Emergic Freedom Update

It is now about almost three months since we have been talking to various external organisations about Emergic, specifically the Thin Client-Thick Server product we have called Emergic Freedom. During this period, we also released an ad in the Economic Times and set up the website. It is time to take a look at what we have accomplished, where we have failed, what are the learnings and what do we do next.

On the positive side, the response to Emergic Freedom has been uniformly encouraging to whomever we have spoken. It does appear to be an idea whose time is just about right people are worried about software licencing costs, there is a rapidly growing interest in Linux, and there are plenty of old PCs around which could be usefully employed. We do have a product ready which can be shipped across and installed. Weve done a number of demos and trial installations during this period. Weve also covered a good cross-section of organisations weve talked to from corporates (small and large) to the government to schools and colleges. At least, there is now an awareness that there is an alternative to the MS-Windows/Office combine. Weve also had a trial installation in Thailand, where Thai has being ported on to Emergic Freedom.

On the negative side, weve had challenges almost everywhere we have done demos and installations. Even in the discussions weve had, it seems to be that the product weve created has limitations and it may not be possible to use it as is in the scenarios that weve encountered. For example, in corporates we need support for various Windows applications and a mechanism to counter user resistance to change; in schools, we need support for local languages; in colleges, we need support for an integrated development environment; in homes, we need to support lower connectivity speeds and multimedia; in government, the issues are Linux, the lack of engineers aware of Linux, after-sales support and end-user training; in remote offices, there is a need for a single desktop, where we have too obvious pricing advantage.

I guess I was over-optimistic when we began. I had thought that the basic product and value proposition that we were offering (lower computing costs by 75%) would be attractive enough to overcome the other limitations. But the resistance to try something different is substantial. In many cases on the software front, we found two scenarios companies had either bought up a lot of software licences, or could not care less about piracy as they were confident theyd never be traced. It now seems that while supporting the core set of applications is good, we will almost always need to do something extra for the different verticals that we are targeting.

As it turns out, the best markets are the new markets where computers do not exist, but they need concept selling and will take time to create. The existing markets are the ones we are able to market and there we encounter the limitations of what we can do as of now. So, the question is, where do we go from here?

Let us first consider the value proposition that we are offering potential buyers:

  • Elimination of Virus risk: This came out as a big deal in the small and medium-sized companies. Virus is the biggest threat and pain-point for them.

  • Reduction in cost of Hardware: This happens through (a) re-use of existing PCs (b) lower cost of new hardware (c) lower maintenance costs for hardware (d) never need to upgrade hardware.

  • Licencing costs for software come down dramatically: This is true for the ones who are prepared (or forced) to make the necessary investments in legal products.

  • Greater security: This is because of (a) Linux, which is considered more secure than Windows (b) privacy for each users data since it can only be accessed via a login and password (c) not having floppies and hard disks on the client side reduces the misuse of sensitive information.

  • Centralised management and administration: What is appealing is the ease of doing backups, adding new users and being able to even manage remote locations from the central office.

    So, a good selling mantra would be: “100% Windows-like, 0% Viruses, 25% Cost”.

    Let us also consider the issues we have faced so far (and there are many), along with solution ideas. First a look at the technology issues:

  • Support for DOS and Windows applications: Emergic Freedom by itself cannot run all Windows applications, though we do have Tally 6.3 running on Wine. We can get DOS applications to run on the DOS emulator. There are still some issues with printing and memory usage we need to get resolved. But in general, to run Windows applications, we will need to use one of two options: Win4Lin, which costs an additional USD 100, or rDesktop with a (separate) Windows Terminal Server. The latter option will run everything, but needs some additional investment along with a separate Windows server. Of course, taken together, the costs will still be much lower than a pure Windows-Office thick desktop alternative. What we have seen is that almost every organisation (especially in the corporate sector) has some proprietary Windows application which needs to be supported so it is impossible for us to simulate or test these applications in our lab.

  • MS-Office file formats discrepancy: There is a problem opening some MS-Office files in OpenOffice in the formatting and with macros. Most normal users will not see much of a difference, though power users are likely to feel the pain for some files.

  • Specific MS-Office features: Besides documents discrepancies, OpenOffice also lacks some features as compared to the individual MS-Office applications. Again, the impact of this is more likely to be only on power users.

  • Single point of failure on the server: Even though we recommend a dual CPU system with two hard disks (and software RAID enabled on them), the fact of the matter remains that if the motherboard fails, the system is completely down. With PCs, a single PC going down does not make a difference. This is the difference between a centralised approach (ours) and a decentralised one (with PCs). The solution: have a two-server cluster with automatic rollover. Of course, this will increase costs.

  • Local Languages: For the government and especially public schools in India, the need to support local languages is very important. We have not done much in this respect. Microsofts Windows platform is way ahead in this matter. The other place where this is important is in internationalisation especially, because the emerging markets we want to target are all likely to have their own local languages.

  • Support for lower LAN speeds (1-10 Mbps): Currently, we need a 100 Mbps LAN to support a lot of users. (We have not actually done a detailed network traffic analysis, though). If we can get to the lower speeds, then we can support WiFi and cable. In many places in India, the cabling is still that of 10 Mbps, though it does not cost much to upgrade.

  • Support for local peripherals on the Thin Client: There is a need to support local hard disks, printers, modems, CDROM drives and even multimedia peripherals. One specific need is in schools where students may want to backup their work on floppies and take it work them.
    Migration of existing users and their data: Emails on local disks in Outlook or Outlook Express, Address books, bookmarks and cookies all need to be migrated to the Emergic Freedom platform. We have been able to automate much of this migration.

  • Non-integration with Messaging and Proxy Servers: There is a need from certain quarters for running our messaging server on the same thick server. This can be useful in smaller branches, where a single server can play the role of both the thick (file, print and applications) server, as well as the mail and proxy server. It enhances the value of what we are providing.

  • Apps requiring Internet Explorer: Amazingly, even though some applications are running in a browser, they only work in Internet Explorer! Weve seen this in at least two places: a banking application and a call centre application. The question: how do we run these apps in Mozilla or another such browser?

    Among some of the other issues:

  • User Perception: Users instantly compare this to what they are used to the Windows platform, and conclude that this is an inferior solution. They feel disappointed. We are asking users to compromise on each of the applications they are using. In return, we are not giving them anything extra. There is nothing in Emergic Freedom that can delight most users (tabbed browsing, and the unified IM client are good, but still not overwhelming). We have to find ways to delight users with Emergic Freedom. Maybe we need to target users for whom Emergic Freedom becomes the first taste of computing, or maybe we need to come out with some killer app on the Emergic Freedom platform.

  • Old PCs: There is a mindblock that many people have in using older PCs. Old equals bad in computers. They want to use the latest, even when this is not really necessary. There are alternatives where the new PCs are costing much less (eg. eSys launched a monitor-less PC for under Rs 10,000). We could even look at diskless terminals.

  • Non-Windows desktop: We should try and make the desktop as Windows-like as possible. Maybe the background colour should be made green instead of blue. The perception again is that Windows equals user-friendly. So, to begin with, perhaps we need to just make our desktop look as close to Windows as possible.

  • Pricing: It is hard to say if Rs 2,500 (USD 50) per Thin Client is the right price or not. One of the issues we are facing is that there is substantial work that needs to be done for the installation and migration of user data. For the channel, even a 20% margin and a 20-user set-up will only result in a Rs 10,000 revenue, which will probably not be enough to compensate for the work being put in. The second issue is with pricing from the second year onwards: do we continue to charge Rs 2,500 or should it be lower or nothing at all.

  • Support: This is going to be a big issue. We are not going to be able to provide onsite support, and yet a product like this needs it. Who provides that? Maybe, we should get this under the purview of the AMC contract that companies have. In that case, we will need to train people on our solution.

  • Training: We need to create training programs on Linux and Emergic Freedom. How will these be administered?

  • Awareness: How do we make people aware that an alternative exists? Advertising is expensive. We do not have a channel set-up yet. We need to know when people are placing orders for new hardware or software that is the best time to make an entry.

  • Channels: This product has to be sold through channels, and yet, our past experience with channels has been pathetic. How do we manage channels?

  • Linux: There is still a fear of Linux it is like the fear of the unknown. Also, there are few people in the market who know or understand Linux well, unlike the availability of Windows knowledge at almost every street corner.

  • Time: We need time with the users. An overnight shift is not easy and very wrenching. People must be made to feel comfortable with the solution. It takes a few days to get used to the solution. Perhaps, we need to think of an intermediate path where we put Mozilla and OpenOffice on Windows and then switch Windows to Linux later. This way, the two key applications will not change and it takes the migration process easier and less noticeable.

  • Lack of an ecosystem: Microsoft and its partners are entrenched across the value chain. Right from support engineers to Independent Software Vendors (ISVs), from books to training institutes, a person knowledgeable in Microsoft-products is never too far away. The same cannot be said of Linux. Even though we may underplay the Linux part of the solution, the fact remains that we are not Microsoft. Microsoft has made deep inroads into the entire system right from being present in school curricula to being pre-installed on desktops to having a huge array of applications and developers continuing to strengthen the chain. We are trying to take on Fortress Microsoft and at this point, they seem well nigh invincible.

  • Better documentation: We need user and admin guides. In addition, as part of the brochures, we should also explain the philosophy of our approach (server-based computing, open-source) and why it is better than what is out there today.

    And yet, I have seen some rays of hope, some chinks in the Microsoft desktop armour, some openings. The road going ahead is not going to be easy, but there is cause for optimism. Let us look at the learnings from our recent experiences.

  • The opportunity is there and the time is right: No doubt about this. The solution touches a chord. It excites. It taps into an anti-incumbency feeling against the existing solution. We somehow need to take that and capitalise on it.

  • Dont be too radical, try incrementalism: Let us first try and edge into the company with a thick server and Linux-boot floppies for Windows machines. This way, they can at least try out the solution. They need a compelling reason to be made to boot under Linux perhaps, this could be for virus-free email.

  • Co-exist with Windows: This is the point made about being incrementalist. Take a staged approach to shifting people: (a) Use Linux for email, (b) Use OpenOffice and Mozilla for Windows, and then finally replace Windows with Linux. The first two steps ensure that for the key applications they are not dependent on a Windows-OS.

  • Need for a whole solution: Maybe we need to take on the responsibility for the whole solution, hardware included. Also, we need something extra for each of the verticals that we are targeting. They need a more complete solution that the base that is on offer today.

  • Build an ecosystem: This is very critical. We need to create a syndicate, a consortium of like-minded people and companies. It is not something we can plan and win alone. This is almost like tacking the East India Company of the past. If we stay divided, then we will lose.

  • Identify pro-Linux people and companies: We need to be the core around which others can coalesce. We need to become the rallying point. There needs to be a directory of such entities, organized by skills and location.

  • Need for a Linux Desktop: We also need a single PC (thick client) solution. This means having a Linux Desktop on a standalone machine. We could still use Emergic Freedom here, so that in the event of the addition of more computers, they can now just be thin clients. [In fact, this exists even now with the solution – the server and client run on the same system. The good thing about this is that whenever an additional computer needs to be added, it can be a thin client.]

  • Build an applications base on Linux: There are a lot of applications available in open-source. We need to get them all together. Look at what is available for schools, engineering, etc. and package them together. Even locally, we need to get various applications running on Linux. Is there an easy way to port VB applications to Linux? If this was needed, who can do it?

  • Look for niches: We need footholds to begin the battle. Which are the places we can get success first? Who can be our early adopters? We need to create islands of successes, which later can be joined together.

  • Look international: Even as we make the solution work in India, we need to aggressively take it to other countries who may be much more receptive.

  • This is a marathon: They are no easy pickings. We must be able to sustain the morale and enthusiasm for many years. It is like hammering against a wall. We do not know when it will collapse, but the hammering must continue.

    All in all, there is a greater realism on my part. The opportunity is there and it is bigger than I could have imagined (maybe I had thought about it, but didnt actually think that such a large opportunity could be available in todays competitive world). And at the same time, the challenges are many. We have very limited resources in terms of money, people and geographical base. But we have unbounded enthusiasm and passion for what we are doing. That by itself will of course not be enough. Yet, it has brought us this far and I am confident it will take us forward.

    The question is: as many roads diverge from where we are standing, which are headed in the general direction of where we want to do? The time is coming soon where we will need to make some bets on the roads going ahead. And these decisions we will have to live with. This is the challenge every entrepreneur faces at some point or the other. There are no re-takes in business and life.

    Going ahead, we should continue to target corporates with the recognition there will be some customisation for each installation. At the same time, we need to increase our emphasis on “new markets” where Emergic Freedom is a disruptive innovation, and can genuinely delight users by giving them their first taste of computing.

    So, there is a 4-pronged approach we need to take:

  • For corporates, we need to focus on 3 key decision points wherein we have an opportunity: when they are buying new computers, or planning to new licences for desktop software (MS-Windows and Office), or planning to dispose off their older computers. A fourth point which is always applicable is the fear of viruses.

  • We need to focus on building out the channel. This will give us scalability. The channels are what will give us the reach. We have a solution that can dramatically increase margins for channels, with their existing customer base.

  • We need to look at the education market much more closely – schools, colleges and training institutes. In India alone, there are 1.2 million schools. For this, we need a whole solution – with the course material, and support for local languages. What I like about this segment is that we can truly delight our end-users.

  • Finally, we need to look at the government – they are a big spender on IT, and as much, will be a big beneficiary. Public sector units, banks, post offices, village centres, railway stations, STD/PCOs – all are places where we can set up 10-40 computer centres.

    Our chances for success will be greatest where we can deploy clusters of computers in an enclosed area so that we do not have to worry about networking issues. These computers will be used in a shared access manner, and will therefore support a much larger user base. We need to find “chains” of such clusters, so our selling costs come down.

    A 10-computer centre can be set-up for less than Rs 200,000 (USD 4,000) and can serve 100 people or more, giving a per person cost of less than Rs 2,000 (USD 40). A 40-computer centre cn be set-up for less than Rs 500,000 (USD 10,000) and can serve 500 people or more, reducing the per person computing cost to less than Rs 1,000 (USD 20).

    The greatest strength of Emergic Freedom lies in the fact that it can serve as the base for a whole new class of “Tech 7-11s” – computing and communication centres, which can make technology a utility for the mass market.

    So, all in all, it has been a great learning period for us. This would never have happened had we not (a) made our product ready and (b) done the demo and trial installations. This is the feedback process which is so critical in any product strategy.

    At times, I feel like I am doing a jigsaw puzzle – all the pieces (answers) lie in front of me, and its up to me to put them together to make up the entire picture. The only problem: the actual picture to be made is not there. This is where one has to use one’s Imagination. It’s a game I love. Couple it with the fact that we are on the cusp of an opportunity to create the computing platform for the next 500 million users. What more can an entrepreneur ask for? Marketplace Success, Revenues, Profits will all come – but they will take some time. Meanwhile, we have to work every day as if we had a million customers. Because one day very soon we will.

    Emergic Freedom

  • Published by

    Rajesh Jain

    An Entrepreneur based in Mumbai, India.