Category: Tech Talk

As another year transitions, I thought Id take this week to look back at some of my writings over the past year. At a global level in technology, 2002 was more like the previous year waiting for a recovery. And yet, there are some very interesting developments taking place. There is a lot of action happening in what Kevin Werbach calls the next WWW WiFi, Weblogs and Web Services. The last three issues of Esther Dysons Release 1.0 have talked about visualization, gaming and grid computing. While some of our optimism may have diminished, the opportunities for tomorrow have not.

My writings in Tech Talk have sought to highlight some of the promise that technology brings forth in making for a better and more exciting future. My viewpoint is as a technologist and entrepreneur in a developing country (India). Some of the beliefs that I bring forth and which reflect in my writings are:

Emerging Markets are where the next technology markets are. Computing has reached 500 million users, largely in North America, Western Europe, Australia and Japan. These markets are saturated, and are largely upgrade markets. The next set of users are going to come from the worlds emerging markets like India, China, Brazil, Mexico, Africa. But they need solutions which are at very different price points, in fact, at a tenth of the costs of todays solutions. This is where the next set of opportunities are.

Technology can and must bridge the digital divide. Technology has unleashed a huge change in our lifetimes in the past many years. But so far, it has only touched the top of the pyramid. What is now needed is for technology to impact the bottom of the pyramid. It needs to build bridges to these users and enterprises. Just as cellphones and STD/PCOs have helped bring voice communications to the previously unconnected, what is now needed is to do the same with computing, software and knowledge.

We have to build the New India (and the New China, the New Brazil, the New Mexico, the New Africa). The new nations have to built bottom-up, in an emergent manner by us. We have made our choices to live in our nations it is up to each of us to make them Great during our generation. And this is where, technology is our ally. We should use the newest ideas and put together solutions think of them as disruptive innovations which can help people and organisations leapfrog. No one but us is going to make the New Nations happen.

As I look back, there were 3 themes underlying much of my writing: emerging technologies, new computing paradigms and bridging the digital divide in India and other emerging markets. Well discuss each of these in the coming days.

Tomorrow: Emerging Technologies

The basic set of applications and tasks which are present on My First Computer are just the beginning. The cluster of these computers with the thick server in the enterprise can now be the base for a host of additional services. The Trojan Horse in this case is the thick server. Armed with its 80 GB (or higher capacity) hard disks and its presence on the LAN with a small pipe connecting it to the Internet, the thick server can now become the local distribution for a wide variety of information services and applications. Specialised content, training programmes, stock quotes, e-books, company portfolios and databases, self-development courses are some of the services which can be offered via the thick server.

The LAN presence overcomes a number of key limitations in todays web-centric world: low wide-area connection speeds in most emerging markets, unreliability of these connections, and billing. The thick server, in its avatar as the local content and applications repository, provide access at LAN-speeds, is always-on and facilitates the billing process by being able to add the appropriate charge to the monthly service bill for the user or the enterprise. Interestingly, the thick server is not limited in any way to offer services to just the thin clients any of the other users in the organisation can also do so. (That is why I termed it a Trojan Horse!)

How does one update the thick server with new content? This can be done in two ways. Content which needs to be accessed in near real-time like stock quotes can be updated as a stream on thick server and then distributed to users on their desktop. Other content can be distributed periodically via a CD, and can be copied over to the hard disk. Storage space is cheap and plentiful.

On the applications front, the thick server becomes the delivery point for the enterprise software applications which will be created by the domestic software developers. In addition, there is a huge base of open-source applications already available. After appropriate testing and debugging, these applications can be made available on the thick server, with the emphasis being on how they can make a difference to the users, and how they can be used. The software may be free, but some time and investment will need to put in by intermediaries on making these applications usable and task-centric, so that they just do not become an additional feature of the system.

As the critical mass of thick servers and thin clients and Tech 7-11s and My First Computers develops, we will find software companies coming forward to create specialised (and localised) applications. As these low-cost computers proliferate, the network effects will work positively for the solution and pass a tipping point. In addition, the same building blocks which can even spread computing in homes: a WiFi-enabled thin client (My First Wireless Computer) which connects to a neighbourhood Tech 7-11 can do the trick.

The ideas presented here present a framework for realizing the vision of a connected computer for every employee and every family. The result will be the creation of an alternative computing ecosystem for the developing countries, one which is affordable to the mass-market and whose evolution is driven by the community. These disruptive ideas are the bridges which will take computing across the digital divide to where computings next 500 million users await their turn for using one of the greatest inventions of the past century, and entering the Information (and Connection) Age.

Continue reading TECH TALK: Disruptive Bridges: My First Computer: Scaling Up

So, we now have a thin client for Rs 150 per month and a thick server available to 10 users or more for Rs 150 per user per month. (There may be some additional costs for the network hub and cabling, which I have not considered here.) Add to this a per-user cost of software of Rs 100 per month, and a support and maintenance cost (paid to a channel partner who also does the marketing and installation) of Rs 100 month (including keeping a spare thin client for every 10, just in case any of the older thin clients stop working and we have a solution which costs Rs 500 per user per month.

From the enterprise point of view, another way to look at what is on offer here is a group of people need to pay Rs 5,000 per month to get a 10-user thin-client and thick server solution. This could be used by 10 users or a group of 25. In fact, I expect that as the benefits of computer literacy become clear to people, they may even contribute a part of the money from their salary there is no other way for them to get to use a computer for as little as Rs 20-25 a day.

Consider the alternatives: a single new computer even today costs Rs 25,000. Legal software to match what is available on the thin client MS-Windows and MS-Office will cost an additional Rs 25,000. Instead now, for less than 25% of the cost, the enterprise is able to get a computing solution. Or in other words, instead of buying one new computer, it can get four thin clients connected to a thick server, providing computing to three people who did not have access to computing earlier.

One of the key players in this value chain is the channel partner who also becomes the facilities manager for these enterprises. These figures by themselves may not seem large from the viewpoint of a service provider, but multiplied over 10 or more installations can provide a good financial base to offer its services and thus become a bridge for the last-mile. For supporting a 10-person organisation, the service provider gets Rs 18,000 a year.

What I have described here may seem like wishful thinking. Why would an enterprise want to give computers to the ones who dont have it as the argument goes, everyone who needs one already has it. Also, whod want to finance an old computer? What about the collection problems? How do we reach all these enterprises? The marketing costs would be just enormous. The questions are endless.

I dont have a whole lot of answers. The way I look it as that a connected computer for every employee needs to become part of the fabric of an enterprise, just like they are provided with a table and chair. This desire (or demand) needs to become a bottom-up one (by the beneficiaries the employees) and be driven top-down by the employers, who will also benefit through increased employee productivity. For the emerging markets and emerging enterprises, computing needs to be thought of not as a luxury, but as a competitive weapon which can give their people and their organisations an edge in the marketplace.

Tomorrow: Scaling Up

Continue reading TECH TALK: Disruptive Bridges: My First Computer: Economics (Part 2)

How do we bring the price point of My First Computer to Rs 500 per month? Let us first consider what the components of the price are.

My First Computer needs to be used in a network environment, and not as a stand-alone computer. Considering that we are targeting non-consumer in enterprises and government, this should not be an issue. The two elements of the solution are the thick server and the thin client. The thick server is a standard desktop. A system to support about 10 users would cost Rs 40,000 while one to support 40-users would cost Rs 70,000. The higher-end solution would have a dual CPU, have two disks with software RAID and increased memory. This is because all the processing is happening on the server. Thus, in the 10-cuser situation, we can expect the monthly cost in the case of a rental to be about Rs 1,500, assuming a loan period of 36 months. For 10 users, the cost per user thus becomes Rs 150 per month.

The thin client cost varies from Rs 7,000 for an old (recycled, in quantities of one) computer to about Rs 15,000 for a new one. One option is for users to buy the system of their choice. The client need only have a motherboard and network card, along with the keyboard, mouse and monitor. There is no need for a floppy drive, hard disk or CD-ROM since all storage and processing is happening on the server. The motherboard needs to have just a Pentium I CPU and 16/32 MB RAM.

An interesting variation on how the clients can be funded is the following. Think of the older thin clients as assets whose value depreciates by no more than 10% a year. This is a reasonable assumption because the price points are anyways very low and given that there is (a) software which can leverage these thin clients, and (b) there is a demand for thin clients which there can be, considering that there are hundreds of millions of users who do not have a computer at this point of time, and who could afford one if the price points were lower.

Now, if there is a person or institution with surplus cash, their options for getting more than 10% returns per annum on the cash are very limited. So, if we think of the thin clients as assets which depreciate 10% a year and the need to give more than 10% returns a year on cash, if we can provide a solution which gives a higher rate of return (say 25% or more, to account for the increased risk), then investing in thin clients may be a good value proposition. For a 25% investment return on a Rs 7,000 thin client, the investor needs to get Rs 1,750 per annum, which works out to Rs 150 per month.

Thus, we can think of setting up an investment vehicle to buy thin clients and provide above-market returns to investors. This may seem a far-fetched option considering that this has never really been tried in the world of computing with respect to older computers, but I believe it can be done and in fact, can provide a win-win situation for all entities.

Tomorrow: Economics (continued)

Continue reading TECH TALK: Disruptive Bridges: My First Computer: Economics

In talking about My First Computer, we are also (yet) thinking of connecting the employees to existing applications or databases. Our competition is paper and manual processes. What we are offering is a system which can automate some of the basic, repetitive tasks that people do and more.

A telephone operator, for example, can use it as a phone and address book. Instead of storing details of missed calls on scraps of paper, the operator can now send an email or an instant message to the concerned person. Is one call that may have otherwise been missed worth Rs 500? A librarian can use it to record books and magazines that have been borrowed, enabling employees to electronically browse what the library offers. Is their time saved worth Rs 500 each month?

One could think of many such scenarios depending on the people involved. Giving a computer with a basic set of applications (email, calendar, tasks manager, contact manager, browser, word processor, spreadsheet, presentation application, instant messenger) and more importantly, instructions and guidance to use these applications in day-to-day activities can definitely play a role in making their users more productive.

In addition, I feel that the empowerment and confidence that todays non-users will get with My First Computer will result in a more pro-active workforce. The computer can have that magical effect on people. All we have to do is to look back to the exhilaration we felt when we used our first PC. That feeling needs to be permeated across every employee in the enterprise.

The interface that is seen on My First Computer cannot be the one we currently see. Files-Folders-Icons along with the Start-Menu may be fine for todays power users. Is there something simpler we can offer to the novice users? It should be something which does not make feel that theyve been given a cheaper, poorer version of todays MS-Windows interface. In fact, they should feel delighted with what they have, not disappointed. There is a wonderful opportunity to rethink the first screen that users see and use for this next set of users. What we do them to feel is that they have a superior version of a new product, rather than an inferior version of an old one.

What is needed is the equivalent of a Digital Dashboard on the PC, which becomes the gateway for performing tasks, the aggregator of information, and the launchpad for applications. It is the one screen which users can think of as their electronic home.

My First Computer along with a set of ideas that simplify computing for todays non-consumers in enterprises can create the first step in opening up a whole new world of opportunities for the workforce. It is the key component in creating a new technology ecosystem in the worlds developing countries. It is the first step in creating nations whose populace is computer-literate. The biggest challenge and question which we have to answer is how can we make this possible (profitably for the entire value chain) at the price point we had talked of: Rs 500 per person per month.

Tomorrow: Economics

Continue reading TECH TALK: Disruptive Bridges: My First Computer (Part 2)

My First Computer is an idea to bring the computer on the desk of every employee in enterprises and government who are presently not using computers for no more than Rs 500 (USD 10) per month. First, we will discuss the concept in more detail, consider the economics of the solution, and how this can serve as the foundation for creating a platform for developing a variety of software and information services.

A word of caution: the approach outlined here may seem like a set of retrograde steps from our vantage point as power PC users, but let us remember that we are looking at users who have not in the past 20 years tasted computing. For every person who us using a computer, there are 10 others who are not perhaps because they cannot afford one, or they cannot use one, or their employer feels they do need one. This is the segment we are focusing on, and these are the problems we are trying to tackle: affordability, usability and need, and for which My First Computer is the answer.

The Rs 500 per month per person is an important psychological barrier. Considering that the computer can be thought of as a productivity enhancement tool, any person earning Rs 5,000 per month or more can become a candidate for using one if it can result in a 10% productivity increase. Looking at what the computer can do and what employees are typically doing in a company, a 10% increase in the efficiency of tasks they do should be an achievable target.

At a Rs 500 price point, what the employee gets on the desktop is a system which (a) enables letters to be written, read, stored and printed (b) allows for basic tabular data to be written and manipulated for contacts or phone numbers (c) serves as a communicator – with messages to sent to others (d) offers a window to browse the Internet, and (e) is an extensible platform on which new services can be added.

Note that we are not talking of the operating system and applications (yet). Instead, the focus is on what the computer can do the tasks and scenarios in which it can be used. This is where I think we have grossly under-utilised the computer and what it can do. (In fact, I cannot imagine any other investment where the asset is used at less than 5% of its capabilities.) We need to think of and explain to end-users what the computer can do for them. This must have been done in the early days of the computers. The same selling points need to be revisited now because we are selling to non-consumers. The big difference from 20 years ago: we are selling at a price point of a mass-market product for the bottom of the pyramid almost like a razor-blade shaving system. We need to explain the benefits of the solution (in case the connected computer) and show how the enterprise can get a return on its investment in terms of the increased productivity of the employee.

Tomorrow: My First Computer (continued)

Continue reading TECH TALK: Disruptive Bridges: My First Computer

The second innovation in the Tech 7-11 is the wireless access point. This extends the network beyond the physical space that the Tech 7-11 occupies. This has a dual benefit: it can now offer connectivity to anyone with a WiFi connection in the neighbourhood, and going beyond, offer the same set of services of processing and storage to the computers in the vicinity, thus ensuring that a thin client costing no more than Rs 7,500 (USD 150) can be used as this remote computer.

Let us discuss both these benefits further. In the first case, as more and more devices are WiFi-enabled and the WiFi range increases due to the trajectory of innovation, users can leverage the wireless access point for Internet connectivity without actually being in the Tech 7-11. This is similar to the strategy being used by Starbucks in the US. It has set up wireless access points in its more than 1,00 of its outlets in the US in association with T-mobile, charges USD 30 per month for unlimited Internet access. One could of course be in the Starbucks or just outside. Starbucks is using its existing real estate and network to offer a service which goes beyond just its varieties of coffee!

In the second case, the thin client with a WiFi card can extend the network and reach of the Tech 7-11. Current WiFi speeds are upto 11 Mbps for 802.11b and upto 54 Mbps for 802.11a and 802.11g. The key limitation at present is the range limited to 100 metres or less. This may not be good enough at present, but as happens so often with disruptive technologies, there is enough work happening to increase this range. Recently, at least two WiFi companies have announced that using special antennae they can extend the range to 10 kilometres.

What this will do in the future is to extend the neighbourhood that can be served. Think of this as a hub-and-spoke network, with the server as the hub and the thin clients as the spokes. The WiFi-enabled thin client spokes are connected to the thick server which does the processing and storage. The result: for an investment of Rs 7,500 or less, anyone can get a connected computer. From the Tehc 7-11 point of view, if it can service 100 such computers in a neighbourhood and charge Rs 1,000 for both the computing and connectivity per month, it generates an additional revenue of Rs 100,000 per month using the same infrastructure that it already has. This same user base could also be targeted for additional value-added services.

There is another interesting by-product of the server-centric computing architecture. The client desktops can be controlled from the server, which means that an advertising revenue stream can also be opened up. In short, a spectrum of value-added services can help increase the earning potential of the Tech 7-11.

The Tech 7-11 in the form of a community computer and communications centre is the first mechanism in making computing available to the masses. In this scenario, the computer is a shared device. What if we wanted to have the computer in the enterprise? After all, the enterprise is where a large number of people spend their work day. A slight variation on the same basic idea of the Tech 7-11 can make this happen. Think of this concept as My First Computer.

Next Week: My First Computer

Continue reading TECH TALK: Disruptive Bridges: Tech 7-11: Hub-and-Spoke Extension

The key to making the Tech 7-11 a commercial success lies in its business model. The Tech 7-11 occupies space. So, any space owner who is looking to franchise this needs returns which are better than alternative uses of the space. Consider first a cybercafe with 10 computers charging Rs 30 an hour (USD 0.60). Assuming 12 hours of operation, the maximum daily revenue that it can generate is 10 computers * Rs 30 / hour * 12 hours = Rs 3,600. Contrast this with a Barista outlet in India which has a footfall of about 400 a day and generates average billing of Rs 60 per person for a daily revenue of Rs 24,000. While we definitely need to look at costs of operation and the net margins, the clear message is that unless we are able to ramp up the revenues of the cybercafe by a factor of 7-10, it is not a viable model for franchising.

Of course, one could rely on the generosity of space owners, especially government and quasi-government institutions. As a result, cybercafes could (and some have) spring up in post offices, railway stations, bus stations, and other such places where the notional cost of space can be taken as close to zero. But that is not a model which can scale up to one in every neighbourhood and stay in the face of other commercial options. The small-business entrepreneur in the private sector holds the key to success if he sees value in the concept, then he will set it up. We have to make it worthwhile for this private entrepreneur just the way a McDonalds has done across the world.

So, back to the question: how can we transform a cybercafe earning a maximum of Rs 3,600 a day to a Tech 7-11 earning Rs 24,000 or more a day? The answer lies in leveraging the two innovations of the Tech 7-11: the thick server and the wireless access point.

The thick server makes it possible to offer various services locally. This means faster access and less dependency on a slow Internet connection. Yes, there will be broadband wide-area networks, but we should not be dependent on them. In the foreseeable future, I still do not see cost-effective LAN-like speeds (10-100 Mbps) happening over a wide area network. By offering storage for the users mail and documents, and making content and applications available locally, the Tech 7-11 can now do two things: increase the earnings from a single user, and charge more per unit of time.

For example, mail can be downloaded automatically to the local thick server, thus enabling speedy access to email. It also means offline access for email and documents, in case the Internet connection is not available at that instant of time (as may be the case in many rural areas). In addition, training courses can be offered from the local thick server, and the charges for these could be Rs 50-100 per hour, or more. The value lies in the content, and not the time spent. This is what the Tech 7-11 is leveraging.

The Tech 7-11 could even charge for printouts Rs 10 for a land record, Rs 5 for a ticket, and so on. These are like the beverages in a McDonalds cheap in terms of raw materials used, and with very high profit margins!

Taken together, these ideas create the platform for a Tech 7-11 to offer value-added services which go far beyond the time-based charging that a cybercafe of today does. This is good for the users who come to the Tech 7-11. Can we also leverage the others in the neighbourhood?

Tomorrow: Tech 7-11: Hub-and-Spoke Extension

Continue reading TECH TALK: Disruptive Bridges: Tech 7-11: Business Model

Each of the Tech 7-11s has a thick server and any number of thin clients. The thick server is a new desktop, costing no more than USD 1,000-1,500 (Rs 50,000-75,000) and capable of supporting upto 40 thin clients. A thin client can be any old or used computer without a hard disk, CDROM or floppy drive. It has a boot-ROM on its network card to get it started, and then uses the processor on the server for all its computation. The thin client provides the user interaction points the keyboard, mouse and monitor. By simplifying the thin client, we can bring down the cost of these diskless terminals to less than USD 150 (Rs 7,500) in bulk, prices could go even as low as USD 100 (Rs 5,000). There is an almost infinite supply of these machines available as the developed nations upgrade their desktops.

In this server-centric computing architecture, all processing and storage happens on the server. The client is a dumb terminal, but wait! Linux and other open-source software can transform the client into a full-featured Windows-like desktop. It can provide a graphical user interface and all the base set of applications that most users need: an email client, a personal information management application, an office suite with a word processor, spreadsheet and presentation application which can read and write MS-Office file formats, a web browser, an integrated instant messenger which can connect up with all of todays IM systems, and a PDF reader and writer. All this in a virus-free environment at a fraction of the cost of what a new desktop with Windows would cost.

The Tech 7-11 would also provide Internet connectivity. This connectivity could be via leased line, dial-up, VSAT or even WiFi using directional antennae to increase the range dramatically. Printers can be connected to the thick server or the thin client as the case may be. Some of the thin clients can also have support for multimedia.

In addition, the Tech 7-11 would have a wireless access point, using the 802.11 protocols. Such an access point is available for between USD 100-150. What this will do is offer connectivity in the neighbourhood to anyone who has a WiFi-enabled computer. WiFi cards are available for USD 50-100, and falling in prices. As their range increases, the WiFi network with the Tech 7-11 as the hub could extend beyond a few hundred metres. This means that in a village, the thin clients could now be at local schools or homes or government offices, and use the Tech 7-11 as the thick server via the wireless access point.

The two key differences from a cybercafe environment are: the presence of the thick server, which can now become a content and applications server (replicated to and from Internet servers), and WiFi, which can now extend the computing endpoints to beyond what is there in the physical space of the Tech 7-11. As we shall see, both these innovations have the potential to increase by 10x the earnings of the Tech 7-11 and make it a viable and profitable franchise.

Tomorrow: Tech 7-11: Business Model

Continue reading TECH TALK: Disruptive Bridges: Tech 7-11: Technology

Imagine: a computing and communications centre as omnipresent as telephone booths (STD/PCOs) are in India today. You can walk into one of them, use the computer to check your email (which could be coming right off the local server, in case youve so designated), access your files, write letters, take printouts, browse the Internet and even, if you happen to be running a small business, do your accounts. The centre also lets you make phone calls using VoIP (Voice-over-IP), cutting down on your long-distance and international phone bills.

You can also widen your knowledge base by taking any one of the hundreds of training programs available on the local server. You can also indulge yourself in the newest multi-player game thats just gone live. The centre is also a trust point where you can make payments for various goods and services that you may have bought online. A wireless access point lets you use the Internet connectivity of the centre from the computer in your home.

Welcome to the world of the Tech 7-11.

The Tech 7-11 is much more than the cybercafe that we know today. The cybercafe, of which there are tens of thousands across India, has a few limitations: it offers a window to the Internet, but is not a home; it offers communications and Internet access, but not much by way of computing functionality; its business upside is limited to the computers that it has within its four walls and the hourly rate it can charge. In India, the cybercafe needs to morph into much more than an Internet access point it needs to become a tech utility for the people in the neighbourhood.

Think of the local kirana or grocery store. It offers all the essentials that are needed for one at home. Abroad (especially in many of the Asian cities and towns), a franchise has sprung up: 7-11. The name comes from the timings that the stores are open: 7 am to 11 pm. They are within walking distance for most people. They offer most of lifes daily needs. More importantly, there is some sort of relationship that gets formed between the store proprietor and the people who frequent the store an underlying trust. In a sense, the local store has become a utility in our lives a kind-of remote utility, because it does not come into our home, like the other utilities, but a utility nevertheless.

That is what the Tech 7-11 needs to become a utility fulfilling all the technology needs of a neighbourhood in the worlds developing markets. It has the computers, if you cant afford one (which is probably true for 990 of 1,000 people in India and 950 of 1,000 people in China). It has the connectivity to the Internet, so you dont necessarily need it. It has the storage and backup facilities, so you can access a lot of information very rapidly rather than over low-speed lines. It has trained attendants to help you navigate the still-complex world of technology.

In other words, the Tech 7-11 can do for computing what the STD/PCOs did for telecom: by emphasising community over individual ownership, it can make it accessible to a much wider group of people. As these people learn how computer can make a difference to their lives and their income levels rise, there is a strong probability that they will opt to buy one. Even then, the Tech 7-11 is there continuing to serve as the processor, storage and network connector.

What is the technology needed to make this happen? Luckily, all the components are already available.

Tomorrow: Tech 7-11: Technology

Continue reading TECH TALK: Disruptive Bridges: Tech 7-11