April 2004 – Page 2

Mini-Chinatowns in US Suburbs

As I was reading this WSJ story, it reminded me of the analogies to Atanu’s RISC model – a cluster of services offered on a common platform for a distributed (geographically spread) populace so that the cost of doing business comes down for all the service providers:

Nine years ago, James Chih-Cheng Chen built what he calls America’s first “master-planned Chinatown” [on a vacant lot a mile from the Strip in Las Vegas] — and, on the way, helped take immigrant enterprise into new territory. Mr. Chen and a few others, mostly East Asians with capital, have come up with an angle that lets middle-class immigrants move away from the coasts and into America’s inland car culture without leaving their own cultures behind.

These investors have brought to life what might be called the ethnic commercial enclave, a cross between the regional mall and the corner store. Because their customers live scattered in unsegregated subdivisions, instant-Asia shopping centers can park anyplace where the rent is low and the drive-time reasonable. These commercial spaces are taking on all the intimate social functions of the old immigrant neighborhood. The neighborhood is the only thing missing.

Rice-loving shoppers from the suburbs are driving to about 70 stand-alone Asian shopping centers on the coasts — not only in New York and Los Angeles, but Seattle, Baltimore and Miami — and to about 50 in such mid-American cities as Denver, Minneapolis and Phoenix.

Capital flowing in from East Asia, itself already full of giant malls, is the main force at work here, along with masses of well-paid immigrants. The U.S. now has 12 million Asians. Their buying power, pegged by the Selig Center for Economic Growth at the University of Georgia, is $344 billion. In 20 states, Asians make up between 2% and 6% of the population: too few to congregate, perhaps, but enough to ignite a demand for very fresh fish.

Mr. Chen learned that early on. His Las Vegas Chinatown Plaza opened for business in 1995. By 1998, it was complete: an imperial arch on Spring Mountain Road; a golden statue of Xuan Zang’s “Journey to the West” in the parking lot; and a two-tiered shopping center under tiled roofs with dragons at every tip. By mall measures, the plaza is an 85,000-square-foot mini. But it has nine restaurants, shops with Asian goods from jade to ginseng, and an anchor supermarket where tree-ear fungus outsells Cheez Whiz. The place is usually jammed with Asians. In a desert city fixated on fantasy, Chinatown Plaza has matured into an oasis of authenticity.

In suburban Los Angeles or New Jersey, and the old urban enclaves of New York or San Francisco, Asian districts encircle Asian malls. In Las Vegas and young cities like it, the ghettos are gone. Hispanics, more numerous and less affluent, still cluster, but Asians often migrate from the coasts and integrate economically before they arrive. Along with the many others who move to Las Vegas each year, Asians are buying houses in the developments that are advancing into the desert like pink-stucco lava flows. Still, they’re rarely more than 10 miles from Chinatown Plaza.

India needs microcities in rural India – this is where RISC comes in.

SME Resellers

WSJ writes about the challenges selling to small- and meidum-size enterprises (SMEs):

while many small and midsize businesses constitute a ripe market, selling to these companies can be a difficult game that demands just as much sweat as big-company sales, but with a far smaller payoff. Steadily falling prices of software, stiff competition among resellers, and highly cost-conscious buyers make the business tough. And it’s resellers which act as middlemen of sorts, that are doing the sweating.

In 2003, the 8.1 million U.S. small and midsize businesses spent $75 billion on information technology, a 4.1% increase from the previous year, while overall IT spending in the U.S. grew just 0.7% over the same period, according to IDC, a market-research firm based in Framingham, Mass. IDC predicts that in 2004 investment from small and midsize businesses will rise 6.2%, outpacing the 4% expected increase overall.

[The resellers are] the entrepreneurial worker bees of the industry that handles the details of selling, installing and maintaining software for the big technology companies. Often geographically focused, [they] are the only way many big tech companies can reach the mass of smaller companies without employing armies of sales and support staff.

Still, there are some challenges for resellers. Many of those stem from the ever-falling price of software. Microsoft and other software makers use lower pricing to attract smaller businesses to their technology. But resellers feel the brunt of that strategy, since even as prices fall, their costs don’t, making it increasingly difficult to earn a profit.

The pressure becomes particularly acute as customers, with their own financial concerns, often take far more time than in the past to mull what software to buy. To make the sale, resellers have to stick with those customers — preparing demonstrations and answering questions — which raises their costs.

The selling process can be even more prolonged at the smallest companies, many of which are operated by owners who know they need new technology but are particularly sensitive to its cost. “As they’re writing the check they clutch onto the checkbook thinking, in effect, ‘It’s coming out of my own pocket,'” says Ray Boggs, an analyst who covers small and midsize businesses at IDC.

Then there’s the middleman. Smaller businesses often don’t have technology expertise in-house or standard processes for choosing a technology vendor. That places extra demands on the reseller to educate and hand-hold — often at no charge and with little promise of any return. Other times, the businesses hire consultants to guide them through the process.

Fuel Cells

Wired News has an update in the context of marine applications:

On April 8, Mississauga, Ontario-based Hydrogenics, which designs and builds fuel-cell systems, announced an agreement to supply a 10-kilowatt power module to HaveBlue, a Ventura, California, company developing patented hydrogen-related technology for marine applications.

The module will be a key component of a regenerative fuel-cell system designed to propel HaveBlue’s X/V-1, a 42-foot Catalina demonstration yacht, said HaveBlue president, CEO and founder Craig Schmitman. The module will also help power the boat’s lights, navigation and galley appliances.

Whether fuel cells will be winners in the commercial shipping industry remains to be seen. Sailboats require far less energy for motorized propulsion than powerboats or ships, for which viable fuel-cell applications are tough to develop. Efforts to do so are under way, however.

Eatontown, New Jersey-based Millennium Cell has collaborated with Seaworthy Systems, Anuvu, Duffy Electric Boat and others in a U.S. Maritime Administration program to explore the utility of hydrogen fuel to power ships and port facilities, noted as major sources of pollution. The team demonstrated a fuel-cell-powered water taxi on San Francisco Bay in October 2003 for the World Maritime Technology Conference and Exposition.

“We came up with the idea to generate hydrogen on board the vessel, rather than to load hydrogen or strip it from carbon-based fuel,” said Martin Toyen, president of Seaworthy Systems. “That way, we could cut down the size of the (fuel) cell.”

TECH TALK: Letter to Arun Shourie (Part 4)

5. Provide a level-playing field for alternative hardware and software solutions

Most Indian states have Microsoft Office hardcoded as part of the education curriculum. This needs to change. Instead of mandating that students need to be taught and tested on MS-Word, MS-Excel and MS-Powerpoint, generic application categories should be used (word processor, spreadsheet and presentation application). A few years ago, it was probably difficult to consider alternatives to MS-Office because none existed. Now, there are. Many open-source applications including the OpenOffice suite are more than good enough.

It does not matter if the academic versions of MS-Office are available at very low price-points. By eliminating the use of alternatives at source, we are creating a difficult situation down the line either we pay a lot of money for MS-Office later on, or encourage piracy since the need is there and the money isn’t. We do not want to build a nation of Robbers. We want intellectual property to be respected and we want every Indian citizen and business to understand that.

Many government tenders specifically mention Intel-based computers and Microsoft Windows as the base software. This too needs to be eliminated. What users need is computing whether it is served from a thick Intel desktop or an AMD/Via-based desktop or a refurbished computers should not be specified in tenders. Similarly, whether it is Windows or Linux on the desktop should not matter go for the solution which gives the best value.

I am not suggesting that open-source software and thin clients be given preference. All I am saying is that the playing field needs to be made such that they get an opportunity to play.

6. Open up the wireless spectrum

In India, we still have this habit of taking half-measures, which are ill thought-out. Take the WiFi policy which allows its use only for campus and office environments. Why? WiFi should be complete delicenced with the use of 2.4 Ghz and 5.7 Ghz made freely accessible to one and all. This will lead to an explosion in the use of WiFi hotspots across India and potentially WiFi as a medium for last-mile connectivity.

India needs to leapfrog in terms of bandwidth and connectivity. We need to leverage the latest advances in both wireless and broadband, and in fact lead the way in the adoption of new technologies like WiMax which go past the distance limitations of WiFi. Wherever wired technologies are possible, let us go for those. But wherever there are challenges in laying the wire (copper or fibre) for whatever reason, the customers should be able to opt for wireless technologies. Competition needs to abound. Note what competition did for mobile telephony. Something similar needs to happen with bandwidth and broadband availability across India quickly.

I would strongly recommend reading Kevin Werbachs The Radio Revolution. Even though the context is the US, much of what he says is relevant for India.

Tomorrow: Letter to Arun Shourie (continued)

Choice Trumps Price on the Internet

NYTimes writes:

“When I first started doing work on how the Internet is affecting commerce, like a lot of people, I was really excited by this nearly perfect market,” said Erik Brynjolfsson of the Sloan School of Management at Massachusetts Institute of Technology.

His early research found that prices on the Internet were 6 percent to 16 percent lower than prices off-line.

But when he thought about how people actually shop online, and what they find valuable, he realized that low prices are not the big story. Selection is. The Internet offers variety that is simply impossible in traditional stores.

Online shoppers are not just buying the same stuff for less money. They are buying different stuff. And they are much more likely to be getting exactly what they want than are off-line shoppers.

In effect, the emergence of online retailers places a specialty store and a personalized shopping assistant at every shopper’s desk,” write Professor Brynjolfsson, Yu Hu, and Michael D. Smith in a November 2003 article in Management Science. “This improves the welfare of these consumers by allowing them to locate and buy specialty products they otherwise would not have purchased due to high transaction costs or low product awareness.”

A copy of the paper is available here.

Tech Trends

An essay by Joi Ito:

Several crucial shifts in technology are emerging that will drastically affect the relationship between users and technology in the near future. Wireless Internet is becoming ubiquitous and economically viable. Internet capable devices are becoming smaller and more powerful.

Alongside technological shifts, new social trends are emerging. Users are shifting their attention from packaged content to social information about location, presence and community. Tools for identity, trust, relationship management and navigating social networks are becoming more popular. Mobile communication tools are shifting away from a 1-1 model, allowing for increased many-to-many interactions; such a shift is even being used to permit new forms of democracy and citizen participation in global dialog.

While new technological and social trends are occurring, it is not without resistance, often by the developers and distributors of technology and content. In order to empower the consumer as a community member and producer, communication carriers, hardware manufacturers and content providers must understand and build models that focus less on the content and more on the relationships.

It is clear that the simplicity of WiFi and the Internet is more efficient than the networks planned by the telephone companies. That said, the availability of low cost phones is controlled by mobile telephone carriers, their distribution networks and their subsidies.

Broadband in the home will always be cheaper than mobile broadband. Therefore it will be cheaper for people to download content at home and use storage devices to carry it with them rather than downloading or viewing content over a mobile phone network. Most entertainment content is not so time sensitive that it requires real time network access.

It is clear that mobile computing is about communication. Not only are mobile phones being used for 1-1 communications, as expected through voice conversations; people are learning new forms of communication because of SMS, email and presence technologies. Often, the value of these communication processes is the transmission of state or context information; the content of the messages are less important.

Media and Entertainment in 2010

[via Jeff Jarvis] An IBM report looks at the future:

An increasing segment of consumers will be able to compile, program, edit, create and share content; as a result, they will gain more control and become more immersed in media experiences.

The future will see more open, reciprocal relationships and more ways to interact and customize at every point of the media value loop among brands, creators, suppliers, distributors, delivery systems, customers and experiencers of media content.

Consumers will be able to compile, edit, produce, create and broadcast complex content and manipulate huge files from the comfort of their homes and personal budgets. The battle for human attention will remain pitched: innovations will continue to cascade rapidly to market. The glut of choices, channels, brands, traditional media and archival content must now compete with customers and consumers new enthusiasms for interactive media, on demand scheduling and publishing, and steadily increasing thirst for the rich, interactive experiences digital technologies make possible.

Media companies must interact with the hot new combinations of technology, devices and behaviors that will be unpredictably driven by open markets and a determined sense of user entitlement.

Merrill Lynch On Demand Index

Jeffrey Nolan has a link to ML’s launch of its On Demand index:

On Demand is more than just a software notion as the broader technology concept is about bringing much needed flexibility, agility, and execution capabilities to a business. This is not an investable or tradable index. MLODI is designed to help investors better track, measure, and understand the transformation of the software industry to the On Demand model. Very simply put, On Demand practices will change the way customers buy, vendors sell, and investors invest.

MLODI breaks the software market down into sub-segments for applications, infrastructure, and management. We look at how software is licensed and how it is deployed to determine our final MLODI score. Index scores range from 0 to 100, with 100 indicating a model that is 100% On Demand.

The overall software rating for the index at the end of 2003 was 20.0 or 13.1 excluding Microsoft and IBM. Enterprise Application Software had a 2003 calendar year rating of 14.5, with the bulk of the On Demand revenue coming from Microsoft.

On Demand is all about flexibility. The price/performance of technology components has improved so much that it is cost effective to build highly scalable computing platforms. The software that runs on these platforms is unique in that it can be comprised of a highly flexible set of components. This promises that business analysts and consultants can now represent their business processes in the software itself to a degree previously unheard of. The whole system can now be componentized to a level that allows one to scale up or down capacity, depending on the business needs at that moment in time. The signature features of On Demand software solutions are 1) term licensing and 2) hosted offerings – though it is possible to be considered an On Demand software solution having only one without the other.

Differentiation and Segmentation

Seth Godin explains the difference:

Differentiation means thinking very hard about the market and your competitors and somehow making yourself different. Any rational person spending a fair amount of time with perfect information will have no trouble figuring out why you’re different.

Segmentation is a variation of that, but it involves breaking the audience into pieces you invent, and then differentiating yourself for that segment.

Both are selfish.

Both assume that people care about you.

Both don’t work the way they used to.

Used to be that you could buy enough ads and interrupt enough people to make this strategy work. No longer. The filters are too strong. People are too resistant.

You don’t create a purple cow by being different. You do it by creating something worth talking about!

SOA Explained

MDSN has a tutorial on service-oriented architectures (SOA):

It’s would be easy to conclude that the move to Service Orientation really commenced with Web servicesabout three years ago. However, Web services were merely a step along a much longer road. The notion of a service is an integral part of component thinking, and it is clear that distributed architectures were early attempts to implement service-oriented architecture. What’s important to recognize is that Web services are part of the wider picture that is SOA. The Web service is the programmatic interface to a capability that is in conformance with WSnn protocols. So Web services provide us with certain architectural characteristics and benefitsspecifically platform independence, loose coupling, self description, and discoveryand they can enable a formal separation between the provider and consumer because of the formality of the interface.

Service is the important concept. Web Services are the set of protocols by which Services can be published, discovered and used in a technology neutral, standard form.

In fact Web services are not a mandatory component of a SOA, although increasingly they will become so. SOA is potentially much wider in its scope than simply defining service implementation, addressing the quality of the service from the perspective of the provider and the consumer. You can draw a parallel with CBD and component technologies. COM and UML component packaging address components from the technology perspective, but CBD, or indeed Component-Based Software Engineering (CBSE), is the discipline by which you ensure you are building components that are aligned with the business. In the same way, Web services are purely the implementation. SOA is the approach, not just the service equivalent of a UML component packaging diagram.

SOA is not just an architecture of services seen from a technology perspective, but the policies, practices, and frameworks by which we ensure the right services are provided and consumed.