WSJ writes how cellphones are being used for a wide variety of purposes:
Stuck on a cramped bus in this congested city’s rush-hour traffic, Oh Hye Rin whips out her cellphone and puts it to work. The 25-year-old Web designer logs onto her wireless Internet service and starts downloading Korean pop songs to the MP3 player in her phone. Then she switches to online banking, pays some bills and transfers money.
South Korea, where about 70% of the country’s 48 million citizens have mobile phones, and where the broadband penetration rate is one of the highest in the world, offers a glimpse into a future in which cellphones play an increasingly multifunctional role of connecting people to the Internet. For local cellphone providers, the challenge is to feed this expanding market with new data services.
Simple data services, meanwhile, like SMS, a cheap method of communicating through short text messages sent via mobile phones, are no longer major revenue earners either. So, while the carriers are placing new emphasis on data services, they have to be very creative. Residents of Seoul already use their phones to watch movies, activate home appliances, bank online and post photos and commentary on Web sites. So the trick now is to work in partnership with banks and credit-card companies, appliance makers and even construction companies to devise even more services to maximize phone usage in everyday life.
Turning cellphones into remote-control devices for home appliances is seen as a particularly promising area. Since April, residents of a large Seoul apartment complex who sign up for the service with SK Telecom have been able to control lights, TV sets and other electronic appliances with their phones while they’re away. The user dials into a control module in their home that is linked to their electronic devices. Lee Hee Won, a 56-year-old recent retiree who spends a lot of time traveling, says the service is convenient. “You don’t have to worry about leaving the lights on because you can always check with your cellphone whenever and wherever you want,” he says.
Yahoo News has an AP report on server-centric computing in the context of IBM’s efforts to push Workplace:
IBM and Sun Microsystems Inc., which also offers a server-based computing system, the Java Desktop, insist their efforts aren’t a direct stab at Microsoft’s huge and hugely profitable presence on corporate desktop computers.
Even so, the rivals say they hope to win over corporate technology managers who are tired of the cost and security headaches inherent in having hundreds of PCs running Microsoft’s Windows operating system.
In a server-centric computing system, software updates can be pumped to every machine at once, and individual computers can be shielded from viruses and attacks.
“That’s one of the biggest things (information technology) faces today: keeping all of the software on the PC up to date,” said Bruce Elgort, manager of information services for Sharp Corp.’s U.S. microelectronics division. “It’s a nightmare.”
He said he’s “50-50” on whether to have his organization adopt IBM’s new server-based desktop system, known as Workplace 2. Even so, he said, “I’m pretty keen on what they’re trying to do.”
Workplace is accessed over a Web browser, so users can be anywhere, even on a handheld computer or an Internet-connected cell phone. A Macintosh version is due this fall.
Also, unlike earlier incarnations of thin-client computing, users don’t have to maintain a constant connection to the network. E-mails and other work can be performed off-line and synched up with central servers later.
Amy Wohl, who runs the Wohl Associates tech consulting firm, said it will take a few years to gauge the success of programs like Workplace.
Switching isn’t easy for many companies, especially those with internal programs written to work with Office.
“If you’re looking for Office to disappear, that’s not likely,” Wohl said. “If you’re looking for IBM to have a fairly substantial number of customers, large customers, I think that’s reasonable. … It’s going to be really interesting to see.”
Sun President Jonathan Schwartz writes:
What do oil & gas, telecommunications, and financial services have in common?
They’re all commodities.
They’re also the industries that have yielded the world’s largest companies. Oil companies, Telcos, Banks. The Fortune 50 are littered with them. Why? Because commodities, by definition, are those products for which a universal and perpetual demand exists – the planet is your marketplace, and everyone is your customer. Commodities yield massive opportunities. If you’re prepared.
A whole host of folks like to believe the computing industry is commoditizing. I don’t buy it. Some technology products are certainly becoming interchangeable (why buy WebSphere when you can deploy the J2EE Reference Implementation for free?) – but what’s really commoditizing? Bandwidth. Not software, not hardware, bandwidth. It’s coming out of the wall in your house and office, just like a three prong outlet provides another commodity, electricity (and broadband, soon enough).
Having spent a great deal of time with some of the world’s largest commodity companies, I’ve taken note of three simple imperatives.
One, the largest companies serving commodity markets are all technology companies. Talk to a bank with a trading operation, and you’ll hear all about how better order execution or analytics give them a competitive edge. “Banking is a technology industry.” Oil and gas companies invest billions in R&D – for the same reason. And the telecommunications companies? That’s getting more obvious by the day. Technology is their most significant means of differentiation. It’s true for every company engaged in supplying a commodity marketplace. Don’t be deluded by the retail bonanza – in commodity markets, retailers have a much harder life than wholesalers.
Second, technology differentation is necessary, but not sufficient. Companies serving commodity markets must leverage their technology to drive business model differentation. Oil and gas companies leverage the derivatives markets to better serve customers (and stockholders) – and manage production and supply through those systems. Financial services companies, especially in their consumer businesses, use disruptive pricing – with offers of “free checking,” discount trading or other incentives to leverage consolidated product portfolios. And obviously, telecommunications companies are famous for innovative pricing, from free handsets, to call plans that make it more expensive to call outside your network (MCI’s Friends and Family was among the first). The point behind all of this – technology is a must have, but only insofar as it enables disruptive market moves.
Lastly, among the most interesting characteristic I’ve seen in companies that win in commodity markets – they’re intensely focused on standards.
Johnza points to a post by Cliff Atkinson which discusses questions to ponder “when you’re so far along you seem to have lost your way, sometimes it’s easiest to map your way back to the beginning.” Johnza applies the same questions in the marketing context:
– WHO: Who do you need to be thinking about? Who are your target customers, your competition, your partners, your constituents?
– WHAT: is your product, offering, category?
– WHY: should you exist in the first place? What is your vision and mission?
– WHERE: are you trying to go? What are your goals and objectives?
– HOW: are you going to achieve them? What is your core strategy or play, what bets are you making? What are the tactics your will deploy?
– WHEN: are you going to do what? What is the actual plan for rolling out these strategies over time? With what realistic milestones and expectations?
India has been in the limelight over the past year for the business process outsourcing that international companies have been doing in order to cut their costs and sharpen focus on their core businesses. Some Indian companies too have started to outsource their non-core operations. Bharti recently decided to outsource its IT operations to IBM in a multi-year, $750-million, deal. Various banks are also starting to do the same. Think of this as the IT equivalent of the build-own-operate model common for infrastructure development.
Thomas Friedman writes how globalisation 3.0 is making outsourcing possible: These work-flow platforms can chop up any service job accounting, radiology, consulting, software engineering into different functions and then, thanks to scanning and digitization, outsource each function to teams of skilled knowledge workers around the globe, based on which team can do each function with the highest skill at the lowest price. Then the project is reassembled back at headquarters into a finished product. Thanks to this new work-flow network, knowledge workers anywhere in the world can contribute their talents more than ever before, spurring innovation and productivity. But these same knowledge workers will be under more pressure than ever to constantly upgrade their skills in this Darwinian environment.
John Hagel looks at the wider view: Offshoring is not just about cost reduction through wage rate arbitrage. Instead, it is a powerful way to improve performance by accessing distinctive resources and accelerating capability building. Bottom line: offshoring will force all of us to become more specialized and to make some difficult choices to exit certain activities along the way. In fact, by viewing offshoring too narrowly as simply a way to access cheap labor, companies risk unleashing a vicious cycle that will lead to value destruction.
Outsourcing is a fundamental trend, and there is little any US government is going to be able to do anything about it. What is clear is that companies globally are relooking at their cost structures and leveraging the commoditisation that has taken place in IT as well as services to focus on what they do best. It is hard to overlook a 30-70% cost savings for certain processes, but that is just the start. What outsourcing also allows is to also fundamentally redesign business processes. This is what companies like IBM are onow offering the global majors.
From the Indian viewpoint, outsourcing has been the key driver in making it a critical component in the global value chains of organizations. The Economist wrote about four trends in the context of Indian outsourcing: Some multinational firms with captive offshore operations in India, such as Phoenix, are thinking of selling themin effect, outsourcing through divestment. Second, young, fast-growing India-based firms, flush with cash and besieged by would-be investors offering more, are thinking of acquisitions as a way to sustain growth. Thirdly, while these upstarts race to expand in their target markets, the big western IT consultancies are reversing the process. Last month, mighty IBM bought Daksh, one of India’s biggest call-centre firms, with about 6,000 employees. Finally, as these multinationals bulk up in India, extending the range of their wares to include call-centre and other BPO operations, Indian firms such as TCS have been matching themas well as expanding overseas.
Tomorrow: The Future of Services