TECH TALK: India’s Challenges: Fortune

In another recent article that was much debated and often criticised, Fortune’s Cate Murphy blew the fantasy of India as a superpower. This is what Cate had to say:

India is not a superpower, and in fact, that is probably the wrong ambition for it, anyway. Why? Let me answer in the form of some statistics.

* 47 percent of Indian children under the age of five are either malnourished or stunted.
* The adult literacy rate is 61 percent (behind Rwanda and barely ahead of Sudan). Even this is probably overstated, as people are deemed literate who can do little more than sign their name.
* Only 10 percent of the entire Indian labor force works in the formal economy; of these fewer than half are in the private sector.
* The enrollment of six-to-15-year-olds in school has actually declined in the last year. About 40 million children who are supposed to be in school are not.
* About a fifth of the population is chronically hungry; about half of the world’s hungry live in India.
* More than a quarter of the India population lives on less than a dollar a day.
* India has more people with HIV than any other country.
(Sources: UNDP, Unicef, World Food Program; Edward Luce)

The problem with India’s self-proclaimed (and wildly premature) declaration of superpower status is that it reflects a complacency about both its present – which for many people is dire – and its future. Eight percent growth for four years is wonderful, but as the saying goes, past performance is no guarantee of future results. And India is not doing what it needs to in order to sustain this momentum.

Consider the postwar history of East and Southeast Asia. The comparison is appropriate because India started at about the same point, and has watched just about every country in the region get ahead of it on the economic curve. All these places developed by being relatively open to trade; by investing in primary and secondary education; and by building pretty decent infrastructure (not only roads and ports, but health clinics and water supplies). India has begun to embrace one leg of this triangle – freer trade.

Even here, though, many of the worst features of the swadeshi (“self-reliance”) era remain intact, including an unreformed state banking sector; labor regulations that actively discourage hiring; abstruse land laws (and consequent lack of land titles); misshapen subsidies that hurt the poor; and corruption that is broad, deep and ubiquitous. Nothing useful is being done about any of this.
As for the other two legs of this development triangle – education and infrastructure – these are still badly broken. About a third of teachers fail to show up on any given day (and, of course, are unsackable); the supply of both water and power is expensive and unreliable.

Cate’s summary captures the challenge ahead of us in India: Hubris, of course, is the stuff of politics everywhere. But the future will not belong to India unless it takes action to embrace it, and that means more than high-profile vanity projects like putting a man on the moon or building the worlds tallest tower. It means showing that the world’s largest democracy can deliver real progress to the hundreds of millions who have never used the phone, much less the Internet. And in important ways, that just isn’t happening.

Tomorrow: Atanu Dey

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Focus on Customers

Stephen Johnston writes:

s people insulate themselves from marketing messages and are influenced more by what their friends say than what expensively produced marketing materials say, the trick for companies to shift their wares is to convert current customers into their evangelists. All very Cluetrain 101. However, what strikes me odd as how badly companies manage their current customers, preferring instead to focus on non customers.

Advertising for new customers is not as effective (depending on product, geography yadayada) as it was, but the simple key proposition to is to manage and delight the current customers. However, the current tools that we’ve got for companies to manage them are pretty minimal. In particular those tools that allow customers to interact with brands using their mobile.

Motion Capture Technology

Business Week writes:

Motion capture is starting to transform how businesses market their products as well as design and manufacture them. This spring the Las Vegas McCarren International Airport will set up large plasma screens with a motion- tracking component that lets advertisers bring pedestrians into their commercials. When you walk past a car ad, for example, the vehicle might move at the same speed you’re walking. When you turn to look at the driver, he’ll turn to look at you, and you’ll be staring into an image of your own face. Dozens of blue-chip aerospace, auto, and heavy-equipment makers, from Lockheed Martin to BMW to Caterpillar already use motion tracking to let workers collaborate in shared virtual environments, sometimes when they are thousands of miles apart. Together they can test the ergonomics of a design for a car or a plane. “Any company that creates a product used by people needs to understand how the human body moves,” says Iek van Cruyningen, head of securities at Libertas Capital Group, a specialist investment bank. “Motion-tracking systems and virtual simulations accelerate product development and boost productivity.”

US Univs Coming to India

The New York Times writes:

Among Indians ages 18 to 24, only 7 percent enter a university, according to the National Knowledge Commission, which advises the prime ministers office on higher education. To roughly double that percentage effectively bringing it up to par with the rest of Asia the commission recommends the creation of 1,500 colleges and universities over the next several years. Indias public universities are often woefully underfinanced and strike-prone.

Indians are already voting with their feet: the commission estimates that 160,000 Indians are studying abroad, spending an estimated $4 billion a year. Indians and Chinese make up the largest number of foreign students in the United States.

Mobile Money

Smart Mobs writes:

The Guardian reports “in what is being touted as a world first, Kenya’s biggest mobile operator is allowing subscribers to send cash to other phone users by SMS.Known as M-Pesa,or mobile money,the service is expected to revolutionise banking in a country where more than 80% of people are excluded from the formal financial sector.Apart from transferring cash – a service much in demand among urban Kenyans supporting relatives in rural areas – customers of the Safaricom network will be able to keep up to 50,000 shillings (370) in a “virtual account” on their handsets”.Further,”M-Pesa’s is simple.There is no need for a new handset or SIM card.

TECH TALK: India’s Challenges: Business Week

India featured on the cover of a recent issue of Business Week. This is what Business Week had to say:

[India’s] economic boom is being built on the shakiest of foundations. Highways, modern bridges, world-class airports, reliable power, and clean water are in desperately short supply. And what’s already there is literally crumbling under the weight of progress…The infrastructure deficit is so critical that it could prevent India from achieving the prosperity that finally seems to be within its grasp. Without reliable power and water and a modern transportation network, the chasm between India’s moneyed elite and its 800 million poor will continue to widen, potentially destabilizing the country.

Blame it partly on India’s revolving-door democracy. Political parties typically hold power for just one five-year term before disgruntled voters, swayed by populist promises from the opposition, kick them out of office. In elections last year in the state of Tamil Nadu, for instance, a new government was voted in after it pledged to give free color TVs to poor families…Then there’s “leakage”India’s euphemism for rampant corruption. Nearly all sectors of officialdom are riddled with graft, from neighborhood cops to district bureaucrats to state ministers. Indian truckers pay about $5 billion a year in bribes, according to the watchdog group Transparency International. Corruption delays infrastructure projects and raises costs for those that move ahead.

[Prime Minister Manomohan] Singh, in fact, is promising a Marshall Plan-scale effort. The government estimates public and private organizations will chip in $330 billion to $500 billion over the next five years for highways, power generation, ports, and airports. In addition, leading conglomerates have pledged to overhaul the retailing sector. That will require infrastructure upgrades along the entire food distribution chain, from farm fields to store shelves.

Unless the nation shakes off its legacy of bureaucracy, politics, and corruption, its ability to build adequate infrastructure will remain in doubt. So will its economic destiny.

There’s more to read and ponder over.

Tomorrow: Fortune

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Media Changing

Bambi Francisco writes:

The media are undergoing a significant overhaul of business models, and this is driven by the customer, now involved in producing and marketing content. The consumer or audience has a lot of power today.

It is with such power that magazines, such as Time, are trying to relate to the new consumer while not abandoning the old by testing out new models.

One new business model is in the economics of sourcing content and talent. At least for now, new sources of content can be bought cheaply — meaning free.

Ad Supported Mobile Games

MocoNews has a commentary by Matthew Bellows, the GM at Floodgate Entertainment, a leading mobile games developer:

Mobile game ad networks combine the problems of the Internet ad networks with the current issues facing mobile games today. Developers still shoulder the porting, localization and support costs of their games, and they still have to fight for deck placement in each download channel. But now, instead of getting paid during development (from a publisher), or getting paid as a percentage of the consumer price (from the carrier or D2C sales portal), they now have to depend on the success of a 3rd party ad team, and the response rate of mobile consumers.

In every media, cross-publication ad networks exist, and in some they do fairly well. But my suspicion is that main impetus behind the mobile games ad networks comes from more from Microsofts acquisition of Massive and Googles acquisition of Adscape Media, than from the opportunity to build real and sustainable businesses. The mobile games industry has been through a lot of investor-funded value chain experiments in its short history. We dont need another one right now, especially one so likely to fail.

Online Video Landscape

Will Price writes:

Today, Youtube, NBC, CBS, etc use Flash Video and Flash Media Servers to deliver their content. Many pundits are also pushing the merits of P2P….

As of yesterday, however, ABC.com moved away from Flash and is now streaming full episode content via the Move Networks player. Full episodes of Lost, Desperate Housewives, etc are available via Move.

Move is the only video delivery system that allows customers to deliver both live and on-demand content, supports continuous play, utilizes least-cost CDN pricing and routing, leverages commodity web infrastructure, provides full support for PVR features, and provides per stream, per user reporting and tracking.

SMS vs IM

Telecoms.com discusses the two:

Logically, of course, IM is a more convenient and flexible service than SMS, as well as real time. SMS, however, is the only mobile data service that is almost completely interoperable and, more to the point, even if they slash prices per SMS, operators are still making a fantastic margin from something that costs next to nothing for the carrier to send. As Jeff Wilson, chairman of Telsis, a company with a strong background in messaging systems, says: “Despite predictions in the past of the death of SMS, it has continue7d to grow. People know it works and are familiar with it.”

But IM and email are very user-friendly aren’t they? Well, yes – if the user happens to be sitting in front of a PC or a Mac. Sending long messages on a phone is an arduous task. What about presence? Presence is something SMS cannot offer. But it is far from proven that, outside the fixed environment, many texters are that bothered about presence, or indeed whether users, many of whom still need guidance to lock their keypads, will really go into their phone’s menu and get online to set a mood or IM profile.

Game Consoles

The Economist writes:

IT IS a vicious fightand one that all three participants claim to be winning. Sony, Microsoft and Nintendo are battling for supremacy in the $30 billion video-games industry, a struggle that takes place in rounds lasting five or six years each…With the start of sales of the PS3 in Europe on March 23rd, all three machines are at last available in all of the world’s biggest markets. The fight is just getting started, and already everyone claims to be on top.

Analysts are divided about the outcome. The PS2 achieved a level of market dominance never seen before, and I’m not sure we’ll see again, says Ed Barton, an analyst at Screen Digest. This time around, he suggests, different winners might emerge in different markets: it seems likely that Sony will do best in Japan and Microsoft in America. The wildcard is the Wii, which could trump the competition by attracting entirely new customers. IDC, a market-research firm, predicts that the Wii will be the bestselling console by 2008, and Merrill Lynch predicts that 30% of American homes will have a Wii by 2011.

TECH TALK: India’s Challenges: Indian Express

Saturday’s Indian Express had an editorial page article by its editor, Shekhar Gupta, which captured the mix of politics and economics that we are seeing in India today. A disappointing, tax-everything budget is the backdrop for Shekhar Gupta as he writes:

The 1997 budget, he says, was about another dream, of unleashing Indian enterprise and that has more or less been achieved. This one was about distributing the spoils of that success. What [Finance Minster P. Chidambaram] wouldnt say is, every time industry complains of new and complicated taxes, the white collar worker protests about the tax on stock options, or some get their cheap thrills that the really rich will now have to pay a sizeable tax on planes they import (they may do no such thing, and register their planes in Dubai instead), he is vindicated in terms of his partys current twisted politics. While on the one hand it celebrates the fact of 9 per cent growth, on the other its not sure if it makes a large enough section of its voters happy. So it has chosen a novel way of conducting its politics: celebrate the growth, but punish its beneficiaries or at least be seen to be doing so.

In Indias politics, to be anti-rich is usually considered safely synonymous for being pro-poor. It is tough to do something that will make a real difference to the lives so many poor persons that can swing an election your way. But compensating them with cheap thrills by seemingly hurting the rich is an easier alternative.

Confused politics produces confused economics as well. So while on the one hand it goes after inflation with a sledge-hammer, it is actually, mostly, hurting the very aam aadmi it swears by. In this mad dash to moderate inflation, it has allowed interest rates to go up nearly 400 basis points for ordinary aam aadmi home loan borrowers. Because of the way banks structure these things, they will only now realise the implications of this when their annual loan statements come…When people realise whats been done to them, they will react more sharply than they react to increases in arhar dal and onion prices. For the common man, rising interest rates, taxes, all mean inflation. This government may have done a fine job of keeping its deficit under control. But if its tax collections have risen so massively, if there is service tax on all kinds of things including tuition, tents and commercial rents, if all of Indias usually bankrupt states are cash-surplus now because of VAT, it is all going out of somebodys pocket. And these additional taxes are being passed on to somebody.

By all accounts, today nearly three crore Indian families carry the burden of EMIs that is, nearly 10 crore voters. Most of them are ordinary folk, aam aadmi. Billionaires do not have to borrow to buy their toys. The same aam aadmi is today reeling under the weight of new taxes levied in the name of the poor who, in turn, have no idea where that money is going. The Congress, therefore, is setting itself up for slaughter, earning the wrath of the rapidly growing urban and semi-urban populations while at the same time earning no gratitude from the really poor.

Living in India, I can definitely see some of the shine wearing off. There are hard challenges for us if we have to maintain the momentum and grow incomes. It seems to me that, not for the first time, we are not going to be let down by the people we have put in power. India needs a bold vision coupled with precision execution. Right now, we are getting neither.

Tomorrow: Business Week

Japanese Puzzles

The New York Times has a story on how the likes of Sudoko are created:

Few Americans had ever thought of Japan as a source for puzzles until a little more than two years ago, when sudoku suddenly took the nation by storm, flooding airport gift shops, and even rivaling crosswords in popularity. Now Nikoli, which publishes puzzle magazines and books, is widely regarded as the worlds most prolific wellspring of logic games and brainteasers.

Mr. Kaji and the company have had a hand in creating and promoting most of the half dozen or so number puzzles that have taken off after sudoku. But Mr. Kaji says that Nikoli has at least 250 more puzzles like sudoku, the vast majority of them unknown outside Japan.

Wireless Disruption

Forbes has an article by Clay Christensen and others:

The combination of the dramatic growth of new wireless Internet access technologies such as WiFi, the ability to use Voice over Internet Protocol (VoIP) to make voice calls and the potential rise of companies willing to give away wireless service makes disruption a real possibility.

What happens if companies go beyond charging a low flat rate that undercuts wireless carriers? What if they actually give away wireless voice and data service?

Free wireless access for all may be the wave of the future. In January 2006, serial entrepreneur Martin Varsavsky launched FON, an open WiFi community where members agree to share their broadband Internet connections through WiFi access points in return for the ability to use the WiFi access points of other community members. Just one month later, FON received financial backing from Google, Skype and a number of prominent venture capital firms.

Mobile Advertising

The New York Times writes:

In advertising terms…the mobile phone remains very much the third screen, behind television and the computer. Mobile advertising has grown rapidly in markets like Japan, but outside Asia, activity is still dominated by “text and response”� campaigns that for example, ask users to send text messages for more information on a product, or enter a contest.

The study also showed how effective mobile advertising could be if the personal space could be entered deftly. Sizable percentages of respondents said they had visited a Web site or requested more information about a product after seeing a mobile ad.

Semantic Web Issue

Stephen Downes writes:

The Semantic Web will never work because it depends on businesses working together, on them cooperating.

We are talking about the most conservative bunch of people in the world, people who believe in greed and cut-throat business ethics. People who would steal one another’s property if it weren’t nailed down. People like, well, Conrad Black and Rupert Murdoch.

And they’re all going to play nice and create one seamless Semantic Web that will work between companies – competing entities choreographing their responses so they can work together to grant you a seamless experience?

Not a chance.

Apple TV

WSJ reviews Apple’s new product:

The race to connect your TV to your computer and the Internet is about to kick into high gear this week when Apple Inc., the company many believe is best positioned to pull off this feat, introduces a slender, wireless set-top box called Apple TV.

This silvery little $299 gadget is designed to play and display on a widescreen family-room TV set all the music, video and photos stored on up to six computers around the house — even if they are far from the TV, and even if they are all Windows PCs rather than Apple’s own Macintosh models. It can also pull a very limited amount of music and video directly off the Internet onto the TV.

Dell’s Cheap China Computer

WSJ writes:

Chief Executive Michael Dell said the new computer, with a base price starting at about $335, would be sold first in China, then other countries, including India and Brazil.

The computer, which Dell calls the EC280, “was designed with China and other key markets in mind,” Mr. Dell said. He said Dell is striving to “adjust our business to meet the needs of customers in fast-growing and emerging markets.”

Designed by engineers in Shanghai, the EC280, unveiled yesterday, features an Intel 205 microprocessor and will cost from 2,599 yuan to 3,999 yuan ($336 to $517), depending on the specifications of the monitor, hard drive and memory chips.

Lenovo, which dominates the Chinese consumer-PC market, has found an even cheaper way to get computers to people with low incomes. The company has teamed up with Microsoft Corp. to offer a “pay as you go” computer model that puts a PC in a consumer’s hands for an upfront price of about $150. Part of the computer will be financed by a bank loan. The loan is paid back over time as the consumer buys computer cards — similar to phone cards — that give them a set amount of time on the computer and eventual ownership of it.