Mobile Computing in 2006

AWright writes, among his 10 predictions:

1. AJAX will change the way developers look at making web applications.
Now, if you are not a website or application developer, you might not have heard the term AJAX before. But, if you have ever used Google Maps, Amazon’s A9.com service, or even Yahoo’s Mail Beta, then you have a good idea of what it is. What it means for the mobile landscape is that the move from applications being stored on our PDAs and laptop hard drives is coming to an end for some applications. With AJAX, the ability will be for applications to be fully run from a browser, but there will not be a need to have a large app to load, or even long load times. Look for more of these types of applications, especially in the office products area. And watch how many will quickly add support for mobile devices (if you think Google Mail doing mobile devices was kool, just wait).

9. There will be at least one attempt to make a mini-notebook/large PDA device that docks to become a full-fledged computer.
While this is something that I am personally wanting to see and do with my Treo 650 (as much of what I can do I really do on there), 2006 will see this device not only come out to some fanfare, but that device will see some success in vertical and education markets. The key will be making sure that the device hasn’t any compromises as compared to a similarly priced laptop or desktop, and that device and informational security are a large part of the platform. But I do think that this device is well overdue, and we should see at least one, possibly two. OQO has started down this path, hopefully they can continue to push this market further.

Economic Moats

[via Yuvaraj] Morningstar writes:

We begin with the premise that all highly profitable firms attract competitors, and only firms that are able to keep competition at bay will earn above-normal profits for a long time. An economic moat–or competitive advantage–allows a company to fend off competitors and earn sustainable excess economic profits. We look at return on invested capital (ROIC) relative to the company’s cost of capital to determine profitability, because ROIC shows us the cash return on the capital invested in the business. We think that ROIC is the best measure of a firm’s true economic profitability.

Of course, we have to examine ROIC relative to a firm’s cost of capital because money isn’t free–those who have capital charge companies for the right to use it, and they charge some companies more than others. A firm that operates pipelines or sells beer has a low cost of capital because it has a stable business, so investors don’t ask for much in the way of returns. A small semiconductor or biotech firm would have a very high cost of capital because it’s entirely possible that investors might not get their money back, so they ask for a high return to compensate for the higher risk. For example, an ROIC of 14% would be spectacular for a pipeline company relative to its 8% cost of capital, but would barely clear the bar for a small tech or biotech firm.

Google PC?

Dan Farber discusses some of the buzz surrounding Google’s rumoured plans to launch a $100-200 PC of its own:

There’s no reason why Google can’t build and brand a $100 to $200 PC, but does the company that wants to organize the world’s information want to go beyond its search enterprise appliance hardware at this point. Is the prospect of supplying the worldespecially the developing economieswith Google hardware, and extending its footprint with more than bits, worth the hassle of being in the mass market hardware business, which is different from the beta Internet services business?

Doesn’t Google have enough to do improving its software services without expanding in yet another direction, or is growing more tentacles the order of the day. Clearly, Google could outsource most of the work and use partners like Wal-Mart to do heavy lifting. Hardware works for companies like Dell and Apple, why not Google. It has the money and headcount to invest in quality assurance and support services for a consumer hardware device, and the idea of booting up, to use an old term, your Google machine has to have a nice ring. Maybe Sun can lend a hand with Google’s effort, or perhaps the Googlers are acting as more than just a sponsor for the $100 PC that MIT is promoting.

PPC Killing Publishing

Robert Cringely writes that pay-per-click advertising is killing the traditional publishing industry:

It isn’t the rising cost of paper, the toxicity of ink, or the increasing ease with which people read from electronic devices that is driving this effect. This has nothing to do with handheld computers, eBooks, or electronic paper. Nor is it the widely decried decline in reading. What’s killing the printed word is advertising.

For every form of publishing other than books, advertising makes the accounts balance. Unless your product is Consumer Reports, you as a publisher need ad revenue to keep the system running. Subscription fees alone aren’t enough to support most magazines and newspapers. In fact, most publishers will gladly pay the entire cost of a subscription in marketing expenses alone just to gain another subscriber. That’s because to a publisher, a subscriber is really just a reader of ads. Sell enough ads and you’ll make a lot of money.

Then along came Google and pay-per-click and everything began to change.

India’s Talent Pool Drying Up

WSJ writes:

India, despite its reputation as a bottomless well of back-office talent ready to scoop up American jobs, is having an increasingly difficult time finding qualified workers to fuel its booming services sector.

The cross-sector crunch is especially worrisome in the technology industry, where wages are rising 15% a year as call centers and software firms throw money at the increasingly shallow pool of youngsters who can hit the ground running. Consulting firm McKinsey & Co. says India’s information-technology industry could face a deficit of 500,000 workers as soon as 2010, undermining its attractiveness as an investment destination.

Even if companies continue to find the talent they need in the near term, the rising wage bill is a troublesome long-term trend for India’s competitive prospects — and for foreign companies pumping money into the global outsourcing market. The emerging talent deficit is giving rivals such as Russia space to compete with India for high-end outsourced work such as software design and solutions, and allows aspirants such as the Philippines — where English is widely spoken — to better compete for call-center business.

Business Week writes:

If India doesn’t take urgent action to reform education and build modern infrastructure, the nation could fall far short of its potential as an outsourcing haven. That’s the conclusion of a new study to be released Dec. 16 by McKinsey & Co. and Nasscom, India’s influential information technology trade association.

The first inklings of a tightening talent supply are already visible in rising staff turnover and skyrocketing wages. If offshore outsourcing work grows as rapidly as expected, the study predicts, in five years India will have a shortfall of 150,000 IT engineers and 350,000 business-process staff. “The problem we are facing is huge,” says Noshir Kaka, a McKinsey consultant who led the study. “The acute demand is leading to supply-side shortages.”

TECH TALK: 2006 Tech Trends: Digital Home

4. The digital home is the next big technology battleground.

The iPod and the Xbox 360 were the hottest selling items during the Christmas season in the US. They are harbingers of change. Music is no longer being consumed on big boom boxes. Rather, people are starting to carry it with them on their iPods. The Xbox 360 is the first of the next-generation gaming consoles with graphics which mirror the visual reality of our world and the ability to connect multiple players into fascinating online virtual worlds. Intels year-end redesign of its logo and byline are but the start of the home wars. Call it convergence or divergence, the stakes are huge. For us consumers, it is a world where the digital dreams that have been talked about for long finally start becoming real.

Technology Futures (via TMC Net): The digital home is entering the next level of acceptance, with the expansion of the electronic gaming and MP3 marketplace being a major driver. High definition TV and digital recording at home are important drivers, but increasingly a major driver of the digital home is the electronic gaming and MP3 marketplace. The devices have become more than just a video game or a portable audio experience, with integration into many different devices and vehicles, and the addition of video to the MP3 devices.

BBC News: On-demand game services offered via cable, satellite and broadband TV is likely the be the next big thing and there is also an opportunity for the next-generation consoles to become the hub for a digital home. Incorporating online game play with HD movie playback and connectivity to PCs, digital cameras and other devices, the games console could take centre stage in the living room, according to a study by the Consumer Electronic Association.

Internet News: The prediction here is that we’ll finally see some interesting designs for home PCs based on the Viiv spec, which includes Microsoft’s Multimedia Windows Media Center Edition software. Certainly we’ve come a long way from the Web TV fiasco, but 2006 will not be the year consumers flock en masse to get a Viiv in their living room. Why bother when all the fun’s in the den where the new Xbox 360, or even PlayStation 3 when it ships this spring, reside? Built-in surround sound, slick design, the latest Intel dual-core processors, remote-control access, and other nice touches, such as QuickResume, will attract a healthy niche of early adopters for Viiv.

Tomorrow: Search and Online Advertising

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