but this is only the start. India has many lost decades to catch up on.

I believe that one of Indias greatest strengths lies in the entrepreneurial ability of its people. There is still a lot that holds us back than propels us forward. Many amongst us will need to change their mindsets to take the risks that are necessary to build innovations and institutions that can be the foundation for a smarter, better and richer India. And for that we have to get a lot of the small things right. Consider for example the way we have our addresses. Try finding a place based only given a three-line address anywhere in India. Of course, there are plenty of people walking around who can be stopped and ask. But thats not the solution. We have to do things right not create alternate paths around wrongs.

So, what will 2005 bring? As always, I am optimistic I believe that a handful amongst us can make a deep and positive impact on the India of tomorrow. We have to believe and dream that a better India can be built by us, the people. Technology can now enable us to do things faster, better and cheaper. By aggregating the best ideas and innovations, we can build a platform for others to participate in bringing about the renaissance of a nation that binds us all together.

Continue reading TECH TALK: India Trends: Looking Ahead