Microsoft and GE

Henry Blodget writes about the differences:

One reason Microsoft has struggled for twelve years with its Internet business is that it has always managed the business with an eye to protecting and/or augmenting its core desktop monopoly. Microsoft’s competitors, meanwhile, have approached the Internet business with an eye to doing whatever is best for the Internet business, desktop monopoly be damned. And now that it is clear that the Internet business is going to compete with the desktop business, Microsoft finds itself in an even stickier situation: How can it do what it needs to do to win in the Internet without hastening the demise (or at least slowing the growth of) the desktop cash cow?

GE can compete in dozens of different businesses because it is a true conglomerate: Each division is free to do whatever it needs to do to win (and the divisions also aren’t that competitive with one another). At Microsoft, meanwhile, all the sideline divisions exist to protect or augment the major businesses, and Microsoft’s Internet team has to work within this system. For Microsoft’s Internet business to have a real chance to win, it has to be able to launch wholesale attacks on Microsoft’s core business. And it’s hard to see that happening within the Redmond corporate structure as currently defined.

Remixing the Internet

LifeBlog writes:

Netvibes is ‘Rearranging the Web’, yes, allowing us to grab (self-contained) pieces of our online world and bringing it to one place. That drum, I have been beating for ages.

But, the next Internet is not about widgets, but about truly ‘mixing the Internet’. It’s about bringing those pieces together and then exchanging the bits and pieces (hidden in those morsels, those widgets), in the way I want them to be.

That’s mixing. That’s getting all the pieces of my online life and having them mix and match and become a new something that the individual pieces (sometimes served in widget-sized morsels) were not.

Open Wireless

VentureBeat has an article by Ram Shriram about the US market, but it applies equally well to the Indian market:

Wireless devices, meanwhile remain stuck in the walled gardens.

The same goes for applications, services and protocols. Opening wireless broadband to new market entrants with open devices, open software and open IP services is critical to continued innovation in new devices, new services and new mobile web applications coming out of Silicon Valley and elsewhere.

Similarly, to promote innovation in services and applications for consumers in the wireless world, a better model is needed than the current status quo. A key ingredient to change this is that competition should be fostered.

Five Future Innovations

IBM writes about five innovations that will change our lives over the next five years:

# We will be able to access healthcare remotely, from just about anywhere in the world
# Real-time speech translation-once a vision only in science fiction-will become the norm
# There will be a 3-D Internet
# Technologies the size of a few atoms will address areas of environmental importance
# Our mobile phones will come close to reading our minds

Mobile Handset Makers

Hampus Jakobsson writes:

Mobile phones will increasingly resemble platforms, but no one in the manufacturing part of the value chain will want a new Wintel, i.e. a singular platform. The manufacturer-operator battle is clear and a dividing line exists between the two the players above this line (operators and service providers) want all handsets to be the same for their applications, services, advertisements, etc. The players below (the handset OEM) dont want to become too platformized and end up like set-top-box manufacturers (I love asking people what the brand or even manufacturer of their set-top box is. Many answer TiVo or some other non-manufacturer; little knowing or caring about that it is built in Taiwan or China.

The way forward: handset OEMs are either building services or service platforms of their own, or are creating a flexible white label solution for third parties. Look at Nokia Ad Service, Content Discoverer as well as Motorolas Screen3. Rumors say that Google is having close talks with LG and Samsung, two hardware centric manufacturers, who should watch out for platformization. Why would Motorola not just use uiOne and why does Three remove the Nokia Active Standby? Because being able to enable third parties to monetize the mobile platform, but keeping control of the user experience will be a promising post sales revenue stream.

TECH TALK: Doing Education Right: Consequences of Liberalisation

By Atanu Dey

The liberalization of the education sector in India, that is, by allowing free entry especially for-profit firms will result in increased supply of educational services. Here I will explore the predictable consequences of this. We begin by recognizing that education is not an undifferentiated homogeneous good; there are distinct levels within it, from basic primary education to post-secondary and tertiary levels. Each level has different pay-back periods for the return on investment. Furthermore, different people have different abilities to pay for the various levels of education.

Lets graph the ability to pay along the x-axis, with the very poor at the left and the very rich on the right. On the y-axis, lets graph the level of education, with basic primary at the bottom and specialized tertiary (Ph.D level) at the top. The top right quadrant of this diagram represents rich people and higher education, the lower left quadrant poor people and basic education. Recall that higher education has a short payback period and the payback is both private and social, that is, it has positive externalities. So the rich will pay for both higher and basic education if the capacity increases. Basic education, however, has long payback periods and most of the returns are social, and therefore poor people will under-invest in basic education given their shorter planning horizons.

Firms will profitably supply to the two right quadrants because the demand and the ability to pay, both, exist. The left top quadrant is also served by the for-profit firms. For the poor, who have basic education but are unable to pay for higher education they desire, if credit (educational loans) were available them, they would be able to pay for higher education and firms will supply to that need. That leaves the left lower quadrant: if the poor have public support (grants), they would be able to pay for basic education and thus the for-profit firms will supply to that market as well.

By allowing the private sector firms into education, the capacity for greater human capital increases and thus the economy itself grows larger and the growth rate increases. This increases the revenue base for the needed public support of basic education for the poor. Universal primary education can be a reality if the government raises the resources from a larger economy and allows the private sector to efficiently provide the education. Note that the funding is public but the provisioning is left to firms that compete in the market.

Guaranteeing universal basic education is a must for ensuring equality of opportunity. Even the poor, if given the opportunity, will be adequately prepared to continue on to higher education if they so wish. While for basic education the poor needed a grant, for higher education the poor will need a loan. Banks can easily enough provide these if the funds are efficiently spent on acquiring suitable higher education which again depends on the availability of wide range of choices. And the choices will exist if the education sector is liberalized.

India is stuck in a low-level equilibrium: a US$50 billion education market and a GDP of US$500 billion. It is possible to move to a higher-level: a US$150 billion education market and a US$1.5 trillion GDP, if education were freed. But those who extract their annual US$100 million today from the low-level equilibrium by controlling the education sector, will not allow the liberalization of the education sector for then they will lose the rent. Year after year, they extract the rent but keep the economy effectively shackled.

Let me stress this: education is an amplifying mechanism for economic growth and development. If we fix our education system, what we will get for our efforts is going to be far greater than what we put in it. In todays dynamic world economy, the returns to education are staggering, and so also are the losses that accumulate from a dysfunctional educational system. If need be, we should even borrow money, people, ideas from others to fix our system.

If I were a billionaire industrialist, heres what I would do. I would get a few of my fellow billionaires to create a corpus of funds say US$200 million for a Golden Goose strategy. With the money, I would simultaneously buy out all the politicians of every party so that they will en masse vote to liberalize the education sector. It will be a one-time cost for us billionaires. But that would lay the foundation for an India with such formidable growth that we would recover our investment in short order.

But alas I am not a billionaire and nor are you. We, as the saying goes, are up a creek without a paddle.

Write to atanudey at gmail.com if you have questions or comments.

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