Mittal, India and Europe

International Herald Tribune has an interesting article on Lakshmi Mittal’s bid to buy Arcelor and the subtle underplay that is resulting from it about India’s emergence as a global power:

… the Mittal bid may give rise to a new image of India, and of emerging markets more generally, as a profound and sophisticated threat. European concerns partly reflect the unknowns of how Mittal Steel will apply its low-cost model to Arcelor’s plants. Steel industry analysts say that Mittal Steel is far leaner than Arcelor and is likely to trim, but Mittal has denied that there will be any plant closings or layoffs.

Europe is also wary of the ascendancy of business models invented outside the West – whose inventors claim that they can operate Western companies better than Westerners do. In interviews, several India-based expatriate workers for European multinationals all argued that it was this deeper, high-end threat that worried Europe.

“This threat is stronger than the threat of” outsourcing, said Antoine Zenone, a vice president at the French cement maker Lafarge and the company’s lone French expatriate in India. “We’re no longer talking about keeping companies within the borders, but rather about preventing companies from coming in.”

PayPal vs GBuy

WSJ writes about the coming battle between PayPal and Google in payments: “PayPal must now contend with Google. The Mountain View, Calif., Web-search giant, which has terrified Silicon Valley with its ability to quickly create new consumer products and services, is developing a rival service called GBuy. For the last nine months, Google has recruited online retailers to test GBuy, according to one person briefed on the service. GBuy will feature an icon posted alongside the paid-search ads of merchants, which Google hopes will tempt consumers to click on the ads, says this person. GBuy will also let consumers store their credit-card information on Google.”

Davos Conversations on the Future of Media

[via Richard MacManus] Richard Edelman puts together some nice quotes. Among them:

“Who is the biggest distributor of content? It is the consumer, who does not expect to be paid for this service but wants free in kind services. We also need to enhance individuality within each community.”
— Tom Glocer, CEO, Reuters

“There are five forces pushing the consumer to be involved with on-line media. Self expression/self publishing; Aggregating to relevant people; Sharing; Collaboration; Knowing where you are in the pecking order.”
— Yossi Vardi, venture capitalist, creator of instant messaging

Gladwell on Profiling

Malcolm Gladwell writes:

When we say that pit bulls are dangerous, we are making a generalization, just as insurance companies use generalizations when they charge young men more for car insurance than the rest of us (even though many young men are perfectly good drivers), and doctors use generalizations when they tell overweight middle-aged men to get their cholesterol checked (even though many overweight middle-aged men wont experience heart trouble). Because we dont know which dog will bite someone or who will have a heart attack or which drivers will get in an accident, we can make predictions only by generalizing. As the legal scholar Frederick Schauer has observed, painting with a broad brush is an often inevitable and frequently desirable dimension of our decision-making lives.

Another word for generalization, though, is stereotype, and stereotypes are usually not considered desirable dimensions of our decision-making lives. The process of moving from the specific to the general is both necessary and perilous.

TECH TALK: India Internet and Mobile: Internet Challenges

We would like to explore the salient challenges facing businesses predominantly driven by Internet & Mobile.

The Internet user base in India is said to exceed 35 million with two-thirds of that access coming in from cybercafes. I believe that for the Internet to play a significant role in our lives much of that access has to shift to homes. Only then will people start building their lives around the Internet. Availability of access away from home for a few minutes a day is not how the Internet usage will take-off, even though the user base may keep growing.

There are many bright spots on the Indian Internet. Jobs and matrimonial sites have done exceptionally well. Ticketing (both for railways and airlines) has taken off in a big way, as has online trading. But whats needed for the Indian Internet is a positive feedback loop of an increasing user base and increasing usage way beyond whats there today. For this, there are four key challenges that need to be addressed: PC installed base, broadband availability, content and payments.

The installed base of PCs in India is growing from its base of about 18 million, but not quickly enough. That is primarily because of the ADAM problems that I have discussed earlier: affordability, desirability, accessibility and manageability. PCs are still quite expensive (the Rs 10,000 PCs are barely usable), the importance of the PCs in daily life has still not been driven home, access to PCs is still not ubiquitous to build connected lives around it, and finally, users have to be reasonably competent to manage their PC (especially to prevent viruses and spyware). All of these four problems need to be solved simultaneously.

Broadband is one of the big disasters in India. Not only do we need to redefine the lower speed limits of what what is considered broadband, we need to make it available to people rapidly and for an all-you-can-eat pricing. Currently, we have speeds well under the official limit of 256 Kbps masquerading as broadband. In places like Mumbai, it takes weeks to get a connection from the local telco (MTNL). The low entry price point of Rs 200-250 ($4.50-5.50) per month is only applicable if one limits downloads to less than 100 MB. Beyond that, it is metered. Without unbundling of the last mile, it will still be some time before the private ISPs can provide affordable broadband access.

The content and services available on the Indian Internet still leave a lot to be desired. Part of this is due to a historical accident the funding window for start-ups in the space during 1999-2000 was too short for many businesses to get created. Even though there are signs that this is now changing with venture capital starting to flow in, India needs at least a hundred different start-ups to start building out the relevant content for domestic users.

Finally, we need payment options beyond credit and debit cards. It could be pre-paid cash cards or it could be via mobiles. What is needed is that both customers and merchants feel comfortable paying and accepting payments via the Internet. In the US, the combination of address verification and credit reporting agencies keep fraud in check.The same is not the case in India. Without the ability to complete transactions, the consumer Internet will remain more info-centric rather than a utility for people.

Tomorrow: Mobile Challenges

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