Computing and Web Software

The New York Times writes:

Many technologists contend that the increasingly ponderous PC-bound operating systems that currently power 750 million computers, products like Microsofts Windows Vista and Apples soon-to-be-released Mac OS X Leopard, will fade in importance.

In this view, software will be a modular collection of Web-based services accessible by an array of hand-held consumer devices and computers and will be designed by companies like Google and Yahoo and quick-moving start-ups.

Faced with that changing dynamic, Apple and Microsoft are expected to develop operating systems that will increasingly reflect the influence of the Web.

HP’s Turnaround

WSJ writes how HP reclained its lead over Dell: “H-P owes that remarkable turnabout to something Mr. Bradley concluded within weeks of arriving at the Palo Alto, Calif., company: H-P was fighting on the wrong battlefield. H-P was concentrating its resources to fight Dell where Dell was strong, in direct sales over the Internet and phone. Instead, he decided, H-P should focus on its strength, retail stores, where Dell had no presence at all. H-P was neglecting that advantage, Mr. Bradley found as he visited retailers and H-P factories, hearing complaints about late or incomplete deliveries. He worked hard to fix the logistical snafus and build better relations with the retailers, helping H-P surpass Dell in world sales late last year for the first time since 2003.”

Business Core

800-CEO-READ Blog writes about a new book “Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth” by Chris Zook:

Zook has always stressed looking at the industry profit pool rather than the market size. He suggests it is changes in the profit pool that signal the need for redefining a company’s core. Your company could be losing your share of the pool (U.S. vs. Japanese automakers) but the market has not changed; the profit pool could have shifted to a different point in the value chain (Intel and Microsoft in PCs); new technology could completely change the economics of an industry (Amazon in books).

The core is where companies must find strength to withstand industry turbulence, Zook argues. But he also suggests that all companies have hidden assets that can be utilized when a company must redefine its core. Like any good consultant, Zook has classified them into three broad categories. The first is undervalued business platforms ranging from adjacencies into new geographies to support services to non-core businesses. The second is untapped customer insights, a familiar idea often hard to act on. Finally, underutilized capabilities are the most abstract of the three and were the least often used in the companies Zook examined.

TECH TALK: PM to CII: Governance

Continuing with Atanu Dey’s perspective of the speech that the Indian Prime Minister should have made to the CII last month:

Ladies and gentlemen, the sole objective of a government has to be to provide governance. The raison detre of a government is the creation of social capital, to be a guarantor of civil rights, to maintain law and order, to correct for externalities, to create an environment where individuals and corporations have the freedom to create wealth. The government has to be an enabler in the process of wealth generation, not an inhibitor that it has been for so long.

The role of the government is to set the rules, not play in the great economic game. Nobel prize-winning economist Douglass C. North noted that economic history is overwhelmingly a story of economies that failed to produce a set of economic rules of the game (with enforcement) that induce sustained economic growth. It is a cautionary observation and clearly underlines what lies at the root of our failure so far in sustaining our economic development: the government has abdicated its primary function of designing the rules and enforcing them fairly, and instead entered the game as a player.

The results of the governments involvement in production rather than in rule-making and enforcement are plain to see. Just to take a very critical example, consider the generation, transmission, and distribution of electrical powerthe life-blood of a healthy economy. Public sector power corporations have let us down. The shortage of power is severe, acute, and chronic. Just in the state of Maharashtra, demand outstrips the supply of 15,000 MW by over 5,000 MW. It is a crisis for consumers, but even more for our industries, the producers of wealth. It raises the production costs of our manufacturers and they are handicapped in the global marketplace.
In an era of globalization and international competition, Indian corporations face challenges that are mainly derived from government interference and control. Indian industry faces an acute shortage of trained human resources. It is regrettably reported that only about a quarter of our college graduates are employablea sure sign of our failed education system. Once again, the government needlessly prevented the private sector to be in education, and instead took monopoly control of the sector. The results are as could be expected: poor quality, extreme shortages, and high costs.

The production of goods and services is not the job of the government; that is the job of the private sector. By getting into production too often as a monopolist the government has demonstrated its abject failure. And this is understandable because governments are not capable of inventiveness, entrepreneurship and innovation; qualities that it does not have and thus cannot compete in the marketplace. By wasting its energies on activities that it has no comparative advantage in, the government has neglected what it is required to do: design the rules and enforce them, and create the environment where contracts can be made and enforced. That failure is as costly if not more than the failed attempts by the government to produce goods and services efficiently and in sufficient quantities. Consider the functioning of our legal system, as an example.

Among the institutions of governance are the legislature, the executive, the bureaucracy, and most importantly the judiciary. The statistics of the inadequacy of the judiciary are staggering. There are an estimated over 20,000 cases pending in the Supreme Court, around 3 million in the high courts, and a mind-numbing 22 million cases in the rest of the legal system. There are cases in the high courts which date back to the 1950s. Aside from the deep concern that justice delayed is tantamount to justice denied, the backlog of cases has a detrimental effect on the conducting of business in India. When contracts cannot be enforced, the economy loses from potential trades that do not take place.

The limited liberalization of the economy from the shackles of socialistic control has given us an economy growing at a respectable rate of 7 to 9 percent annually. But unless the governance of the economy is improved, even further liberalization which is sorely needed will be insufficient to sustain growth. And if growth is not sustained, the hundreds of millions so long trapped in poverty will not have a reasonable shot at economic emancipation. Lets consider what needs to be done.

Tomorrow: Fair and Just Profit

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