Why are India and China gaining?

Dana Blankenhorn asks “Why is America losing ground to China and India, while we gained ground in the 1990s?” and answers:

The answer is commoditization, the process of something becoming a commodity. Most of our big technology products have become commodities.

PCs are commodities. Even routers are commodities. (Commodities are not always cheap. Gold, silver and platinum, all pictured here, are also commodities.) All the talk about “open source” and “intellectual property” is really an attempt to use law in order to prevent software from becoming a commodity. And it wont work, at least it wont work in operating systems.

When Americas tech economy last got into trouble, in the 1980s, the problem was much the same. PC innovation slowed down. Excitement moved toward consumer electronics. Economies of scale in manufacturing came to trump innovation. Japan ate our lunch.

From a technology standpoint what made the 1990s different were applications. Starting with MS Windows 3.0, then going on to 3.1, multimedia, and the Internet, you had huge new green fields for the development of applications. In a world looking for applications innovation, and small intense teams, made all the difference. America had more flexibility in Japan, more freedom, and America came to dominate.

Reversing the trend of the last few years requires the same sort of platform. We need to understand that wireless broadband isnt a solution but a platform. We need to write and deliver applications that take wireless broadband in the home, in the factory, in the workplace, and then in the world as a given. These applications must deliver outstanding value, they must do things we want done we didnt know we could get done.

So the platform is there. The way we reverse the commoditization trend is through The World of Always On.

I agree with Dana. Commoditisation can help companies in the emerging markets leapfrog. A mix of server-centric computing (on the LAN) with desktop thin clients and open-source software can make for affordable computing solutions, reducing the price barrier. Of course, a lot more has to be done – these countries have to start creating IT ecosystems which go beyond just the tech companies. There needs to be adoption of tech at the engineering colleges to create both trained human resource as well as more open-source software. There also needs to be training for the new adopters, with “demo points of presence” in various neighbourhoods – sort of an IT Starbucks. There needs to be an alleviation of the credit constraints faced by the new adopters by getting banks to provide financing for IT infrastructure. And finally, the local software companies need to recgonise that there is a singificant domesti market waiting to be tapped. All these have to happen simultaneously.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.