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Friday, June 30, 2006

Community Based Infrastructure To Preserve Net Neutrality

Bob Cringley comes out with an astounding idea that its tine to own our own last public mile to enforce net neutrality - he bases his ideas on that of Bob Frankston who sees the issues surrounding Net Neutrality come down to billability and infrastructure. For ISPs it isn’t about service, it is about creating billable events, that's all. He contends that with a preferred or exclusive provider versus a competitive marketplace, prices are always higher, not lower. The ISPs (telcos and cable companies) would very much like to go back to the sort of system, where they, not you, are the provider and determinant of what bits are good bits and what bits are bad. He points out that we build and finance public infrastructure in a public way using public funds with the goal of benefiting economic, social, and cultural development in our communities & for people to own the last mile Internet connection. The idea is simple: run Fiber To The Home (FTTH) and pay for it as a community of customers - a cooperative. The cost per fiber drop, according to Bill's estimate, is $1,000-$1,500 if 40 percent of homes participate. Using the higher $1,500 figure, the cost to finance the system over 10 years at today's prime rate would be $17.42 per month. Such a connection is a gigabit-capable circuit with no bits inside - just a really fast connection to some local point of presence where you could connect to ANY ISP. The effect of this move would be beyond amazing. It would be astounding. No more arguments about Net Neutrality, for one thing, because we'd effectively be extending our ownership and control of the wires all the way to the ISP interconnect. There would be a community-financed Internet revolution and this time, because it would be locally funded and managed, very little money would be stolen. Dark fibers would be lighting up all over America, telco capital costs would plummet, and a truly competitive market for Internet services would emerge.
Like in the road system: Local builders add capacity; communities add capacity and large entities create interstate roads. They don't create artificial scarcity just to increase toll revenues - at least not so blatantly, its time for a model in which the infrastructure is paid for as infrastructure - privately, locally, nationally, and internationally can create a true marketplace in which the incentives are aligned. Instead of having the strange phenomenon of carriers spending billions and then arguing that they deserve to be paid, we'd have them bidding on contracts to install and/or maintain connectivity to a marketplace that is buying capacity and making it available so value can be created without having to be captured within the network and thus taken out of the economy. Sound vision- definitely worth discussing further.

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EMC announces acquisition of RSA. This is certainly a welcome move for RSA shareholders and customers as RSA has been sort of stagnating for a while. RSA could not move beyond the authentication space and EMC finds this space an important constituent in the enterprise market space. The security market itself is very hot – one of the hottest areas in the enterprise industry but more importantly this is an important area for EMC to move in. A flurry of activities in terms of acquisitions are seen in this space as well. For EMC,which is already on a roll, this is a good move(valuation may be seen to be high though). Legato, VmWware, Documentum and RSA –string of carefully chosen acquisitions – Vmware somebody values at 5 billion USD. EMC’s recent acquisition of proActivity clearly worried their competition in the document/record/business process management space. No doubt there’s a method in their madness. Three years, 17 deals, and $4.7 billion into an ambitious diversification drive, Tucci has quietly put together one of the most successful mergers and acquisitions records in the tech industry.EMC on the field is also executing well. All the while, EMC has hit earnings targets 13 quarters in a row.These well crafted set of moves should help EMC substantially in the days to come.

Category :EMC

Wednesday, June 28, 2006

Mobile Phones & Location Based Services

Japanese cell phone users are able to point their specialized phones at buildings and monuments and get information about the location. More than 700,000 locations have information or advertisements associated with them already. The NYTimes writes, "If you stand on a street corner in Tokyo today you can point a specialized cellphone at a hotel, a restaurant or a historical monument, and with the press of a button the phone will display information from the Internet describing the object you are looking at". The new service is made possible by the efforts of three Japanese companies and GeoVector, a small American technology firm, and it represents a missing link between cyberspace and the physical world. The phones combine satellite-based navigation, precise to within 30 feet or less, with an electronic compass to provide a new dimension of orientation. Connect the device to the Internet and it is possible to overlay the point-and-click simplicity of a computer screen on top of the real world. The Japanese use the GPS for finding precise locations unlike the practice in other parts of the world offering similar service where the difference in accuracy could be 100 yards or more. What next : putting location-based information on cellphones would be a logical step for search engine companies and potentially look for ways to increase advertising revenues. Microsoft has already moved into the cellular handset realm with its Windows Mobile software, and Google is rumored to be working on a Google phone.

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Forrester Ranking Of Blogging Platforms

Using Forrester’s standard framework of measuring the platforms on three dimensions - Offering, Strategy, And Market Presence, Charlene Li
with Chris Charron, Tenley McHarg assesses the various players and rank the players. Forrester evaluates leading blogging platforms across 54 criteria and found that iUpload leads the market with its robust blogging capabilities and its strong strategic vision of a blog as a lightweight content management system (CMS), a collaboration and knowledge management tool, and even as a foundation to form communities of customers. When choosing between a full-featured suite like iUpload's Customer Conversation System or strong blogging-focused solutions like Movable Type and WordPress, companies should have a well-developed vision of how blogging will be used within the enterprise and then select a vendor that shares that vision. The report finds the top three platforms as:

- iUpload — Customer Conversation
- Six Apart — Movable Type
- WordPress

followed by :
- Traction Software — TeamPage
- Telligent — Community Server
- Six Apart — TypePad
- Drupal
- Roller
- UserLand Software — Manila

The report advises enterprises that while choosing a blogging platform, companies should first determine both their short-term and long-term needs and put vision first and platform second. The report also covers in passing the emerging trend of content management system beginning to offer blogging facilities. Warning enterprises, to be aware of the need for switching blogging platforms, the report advises enterprises to anticipate the day when you will need to switch providers and recommends conducting tests on how easy it will be to move all of your content to a new solution, especially if it is a hosted solution or if you anticipate using complicated data structures like linked profiles in a social network. A good report, a welcome one at that however few things stand out:

A. Forrester's skewed assessment methodology of assigning 0% weightage to market presence - this means a platform having a dominat marketshare has no bearing on the scores awarded and by extension, the rankings.
B. Within the meassures, I was surprised to see criteria like group blog management, internationalization support and online support features being given such a low weightage - after all blogs are all about colloboration!
C. The exclusion of blogger platform in the assessment takes the color out of the exercise
D. It might have made sense to have different categories - fully hosted and third part hosted (considering significant downtimes experienced sometimes in fully hosted solutions
E. The report would have beem more complete, if some real life switch/migration cases have been analysed.
I can go on and on, but can't ignore the fact that it is easy to criticise something and difficult to create something - I think on balance, the blogsphere could have done amuch better job - considering that charlene li and gand could have been under pressure to use a standard Forrester framework for assessment - which is certianly open to criticism - waht do you make out of an assesment criteria that tells you that the weightage of number, size, reference of user implementation accounts as zero. wait before closing - assessments from competing firms suck more- atleast forrester is attempting to be transparent with scores and attributes , others just declare and do not expose the details. So congrats charlene and team for coming out with a good report.

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Tuesday, June 27, 2006

Offshore IT & ITes Players

NASSCOM, releases the rankings of Top 20 IT Software and Service exporters in India (excluding ITES-BPO revenues). There are no major surprises here. Independent of this, Economic Times research lists the Top 7 BPO players operating out of the country.

In both the industry, clearly the big companies getting bigger, and the smaller or mid-sized companies either being acquired or muddling around. Talent concerns abound in relation to demand but the similarity ends there. There is no correlation between success in one sector helping to succeed in the other one despite the ability to offer integrated services, ability mine deeper into established accounts, cross sell, up sell etc. The customer (in some cases customer's customer) demands and get the right value and they exert choices in pursuit of these.The rise of ITes sector clealry shows that captive option may not be the best way to go and outsourcing is becoming more and more an attractive option.

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The Resurgence Of The New Media

The traffic growth to media sites are increasing quite significantly. Vertical sites like the travel sites have experienced a slightly higher rate of growth than the Internet in general over the past year, according to comScore Networks, a Web research firm. But over the same period, real estate sites have had triple the growth — and auto sites quadruple the growth — of the Internet over all.Sites devoted to big-ticket purchases — particularly cars, real estate and travel — are feverishly refining features and marketing strategies in an effort to attract the growing number of consumers searching the Web for buying advice. With online merchants paid 33 percent more for advertising last year than the year before, its clearly pointing to the trend: For high-margin, big-ticket items, the competition for eyeballs is even more intense & the new sites have become more specific and niche-oriented as the competition for advertising has increased. So how about Google & Yahoo cornering all these: the new sites have become more specific and niche-oriented as the competition for advertising has increased. Another claim makes an interesting reading : sites with the longest tenure had gotten much smarter about their businesses - The thing the older sites did well was stay alive long enough for the rise of Google.Clearly interesting times are dawning upon us - while we may complain about the signal-to-noise ration being seen as high, fact remains that some strong signals can also be picked up.

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Indian SEZ, Tax Breaks & IT & ITES Industry

Basab Pradhan wonders,why the tax holiday should be extended for the IT services companies operating in India. He points out that companies like Infosys make 25% net margins after taxes. At $20B in revenues, the industry is no longer a small industry needing encouragement. So why does the IT industry not pay corporate income tax? Not just that, under the SEZ act, that tax holiday will now be extended, indefinitely. The details of the SEZ facilities make an interesting reading. Basab questions the need for such provisions given that India today has a large and still rapidly growing IT and BPO industry entirely focused on offshore services to developed markets. Most of the larger firms are very profitable and in a scenario where the custom duties are way down & telecom bandwidth is dirt cheap, probably this is anachronastic.
My take: Very valid questions – I guess SEZ provisions are not just for the software industry alone -most of the terms covers all industries – this time around it should be seen as aiding SEZ growth and not necessarily to be seen as a concession to the services industry. In fact there's a view that Indian SEZ's may not give the needed boost.If we take that perspective and given the fact that the country’s trade numbers are such a miniscule % of global trade, it has to be welcomed. I have another issue – some do not think that Indian IT service providers have conquered the world – still a long long distance to grow to be in the top 5 of the global list. The focus has got to shift. I was trying to browse Nasscom site to look for some relevant info on the tax breaks and stumbled upon this note. The offshore players themselves need to make innovation a priority – given the perception that companies are not seen as innovation chasing entities. In fact Nasscom’s innovation award finalists last year happened to be all small sized enterprises. The format has changed for this year– no complaints though.
The innovation technology framework makes interesting reading – with Nasscom announcing the set up of innovation awards, the stage is well set – but in reality there’s a long road ahead. The setting up of innovation awards and the criteria set out for these are indeed interesting:
- Original IP Creation
- Install base for Products
- Revenue from IP
- Potential of the IP
The emerging challenges related to the industry coming from intensified competition from even lower-cost offshore outsourcing destinations and given the tight talent supply situation in proportion to the demand, means corporates need to take a more imaginative and radical approach to be more innovative and roll things faster. unconventional form. Companies will have to explore new avenues that will give them a definitive leg up over global competition. As I wrote earlier in a different context, when we shall be getting to see something like a J.D.Power rating for the IT consulting majors service offerings – high time for it. So the margins, (which are already under pressure for some), would be better served in terms of funneling towards growth in these pursuits – mere capex on buildings, landscape alone won’t clearly help. Having said these, am also aware of the various initiatives pursued by Tier 1 offshore companies on such initiatives – the issue is more and more of that need to happen.

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Monday, June 26, 2006

It’s the Economy That Matters

Came across this piece by James Altucher titled "The Underlevered American Household". The US is clearly consuming more than what it is earning. While this is not news, the accelarating trend definitely is.
The world’s economic engine sees consumer spending accounting for almost 70% of the US GDP. For the first time since the Great Depresssion, savings rate is now negative. Look the 77 year chart for Personal Savings Rate. Consumer spending accounts for 70% GDP. Ut is apprarent that this party will not last long - atleast in its current structure. The fear of recession looks ominous looking at this.The falling markets have already sent a strong signal to this effect. Visit this link for more details.

Image courtesy :Big Picture Blog

Category :,

Narayanamurthy On Competitiveness

Very rarely one comes across business leaders who can offer new perspectives every time they speak - NRN is the amongst the tallest of indian business leaders who can offer different perspectives, every time he airs his views. In an interview, he attributes the dramatic and powerful effect that the Indian headquartered firms has on the worldwide tech industry to becoming more and more relevant to customers and are having greater and greater impact in atleast two ways: helping the customers reduce the the cycle time in designing and implementing new systems that reflect the changing marketplace and the new business rules & the second thing is we're able to giving more value for money.
Stating that the multinationals entry shall accelerate the Indian headquartered firms to innovate more – he identifies that there are five elements of success. They are:
- Openness to learn: Openness to subordinate your ego to take ideas from others.
- Second, meritocracy: The best ideas are adopted and implemented using data to arrive at the best decision.
- Third, speed: Assuring you do things faster compared to yesterday and last quarter.
- Fourth, imagination: You continually bring better ideas and better innovation to the table.
- And finally, excellence in execution: That is implementation of these great ideas with a higher level of excellence today than yesterday

As this comes from NRN himslef, I do not want to add any thing more - just read, reflect and should I say,reap rewards.

Category :,

The (DVD) Standard War Intensifies

Movie studios favor Sony's Blu-ray DVD due to bigger capacity, says SONY Corp Chief Executive Officer Howard Stringer.The Blu-ray DVD can store high-definition films and other media, because its capacity is higher than rival formats. As known to most, Sony is promoting Blu-ray DVD against Toshiba Corp's HD DVD to gain acceptance from film makers and consumers as the standard for offering sharper, more lifelike visuals in video players, games and personal computers. Toshiba has said it expects that by December between 100 and 150 movie titles will be available in HD DVD in Japan and Europe and 150 to 200 in the United States.Sony expects about 100 films will be available on Blu-ray this calendar year.The HD DVD disc can hold 15 gigabytes of data, against 25 gigabytes for Blu-ray and 4.7 gigabytes for a conventional DVD. Toshiba in March began sales of HD DVD players for about 110,000 yen (US$859) and said it aims to sell between 600,000 and 700,000 units by March 2007. The format has the support of Microsoft Corp, Intel Corp and NEC Corp, while Blu-ray is backed by companies such as Samsung Electronics Co and Matsushita Electric Industrial Co. As i wrote earlier, In the near future, movie goers can have the same interactive experience typically available in multiplex. Blu-Ray technology can enable viewers go from watching an action movie to participating in an interactive game based on the movie, or he could switch to a 3-D version of a particular scene. Massive storage capacities up to 200 gigabytes supported by Blu Ray- provide an almost endless capacity for add-ons by home audiences. Sony stated that in fact, part of the justification for acquiring MGM was the profits to be realized from reissuing the 4,100 films in MGM's library in the Blu-Ray format. Sony has a critical mass of movies that it can release on Blu-Ray. Aside from its own titles, Disney, 20th Century Fox, and Lions Gate have agreed to release their titles on Blu-Ray. Warner Bros. Entertainment, announced it would release films on the Blu-ray format as well. Among six major Hollywood Studios- all but Universal have announced support the BD format. Paramount, Universal and probably Warner will release HD-DVD titles. A studio wanting its high-definition DVDs to be playable on personal computers - or for that matter on PlayStation 3 – will have to issue them in the Blu-Ray format. Next, almost all of the leading computer manufacturers, including Dell, Hewlett-Packard, and Apple, are committed to using Blu-Ray, though they may have show some support for HDTV as well. The situations of Sony and Toshiba are not symmetrical. For Sony, the Blu-Ray is an integral part of its overall strategy. For Toshiba, the HD-DVD is just another product they manufacture. A company reaching an accommodating deal on licensing fees could also end up making money by manufacturing the Blu-Ray DVDs. Microsoft and Intel recently announced that they would break from their neutral stance to back HD DVD. Key Chinese manufacturers said they planned to have HD DVD products on the market in 2006. The next-gen DVD wars were reignited, making it increasingly clear that consumers would soon be faced with two kinds of DVD players when they go to the local retailer.

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Sunday, June 25, 2006

L.N.Mittal Gets Arcelor – Finally!!

The world’s largest steel making entity is almost there. The Arcelor board backs its takeover by L.N.Mittal’s Mittal Steel. Arcelor chief executive Guy Dollé has done everything possible in the past five months to fend off the hostile bid from the No. 1 player Mittal. Despite Mr. Dollé's stout resistance, momentum recently shifted Mittal's way. A key reason is that some Arcelor shareholders feel their company's management had gone too far in trying to block Mittal. These shareholders are part of a trend sweeping Europe: activist investors who no longer simply accept management's views. Mr. Dollé rallied prominent politicians to speak out against Mr. Mittal's bid, a chorus that in the past would have chased away a hostile bidder. This time, the political pressure, along with some of Arcelor's own defense strategies, instead angered some Arcelor shareholders.The global circulation of capital is now a well oiled machinery. Day in and day out, the developed world sends dollars and euros to the developing world in exchange for commodities, natural resources, and manufactured goods. And every day, the cash makes a round trip as foreigners buy assets in the United States and Europe. The US debt is to a large extent getting funded by the reserves of the emerging nations. Now slowly the Euro is also becoming a second alternate for the dollar to park national reserves. So as I covered in L.N.Mittal, Arcelor & Changing Mindset the one world camaraderie and free market principles disappear when someone from the developing world wants to buy a huge corporation manufacturing large commodity churning assets. As the WSJ notes, Mr. Mittal always felt that he needs to acquire Arcelor to speed the pace of steel-industry consolidation, particularly since both suppliers to the industry and customers are consolidating. Arcelor and Mittal, being both aggressive consolidators, have often found themselves bidding against each other for assets and driving up the cost. Mr. Mittal has said the combined companies could save more than $1 billion in annual costs but no Arcelor executives would lose their jobs. The whole saga of this acquisition would sure be a case study in future business schools and history books – this is a testimony to the fact that this is an era of globalization, cross-border investment and liberalization, not one in which investors are judged by the color of their skin ( I also point out here that most of asian - that includes the chinese and indian enteprises have significantly benefitted by the capital in the form of equity & the technology that came from the western nations– it is highly doubtful if they would have become so strong without it and the market access provided by them. Also I can't overlook the key positions that Asians hold in several marquee western headquartered firms)- only that it has called for such massive efforts in the case of Mittal steel – all’s well that ends well.

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The Microsoft Empire Besieged

Courtesy of Manish Madan saw this nice map depicting Microsoft Vs F/OSS as part of a software war landscape.

I have been highlighting for the past couple of years a series of developments in the computing environment and assessed the progress made by various players with emphasis on Microsoft. The potential impact of opensource was always a worrisome aspect for microsoft for quite some time. In fact its supporters fell that in the next five years, the use of open source to grow for the cost advantage that it confers and also because it offers more flexibility
Amongst others, developments centering around firefox , Firefox is to internet explorer what internet explore was to netscape emphasising the growth of Firefox browser and the importance of browser as an important platform component
. Some time back, I covered on the topic of microsoft's readiness to leverage bandwidth in the article Bandwidth is Microsoft's enemy and how this may influence the computing environment of future and how Microsoft is underprepared to face the emerging future. Also of interest was Microsoft's readiness to capture the mobile marketspace in the article The Coming Mobile War : Microsoft Vs.Nokia and in general through a series of coverage Microsoft's approach in maintaining desktop marketshare and preparedness in all the proximate areas.I also wrote on the setback to Microsoft's passport framework in the article eBay Says Bye Bye Passport, Microsoft Calls It Quits and we also covered how the consumer electronics sector may not be all that covergent in the post TV Is Not PC.

Microsoft now is in a very tough suituation in its lifetime more than ever in the past- It is beyond doubt that Microsft is getting weakened on most of the fronts, but one needs to give credit to Microsoft for pushing the innovation engine and making bold moves in the consumer electronics sector and in the digital convergence space. Vista delay is making things more difficult for Microsoft. Ozzie’s "Live" vision, Combining Microsoft software with SaaS-based services is just being rolled out. This means as competitors like Google unleash competition to Microsoft’s Windows and Office, Microsoft is gearing to bring a set of online, services. Companies, such as eBay, Yahoo and Amazon.com, treat their Web sites as customizable platforms, & offers a starkly different technology vision to developers than traditional software companies do. It is slowly leading to a situation where one model says build for Windows and the Microsoft 'stack'; the other says build for the Internet. The platform of the future shall not be focussed on controlling the hardware but it is going to be around access, community, collaboration & content. - clearly the rules of the game are changing. The only solace for microsoft is that most of the opensource challenges look like snipers and not heavy duty godzilla's - but they may be hardly be a source of comfort to Microsoft as things begin to change.

Image Courtesy : software_wars

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Saturday, June 24, 2006

Businessweek Infotech 100 : Surprises Galore

The 2006 Businessweek Infotech 100 ranking makes interesting reading: The list factors companies rank on four criteria: return on equity, shareholder return and revenue growth (which were given equal weight), and total revenues (which was weighted). For those trying to understand offshore players, the list gives some basis for understanding.
Of the Indian headquartered service providers, the rankings make an interesting reading (the ranking of these majors have changed over the previous year)

- Tata Consultancy Services ( Rank 34)
- Infosys Technologies (Rank 42)
- Satyam Computer Services (Rank 48)
- Wipro (Rank 57)

The other well known offshore services player also finds a place in the list:

- Cognizant Technology Solutions (Rank 84)

Of the already well established consulting majors, two find a place in the list

- Accenture (Rank 14)
- Cap Gemini(Rank 72)

While most of the technology majors find a place in the list –(Apple(4), Microsoft(37), SAP(39), HP(44), Oracle(51), Yahoo(56)), I was surprised to note that IBM & EDS do not find a place in the top 100!!. I must also say that the methodology seems to be quite number centric( while the company specific details are reasonably elaborate) & should be seen in that light. I am also wondering when we shall be getting to see something like a J.D.Power rating for the IT consulting majors service offerings – time for it considering that consulting and services revenues/marketcap are more than the GDP of several nations.

Category :,

Blogs – The Recipe For Success

Courtesy of Steve Rubel came across this well compiled report by Dr. Nora Ganim Barnes, Chancellor Professor of Marketing, UMass titled –"Behind the Scenes in the Blogosphere". The report looks at the time it takes to run a blog, feelings about a public policy for comments and how blogs tie into existing business websites, products and promotions. The report points to the existence of all types of blogs. They include political, business, religious, financial, health oriented blogs and many more. Each has hundreds of specific subdivisions. In this study there are, corporate blogs for internal and external use (38%), independent blogs (27%) corporate sponsored blogs (15%), business affiliated/endorsed blogs (7%), business and business development blogs (5%), internal corporate blogs (3%) and a “network” blog. Pointing out that it is the humanity of the blogoshpere that makes it an enormous threat to business
as usual. The only way for businesses to survive this new consumer movement is to understand what makes blogs successful.

1. Blogs Take Time and Commitment – observations include –“Be prepared to spend more time than you think.”
2. Blogs Must Be Part of A Plan – “Bloggers decide on a focus for their site”.
3. A Blog is a Conversation – “blog is an invitation to debate, discuss and exchange”
4. Transparency, Authenticity, and Focus are good. Bland is Bad.Consumers who feel like a business blog is authentic, honest and interesting will
contribute to it and support its products.
It must also be noted that blogs are becoming more international than could have been expected. In summary, blogging takes time, commitment, and honesty. In return connections are made that are personal and strong. Blogs are not a fad. They are no longer even an option. Those businesses that choose to remain outside this online conversation, will be sidelined. Eventually they will become extinct.

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Connexion : Useful Product & A Good Business

It appears that the facility to access the internet while being onboard aircrafts is being reviewed for viability. Boeing seems to think that while connection is a useful product, its not too sure if its a good business. There are reports appearing that Boeing may dump Connexion, which has failed to turn a profit in six years. Boeing has been shopping the unprofitable service around and there appear to be no takers yet. Connexion has been installed by several airlines, which have been using it on international flights. However, in the U.S., the service hasn't been approved by the FCC for domestic flights. The Boeing service uses costly satellite links - the Wall Street Journal said people in the know estimate that about $1 billion has been spent on the service so far. Connexion provides Web access and has generally been well-received by passengers who have used it. In the meanwhile,comes the news that carnival cruise is makingcellular sercice available as part of its service.While some may see that as a poor productivity mechanism to connect while being onboard, I put a premium to the availability of the service. I think every flight with a flying time for more than three hours should have this facility and probably its time to look at different ways of charging customers. A flat fee may not be the right model for this service – For someone like me doing a lot of transcontinental or long distance flights, Connexion is a dream come true and Boeing has a good chance to make this a good money earning service – in fact this may potentially become a very profitable revenue stream for Boeing moving forward if managed lot more imaginatively(variable pricing, loyalty points, co-branding etc) and promoted with lot more focus and aggression – for example flights fitted with connexion can carry a separate logo etc..

Category :,

Friday, June 23, 2006

Offshoring & IP Protection

Vinnie invited me to write a brief note on protecting IP while offshoring - he has been very kind to have it published here under the real deal series in his blog. Moving professional work overseas is becoming better pronounced. In this ever globalizing economy, while not defending or supporting such a movement, it must be seen as a fact of life today. Talent in abundant numbers are available around the world helping redress local shortages/improving on cost structure and faster rollouts are amongst the various other factors influencing the offshore adoption. But offshoring is not for the light hearted – it calls for substantial involvement and commitment with adequate checks, controls and balances to bring about success. In the process the historical advantage that developed nations have in the form of intellectual capital and the propensity to innovate need to be maintained to provide a sustainable advantage for such nations. Read the full note here.

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Thursday, June 22, 2006

Google Getting Stronger In Search

A comScore network research study shows, in May 2006, Google gained in search market share for the tenth consecutive month. Yahoo seems to be marginally slipping while MSN is losing heavily and others including the much talked about Ask.com are not gaining either despite their low base. As a matter of fact, no body else other than google have been able to growe theit share in the last ten months. If this trend continues it is likely that before the chirstmas season this year or early next year, Google would touch and surpass the 50% marketshare for search in the US market. Thats something to talk about. I am just curious - in such scenario how much time would Amazon be pumping money in A9.com,hoping it would grow and make a difference.

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Global Economy, Wealth Creation & The Rich

The global economy is making more millionaires. A recent study finds the ranks of world millionaires had swelled to 8.7 million last year - half a million more than the population of New York City. Millionaires also invested more aggressively, pouring cash into emerging markets and pulling it out of fixed income holdings, as their wealth reached $33.3 trillion, more than double U.S. economic output. Bloomberg magazine's latest issue talks about China's uneasy billionaires - China also has 300,000 millionaires, according to the World Wealth Report compiled by Merrill Lynch & Co. and Capgemi­ni SA. Three hundred million people have been lifted out of poverty since 1978, according to a September United Nations report, and mil­lions more are starting businesses in hopes of joining the country’s rap­idly expanding plutocracy. All this leads to the question - Over 6.4 billion people participate in a $36.5 trillion global economy, designed and overseen by no one. How did this marvel of self-organized complexity evolve? How is wealth created within this system? And how can wealth be increased for the benefit of individuals, businesses, and society? and of course for my self consumption - how do billionaires become waht they are and how come everywhere around the world -people only see growth, moderate growth and robust growth. In his new book The Origin of Wealth, McKinsey & Company Senior Advisor Eric D. Beinhocker argues that the traditional view of economics as a static, equilibrium-balanced system is going through a radical rethinking involving a multitude of disciplines and argues the case for "complexity economics," in which the economy is viewed as a highly dynamic and constantly evolving system that is all but impossible to predict. He advocates looking at strategy as a portfolio of experiments and that the key to doing better is to "bring evolution inside" and get the wheels of differentiation, selection, and amplification spinning within a company's four walls. Rather than thinking of strategy as a single plan built on predictions of the future, we should think of strategy as a portfolio of experiments, a population of competing Business Plans that evolves over time.There are some general lessons that can be learned from a portfolio-of-experiments approach to strategy:
- First, management needs to create a context for strategy. Constructing a portfolio of experiments requires a collective understanding of the current situation and shared aspirations among the management team.
- Second, management needs a process for differentiating Business Plans that results in a portfolio of diverse Plans.
- Third, the organization needs to create a selection environment that mirrors the environment in the market.
- Fourth and finally, processes need to be established that enable the amplification of successful Business Plans and the elimination of unsuccessful Plans.
In short his view : The economy is a "complex adaptive system" in which physical technologies, social technologies, and business designs continuously interact to create novel products, new ideas, and increasing wealth - wealth creation is the product of a simple but profoundly powerful evolutionary formula: differentiate, select, and amplify.

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Net Neutrality - For Innovation & Growth

Tim Berner’s Lee sees Net neutrality like this:

If I pay to connect to the Net with a certain quality of service, and you pay to connect with that or greater quality of service, then we can communicate at that level. That's all. Its up to the ISPs to make sure they interoperate so that that happens.
- Net Neutrality is NOT asking for the internet for free.
- Net Neutrality is NOT saying that one shouldn't pay more money for high quality of service. We always have, and we always will.

Plain, direct and simple. Lessig says that recent events form the real basis for being concerned about the games the network owners would play if free to play games. Some of what Lessig points to as telco machinations actually make scary reading. The telco’s are definitely pushing lock-ins through not so straight means and most of the occasions package deals are forced plans – so it is quite important that in this increasingly convergent age, net neutrality is maintained in a steadfast way.This is important for the the internet to keep growing, innovating and adding more value to business and society.

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Wednesday, June 21, 2006

Laptop Explosions

We have heard of mobile phone battery problems and explosions.
Courtesy of Zoli saw this about Laptops exploding.The The Inquirer reports that laptop computer( said to be a DELL make) suddenly exploded into flames, in what could have been a deadly accident. The reporter adds, "The damn thing was on fire and produced several explosions for more than five minutes". Look at the pictures - the fire is indeed intense, considering that it happened from a device.
This is not the first time such incidents get reported – some time back, it was reported that a 15 yr old girl suffered second-degree burns to her hands and thighs after her laptop exploded . Battery pack explosion and disintegration was seen as the reason for the incident. The advise when an explosion happens is to just stay away. More than that his warning something else that needs to be taken seriously -“is only a matter of time until such an incident breaks out on a plane”. This needs thorough investigation and we need to have reliable solutions. Scary thoughts – in accidents of new kinds generally the secondary /collateral damages can be equally or more deadly than the primary damage.. Are we all living life on chance!!

(Image Courtesy : The Inquirer)

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Tuesday, June 20, 2006

The Newspaper Industry & The Internet

Few years from now, the newspaper industry for sure would look very different around the world. Patricia Sullivan, points out that some news organizations surely will die as the Internet disrupts and remakes the century-plus-old newspaper and half-century-old television industries. But overlooked in this massive transformation are some underlying insights that should give pause to those who would put a gravestone on the mainstream media. He adds, The Internet has largely replaced the immediacy of radio and television for breaking news. Well indeed true. Last week the Guardian adopted a "web first" policy for business and international stories, putting newspaper stories online as soon as they are edited. The Guardian is launching a new service providing readers with a rapid overview of news that will be updated every 15 minutes. G24 will be a free service featuring news content from the Guardian Unlimited website across five areas: general news, international, economics, sport and media. Users will be able to log on to Guardian Unlimited and download an eight to 12-page A4 pdf document, which can then be printed off. They can select any of the five news streams. Newspapers are increasingly using the web as a platform for fresh content rather than waiting for the printed edition to be published before stories can be filed. My good friend, JK points me to Group 1's technology that enables organizations in nearly fifty countries to create billions of personalized business communications for multi-channel delivery - Web, print, fax, or e-mail. By providing complete control over personalized messaging, our technology ensures consistent branding across multiple communications channels. The technology enables, organizations can personalize direct mail, letters, brochures, newsletters, contracts, and booklets for on-demand printing - all with a single solution.One can have a look at the preview copy here. What next - affinity marekting, without doubt. There's no question that the Internet has changed the news industry in the past decade. Old media has learned that simply shoveling content from one medium to the Web doesn't work, any more than reading a newspaper into a TV camera capitalizes on the strength of that medium.

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Organizational Scanning For Threats & Opportunities

There’s a saying that luck is the residue of hard work and when preparation meets opportunity, out comes success. Harvard Business School's Working Knowledge, has an interesting preview of "Scanning for Threats and Opportunities", which brings out in a very telling way the key differences between "active" and "passive" scanning of the competitive landscape and the emerging business place horizon.
To see new parts of the periphery, managers must use different scanning approaches and a portfolio of scanning methods to capture and amplify the weak signals within targeted zones of the periphery: inside the firm; customers and channels; the competitive space (competitors and complementors); technologies, political, social, and economic forces; and influencers and shapers. The figure brings forth the key themes to capture signals from the periphery. The article highlights passive scanning for information as reinforcing beliefs and active scanning as the basis for explorative thinking:

"Because most of the data comes from familiar or traditional sources, this mode of scanning tends to reinforce, rather than challenge, prevailing beliefs. Because these metrics are tightly specified and focused on current operations, they are the antithesis of active scanning. There is no room for exploration. This passive stance narrows the scan and dulls the curiosity. Unexpected and unfamiliar weak signals will probably be lost."
“Active scanning calls for new ways to think about the market, emerging technologies, and new business models. Active scanning reflects intense curiosity and emphasizes the further-out and fuzzier edge of the periphery.”.

In the tech world, one should just note the Microsoft example – where the deflationary effect of the internet was getting more and more pronounced, Microsoft was probably struck on beliefs held based on its historic success. Lets look at any business today : The effect of the rising online economics, on demand delivery model, convergence effect, global economy, demography, SOX, Private Equity all would have to be factored in any business future forecast scenario – all these constitute active scanning. Organizations entertaining multiple theories will more probably mount search parties using teams of outsiders and insiders, with diverse portfolios of methods. The active scanning process can start with the insights locked inside the company. Each point of contact has the potential to be a valuable listening post. Organization is a self emitting and sensing radar and all parts of it matter. People must engage in frequent and free dialogue for the necessary connections to occur spontaneously. This, in turn, requires a culture of trust, respect, and curiosity, plus the recognition that information sharing is crucial. Oragnizations needs to think through, strategise and then ruthlessly execute - that would define their future..

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Tom’s Call On Bias For Action

Bias For Action is the first idea Tom emphasized in his early work In Search Of Excellence. Courtesy of Paul Kedrosky, noticed Tom's recent slide deck where he higlights what looks simple but perhaps amongst the toughest to act upon:

In Tom’s world, it’s always better to try a swan dive and deliver a colossal belly flop than to step timidly off the board while holding your nose.” —Fast Company /October2003

We have a ‘strategic plan.’ It’s called doing things.” — Herb Kelleher

We made mistakes. Most of them were omissions we didn’t think of when we initially wrote the software. We fixed them by doing it over and over, again and again. We do the same today: While our competitors are still sucking their thumbs trying to make the design perfect, we’re already on prototype version No. 5. By the time our rivals are ready with wires and screws, we are on version No. 10. It gets back to planning versus acting: We act from day one; others plan how to plan—for months.” —Bloomberg by Bloomberg

Some ideas are indeed universal and timeless!.

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Sunday, June 18, 2006

Microsoft & Missed Opportunities

Mary Jo Foley writes about Microsoft's Top 10 Flops. I can add a few more to the list - but it would be pointless at this stage. An impressive read and one will have to concur with her when she writes that"Gates will be remembered as a visionary and PC industry leader. But even Microsoft's Chairman hasn't been right in all of his bets". I have been highlighting for the past couple of years a series of developments in the computing environment and assessed the progress made by various players with emphasis on Microsoft. Amongst others, developments centering around firefox ,Firefox is to internet explorer what internet explore was to netscape emphasising the growth of Firefox browser and the importance of browser as an important platform component. Some time back, I covered on the topic of microsoft's readiness to leverage bandwidth in the article Bandwidth is Microsoft's enemy and how this may influence the computing environment of future and how Microsoft is underprepared to face the emerging future. Also of interest was Microsoft's readiness to capture the mobile marketspace in the article The Coming Mobile War : Microsoft Vs.Nokia and in general through a series of coverage Microsoft's approach in maintaining desktop marketshare and preparedness in all the proximate areas.I also wrote on the setback to Microsoft's passport framework in the article eBay Says Bye Bye Passport, Microsoft Calls It Quits and we also covered how the consumer electronics sector may not be all that covergent in the post TV Is Not PC.

Microsoft now is in a very tough suituation in its lifetime more than ever in the past- It is beyond doubt that Microsft is getting weakened on most of the fronts, but one needs to give credit to Microsoft for pushing the innovation engine and making bold moves in the consumer electronics sector and in the digital convergence space. Vista delayis making things more difficult for Microsoft. Ozzie’s "Live" vision,combining Microsoft software with SaaS-based services is just being rolled out. This means as competitors like Google unleash competition to Microsoft’s Windows and Office, Microsoft is gearing to bring a set of online, services.Companies, such as eBay, Yahoo and Amazon.com, treat their Web sites as customizable platforms, & offers a starkly different technology vision to developers than traditional software companies do.It is slowly leading to a situation where one model says build for Windows and the Microsoft 'stack'; the other says build for the Internet. The platform of the future shall not be focussed on controlling the hardware but it is going to be around access, community, collaboration & content. - clearly the rules of the game are changing.Some other time in future, I shall also write about Microsoft's missed opportunties in the non dektop centric enterprise solutions space..

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Saturday, June 17, 2006

Patents: Time To Relook

Had VisiCalc been patented, it is believed that we would not have seen the rise of the microsoft excel in its current form. I read elsewhere that Nintendo has patented instant messaging on gaming applications. As Techdirt points out, one of the stated tests for whether or not a patent should be granted is whether it is non-obvious to a person who is skilled in the art. However, the way the patent office currently looks at things, they only look for prior art to prove obviousness. In most cases, prior art either means earlier patents or published journals and the test of obviousness suffers in the process. It would be tough to answer the question if there exists any patent on software that uses program logics and constructs unknown hithertho – while opponents of the idea may equate patented programs to be the equivalent of a literature work being constructed out of known words and letters – I think the key thing to note here is the difference between copyright and patent. I also think that abolishing software patents would be a very good thing, as increasingly the current system actually impedes the advance of software technology, at the same time that it works quite nicely to enrich patent holders. A patent goes well beyond copyright and trademarks - It protects even the underlying concepts from being used by others. Some mistake rise of patenting with robust innovation – not true. The key challenge today is to go beyond the patent accumulation mode into one promoting innovation.

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Dilbert & Enterprise Software

Enjoy viewing the Dilbert strip on Enterprise Software.

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Friday, June 16, 2006

Oracle & OpenText : Getting Engaged

Open Text signs to utilize Oracle Content is important in a few ways. First it potentially quells the rumout that Filenet may be acquired by Oracle ( we can’t say that with 100% certainity knowing oracle and its impressive numbers shown this quarter). Clearly the enterprise-wide content management capabilities are increasingly becoming attractive to infrastructure providers, with ECM vendors gearing to provide more specialized content management capabilities.

ECM space, a phenomenally high growth area in the last few years is expected to clock a very healthy growth moving forward. In many ways the regulatory pressures are also driving adoption of ECM in a big way. By using Oracle Content Database as an underlying infrastructure, Open Text is in many ways making its solution more powerful. This leaves Open Text to keep focusing on building content-enabled solutions to solve innovative, industry-specific problems. Seen from an oracle perspective, this is a shift as oracle traditionally advocated the repository built into the database as the ideal approach, an idea which the ECM vendors were resisting. With intensifying competition form the likes of Microsoft, Open Text may have opted to take a more pragmatic approach –more pragmatism may eventually lead into a marriage between the two companies.The broken model of the enterprise software industry is complicating things towards adopting newer things (Part of the reason for SAP to keep gaining marketshare). As I wrote earlier, a careful examination shows that well evolved industries move towards a decentralized/tiered model – currently the enterprise software industry is highly integrated vertically and its ecosystem is not well set today.

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Social Networking Sites On A Trailblazing Growth

Popular social networking sites in the latest Comscore media metrix report shows that just
released visitor traffic details for some of the largest social networking sites on the Web. The list of unique visitors , shows substantial traffic being driven to these sites. The around the world phenomenon makes this more attractive. Peter Daboll, ComScore’s CEO says, "The challenge for social networking sites will now be monetization and how advertisers will respond to the global marketing potential of these sites."

Two things are standing out clearly :
- Traffic is all set to grow for some more time – whoever has a better business model and monetization policy would go on to win – history provides some good pointers.

- We can expect Google to make a serious effort to move into this space- there could be a new net player operating in this space emerging as am important player in the net space – the momentum and activity levels seen in this space would ensure that.

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Wednesday, June 14, 2006

Opiniated Analysis

I just finished posting here that, last week Forrester has released a report on the offshore services market - have read the report. I have mixed feelings. Byperbusy schedule is coming in the way for me to write on that. Looks like that the earliest I can try is next week - given my current travel schedule.
My mixed feelings is based on the fact that opiniated analysts with limited understanding of reality overlook possibilities like an almost billion billion dollar acquisition possibilities. It is also to be noted that Wipro has made 5/6 targetted acquisitions in as many months. Need to go now - more on this topic next week .

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Microcosm Of New, Emerging India

Vijay Srinivasan, long resident of singapore, recently left singapore to start working In India. Here he writes about his impressions of Bombay & Delhi. As he sees it,there's a concerted effort to quickly build out highways and the Metro network in Delhi and these are showing results. In his own words,

"Finally, Delhi is starting to look like any other advanced country’s capital city ! Gurgaon is amazing, looks like it is from North America. Gleaming blue and steel buildings all over the place, good roads, coffee shops in buildings, international companies, lots of youngsters coming to work - this is the microcosm of New, Emerging India !"
The humility gene effect is certainly coming in the way of assessing and talking about progress being made in the country. Clearly India is arriving at the global gate but as The Economist noted recently, a hard journey lay ahead.

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Service Players - Good Times Ahead

Global tech services revenue went up 6% in 2005(based on Gartner findings) - IBM dominates the space but lags growth. Gartner says that its service revenue analyses comes from a multidimensional perspective covering amongst other dimensions, these dimensions - Platform, Service Line, Geography, Vertical, Method Of Purchase, Solution. The survey finds that Healthcare vertical has grown the fastest and BFS retains its prima donna status amongst verticals & BFSI has grown faster than the market average.Am just wondering then which vertical must have brought the vaerage down - given BFSI size & its above averag growth, many verticals could have grown slower than average - I shall comment later after seeing the full report said to be scheduled for release in August. Senthil alerted me to Forbes reporting BoFA's Abhishek Gami exuding optimism about the growth of the service sector. BoFA obliged me with a copy of the report - I read the report and find that an interesting pattern has emerged - U.S. IT services labor growth in IT employment has outpaced U.S. non-farm employment for 23 consecutive months and recently accelerated. Preliminary data for May indicates a continuation of this trend. IT services employment now stands at approximately 2.65 million, which is only 2.6% below the prior (nonseasonally adjusted) peak in March 2001. The report notes that contrary to what some people still believe, there are not enough highly skilled IT workers to go around. Unless global economy trips
thanks to all central bank interventions - its clearly good time ahead for stronger service players, and the tech economy in general looks set for growth.
Last week Forrester has released a report on the offshore service players - I have read the report the day it got published. I have mixed feelings on the findings. Hyperbusy schedule is coming in the way for me to write on that - my limited blogging this week all are happening late midnight. Looks like that the earliest I can try is next week - given my current travel schedule - bit I will certainly blog on what I think are the right findings and not so right conclusions.

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Paid Premium Gmail Service - May Not Fly!

Google announces Picasa Web to link its desktop photo organizing app to a personal 250mb inhouse photo sharing site, along with the upgrade option to 6gb of storage for $25/year. More details available here. Yahoo's Flickr has a similar feature already available. Paul Kedrosky wonders on seeing Google's announcement why Google does not offer paid services for additional storage beyond 2 GB. I think Google is taking the right call here.

Four Key points stand out here:
- Despite Pual's claim that more than 2 GB space may be needed -I think that the number of such subscribers could be very less. For example, very recently, Yahoo withdrew its premium service,noting that it "was not an essential service for Yahoo users." The additional reason told was : there were very few people using it. It goes without saying that had Yahoo offered these higher level of services for free, and continued to sell ads, they might have been able to keep more users away from the competition.

- Second resaon, Tiered services always create problems for service providers - while premium services besides additional storage may need to be bundled inside, in reality somebody else coud be offering it free. On the other hand, it may be harder to convert free users to paid users without additional features.

- Third reason - you can sell more ads /increase adsense reach by keeping email services free .

- Fourth Reason - Gmail is still way behind Hotmail & Yahoo in terms of number of subscribers.

Strange are the ways that the net economy works !!

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Tuesday, June 13, 2006

SOA: Signs Of Evolution

IBM's 1.5 Billion USD annual investment in SOA is perhaps beginning to show results.IBM announces the availability of the SOA Business Catalog, a compendium of reusable templates, code, and best-practice business models for 15 different industries. The catalog, to be released at first with 500 to 600 reusable resources, will accelerate SOA creation and solve specific business problems. The major benefits are around reuse and flexibility of services that are interchangeable and loosely coupled. Infoworld reports the catalog includes things, such as adapters, that will allow IT to connect its existing environment to Web services. Among the type of applications : the likes of adapters to wrap a Web service around legacy RPG code to create a service that fit into Amazon.com's shopping network. Over time the catalog is expected to include more than 3,000 templates, tools, and reusable Web service code. Some of the resources, all of which are declared as using SOA standards, will be free and open source while some have fees attached. I had a look at the list of the catalogue items listed here which has a comprehensive online directory of hundreds of reusable SOA assets from IBM and select business partners. Expected benefits : Speed time to value by reusing existing services, tools, components, and best practices for building your SOA environment.
The landscape for SOA is wide open and it shall be influencing virtually every aspect of software development and application bringing changes in the nature of usage,development - encompassing customer,product vendor and service offerings. I am under no illussion to call this a breakthrough, but certainly an important step forward. While the move may look small compared to the potential, it is indeed a big step.I shall write more on this later. Am off to catch a flight - travelling for the next three days.

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Mosh Pit & Innovation Models

Kathy Sierra opens a new discussion on the best model of innovation - once that is centered on ideas as against one that is focussed on execution. Professionals in any field come in two flavors: Knowledge Sharers and Knowledge Hoarders. The hoarders believe in the value of their "Intellectual Property"(IP). The products of their mind must be carefully guarded lest anyone steal their precious ideas. But let's face it-if our only "strategic advantage" is our ideas, we're probably screwed. It is mostly the case that ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions. To look at the best example, enterprises having the top ranks in scoring patents may not necessarily be seean as scoring similar ranks in being innovative.
I partially agree with Kathy when she writes, t
- It's our implementation, not our idea that matters
- It's how we apply those ideas.
- How creative we are.
- How useful we are.
- How brave we are.
- How technically skilled we are.
- How we anticipate what our users will love.
- How we learn from the ideas and work of others

Come to think of it, the movement of sharing is interlinked in many ways to the internet, its open model. Building a think alike community in the past used to be a time consuming / lengthy process - the internet had bypassed that route and brought in the ability to bring together like minded community. Sharing, debating and learning all have become quite easy, fulfilling and rewarding - in many ways this is setting the pace for evolution of knowledge itself. So will have to agree in large measures with Kathy when she writes, "The barrier to entry today is way too low to use "intellectual property" as a main advantage. And all too often, we think we have a unique idea only to find that others are-independently-doing the same things". After all an automatic random word writer can't write a book, just as a program generator can't by itself create a business application. May be I want to bring in a distinction here - most of the basic/core ideas follow this trend. No doubt when it comes to building complex ideas/value added ideas things may change - but what does not change even there is the fact that one can reach that stage only by being focussed on execution. Verdict : Ideas and Execution need to go hand-in-hand to be successful. The think -do-communicate-act framework is simply irrresitible to think beyond. Only exception : when creating something quite new - say a seminal idea, new business model ideas may have a disproportionate interest but action also plays a part therein. In general, deep thinking & bias for action need to go hand-in-hand for being innovative and successful.

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Monday, June 12, 2006

Om Malik To Turn His Blogsite Into Real Business?

Valleywag scoops Om Malik could be converting his Gigom.com into real business. At this time of writing,Om Malik's site does not say anything on this. Assuming the news to be true, he would be focussing more and more on his new venture with seed funding already arranged. Regular readers of his site must have noticed that significant changes have been brought in the site in the last few months. Om Malik is a seasoned journalist having worked on a marquee publications before joining Business 2.0. His blogsite is amongst the best in its coverage and is well known for being more right than most other sites. Hoping that the information publsihed is correct, wishing him all the best in his new venture. Lets anyway wait for him to confirm the news..

Update : Om confirms the news. Wishing him the best again.

Category :, Emerging Trends

Tech's Growth Levers

This week's Deep End column is focussed on the new levers for growth for the technology industry. Sceptics talk about the maturation of the technology industry and the limited prospects for future growth. The rampant changes and innovation going on in business technology architecture would create a new impetus for technology growth. The rate of change is so rapid that technology based competitive advantage looks like an advantage that can hold only for a while, as the momentum in adoption forces leading edge/innovative companies to look for newer and newer technologies. Clearly this time around this cycle is getting shorter & shorter. Technology advances, innovative networks, social networks and a few others shall unleash a huge amount of forces chasing innovation & facilitating competitiveness in unique ways - & with most enterprises ever willing to adopt newer & newer technologies - the tech sector is poised for a huge growth moving forward. Those who doubt tech's ability to grow moving forward will have a huge surprise as these forces get unleashed and begin to demonstrate value to enterprises. In such a scenario creating a new business & technology architecture is increasingly becoming an art, a craft, a discipline to build globally competitive enterprises.The technology world would be forced to deliver on its promise: enable new form of architecture enmeshing process specifications to fulfill business requirements. Read the full post here.

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The Internet Industry As A Partnering Industry Sans Monopoly

Google's Eric Schmidt sees the internet industry as going to develop as a partnering industry, not as a monopoly industry. Predicting that it will not end up in a structure with one dominant company, he thinks that it won't be Google and it won't be Microsoft and it won't be Yahoo- It will be a collection of companies. His call - It's not going to end up in the PC model that everybody talks about. The reason is because the advertising industry, which monetizes it, is not a single-solution space. Highlighting that after a hundred years of consolidation, the media industries are down to five mega-media companies. It seems like every day you hear some component is sold or purchased or retargeted and transferred from one large company to another.That's the more normal structure of large industries and that over time that should be the eventual structure of this industry.He would like to think of Google as a technology company run by three computer scientists, and an innovator in technology in its space and operates in the the advertising business — 99% of the revenue is advertising-related but is shy of calling itself a media company as it does not develop its own content. John Battelle may have the right say here when he questions this rationale -he sees that as a staement made to keep valuations in a different quadrant. Eric's other observations are indeed insightful - Viz. All business growth rates eventually slow, The success model for Google is different from Microsoft and Yahoo and the other companies. While I fully agree with his perspective that Google may not know whether the griwth may slow down in a decade or more, I certainly beleive in equal measure, Google should be lot more forthcoming in terms of what their operational plans are for the next 2/3 years in reasonable detail, so that one need not go back to questioning what they are upto with the weekly lauch of a small product. Also supporting hundreds of billion dollar marketcap can't rest on counting adsense revenues - there needs to be more to show in terms of monetizing potential - after all in his own words the advertising industry is not a single solution space - potentially proximate spaces can get merged or players operating dominant in one space can move in easily to the proximate space and get strong as well.

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Falling Markets : Set To Fall More?

The crash of the stock marlets around the world have brought the role of central banks into sharper focus. John Mauldin offers some insightful analysis for the drop in equity markets: rising interest rates, rising inflation, and tough language from the central banks. His analysis of 64 markets aroun the world shows that all the markets in his list are off their recent highs. Two-thirds of world markets are down 10% or more, with Middle Eastern markets in free fall for the past few months. Indeed, they seem to have been a warning sign of trouble, as they have led the way down. By contrast, the broad US markets have held up relatively well. The Dow is off around 6.4% from its high, which hardly qualifies as a decent correction, and the NASDAQ is down by 10%. He attributes the downfall to the change in major central bank policy which began a few months ago. In short, the central banks of the world are taking liquidity out of the system. It was the providing of massive amounts of liquidity that had driven asset prices around the world to frothy heights, and now it can be seen what happens when that process goes into reverse. The warning bells were always there. For the last 30 years, new Fed chairmen (Miller, Volcker, Greenspan) have felt the need to prove their mettle. And it has resulted in a lower stock market. It looks like this time will be no exception. Jim Jubak sees the simultaneous global meltdown in stock and bond markets from Bombay to New York as a vote of no confidence in the world's central bankers. Central banks everywhere are facing huge challenges. Raghuram Rajan in a recent speech to central bankers on the role of central banks in 21st century recommended that "It may well be that monetary policy is best focused on maintaining domestic price stability narrowly defined over a medium term horizon, and not on anything else".

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Apple May Have To Outsource Support More & More

Apple deciding to move support out of India is a top news in the blogosphere as well as the regular reporting world. Though I have not seen any official release from Apple on this. Specualtion is rife that rising costs and difficulties in hiring and retaining talent forced Apple to move out of India.
While, I can't say with certainity what forced Apple to move support out of India, I have reasons to think that the real causative factors behind the decision is not yet out. Look at Dell - all indications are that their india support operations are going from strength to stregngth. IBM's recent announcement to invest 6 billion USD in india in the next three years made some to comment that I stands for India in IBM. The Indian resource edge is not fading or going away - atleast not that fast. In any case no other english speaking country can be more economical than India as things stand today. So what could be the reason. I suspect that Apple's india support operations may not have had the scale to run it optimally - both in terms of fixed cost and variable costs - when operational size is small, it is likely that the best minds may get disillussioned dure to limited opportunities - leading to staff turnover, add switiching costs, retraining costs - the overall cost equation may have lost its attractiveness and it is likely that the situation worsened over a period of time forcing Apple to decide in terms of a pull out - mind you - all am writing is pure speculation. If speculation is right - what's the solution - more outsourcing !! There is no merit in keeping support as captive unit where scale is not there - whichever part of the world it might be - outsourcing support may be the long term option for Apple. Lets us see as the future unfolds for Apple.

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Sunday, June 11, 2006

Shai Talk

Shai Agassi is the master spokesman for SAP – very articulate and full of insights. In the recent Software 2006 meet, MR introduced him by saying SAP paid 399 million $ for getting Shai on board out of the 400 million $ that it paid to acquire TopTier . Courtesy of Vinnie came across this interview of his, where he talks on a few important things. Some excerpts with comments and my related views at the bottom:.
Anwering a question if ondemand is a trendy and a threat to SAP – he outlines three consumption models at the end.

- The first model is where I buy, I install, I modify, I maintain it. It's my system. So I'm independent.
- The second model is the on-demand model. I sign on to the program and I trust you to take me in the right direction. And I trust that the software is not going to die at the end of every quarter.
- The third model is somewhere in between that I'm calling the managed appliance model. I want my box, but I want you to manage it for me and so you give me the software. You tell me when there's a wave of upgrades. If I decide to turn it on or off, it's my decision. But I don't need to manage it. You manage it for me.
It's not going to be a binary decision for a company - do I go to Model A, B or C. It'll be a hybrid across all these models.
However he thinks that make on-demand can bemade secure and reliable. The real issue is again that transportability. Can the on-demand system be taken after two years where one paid for it monthly, move it on premise, make changes and swith to a different model of ownership. Or is that code designed to be shared with lots of other people and can't that really be taken to on premise model? Claiming that the hybrid approach is still not solved by the pure play on-demand sellers, he adds that SAP has cracked this part already. He thinks that on-demand is trendy, may not disappear but does not think it takes over the world and as such should be seen as one more consumption wave. Shai also believes that smarts are equally distributed around the whole world. Saying one can't find geniuses only in one geographic location - Innovation is equally distributed around the world. Passion and drive are equally distributed around the world. He also believes that the silicon valley is secured for a very, very, very long time, because it's got this confluence of early adopters and early access to technology. It also has a rich network of headquarters and smart people.

Talking of SaaS, I wrote more than a year back that overwhelming issues impede adoption & the broken model of the enterprise software industry is complicating things towards adopting newer things (Part of the reason for SAP to keep gaining marketshare). As I wrote earlier, a careful examination shows that well evolved industries move towards a decentralized/tiered model – currently the enterprise software industry is highly integrated vertically and its ecosystem is not well set today. Shai's talk is indeed interesting. Must read for all interested in enterprise software industry

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