Slowing Tech Growth

WSJ writes:

Some economists argue that the tech industry is still suffering a hangover from its blistering 1990s pace, and that growth will eventually ratchet back up. But market-research firm IDC predicts that information-technology spending by the world’s largest companies is likely to increase just 5% a year between 2005 and 2009, down from the double-digit growth rates of the boom years.

Making money in maturing markets requires companies to compete more aggressively for market share. That can mean either buying access to new customers through acquisitions or attracting them with more compelling or cheaper products or services. Keeping prices as low as possible requires a keen eye on costs.

ICICI’s Kamath Speaks

Knowledge@Wharton has an interview with the ICICI CEO:

Our challenge is to invent a new business model where we can create a distribution base effectively in 600,000 villages in India, and to learn to do that at one-tenth the cost of urban India. Just to put that on a scale that someone could understand, we believe that to succeed in urban India, we need to do be able to do business at one-tenth the cost of the West. The reason is that the ticket size of the banking product in India is one-tenth that in the West. If it is a deposit of $10,000 in the West, it will be $1,000 in urban India and $100 in rural India. Loans operate at a similar scale.

We need to be able to conceptualize how to deliver value to this market at an extremely low cost. That’s where the challenge is, as well as the opportunity and the excitement. The challenge is to be able to work with partners because we believe that the branch-led model will not work in this context. The branch-led model would simply replicate our existing structure, and even though we might try to scale things down, the costs are unlikely to go down as much as we need to succeed in rural India.

Insights for Founders

OnStartups has a list of 17 pithy insights. Among them:

6. Eventually, your product will need to work and do something useful. No amount of marketing or strategy will get you around this.

7. At the end of each day, ask yourself: Did the product get better for customers today?. If you dont have a good answer, stay up until you do.

8. Until you are profitable, time is working against you. Once you are profitable, time is on your side.