Nitin Goyal's Blog

Thinking about Investing in Stocks or Mutual Funds?

2011-11-10T15:00:00.002+05:30

While I write this, the markets worldwide are seized with panic due to Greece, Italy, Portugal, US Mortgages and what not. However the reason for this post is not to advise you (I am not qualified to give any financial advice). I just want to share one experience:

5 years ago, if you talked to anyone, you would hear that they were very bullish on the following sectors:

Airlines in India
Companies servicing Indian Infrastructure
Real Estate
Cellphones and Telecom providers in India.

Well this is where we are today (after the economy has been growing at around 8% per annum since the last five years!) :

Airlines in India - Most are on the verge on bankruptcy. Kingfisher does not have money for fuel, Indian Airlines is nearly dead, all carriers are showing heavy losses.
Companies servicing Indian Infrastructure - The Infrastructure Index is doing worse than NIFTY/SENSEX
Real Estate - All the major players like DLF/Prestige etc have literally crashed.
Cellphones and Telecom providers in India - Reliance Infocomm, Airtel, Tata Indicom - well do you still want to hear the story again?

net net - It is practically impossible to take sectoral calls. Just be careful about what you hear and filter the noise.

Anna Hazare's Protest

2011-08-17T14:24:00.002+05:30

1. Anna has provided a viable alternative to the fight against corruption. All the political parties did till now was to show the other one was as dirty as them. Anna has risen above all that.

2. All political parties are against Anna's demands. For example see BJP's stance: http://www.thehindu.com/news/national/article2362546.ece - it is shockingly similar to that of the Congress/UPA - in fact you would think its the UPA stance had you just read the facts without names.

3. It is sad to see the captains of the Indian industry silent on this matter. They are known to lobby for telecom legislation, land acquisition bill, FDI in retail and what not - I cannot simply think of any more fundamental and ground breaking legislation than the Lokpal which will impact the industry's efficiency and operations. Rather than lobby for smaller items, why don't then lobby for LokPal?

4. Finally, Anna has shown that Gandhi's principles of non-violence and peaceful protest still matter in the 21st century, and at times are more potent than all the other means.

God I hate Karena Kapoor

2011-07-26T21:56:00.001+05:30

I simply cannot stand her. I seriously sympathize with all her fans. Amen

World Cup - My Predictions and Analysis

2011-03-25T17:37:00.004+05:30

I am neither a cricket expert nor any soothsayer by any stretch of imagination. However, I did make the following tweet on 22-March well before the world cup quarterfinals:

So whats the latest:

- Yuvi has done really well, but its impossible for any single player to win the world cup. Compared to other tournaments with a few matches, the world cup has typically 7-8 matches to be won in order to lift the cup and so one who does well in the initial stages almost invariably will not be able to star in the last stages. I would be very surprised if India lift the cup and Yuvi is again a man of the match in the semis or even the finals. Ditto for Afridi and Pakistan. Its now time for other Indian seniors like Dhoni, Sehwag and Nehra to come to the party. Otherwise it will be nearly imposible for us to expect Yuvi, Sachin and Zaheer to bail us out all the time.

- India is a strong contender for the cup, but the other quarterfinals between SA/NZ and ENG/LANKA will show the real mettle of these other teams. I am a bit wary of England - they may be the dark horse for this cup for all we know.

- In the World Cup, its mostly the teams that come back from behind that win it. in 1983, Ind was in the shambles until Kapil Dev's 175 lifted them up. Ind beat Aus in 1987 group stage. Pak was the last team to qualify in 1992 for the Semis. In 1999, Aus entered super six with zero points having to win all the remaining 5 matches to lift the cup (which they did). In 2003 Aus had to send back Warne in the league stage due to doping scandal. Possibly the only World Cups that were won without a blemish were the 75, 79 and 2007 ones, though in the first two, West Indies did have a scare in many matches.

So lets hope for the best and pray for India!

Worried about corruption? Just 5 questions!

2010-12-08T22:03:00.001+05:30

Whenever I switch on to TV news or pick up a newspaper these days, the only things I see are scandals related to corruption by government officials. CWG, 2G, Noida land allocation, Home loan bribery case, Adarsh housing scam, Karnataka land allocation scam - the list goes on and on. However if you step aside, can I request you to answer these five questions below:

1. Did you really believe that A. Raja took all the bribes without the full knowledge of the DMK bosses and Congress party? And do you really really believe that there were no percentages fixed for any of these two in the money taken by Raja?
2. Did you really believe that corporate houses do not lobby the government to bend the policy in their favor?
3. Did you really velieve that the CBI, which is a government agency at the end of the day like any other government department, will be able to crack all these corruption cases impartially?
4. Did you really believe that A. Raja and Suresh Kalmadi will spend even one night behind bars in handcuffs?
5. Did you really believe that the media impartially and honestly reports the news and its various nuances without taking money, favours or kickbacks from interested parties?

If you answered any of the above questions as yes, read no further. But if you did not, do you ever wonder why do you see so much noise in the media regarding this issue? My take is - either someone did not get paid to keep quiet, or, a more chilling fact can be that we are being brainwashed into believing every one is corrupt and so everyone is the same. The end result is that you and I will not go out to vote and that my dear friend is the exact reason why all this circus is all around.

Some Samples of Pathbreaking Innovation in India

2010-04-21T22:41:00.002+05:30

The Economist highlights these items from India in its special report on "Innovation in Emerging Markets" (subscription needed):

GENERAL ELECTRIC’S health-care laboratory (has created).. hand-held electrocardiogram (ECG) called the Mac 400. The device is a masterpiece of simplification. The multiple buttons on conventional ECGs have been reduced to just four. The bulky printer has been replaced by one of those tiny gadgets used in portable ticket machines. The whole thing is small enough to fit into a small backpack and can run on batteries as well as on the mains. This miracle of compression sells for $800, instead of $2,000 for a conventional ECG, and has reduced the cost of an ECG test to just $1 per patient.

Tata Consultancy Services (TCS), is equally excited about an even lower-tech device: a water filter. It uses rice husks (which are among the country’s most common waste products) to purify water. It is not only robust and portable but also relatively cheap, giving a large family an abundant supply of bacteria-free water for an initial investment of about $24 and a recurring expense of about $4 for a new filter every few months. Tata Chemicals, which is making the devices, is planning to produce 1m over the next year and hopes for an eventual market of 100m.
Godrej & Boyce Manufacturing, one of India’s oldest industrial groups, has developed a $70 fridge that runs on batteries, known as “the little cool”.

First Energy, a start-up, has invented a wood-burning stove that consumes less energy and produces less smoke than regular stoves.

Anurag Gupta, a telecoms entrepreneur, has reduced a bank branch to a smart-phone and a fingerprint scanner that allow ATM machines to be taken to rural customers: local bank clerks now bicycle out to villages and set up shop under a tree, using the scanner to identify savers and taking in or handing out money. The transactions are recorded over the mobile phone and the banker-on-wheels returns to the local bank branch with the money.

Dr. Devi Shetty 's hospital Hrudayalaya Hospital has 1,000 beds (against an average of 160 beds in American heart hospitals), and Dr Shetty and his team of 40-odd cardiologists perform about 600 operations a week. Shetty has performed more than 15,000 heart operations and other members of his team more than 10,000. The hospital charges an average of $2,000 for open-heart surgery, compared with $20,000-100,000 in America, but its success rates are as good as in the best American hospitals. He has established video and internet links with hospitals in India, Africa and Malaysia so that his surgeons can give expert advice to less experienced colleagues. He also sends “clinics on wheels” to nearby rural hospitals to test for heart disease. He has created a health-insurance scheme, working with various local self-help groups, that covers 2.5m people for a premium of about 11 cents a month each. About a third of the hospital’s patients are now enrolled in the scheme. A sliding scale of fees is used for operations so that richer customers subsidise poorer ones. The entire enterprise is surprisingly profitable given how many poor people it treats. Dr Shetty’s family-owned hospital group reports a 7.7% profit after taxes, compared with an average of 6.9% in American private hospitals

The Future Group, India’s largest retailer, has introduced “organised chaos” into its shops to make consumers feel at home, breaking up long aisles with untidy-looking displays.

The India Tobacco Company, one of the country’s biggest conglomerates, has created a network of more than 5,000 internet kiosks known as e-choupals to help farmers communicate with both the supply and the distribution chains. Farmers can bring their goods for sale and ITC will display their products.

Aravind, the world’s biggest eye-hospital chain, performs some 200,000 eye operations a year. It takes the assembly-line principle literally: four operating tables are laid side by side and two doctors operate on adjacent tables. When the first operation is done, the second patient is already in place.

Airbus hired Infosys to design part of the wing of its double-decker A380 and Boeing asked HCL Technologies to produce two vital bits of machinery, one that averts airborne collisions and another that allows planes to land in zero visibility.

Costs and Captive operations in India

2010-03-28T22:04:00.011+05:30

A while back I wrote that having offshore R&D centers in India are surprisingly worried about costs. I have been discussing this topic with many people off the record lately and some of the observations I have are as below. These people are working for the biggest names in the industry and there seems to be a common underlying thread running in their comments. Please note that this is just a random jotting of thoughts from people I have talked to and so this survey has no scientific basis, it can at best be a collection of ideas from people I have talked to.

1. Most companies having offshore R&D captive centers in India have transferred some operations completely to India. There are cases where some function is handled 100% out of India with only token or skeletal staff in the US. Mind you, these are not fringe operations - they directly impact the bottom line of the organization in question or are key strategic operations. However (without exception), I did not come across a single case of a team based in the US reporting to an India based Manager, even in the same function. This is true even in the case where there are multiple teams working together in different geographies on a project being strategically overseen by a senior executive. While I understand that the US based senior executive is supervising the initiative and running with it, even the smaller teams under her based in the US working closely with Indian arm still end up directly reporting to her, not to their corresponding Indian based managers. Is it that the best managerial talent globally available is being used? Or do Indian Managers lack the skills that their counterparts in the US have to manage global teams?

2. There is a tremendous pressure on the Indian captive operation to contain/limit costs. Yes there is the recession which we are painfully coming out of - however I wonder if this is something deeper. One person gave me a shocking example of HR in his organization stalling a US$50 equivalent bonus for an employee in the guise of efficiency (even when he had the budget to spare the amount). Everything contributing to costs is being continuously looked at which is a good thing in its own right, the thing that stands out like a sore thumb is that the same yardsticks do not apply to the spends in the headquarters in the same function or team. Maybe this sentiment has no logical backing, but somehow it does not seem right to me from what I observe.

3. Extending the last point further, many companies are not able to afford pay revisions or are grudgingly doing so (the job market in India is slowly picking up). Whats most striking is that while hiring for the same job role/position from the market, the new entrant is almost unfailingly drawing a 20-30% premium over his peers already working in the same roles. Down the line the new entrant also gets "leveled down" in salary revisions to the levels of his peers and this cycle continues.

I am told India has a tremendously talented workforce and most (all?) of the companies have set up operations in India to attract the best talent and not just arbitrage on labour rates.

Dear Readers - I am sure you will have your own reactions to this - please do post your comments. Do you see the same behaviors in your organizations in India? Do you see any business reasons for this to be happening? Or is my rant fully unsubstantiated and missing the mark? Do let me know by posting comments!

Avatar Review with Political Insights

2010-02-02T17:01:00.002+05:30

Naomi Wolf on Project Syndicate:

.......when you see James Cameron’s Avatar , and watch for two revealing themes: the raw, guilty template of the American unconscious in the context of the “war on terror” and late-stage corporate imperialism, and a critical portrayal of America – for the first time ever in a Hollywood blockbuster – from the point of view of the rest of the world.

Quote of the Year - till date - Google in China

2010-01-13T11:19:00.002+05:30

From New York Times:

... said Joe Schoendorf, a partner at Accel Partners, a Silicon Valley venture capital firm with a major presence in China. “Google has Microsoft on the ropes, and China is arguably the world’s most important market outside of the U.S. You don’t walk away from that on principle.”

(Commenting on Google's threat to quit China Market altogether)

And silly me, I thought business was all about ethics, principles and fair play. I know market dictates a lot of things but we all ultimately make some choices which we need to stand by. Atleast Google is thinking about quitting, while the business fraternity has its own thoughts.

Best Social Networking Site!

2009-07-20T13:25:00.002+05:30

Overheard two guys talking:

"Do you know of the best social networking site?"

"Ummm no... what is it?"

"Ha ha its called OUTSIDE"

:-)
Sadly its true.

Best Books - The Ones I Recommend

2009-07-13T22:06:00.002+05:30

This post is about three awesome books that I think are very nice as well as complementary to each other. They make a nice package together and are an indispensable read for any professional.

Poor Charlie's Almanac : Charlie Munger's common sense approach and examples and management insights make this book a very valuable read. It has examples and cases and it tells you how to think in an interdisciplinary manner.
Management Challenges for the 21st Century : Peter Drucker says it best and its worth reading this one and pondering over it.
What They Don't Teach you at Harvard Business School : One of the best books you will read about being street smart and hands down approach to work.

These three go well together. The first one is concepts, second one more of a future view and the third one a very practical do-list kind of book.

What do you think?

Indian Elections

2009-05-18T13:57:00.001+05:30

A fascinating article on the logistics of Elections in India. Sample:

The Election Commission's budget

Our budget is just Rs 20 crore (Rs 200 million). We are a very small organisation conducting one of the biggest exercises in the world. We are just 300 people in the Election Commission. That's all. It's remarkable.

In every state, we have a Chief Electoral Officer supported by eight to ten people. That's all we have. But for the election, we can call on anybody. That is how 7 to 8 million people are deployed.

Money is not the problem. For India, the democratic exercise is very important. The election system is 100 percent free, fair and democratic, and we have no doubt about it.

How Smarter Driving improves your mileage drastically

2009-04-10T21:24:00.005+05:30

A while back I came across an article in the Reader's Digest which detailed how a man was able to get an astonishingly high mileage from his car by driving smart. I tried some of the tips mentioned there and here is the result of my last 3 petrol fills:

2006 Model Hyundai Santro (normal petrol - no power or speed variant), tank full at first automatic filling cut. City driving mostly to office and back (one way 12 kms), grocery stores, bank, shopping etc. One trip to BIAL, one to Bannerghatta, maybe 40-50Kms in these trips with AC on, otherwise normal fan on.

This car never gave more than a mileage of 14 in normal city driving earlier. My Office is in K.R. Puram while I live in Whitefield - since there is always a return trip there is no question of a one way slope assisting the mileage. The results were a pleasant surprise to me as well. So what did I do different this time?

Minimize braking. Anticipate all speed breakers, slopes, crossings and signals where you end up slowing down. If I was at 40 kmph and there was a signal 200metres away, I would just put the car in neutral gear and reach the signal at a low speed and then brake.
Minimize Speeding. Avoided all un-necessary speeding and then sudden deceleration.
Keep Air Pressure in the tyres optimal
No use of clutch other than for gear change.
Key: Drive as much as possible in neutral gear. It is amazing to see the distance your car can cover in neutral gear when you use the momentum already present. If you need to change gears - switch them according to the speed you are running in (say on a barren road you are running in neutral at 60 kmph - then you can directly switch to 5th gear, however on a busy road you may switch to the 3rd from neutral when running 20 kmph)
Keep the windows rolled up to keep air drag at a minimum. Do not drive with partly or fully open windows.
Try to use the slopes on the road to your advantage. If one is driving at 30 kmph at the start of the slope and puts the car in neutral, she can maintain the speed with the assistance of the slope.

The man in the Reader's Digest article (sorry cannot find it online) could do 1.5 litres per 100 kms. Maybe that's something to aim for next time!

What is there in a password?

2009-03-20T09:42:00.002+05:30

I just came across a post which says "123456" is the most commonly used password on the Internet, followed by "password" in the second place. This reminds me - in 2000, I was on a consulting assignment to a very popular Indian gaming site in Mumbai. During the course of work we had to login and check the user journeys and the DBA there showed me the passwords which people used. Surprisingly the passwords were stored as clear text fields in the database and one could just query the table and see what they were.

I happened to discuss with him what were the most common passwords:
- #1 was "password"
- Some people had used "123456" or "999999", but in India in those days, "password" was the clear winner
- The second most password - a variation of the username - like "username1"
- The third most popular one - name of your spouse/girlfriend/boyfriend - this was the most common one among male users!

Book Recommendation: Making Globalization Work

2008-11-11T20:37:00.002+05:30

I completed Joseph Stiglitz's Making Globalization Work this week. I found it a very interesting and well compiled book. Globalization is a very complicated issue and there are many sides to each action and story. Stiglitz has been able to analyze the issues concisely with remarkable clarity. This book is bereft of feel good examples that abound in "The World is Flat" and it uncovers the ugly face of global dynamics in today's world. It tells the things as they are and as it is. Surprisingly, Stiglitz is a very harsh critic of the American way of handling the globalization and amply illustrates how the poor and powerless are being trampled upon in this race. He offers suggestions and solutions too.

Some of the things that I liked:

Why and how patents are misused by powerful corporations? Examples of Neem and Basmati rice are very interesting.
Why do policies of IMF and World Bank spell disaster for developing nations?
How vested interests arm twist those desiring a free and fair world?
What is the case for developing countries asking for status-quo on farm subsidies?
Why does Euro not want to be the currency of reserve of developing countries (unlike the dollar)?
Why are poor denied basic medication and how their assets are monopolized and stolen by the rich few?
Finally, what is the toll consumption is having on our environment?

It is said that the enlightened ones can look at situations objectively and their faults without emotion. Stiglitz stands out in the way he has looked at the various facts - being an eminent economist and a Nobel prize winner is testimony of the remarkable clarity of thoughts he presents. A must read!

Joke of the Year!

2008-11-03T20:48:00.001+05:30

The Hindu Says: RBI move positive, further cut needed: Citi, Goldman

Look who is talking! I wish they took home some of their wisdom first.

Some facts you maybe do not know

2008-08-15T18:12:00.002+05:30

Thought to compile a post on some facts that one may generally not know:

1. Dr. Y.S. Rajasekhara Reddy, the present Chief Minister of the state of Andhra Pradesh, is a practicing Christian. See Wikipedia page here and check under the photo in the right pane. This fact was also published in Outlook Magazine a while back.

2. Praveen Togadia the firebrand VHP politician is a famous oncologist (cancer surgeon). I am told he has a very busy and flourishing cancer treatment consultancy.

3. Dr. Subramanian Swamy, the maverick politician from Tamil Nadu, is widely known to be a Harvard graduate. Not better known are the facts that :
- He has a very sought after consultancy service and is very busy with it.
- His advisors for the PhD thesis at the time were Simon Kuznets and Paul A. Samuelson

iPhone and Pollution

2008-07-21T02:48:00.002+05:30

The last week I traveled to Belfast and London. A coupe of things struck my eye:

- There was a huge queue on Oxford Street in London for the new iPhone. Made me wonder - India and China are the places having the largest number of mobile phone users, but an innovation like an iPhone came out of the US. We always have people talking about being close to the markets and doing the design but here is a product developed completely outside the major markets and still has a lot of people interested in it from India from a features perspective. Innovation always scores... as Henry Ford said, "If I had asked the customers what they wanted, they would have said a faster horse!"

- Being on the busy streets and in bumper to bumper traffic made me realize the amount of air pollution we have in India. Even in crowded bumper to bumper lanes in the UK, you hardly feel any diesel or petrol fumes. Contrast this with the levels of pollution we have in India with nearly the same emission norms. I think fuel adultration is to blame for all this.

Does Amitabh Bachchan write his own Blog?

2008-06-16T09:49:00.004+05:30

I think the RSS feed says it all - some ghost writer Tarun seems to be doing it for him. Some posts are titled "ab" too. I personally would be amazed to know if he was not personally involved in this blog though - there is tremendous depth in his writing and it will we indeed very surprising to know some ghost writer was on the job for him. The jury is still out I guess.

Economics-101 in action Again

2008-05-12T00:14:00.002+05:30

Just came across this one - from Chris Anderson's Blog:

"Every abundance creates a new scarcity"

For instance:

An abundance of information can create a scarcity of context
An abundance of choice can create a scarcity of advice
An abundance of content can create a scarcity of time
An abundance of people competing for your attention can create a scarcity of reputational ways to choose among them.

I found it pretty insightful. I am sometimes really amazed the way basic economics can shape and influence your thinking - from analyzing the markets for search engines to shaping competitive strategy and analyzing competitor moves. See my earlier post on Economic Complements and Substitutes too.

Do you really know what you are really recommending?

2008-02-26T02:02:00.004+05:30

The New York Times has an article recommending that Microsoft should buy SAP instead of Yahoo. Lets see what the article really suggests:

Microsoft has managed to overlook a plain-vanilla strategy, the oldest one in the book: build on its own strengths. What it does best is to sell software to corporations, for all sorts of applications, visible and not so visible, at a handsome profit.

True, but I wonder if Microsoft is really a company that "best" sells software to corporations. As its struggles with Netscape over the browsers, Sony over XBox and Google over ads suggests, its primary target is a normal consumer, not a Fortune 500. If it was a Fortune 500 it was worried about, it would have not even looked at Yahoo in the first place. The article does go on to quote that half of Microsoft's revenue comes from business software ("e-mail infrastructure, database systems, developer tools, Office productivity applications and other mainstays") I can very well argue that half of the revenue comes from the normal, single PC/laptop owners. The glass can be half empty or half full the way you look at it.

Professor Cusumano has a suggestion: Rather than acquire Yahoo, Microsoft should pursue SAP.

Interesting. Instead of taking Google head on, it should try to consolidate the business software space and let Google become such a Goliath that its unbeatable. Even if MS buys SAP, how will it get its act together and challenge Google later on when Google is richer, more powerful and stronger?

Suppose that Lawrence J. Ellison, the chief executive of Oracle, were the head of Microsoft and was doing the shopping. Which deal would he choose? Past experience suggests that it would not be Yahoo.

This makes me smile. Can anyone predict today which is the company Oracle will acquire next? Remeber they have already, with "impressive regularity — (done) 13 strategic acquisitions in 2005, another 13 in 2006 and 11 in 2007 — Oracle has picked up key products and customers". I am sure the field is pretty barren after all this M&A and this prediction will be a cakewalk. Bonus Question: Predict Larry's next strategic move.

A few dozen well-paying Fortune 500 customers may actually be more valuable than tens of millions of Web e-mail “customers” who pay nothing for the service and whose attention is not highly valued by online advertisers.

Well sadly this battle is not for Enterprise customers. This for the John and Jane Does who are merrily surfing the web, checking emails, using social networking and clicking on ads.

Update on Movies I saw

2008-02-22T19:44:00.003+05:30

I had a chance to travel a bit for work and so ended up using the flying time to watch some latest Hollywood flicks. Due to kids plus a hectic personal life, I have been lagging behind a bit on the movies scene. Here is an update on what I saw:

Michael Clayton : This sexed up legal drama was somehow lacking in punch. I think the Director threw away a nice plot and a good acting performance by George Clooney. Avoidable.
Interview : A pleasant surprise. I had not heard of Sienna Miller yet or seen any of her movies, but in this one, she was simply too good. She can act, and she looks nice to top it off. The story was nice, with a touch of dark humor about the lives of celebrities, and the end was also something worth pondering about. Recommended.
Stardust : Ended up watching this one as it had Sienna Miller, but this sick drama or Lord of the Rings rip-off was not worthwhile. I did not make it to the end, and is highly avoidable.
The Invasion : This is a sci-fi and emotional drama all rolled into one. Silly plot, sillier execution and a completely wild end. Could make it to the last thanks to Nicole Kidman - she has looked absolutely smashing in this one.
3:10 to Yuma : This one was the pick of the lot. Reminded me of the good ol' Eastwood genre movies. Lots of style, a superb story and a great execution. The story is gripping, the stunts well shot and the characterization on the dot. Been a fan of Russell Gladiator Crowe since a while and this one is one of his better ones. Did you know Russell is cousin of former New Zealand international cricketers Jeff and Martin Crowe (he was born in New Zealand)? I read an interview of Martin Crowe where he mentioned that Russell does follow the cricket scene.

Happy watching!

Humor of the Week: JohnDvorak's Second Opinion

2008-01-22T00:39:00.000+05:30

I just tumbled across JOHN DVORAK'S SECOND OPINION column which covers the Sun - MySQL deal. Rarely does one see such an ahem.. entertaining analysis from self proclaimed experts. Among the interesting points it makes:

Sun has a poor history of acquisitions and this ensures that MySQL is dead meat for the future.
MySQl was a candidate for acquisition by Yahoo, Microsoft and Google. However they let themselves be acquired by Sun for *only* US$1Billion as Swedes are loathe to do "anything that would appear flamboyant or be interpreted as (gasp) bragging" and thus there was no public/private bidding.
Sun in an Oracle stooge sent by Larry Ellison to do its dirty job.

I wonder if any of the above merit any discussion. My take is that Oracle and Sun hardware are complementary products. When Oracle creates database clusters that run on inexpensive hardware, they directly threaten Sun. If you look at the way the market has shaped, hardware vendors are under more and more pressure from software suppliers. The only way Sun can fight Oracle's onslaught is to acquire MySQL, bundle it and make it a commodity as much as it can. Yes MySQL is free already, however maybe Sun feels that having a preconfigured, bundled supported and maintainable release eco-system of MySQL will be more beneficial for it in the long run.

The Indian Tiger Again

2008-01-21T12:27:00.000+05:30

I came across an interesting McKinsey Study on India's growth and potential. This takes the my last post on the Globalization Confusion related to India a bit further ahead with more data for substantiation. Among other things, the study suggests:

Overall approx. 5% of Indian Households have incomes above 100,000 Indian Rupees in 2006 (page 11).
Considering McKinsey's projections (pages 12-13), by 2025 India will have

2% or 28 million people with incomes more than 100,00,00 Rupees
9% or 12.6 million people with incomes in the range 200,000 to 100,00,00 Rupees (data for 2000 "real" India Rupees.

Dani Rodrick suggests that the purchasing power parity (ppp) equation is 1$=14.7INR. If we apply these ppp figures to the McKinsey study (assuming all their projections are correct) for 2025:

28 million people in India will have household incomes of US$68000
12.6 million people in India will have household incomes of US$13600 to US$34000
Of course the rest are poorer/lesser buying power/lesser income.

Now look at the situation in the US today:

Only 35% of the US population has an income of less than US$25,000

I am sure the marketers are not salivating at the prospect of attracting 28+12.6=41 million Indian people over incomes of US$13600 in 2025 when they can, today, market to 65% of the US population (which is roughly 200 million) having an income of more than US$25,000.

I still believe that there is more hype than substance in the India story. Of course there are some developments, but not like the ones we are seeing highlighted in the media or the stock bull run. It requires persistence, innovation and the Bottom of the Pyramid approaches to make margins in India. No wonder Tata launches Nano, an inexpensive car for US$2500.

(Hat Tip to Vinnie for the McKinsey Study)

The Globalization Confusion

2007-12-12T00:41:00.000+05:30

It is interesting to see people confused by the melting of borders and integration of various economies of the world into a world economy (disclaimer: I do not claim to be the most enlightened one myself). This was well highlighted yesterday while I was interviewing a candidate for a position.

The candidate was very bright (alum of IIT + IIM) and had a wealth of consulting experience (mostly in the US). He was planning to settle in Bangalore after having stayed for around 6 years in Silicon Valley, and it was an obvious interview question to ask what made him decide on Bangalore over the valley. He felt that Bangalore was where all the action was. It was in Bangalore that the new, the next and the greatest would be created in the near future. He felt that in the next few years (maybe 10-15), India will be the place and he wanted to be there at the start. I would not go further into the questions and answers as it is not fair to reveal more on this blog.

You can see many people sold on to the India story. Oft quoted example is the number of cellphone connections where India is adding 3.5 connections per second. People feel that Indian middle class holds a lot of consumption promise. A lot of big names like GM, Microsoft and Google are in India doing RnD. I just wonder aloud:

Most (if not all) of the end consumers for MNCs operating in India are in the US or Europe. The are just leveraging the costs from India, not serving the Indian middle class (yet).
India has just 30 million Income Tax payers. Even if you magnify this number by 5 to include all the people who do not declare their income, this is abysmally low in a population of 1.1 billion. Considering even 150 million people with incomes above Rs. 150000 (US$ 4250) a year, I would guess a maximum of 20% or 30 million will have incomes in the above Rs. 900,000 (US$22500) a year. Contrast this with 300 million people in the US, out of which at least 60% make more than US$24000 a year. It is simply no comparison. [Update1: Omkar Goswami confirms that the number of income tax returns over INR 10 lakhs for 2005-2006 was 5.62 lakhs. This makes around (only!) 5.5 million people with incomes above 10 laks or US$25000 per annum, even assuming that only 10% people declare their incomes]
[Update2: Assuming only 10% of the people earning over INR 10 lakhs declare their incomes, it makes 5.5 million such people]
People who talk of the number of mobile phones in India should also talk of the number of opportunities for Banks operating in India. Why is India not such a hot Banking destination with a population of 1.1 billion - why are Bank accounts not multiplying at even half the rate of mobile phones? Why are the Citibanks and BoAs not scampering to expand their network, reach and business in India? Or what about Credit Cards? Cars? Talking of Indian population is not the same as talking of business opportunities.

It is easy to be blinded. One important thing to know for any business is to understand who is their customer and what she wants. If sitting in India, serving US customers equips you to hype about the India story, you are in for a rude awakening.

The Quest for Happiness

2007-12-07T13:16:00.001+05:30

Everyone wants to be happy. What makes you happy? Money? Success? Love? Work? I guess most will agree that money does not make us happy, so then what does?

Did you know what the research says?
Sex is "the" factor.

Data Centre Complexity

2007-11-23T18:02:00.000+05:30

Whenever I see or ask people working in Data Centers, I see a lot of bureaucracy/process in they way things work. Typical issues are:

- It requires a whole set of processes to get access to the production boxes. This is not a problem per se as these boxes need security, but most of the times the rules are frustratingly complex and require many levels of approval. This typically means that a new joinee takes few weeks to a few months just to get the accounts and accesses before she gets going.

- Many organizations have smart cards, secure IDs, VPNs and a plethora of other softwares that work with their firewalls. One needs to make sure she can connect from home (sometimes these softwares may not allow this to happen) and also even connect from various Office locations. If there are third parties accessing the systems, there may be other layers of authentications coming into play.

- Security measures like Secure Shell (SSH) are sometimes rampantly rolled out even for access within the firewall to Unix servers which is in most cases an overkill.

- Each server has a unique username and password and these vary for Unix, Oracle Databases, Applications, Sysadmin making a DBA/System Administrator wade through Excel Sheets before even attempting to login. Interestingly most of these Excel Sheets are also kept on secure file sharing systems, though you can mostly find latest (unprotected) copies of them on the personal computers of administrators! Imagine running a data center with 500 production boxes and you can already see the system administrator tearing his hair in frustration.

- With the work getting outsources to India, the cheap labour available here does not provide any incentive to automate or streamline this issue.

A really sad state of affairs. Any comments anyone?

My Visit to London and Scotland

2007-11-07T01:11:00.000+05:30

Last week I had the chance to visit London and Glasgow (Scotland) for work. Although the schedule was very hectic and this was my first visit, somethings I found interesting were:

- Lot of Indian and Pakistani community in and around London. Its common to hear people talking in Hindi which makes you feel at home, not away

- More women than men seem to smoke, whic is a bit surprising. I did not seem to notice this in the US, though my sampling is totally random and unscientific.

- Diwali was celebrated on Sunday (28 Oct) at Trafalgar Square on a damp, wet day. Thats me on that day in the picture.

- Lots of Indian food and restaurants around, so eating out is not an issue.

- Stores are much more expensive than the US, variety is also not as much as available in the US.

Life Beyond Indian Stock Markets

2007-10-12T18:48:00.000+05:30

Wherever you go, invariably you hear about the booming Indian Stock markets and the Index reaching 20k, 25k, 30 or so. People advise investing in MFs, Index Funds, scrips and so on, believing in the fundamental premise that over a long run, the stock markets always appreciate. I do not know whether it is a bubble yet in India, but even if it isn't, an Economist story tells interesting facts:

".. it is almost universally accepted that shares always rise over the long run. And this perception does seem to be backed up by evidence; if you take any 20-year period, Wall Street has always delivered positive real returns. In addition, one ought to expect shares (which are risky) to deliver a higher return than risk-free assets such as government bonds.

Nevertheless, investors ought also to remember the world's second largest economy, Japan. Its most popular stockmarket average, the Nikkei 225, peaked at 38,915 on the last trading day of the 1980s; this week, nearly 18 years later, it was still only around 17,000, less than half its peak. Buying on the dips did not work either. By 1994, the Nikkei had fallen to 21,000—at which point a technical analyst, after poring over his charts, told this columnist that it had to be one of the great long-term buying opportunities."

and

"Japanese, French, German and Spanish investors all suffered instances where they had to wait 50-60 years to earn a positive real return; in Italy and Belgium, the waiting period stretched to 70 years. It was no good following the famous advice to “put the shares in a drawer and forget about them”; the furniture would not have lasted that long."

If one feels FIIs are pushing up the prices of India stocks, sample this:
"Rulers and Ruled in the US Empire"
which says, among other things:

"Petras demystifies FI's impact, explains the risks in attracting it, and exposes six myths about its benefits.

Myth 1.

It's untrue FI creates new enterprises, market opportunities and more. Most, in fact, aims to buy privatized and other enterprises while crowding out local capital and public initiative.

Myth 2.

FI doesn't increase export competitiveness. It buys mineral resources for export with little done to create jobs or stimulate the local economy.

Myth 3.

It's false to think FI provides tax revenue and hard currency. An FI export model creates more indebtedness and a net loss.

Myth 4.

It's false believing debt repayments to international lenders is key to a good financial standing. Much foreign debt is odious and repaying it harms borrower countries.

Myth 5.

It's false believing FI provides developing countries needed capital. It's used instead to buy local companies and control a country's markets.

Myth 6.

It's false believing FI attracts further investment. Capital freely moves to wherever it gets the best returns and is anchored nowhere.

Developing countries benefit most by relying less on FI and more on national ownership and investment. The former is predatory. The latter accrues profits to the national treasury and grows the country's economy."

Enjoy!

Oh Yes America

2007-10-10T11:53:00.000+05:30

Interesting, carefully documented satire on America

ByDesign or ByDestiny?

2007-09-21T13:13:00.000+05:30

The blogsphere is resounding with various bloggers analyzing the new SAP offering ByDesign. Some complain that the details are sketchy, some forecast doom while others have their own apprehensions. Irrespective of all this, the fact of the matter is:

- SaaS (however you may end up defining it) is a disruptive business model, especially for a vendor of enterprise technology who is used to a regular revenue stream from license sales

- Since it is so disruptive, vedors (SAP is an example) are very cautious in adopting it as it has a potential to cannibalize their existing business models. No wonder Mark Beinoff, an Oracle employee, was asked by Larry Ellison to startup Salesforce.com on his own, outside the framework of Oracle as it was a thing to be tried and tested outside the established setup. Remember that IBM did not push relational database model inspite of doing all the research and development on it as it had the potential to cannibalize their existing database system. Only after Oracle took up the relational model and started eating IBM's lunch did IBM launch a relational database product.

- SaaS still has a long way to go, as the model is getting adjusted to the needs and demands of various customers. That is why you have ASP, multi-tenecy, full hosting and many other SaaS variants. It is still to achieve "product/market fit" in the words of Mark Andreesen.

Stay Tuned.

Proposed Exit Tax on IIT/IIM Grads.

2007-09-12T13:39:00.000+05:30

Newspapers are full of stories suggesting that the Government is mulling an exit tax on IIT/IIM graduates if they leave India. There can be valid reasons driven by the economics of the matter, but I have a slightly different viewpoint on the way this is being proposed and would be administered.

The Indian Government subsidizes education in IITs and IIMs. When someone goes abroad and works there, in effect the Indian Government is subsidizing the research and development in foreign countries. There is an inherent motivation in the policy to recover the costs associatied with the subsidy as well.

One thing which I fail to understand is why is the Government still subsidizing the IITs and IIMs? They have been around for a while now, have a global brand image, have influential and connected alumni and have a proven track record. Surely they do not need the financial doles that are being meted out to them and if needed, they can raise as much resources as they require. When Harvard has a corpus of a few billion dollars, I see no reason why an IIT cannot be even independent if not run a surplus. If there is a corpus available, the students (whoever needy) can be financed by the institutes themselves ridding the government of the burden of the subsidy.

Here is the real reason: IITs/IIMs are still under the control of the Government and the Babus. No one wants them to stand up on their own. Instead of setting up more institutes and expanding the knowledge base, the policy is an attempt to keep the stranglehold on IITs and IIMs by controlling their grants. Instead of doing better things, this silly step is designed to protect the turf rather than to serve the nation. Even if we keep the nightmares faced in the implementation of this proposal aside, it should be condemned and debated for its flawed intent and ulterior motives.

Disclaimer: I am a graduate of IIT.

Its All In The Substitutes

2007-09-07T11:45:00.000+05:30

Anshu responds to the grouse that ERP systems are:

1. Prohibitively expensive
2. Hard to install and implement
3. Even more expensive from a support and maintenance costs angle
4. Vendors do not pass the 'amortized' RnD costs to customers
5. Vendors do not pass the cost savings leveraged due to development and support from offshore locations in low cost labor markets to the customers
6. The costs for implementation have not gone down even after more than 100,000 implementations and past learnings are not leveraged to reduce newer costs (see in relation to 2 above)

Guys like Vinnie have been cribbing about the high costs for ERP systems since time immemorial. Seems even the Utopian promise of Saas vendors like Salesforce.com (who offer a fixed, predictable monthly maintenance charge per user with no license costs) is able to quench their thirst to reduce the costs further. Anshu makes the point that if you feel the costs are high for an ERP and costs have been amortized, why dont you do one of the three - build one of your own, keep quiet and think why, or be a reseller to sell the best.

One way to look at this is what are the choices the customer has when she looks at an ERP (assuming the case of being a laggard oops.. a late adopter/Gartner type C and thus expects end of life (?) pricing and costs:
1. Do nothing
2. Build her own
3. Go for SaaS and have a fixed, predictable opex with little capex.
4. Go to the blood thirsty breed of today's vendors and live with the capex and opex.

Out of these, if we rule out 1, the only viable options are 2 and 3 which can classify as economic substitutes to 4. What will happen to SaaS is anybody's guess, so 3 is a do not know yet (comes with its own set of risks and bells and whistles). On 2, I have the following premise:

- It is much much harder to implement than 4 even if you rule out the costs
- The costs will in all probability be higher than what you end up incurring if you go with an ERP vendor.
- Its like reinventing the wheel for much of the already avaliable robust functionality like order processing, payroll, payables and receivables which makes it more bug prone and riskier, even for a type C profile.
- The IT major who implements it is now your new blood thirsty dracula - she has a open field to herself when it comes to costs, maintenance and fixes. Reminds me of the IBM Mainframe situation.

Does anyone have any other option? If not, why do you crib about the costs?

Really just another day at the office for a Tiger?

2007-08-22T11:35:00.000+05:30

Fact: Accenture is rapidly ramping up its workforce in India. They are probably targetting to have a 2 to 3X increase in their Indian manpower. Most newspapers and TV Channels are flooded with ads from Accenture featuring Tiger Woods with the tagline "Just another day at the office for a Tiger". Accenture even launched a new website this month specially targetting resumes from Indian BPO and IT professionals. The homepage of the website features Tiger Woods with the above tagline. Ads like these run regularly during cricket matches on TV, radio talk shows and even during film intermissions in Bangalore (not sure about rest of India).

Comment: I wonder of Tiger Woods is the right choice for this message, especially to Indian IT professionals, who I assume are in the 20-30 target age bracket. Reasons:

- Tiger has very poor awareness in India.
- Golf is not a popular sport. It is even less popular among under 30 year olds, the ones who Accenture is trying to recruit heavily. I would guess less than 1% of these people have ever played golf, and maybe a lesser number follow Tiger's exploits.
- Talking about Tiger will rarely translate into much for the brand Accenture.
- Running these ads run during cricket matches may alienate cricket fans or switch them off. Circket is more of a religion in India, akin to Basketball in the US.
- The ads seem to imply that working for Accenture may make one end up being a Tiger. The culture of excellence which Tiger protrays is tempting, but not everybody can be a Tiger.

I can understand that Tiger holds a lot of appeal for decision makers and CXOs who frequent the golf courses and maybe can appreciate Accenture's service offerings, but re-using Tiger to recruit in India does not seem to gel well with me. More of a case of being penny wise and pound foolish.

Comments?

Web 2.0: Help in Fight Against Corruption

2007-08-16T20:49:00.001+05:30

Thanks to Rediff, came across this interesting site:
http://fightcorruption.wikidot.com

It is a novel, innovative attempt to use the Web2.0 tools - Wiki, Blog, social networking to achieve a laudable aim: fight against corruption.

Is it a real race for talent?

2007-08-16T12:29:00.000+05:30

Sadagopan points to an interesting Businessweek article stating that Indian professionals are dumping MNCs over Indian Majors. I am continuously surprised at the kind of articles that get generated in the press, and it seems BusinessWeek is no exception. Sample this:

- All organizations (yes all, including Indian Majors) are competing for talent. This battle, forget the war is not yet over.

- If someone says that only Indian Majors can give career growth, I beg to disagree. Career growth is not just when one "heads a 20-person group designing kitchen appliances and aerospace components" as per the BusinessWeek article. In India the sentiment is that one has grown when he has a large team reporting to him. This feudal mindset has no place in today's globalized economy, where skills and knowledge matter more over transaction management. Many people are lulled into the false sense of career growth provided by Indian majors who give promote them to lead/manager roles without enhancing and growing their technical skillsets. Over a period of time these people are warming the benches or filling management positions with absolutely no clue on what gets done how.

- India Majors lag majorly when it comes to technical prowess and expertise. In any of the Indian Majors, you will rarely find any expert who knows the technical stuff in and out. Throwing hands at a problem is not a substitute for technical finesse. I can bet you cannot find the best Java Designer, best Oracle RDBMS expert or the best .NET framework implementor working for any of the Indian majors. Infact their recruiting programs are designed for masses and *not* for netting class people. Go to any technical forum on the Internet. Let me know if you find an expert from the India Majors answering the "hard" questions.

Makes me wonder. Comments?

Economics 101 revisited - again

2007-08-01T14:01:00.000+05:30

In view of my previous post on complements and substitites and subsequent dilly dallying with Economic Texts, I came across this very interesting open source, free Economics Concepts book:

http://www.introecon.com/

Form the blurb about this book:

Why open source? Academics do an enormous amount of work editing journals and writing articles and now publishers have broken an implicit contract with academics, in which we gave our time and they weren't too greedy. Sometimes articles cost $20 to download, and principles books regularly sell for over $100. They issue new editions frequently to kill off the used book market, and the rapidity of new editions contributes to errors and bloat. Moreover, textbooks have gotten dumb and dumber as publishers seek to satisfy the student who prefers to learn nothing. Many have gotten so dumb ("simplified") so as to be simply incorrect. And they want $100 for this schlock? Where is the attempt to show the students what economics is actually about, and how it actually works? Why aren't we trying to teach the students more, rather than less?

Here are actual prices, as of January 2005 (quoted by Amazon):

Economics, by Campbell R. McConnell, Stanley L. Brue, $136
Principles of Economics, by N. Gregory Mankiw, $131.95
Managerial Economics: Economic Tools for Today's Decision Makers, by Paul G. Keat, Philip K.Y. Young, $133
Economics, by John B. Taylor, $130.36
Microeconomics with MyEconLab Student Access Kit (7th Edition), by Michael Parkin, $93.80
Principles of Microeconomics, by Karl E. Case, Ray C. Fair, paperback $99
Principles of Macroeconomics, by Karl E. Case, Ray C. Fair, paperback $99

The author Preston McAfee is a Professor at CalTech. I find this a very interesting, novel approach to encourage collaborative learning and fostering interest.

Where are thou- IBM and Accenture?

2007-07-21T00:56:00.000+05:30

As per the data from NASSCOM, TCS is the top employer for IT/ITES (IT Enabled services) category in India. The rest of the list also offers no surprises, but I am surprised to see no IBM or Accenture make the list. From what I know and hear in the marketplace, these folks have also ramped up aggressively - see my previous post here. Any comments on their absence from this list?

Who does AOL.IN want to sign up?

2007-07-03T17:50:00.000+05:30

Yesterday I saw an advertisement in Outlook Magazine by AOL.IN about their new service and communities. The ad, unfortunately which I cannot showcase here as there is no access to print advertisements online, shows a girl with a pierced nostril sticking out her tongue (which is also pierced) and the tagline says something about finding all kinds of people/communities on AOL.IN. Makes me wonder who is it that AOL is really targetting in India via this ad:
1. Geeky nerds who fantasize of pierced tongues?
2. Females who already have/plan to have both pierced tongues and nostrils together?
3. All kinds of folks who feel the need for inclusion in the community of such girls?

I thought advertise was about segmenting and delivering the message, but this one left me totally confused. All the above (1, 2, and 3) are in all probability the minority segment AOL is trying to target, unless I am totally out in the woods. Comments anyone?

Startups in India have it much harder

2007-06-27T10:34:00.000+05:30

Marc Anderseen, co-founder of Netscape, has made an interesting observation regarding startups in his Blog post:
"I'll assert that market is the most important factor in a startup's success or failure..."
and
"In a great market -- a market with lots of potential customers and/or a highly growing set of potential customers -- the market pulls product out of the startup. The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along. The product doesn't need to be great; it just has to basically work. The market doesn't care how good the team is, as long as the team can produce that viable product. In short, customers are knocking down your door to get the product; the main goal is to actually answer the phone and respond to all the emails from people who want to buy."

His post makes room for an interesting corollary (see my comment on the post and Marc's response):
Startups having their development teams/engineering staff workng out of India have it much harder. When you are a startup, achieving the right product/market mix will surely require a few iterations. These iterations are much harder to achieve in a nimble manner if your marketing staff sits in the US and "hands-off" the specs over concalls or after meetings. It is very easy to lose precious time in this back-and-forth exchnage. I would guess this partly explains why the Indian software companies have not been able to develop consumer websites or products like Yahoo or AOL Messenger, though they have been successful in Indian markets (Rediff, IRCTC).

Disclaimer: I have worked for a startup (Webrizon) only for a limited period and it was unable to make much headway. Hindsight is always 20/20 and so if any readers have specifics to add, please post a comment.

Eldeco Ananda - Pathetic Service

2007-04-18T14:05:00.000+05:30

Another feather in the cap for providers of awful service after sale: Eldeco Ananda

I wonder how a company can make a customer so mad at itself. Surely it requires extraordinary processes in place.

Bob Woolmer RIP, Shame Shame ICC

2007-03-23T14:31:00.000+05:30

It has now been confirmed by the Police that Pakistan Cricket Coach Bob Woolmer was strangled to death. I liked the personality of Bob Woolmer and he won my admiration the way he was handling the mercurial Pakistan Cricket team. May he rest in peace.

ICC should hang their heads in shame. Inspite of ample evidences about rampant match fixing, not even a single player has been indicted. Consider the following known and publicised incidents:
- Cash (2 Million or so) found in Hotel room of Sri Lankan Team with no one coming forward to claim it
- Marlon Samuels openly chatting to Bookie in India
- Wasim Akram getting calls from Dawood Ibrahim (Mafia Don) before a match
- Multiple allegations flying thick and thin regarding match fixing

ICC should really think what it needs to do. It can be happy till it milks the hen laying golden eggs, or let all hell break lose. I guess betting and fixing are organized rackets with involvement of the Cricket Board Officials, ICC, local politicians and Mafia. Looking at the attempts by respective Cricket Boards to shield their individual players (whether it was Gibbs or Waugh and Warne) it is clear that this muck is very deep.

It is an indeed sad day for a Cricket Fan. Shame Shame ICC.

India: Innovation, Creativity and Products

2007-02-27T14:30:00.000+05:30

John Hagel does a eloquent review of the state of talent and innovation in the Indian IT industry during his visit here. Some interesting comments are also available on the post. Without being bland or repetitive, I would add this 2cents of mine:

- I wonder if there can be any realistic chance of expecting a company who is focussed on serving the Indian customers (ICICI Bank for example as quoted by Hagel) being able to expand and streamline the service offering to scale operation in order to serve the US consumer. It all sounds good when we talk about the Bottom of the Pyramid (BOP) opportunities but I wonder if there are many examples to showcase how learnings from India and China have really given companies a leverage in the US marketplace in the way they service their customers other than saving on costs via outsourcing to a location with cheaper factors of production. BTW, I am sick of the pathetic service of ICICI Bank.

-Hagel's "Fostering talent networks" is definitely a good idea. It can also be considered an extension of Oliver WIlliamson's Transaction Cost Approach where the firms can leverage a shared marketplace resource for talent rather than internalise the operations to reduce uncertainity. However in the absence of any Government backing for such an outfit, the only practical way will be for Indian IT providers to have loose alliances among themselves to take on the world. Maybe the market pressure for talent will make such an allaince a reality. Lets see.

Common SaaS (Software as a Service) Myths Debunked

2007-01-11T14:22:00.000+05:30

In view of Mark Beinoff's interesting perspective to SaaS ala Salesforce.com, I thought a post highlighting the common myths associated with SaaS would be in order. I attempt this with a full understanding of the fact that terms like SaaS and Enterprise Software are hazily defined and exist in numerous forms. So take the following with a pinch of salt.

1. SaaS is for low-end, non-mission critical applications
Wrong. As Beinoff himself points out, 15,000 odd folks at Cisco use his service. SaaS is equally potent for business critical applications and in fact many customers are having their major businesses running out of SaaS based applications.

2. SaaS is cheaper than traditional software licensing and homegrown hosting.
Depends on how you perceive and define costs. SaaS has a subscription based model which is an operating expense, while procuring software and hardware is a capital expense, entitling a different tax treatment. In self-hosting and development, there may be lesser recurring cash outflows than you may end up for the SaaS model. In addition being at the mercy of a single vendor like Salesforce.com may not be a "cheap" option in the long run. SaaS also introduces "newer" management costs - the cost of vendor management, the cost of not having exactly what you wanted in the first place and the cost of getting the things fixed by the vendor as you would like them to have (you have much more control in a home grown system).

3. SaaS is *the* total IT solution ("End of Software"?)
Well I don't know what is meant by this quote announcing apocalypse. You still need networking software and hardware to be able to use SaaS in the first place. In addition you also need to plug your existing legacy systems to be able to seamlessly integrate with the SaaS model, implying new software development. Do not ever think that you as a customer do not need any additional software - let me quote Beinoff himself:
"We are empowering .. partners and customers to create even more applications with our Apex platform and programming language. That explosion of choice attracts more customers."

4. SaaS is less reliable and more outage prone than self hosted home grown solutions
In most scenarios, barring exceptions, a SaaS vendor can guarantee more reliability and up time that your in house IT department. There are obvious exceptions to this (ex. Google) but in most cases the SaaS vendor will have superior checks and controls as well as more skills to ensure that your systems run uninterrupted. I say this with full knowledge of multiple salesforce.com outages as Beinoff claims 99.9% reliability in spite of them - making a total downtime of 8.76 hours a year. In most cases your IT department will be stretched to achieve this figure.

5. SaaS is a security risk -or- How can I give all my data to that guy?
SaaS vendors are highly concerned about your security concerns. Their whole business hinges on the fact that they can provide a safe and secure computing environment. SaaS is a good choice if you have to deal with tight compliance issues (like SoX). Remember most of us have our credit card data and other personal details on the email servers of Yahoo and Google and still sleep peacefully. Another point to view is how safe you are if you have it in-house - can you be assured of zero failures? And if security is still a concern for you from a business angle (ex. you are CIA) then of course you are better off without SaaS in doing your own thing.

6. SaaS saves me from customizations and implementation blues. I do not need any consulting organization's hourly rates to be up and running.
Maybe not. In most cases a plain vanilla SaaS offering will be of little use to your company. You will probably need some alterations in the base "offering" to be able to derive business benefits out of it. And for this you will need to go back to your friendly neighbourhood IT consultancy. Beinoff himself admits:
"months after we gave customers the ability to change table names and add customer fields, we noticed that they were creating entire new applications: a major online news service was managing their legal department; a chip design company was tracking bugs. These were not things that we had explicitly designed Salesforce to do, but because we made it easy for customers to make these changes, they were taking that power and running with it."
The point remains that you will have to make changes in the base software to meet your business requirements and score over competitors, which beings me to the last one in the list:

7. SaaS offers me huge competitive advantage. I can concentrate on the business and not worry about the rest.
Maybe, maybe now. You need to look at questions like:
- What is my business?
- Who are my competitors? Does my IT infrastructure help me score over them?
- Is IT one of your core differentiators in the marketplace?
- Are your competitors better off in the SaaS model?
SaaS is not a silver bullet. Beinoff claims 27000+ customers and 550,000 subscribers. This translates to an average of approx. 18 users per customer. I am sure many of these will be small time operators. On the other hand, Cisco itself has 15,000 users. It is clear that this model works for some and does not work for others.

See my previous post here. Additions and corrections welcome.

The Killing fields of Noida

2007-01-04T16:23:00.000+05:30

The gruesome killing of innocent children in Noida is an absolutely shocking start to this year. All of us have sunk to new lows on hearing this news, and I do not think anyone can say that his soul has not been tormented at being part of the same society that has been witness to this shameful act. May the souls of these kids rest in peace.

How Software Pricay Helps Microsoft

2007-01-04T15:10:00.000+05:30

I just came across an interesting excerpt from Microsoft vs. Open Source: Who Will Win?

...we were also surprised to find that piracy may end up increasing Microsoft's profits. To understand why, notice that there are two types of pirates: those who would not have bought Windows in the first place because it is too expensive, and those who would have bought Windows but now decide to pirate it. The first category increases Windows' installed base without affecting sales. As a consequence, this group increases the value of Windows. And thanks to these pirates, Microsoft is able to set higher prices in the future (because the value of the system goes up). In addition, having these pirates means that Linux's installed base does not grow as much as it would have if piracy weren't there. The second type of pirates (those who in the absence of piracy would have bought Windows) reduces Windows' sales and profit. Thus, if the proportion of first-type pirates is sufficiently large, Microsoft's profits will increase with piracy.

You can bet category one vastly outnumbers category two.

Indian Film Music in Review for 2006

2007-01-03T12:09:00.000+05:30

I found the following honourable mentions in the year gone by:

Soundtrack of the Year: Don
Song of the Year: Kya Mujhe Pyaar hai (Woh Lamhe)
Item Number of the year: Yeh Mera Dil (Don). Also Bidi Jalaayi Le (Omkara)
Video of the Year (non film): Something Something (Mika)

Disclaimer: In view of an actively busy personal and professional life, I did not get a chance to see much movies or TV this year. This list the best I could make out of a random sample of my starving TV diet.

Why the Hell MPs bother about Cricket?

2006-11-30T10:12:00.000+05:30

There has been a furore lately in the Parliament (and outside) on the comments made by Greg Chappel related to the performance of the Indian Cricket Team and the subsequent retaliation by the MPs. Being a Cricket fan, I have a brief comment to make about this one:
There are millions of Cricket fans like me. Politicians want a share of their attention. Till now, they were content with passing congratulatory messages when the team did well or someone broke a record. However with the recent dismal performance, they have seized upon a novel idea: trying to play the guardians of the interest of the fans. I think all of us should treat their comments as a cricket fan - focus on the game and be oblivious to the rest. I wonder if Shahrukh Khan loves cricket so much as to watch it with Priyanka Chopra in Jaipur (India vs. England in Champions Trophy 2006 coinciding with the release of Don) or Rahul and Priyanka Gandhi watching India's tour of Pakistan last time. These are cheap gimmicks to grab the attention of the public and stay in the limelight....a true fan should not worry too much about them and stick to the game.

Useful Links for Everything

2006-11-24T01:20:00.000+05:30

A collection of some sites I came across reading Blogs and web surfing:

www.isbn.nu - compare book prices across all major retailers
http://www.bennetyee.org/ucsd-pages/area.html - A list of US Aread Codes with Locations - extremely useful to see what is the best time to make calls to US
http://ycombinator.com/munger.html - Munger's speech to USC BSchool - a useful page to arrange the learning process logically

I will update this post on and off whenever I see something useful.

The success of Rang De Basanti and Lage Raho Munna Bhai

2006-10-10T15:22:00.000+05:30

I am not much into watching Hindi films lately - work and family seem to have squeezed out the time for them. However I was noting a trend - the success of Rang De Basanti and Lage Raho Munnabhai makes me notice a common, underlying trend in these films. Most filmmakers consider Gandhism and Nationalist sentiment as "passe" among today's youth. The success of these films underscores the point that Indian youth still appreciates well presented nationalist and Gandhian themes. Its just that our filmmakers were not able to present them in a manner that was palatable to the masses, unless these films came along.

Makes me wonder - are Don and Sholay remakes the correct way forward? When the audience is inclined to watch films with old, traditional values, why bombard them with remakes of classics? Both these remakes are targeted to the youth, the under 25 generation. It will be interesting to see how they fare, though if you ask me, I would not be betting on them.

Do You Really like to Fly?

2006-09-14T20:41:00.000+05:30

One of the best pieces of sarcastic, to the point, insightful and humorous journalism was in the Leaders section of The Economist. It is reproduced below in its entirety:

“GOOD morning, ladies and gentlemen. We are delighted to welcome you aboard Veritas Airways, the airline that tells it like it is. Please ensure that your seat belt is fastened, your seat back is upright and your tray-table is stowed. At Veritas Airways, your safety is our first priority. Actually, that is not quite true: if it were, our seats would be rear-facing, like those in military aircraft, since they are safer in the event of an emergency landing. But then hardly anybody would buy our tickets and we would go bust.

The flight attendants are now pointing out the emergency exits. This is the part of the announcement that you might want to pay attention to. So stop your sudoku for a minute and listen: knowing in advance where the exits are makes a dramatic difference to your chances of survival if we have to evacuate the aircraft. Also, please keep your seat belt fastened when seated, even if the seat-belt light is not illuminated. This is to protect you from the risk of clear-air turbulence, a rare but extremely nasty form of disturbance that can cause severe injury. Imagine the heavy food trolleys jumping into the air and bashing into the overhead lockers, and you will have some idea of how nasty it can be. We don't want to scare you. Still, keep that seat belt fastened all the same.

Your life-jacket can be found under your seat, but please do not remove it now. In fact, do not bother to look for it at all. In the event of a landing on water, an unprecedented miracle will have occurred, because in the history of aviation the number of wide-bodied aircraft that have made successful landings on water is zero. This aircraft is equipped with inflatable slides that detach to form life rafts, not that it makes any difference. Please remove high-heeled shoes before using the slides. We might as well add that space helmets and anti-gravity belts should also be removed, since even to mention the use of the slides as rafts is to enter the realm of science fiction.

Please switch off all mobile phones, since they can interfere with the aircraft's navigation systems. At least, that's what you've always been told. The real reason to switch them off is because they interfere with mobile networks on the ground, but somehow that doesn't sound quite so good. On most flights a few mobile phones are left on by mistake, so if they were really dangerous we would not allow them on board at all, if you think about it. We will have to come clean about this next year, when we introduce in-flight calling across the Veritas fleet. At that point the prospect of taking a cut of the sky-high calling charges will miraculously cause our safety concerns about mobile phones to evaporate.

On channel 11 of our in-flight entertainment system you will find a video consisting of abstract imagery and a new-age soundtrack, with a voice-over explaining some exercises you can do to reduce the risk of deep-vein thrombosis. We are aware that this video is tedious, but it is not meant to be fun. It is meant to limit our liability in the event of lawsuits.

Once we have reached cruising altitude you will be offered a light meal and a choice of beverages—a word that sounds so much better than just saying ‘drinks’, don't you think? The purpose of these refreshments is partly to keep you in your seats where you cannot do yourselves or anyone else any harm. Please consume alcohol in moderate quantities so that you become mildly sedated but not rowdy. That said, we can always turn the cabin air-quality down a notch or two to help ensure that you are sufficiently drowsy.

After take-off, the most dangerous part of the flight, the captain will say a few words that will either be so quiet that you will not be able to hear them, or so loud that they could wake the dead. So please sit back, relax and enjoy the flight. We appreciate that you have a choice of airlines and we thank you for choosing Veritas, a member of an incomprehensible alliance of obscure foreign outfits, most of which you have never heard of. Cabin crew, please make sure we have remembered to close the doors. Sorry, I mean: ‘Doors to automatic and cross-check’. Thank you for flying Veritas.”

Et tu, Wikipedia?

2006-08-28T15:19:00.000+05:30

As per Wikipedia Statistics, here is a list of the top 20 articles on Wikipedia that are most visted (ranked in order):

1. Main Page
2. Wikipedia
3. Pluto
4. United States
5. Wii
6. List of gay porn stars *
7. Wiki
8. List of sex positions *
9. Kama Sutra *
10. Pornography *
11. Sexual intercourse *
12. Google Earth
13. List of big-bust models and performers *
14. C programming language
15. The Simpsons
16. Oral sex *

No less that 7 of these (* marked) are somehow related to porn on the Internet - I am dead sure that these are not innocent, academic inquiries. Such a shame, isnt it? The only reason why this is happening is that the major search engines are having Wikipedia articles as their top hits and well the rest is obvious. I am wondering if I can start a PornWiki on the lines of Wikipedia. Any VCs hear me out there?

SaaS Revisited

2006-07-15T20:16:00.000+05:30

I have been posting on and off on the SaaS model elsewhere in this blog. Sandhill.com published an article on The Bottom Line on SaaS recently. While this article was more focused on SaaS per se Salesforce.com, it summarily mentions the following three advantages of the SaaS offering:
1. SaaS Vendors Capture A Higher Share of Customer Spend.
2. Better Profitability for SaaS Vendors.
3. Continuous Innovation.
The other interesting thing this paper mentions that if you use SaaS, you can show your IT spend as an operating, recurring spend rather than a one time capex.
I would add the following points:

- SaaS vendors may indeed capture a higher percentage of the customer's spend, but they also have higher capital expenses in setting up a suitable IT infrastructure backbone. I am not sure of the economics involved, but if the SaaS vendors capture double of the customer's dollar spend percent, I am sure they incur higher expenses than they would have in a pure play license sale.

- SaaS vendors do not necessarily have economies of scale as the article mentions. In many cases, the SaaS vendors may maintain multiple complex "one-off" customer configurations that do not offer the scale advantage. Thus it is also important to understand that the "one size fits all" SaaS offering with standard software does not offer any competitive advantages for customers who are more desirous of exactly mirroring their business processes. It may be virtually impossible for an "out of the box" software (SaaS or other) to achieve this.

- SaaS vendors have many avenues of innovation that the customer cannot have in his captive setup. As I mentioned earlier, access to product and technology specialists and proactive fixes coupled with "learn one fix many approaches" are some areas where SaaS vendors have unique opportunities. I would also add security and compliance to this list.

Service Providers - A Pain in the Rear

2006-07-06T11:49:00.000+05:30

All of us have sob stories about how the service providers took us for a ride. I think most people waste atleast 3 hours a week following up with service providers and call centers about the status of their requests for services of Banks, Telephone, Airlines and Travel Agents, Broadband, Magazine Subscriptions, Cellphone and other utilities. I am sure it is not a pleasant experience either. In this respect, I found the following though (and experience) of Tom Peters very "disruptive":

"Hence my "golden rule" du jour: My service provider is my customer. To get good service give good service to those who service you."

I think it is easier said than done. However imagine trying to empathise with the service provider and helping him/her. I think it is definitely better than yelling and coming back with a sour taste in the mouth. Moreover you do not give them the power to spoil your day (and life). On a personal note, I try to make it a point not to make any calls more than 30 minutes per day to any customer service department, and limit them to one a day maximum. Only in the rarest of the rare cases will I make two calls in the same day. I can atleast control this aspect of my life and not let them run it on a daily basis.

Any reader having other/similar thoughts?

FreeGanita.com - A Noble Cause to make Maths more popular

2006-06-25T20:19:00.000+05:30

I had the pleasure of working with Somayaji (Som) during my first stint with Oracle during the period 1998-2000. A lot of things which are a part of my day to day work habits were ingrained and sharpened during the time I worked with Som. Today he organized a get-together lunch of old timers to announce the launch of FreeGanita.com - a free and useful site targeted to the students of class VIII to X to help them grapple with the nuances of Mathematics (Ganita is Sanskrit for Mathematics). This is a charitable cause and knowing Som's personal integrity, I can wholeheartedly vouch for and endorse the purpose and operation of this non-profit enterprise.

If readers of this blog in India have folks in classes VIII to X, they can log on to FreeGanita.com and check it out. The content there should be available soon in English, Hindi, Kannada, Tamil, Malyalam and Telugu.

Philanthropy and its common perceptions

2006-06-23T12:02:00.000+05:30

Out of all the things that continue to amaze me day in and day out (believe me there are tons of items in this list), the way people perceive and carry out philanthropic causes is probably at the top of the list. The other day I was discussing with my wife about the orphanage that our apartment residents support. She told me that every month, all the waste newspaper, old clothes, donated foodstuff etc is picked up by the orphanage thanks to the efforts of a couple of enterprising and generous ladies who coordinate these activities. I think that today, being philanthropic means:
- Being generous with donating your money and supporting charitable causes by donating liberally - Bill Gates is admired as he donates the largest amount of money.
- The amount of donations you make should be a considerable part of your income or net worth. If your are a millionare, a few thousands should be nothing much to give away. Otherwise, beware!

I have a slightly different view:
- Your lifestyle and expenses have nothing to do with the amount you put aside for charitable causes. I know of people who religiously donate a fixed part of their income every year and still have a very lavish lifestyle. I also know of people who donate a similar part of their income and have a frugal lifestyle. I do not see any difference in these two sets of people.
- Its is infinitely easier to donate than to do something that is sustainable. Coming to the orphanage thing, its much easier for us folks to donate clothes, food and newspapers rather than pick up a couple of children and teach them how to read and write. If you measure the amount of money donated versus the outcome, I like to believe that a person who did not donate a cent but taught two children the 3Rs is making a far larger impact than one who donated a large amount of money. You can argue that time + effort = money. Still giving away money is the easier thing to do.
- Its sad that the society admires people on the basis of the total value of their donations - I think its much more meaningful to look at the net result, rather than the amount. It is in this respect that the missionary sisters of Calcutta or other people who undertake painful efforts stand out. It is much easier to throw money than making an effort to make it meaningful.

How to create a Silicon Valley in India?

2006-06-08T11:24:00.000+05:30

Guy Kawasaki has a nice post on creating a new Silicon Valley. If I contrast his recommendations to the general policy making in India, the following stand out:

We do not seem to have any plans to:

Focus on educating engineers.
Encourage immigration
Send the best and brightest to Silicon Valley

Our goverment is not a believer in this:

Don’t focus on “creating jobs.”
Don’t pass a special tax exemption.
Don’t create a venture capital fund.

The hiring spree picks up pace in India

2006-06-02T14:03:00.000+05:30

A while back I had mentioned how the Indian and Multinational companies are increasing the pace at which they are ramping up manpower in India. Today the ET reports that the pace is increasing further.

Costs and The Software Outsourcing Scenario in India

2006-05-30T11:45:00.000+05:30

In a previous post on KPO, BPO and IT, I had wondered whether this Outsourcing thing is really beneficial for India. Let us look at a few recent developments:
-The US Government announced a hike in the H1B visa cap.
-SAP CEO: India is getting expensive

All this makes me wonder. If the visa cap is hiked, more and more software professionals from India will be able to work in the US. Assuming the same talent pool (or a part of it) migrates from India to the US, I would think that they would cost more in the US than what it would cost to hire them in India. Accounting for the fact that a company will prefer to have most of its RnD (research and development) folks close to each other, it simply implies higher personnel costs in the US in hiring and retaining. At the same time, SAP (and I am sure many others) feels that the costs in India are getting high to the limit that it makes it an unattractive destination for outsourcing. Now look at this (source here):

We have a couple thousand open technical spots that we cannot find people to fill," said Jack Krumholtz, managing director of government affairs for Microsoft, the world's largest software maker. If that situation persists, he added, "we're going to have to do more of our development work abroad.".....U.S. Companies are now limited to hiring 65,000 skilled immigrant workers annually under the H-1B program.Because of the visa cap, Intel has begun placing some foreign engineers in countries with more lenient immigration rules, like Canada, Ireland and Israel...

Is cost the only thing under play here? I mean if Microsoft is willing to shell out more bucks and have the folks come to the US rather than hire them in India, why are some Companies worrying about rising costs? If Intel is worried about not getting quality manpower, it is willing to hire the best folks from all over the world, and put them in Canada and Israel, bear higher costs and still be happy. SAP Labs India has more than 1000 personnel "engaged in collaborative software engineering that facilitates the delivery of innovative business solutions." I presume this is SAP's equivalent to RnD for Microsoft or Intel, but its still worried. Any guesses (unless you want to hear mine)?

Common Sense view of Customers and Competition ala Microsoft and IBM

2006-05-18T08:38:00.000+05:30

We always speak about customers and competition in day to day work life. However do we really think about them as the way we should? I found a couple of interesting ideas that I though would be worthy of a post.

In the Fortune story on Microsoft's Ray Ozzie:

"Ray really starts with the customer," says Windows and MSN boss Kevin Johnson. "He looks at things 'outside in,' as he says, not
technology-out."

It comes as no surprise. A company like Microsoft, which is highly successful and deep into consumer software, still has a warped view of the customer. It is more like what we can do, rather than what the customer wants. I would argue this is the case with most other companies. I wonder how life would be if each of us asked every time we did something at work: How is it helping my customer? Is this what the customer really needs? Are we really solving the customer's problems or are we pushing paperwork and bureaucracy forward? It does not matter if you are doing sales, marketing, service, engineering or finance. Keeping the customer in mind can be a really powerful weapon.

In Who Says Elephants can't Dance? - a book on IBM's transformation, Gerstner talks about competition. He says that many IBMers lost their jobs, pensions and healthcare plans due to layoffs when IBM was in a bad shape. But who were responsible for those layoffs? Surprisingly, things like tough time, bad products were attributed as the causes inside IBM. Gerstner says it was the competition that took away those jobs, it was competition that ate the lunch of IBMers and made their lives tough in retirements and layoffs. I wonder how many of us think like this. If we do not get a raise, we will blame our management, colleagues or luck, but I have rarely seen anyone blame competition for it. We are there in business to win against competition and the rest of the things will fall in place. Gerstner further says that response to competition should be visceral, flowing in the veins, and not stimulated externally. Its such a common sensical, neat approach which is sadly mostly found missing in worklife.

Google: Search Engine or Advertisement Delivery Mechanism?

2006-05-13T20:14:00.000+05:30

In the latest issue, The Economist says:

Google is primarily an advertising agency. It does not sell the usual sort of advertising, in which an advertiser places a display on a page and pays per thousand visitor “impressions” (views): it has perfected the more efficient genre of “pay-per-click” advertising. It places little text advertisements (“sponsored links”) on a page in an order determined by auction among the advertisers. But these advertisers pay only once an internet user actually clicks on their links (thereby expressing an interest in buying). This works best on the pages of search results, which account for over half of the firm's revenues, because the users' keywords allow Google to place relevant advertisements on the page. But it also works on other web pages, such as blogs or newspaper articles, that sign up to be part of Google's “network”.

I like this analogy to an advertising agency. However an ad agency does a lot of other things like creative design, positioning, market segmentation, media seleection and ad delivery. Google does only ad delivery. You can argue that it is a search engine, but I will say its just an "ad delivery mechanism". Search is no longer the only way it delivers ads (example: Gmail, Google "network" websites which display ads from Google, Ads on Blogs). A future scenario can have Google delivering ads to your TV, Home, Car or Mobile Phone, and I wonder if you will still call it a search engine. We admire the evolution of human beings across ages, well here is a company evolving for you in just 10 years.

Outlook Magazine Subscription - New Low of Customer Service

2006-05-11T11:33:00.000+05:30

I have a subscription to Outlook Magazine (# OL P/328193). I repeatedly get the issues late. On emailing customer service, this is the response I get:
Hello sir,
With reference to yr mail have asked the courier person to take an
acknowledgement for the copies del and reg the issues you getting
on Tuesday it is b'caz if we get copies on time that is on saturday or latest by sunday the del start only by monday hence thedelay. We will see to it that you get atleast by monday. We apologize once
again and assure you that we shall endeavor to reach your copies on regular basis.
With warm regards.
Vinitha Stephen
Service officer

Now, I wonder. This magazine hits the news-stands on a Sat eve or a Sunday. While subscribing, I was told that the issues will be delivered "by hand courier" in Bangalore. I am thus being told that the best thing that can happen to me is that I will get the issue delivered on Monday (and for that also I should be grateful). I am worse off in subscribing than picking up the latest issue from the news stands!

Another thing which the courier guy told me (off the record): These folks maintain a list of priority customers. A priority customer is one who makes noise about his delayed delivery of the issues. I have had the honour of being in this list a couple of times. Sadly, they keep recycling the list every 3-4 months. So the key is to keep on making noises every 3-4 months in order to get the issue on time. I guess many of the subscribers kind of take late delivery for granted and they are always taken for granted. Ouch!

From a Name to a Career to an Ideal Price

2006-05-10T14:05:00.001+05:30

Some interesting links:

- What's in a name? Businessweek article on the brand values of celebrity names.
- Career Advice for Corporate Employees - A very practical, workable strategic look at our career directions
- Pricing your software product - A fun read on Joel Spolsky's take on software pricing.

Soft Drinks and Calories - A sweet and deadly mix

2006-05-05T16:31:00.000+05:30

I wonder if folks are aware of the sugar content of popular soft drinks available in the Indian market:
(All figures are total sugar content for a 500 ml "pet" bottle)
Mirinda: 65 grams
Thums Up: 49.5 grams
Sprite: 59 grams

A cup of tea had 2 teaspoons of sugar. Thus a bottle of soft drink has sugar equivalent to 5-7 cups of tea! In my household (2 kids and 2 adults), 500 grams of sugar lasts around 2 weeks!

Sample these stats (assuming one teaspoon is 5 grams and 20 calories, and average calorie intake needed for an adult is 2500 calories/day):
- A person drinking 2 pet bottles of Mirinda a week (not uncommon) ends up consuming 130 grams of sugar and thus 520 calories, which is nearly one fourth of a day's calorie intake for most people.
- If you even drink a couple of Thums Up pets in a week, you are "richer" by nearly 100 grams of sugar and 400 calories.

Remember 8000 calories = 1 Kg of weight. So if you drink an average of two "PETs" a week of Mirinda, you are looking at a weight gain of 1kg in 4 months time.

I am not sure of the sugar content in the European and American markets. One thing is for sure: if you are weight conscious and like to have soft drinks, try Thums Up - it has just 76% of the sugar that Mirinda/Fanta has.

Update: Corrections in calorie calculations thanks to Neil's comments.

How they rip you off in India, esp. if you are a foreign tourist!

2006-05-03T13:28:00.000+05:30

While browing the Internet, I came across an interesting (but sad) story of a person ripped of while visiting the Taj Mahal in Agra:

"I was asked if I could do the gentleman a favour! I thought this was to be another pressure sale and in a way I suppose it was. Mr Singh was a jeweler who traded all over the world, or so he told me. His problem was that after a certain amount he had to pay duty on all items he imported and as a coincidence, he was coming to Scotland in February 2001, which was only two months away. He asked if I could take jewelry into the UK for him, therefore allowing him to bypass this duty he would need to pay. By this time two of Mr Singhs brothers had also entered into the room, they had shown me a receipt book with details of other people from around the world that had helped them as well as an E-Mail from someone looking for more work. After much convincing / persuasion, I had convinced myself that Mr Singh seemed like a nice guy, there was no risk involved and that I wanted to get out of there in one piece. Therefore before I knew it I was handing over my credit card to pay for over £1500 of jewelry, which would not be debited from my card as long as I turned up on the day in Glasgow, and as a bonus I would be paid for."

I am amazed that in this age and time, these kind of stories abound. Basically what happens is like this:
- A tourist comes to see the Taj Mahal. He is "cajoled" by the Taxi/Auto/Rikshaw puller into visiting some shops - asking him to just look and not to buy.
- Most of these shops are genuine businessmen. However bad apples like Mr. Singh also exist. Invariably they trade in precious stones and jewelry as most people cannot identify real gems and it is much easier to dupe someone to carry a small case back with him rather than carry a statue and/or tabletop. It is also harder to make a worthless statue 4 feet in size, while it is much easier to make a worthless pair of rings.
- In case of a genuine business, if the tourist likes something, he pays for it and gets the stuff either right away or shipped to his address. In case of guys like Mr. Singh, he is told long stories about Mr. Singh's business, his various visits across the world, his challenges in saving "excise and custom duty". Many of these folks will willingly smoke dope and make the tourist high before cutting the deal.
- See links below for what are the various permutations and combinations that can be tried out:
India Ring Scam
Victims Cry about the Ring and Gold Scams

The thing that amazes me most is not the scam, but the fact that the European and American Embassies in India are fully aware of this nonsense (invariably they hear one or two complaints each day). However these "bad apple" businessmen have connivance with either local policemen and/or politicians and thus are carrying on this duping. Even the credit card companies like Visa, Amex and MasterCard are simply turning blind eyes to the travails of the conned. It is the free rein of these folks that leads to either food poisoning scams or drug scams where these folks think they can bribe themselves out of any situation. All in all a shameful and sorry state of affairs.

Google and Microsoft at it again.

2006-05-02T11:38:00.000+05:30

An interesting post in NY Times highlighting the current search defaults dispute between Microsoft and Google. Nick Carr givers more perspective in his post. I feel an interesting way to look at this is like this:

A web browser is an economic complement to Microsoft products (Word, Excel). So is Internet Search a complement to Microsoft products as well as a Web Browser. Google fully dominates the market for Internet search, while web browsers are already commoditized (free). Thus you have one company (Google) fully monopolizing a complementary product (search). As I posted earlier, companies want to commoditize their complements. Google's monopoly in search (even though it is free) does not allow MS to prosper as Google has a stranglehold over one of the most important complements and maintains a constant threat. So what does it do? Turn the tables, erect barriers to the usage of the complement using an already commoditized product (browser). As I said earlier, the person/product interfacing the end customer directly is the most powerful link in the distribution channel. Never underestimate its power, even if it is free.

Jeff Nolan says:
Of course, Google could also make available a script from their search page or as a button on any site (perhaps as part of AdSense) that overwrites the default search engine in IE7 with Google (with user permission of course)

I wonder if it would be as easy for Google to come up with such a script - it can be only done *if* MS will allow the browser's default search wndow to be configurable. I would not bank on MS' generosity if I were Google.

The Weasel in an Engineer

2006-04-30T08:27:00.000+05:30

Guy Kawasaki put out a list of top 10 lies of Engineers. My comment to his blog made it to the addendum to the list:

Addendumbs (sic):
"Even my mom can navigate the screens." (Nitin)

My MBA convocation at XIMB

2006-04-26T23:11:00.000+05:30

I graduated from the Executive MBA Program of XIM in March this year. Me and my family went to the Institute and we had a lot of fun visiting Puri, Konark Temple, Nandankannan National Park and Bhubaneswar city generally. My daughter was too excited in viewing "Papa's School" and "Papa's classrooms" (she can only relate my education to hers)!

Mr. Damodaran, the Chairman of SEBI awarded the degrees. Finally after a long time of nearly three years this initiative of mine has come to completion. I think its not an easy job to juggle professional, personal and academic life. I had to make a lot of sacrifices with my vacations and other activities. Fortunately Oracle was kind enough to support me during this program and that was instrumental in my completing this program. My wife also deserves a big thanks for all the support and encouragement without which this would have remained a distant dream. The icing on the cake was that I topped my class!

A perspective on intermediaries - the case of search engines

2006-04-26T08:35:00.000+05:30

Search Engines frequently are classified as evil, too powerful and omnipotent in Internet space. Consider the following:

Search Engines as Leeches
Search Engines lead to Economic Assymetry
How Wal Mart is "Afraid" of Google - This one does not deride them, but mentions their power and how it can be leveraged

In a previous post, I presented a different viewpoint - classifying them as simple commission agents (intermediaries) who "charge" a service fee.

I think classification of search engines as leeches is taking it too far. In any sales situation, the person interfacing with the customer holds the most power within his organization. Take any company, you can always find engineers cringing about sales folks pocketing huge bonuses and the importance they hold in the eyes of the management. As Erik Keller points out, even in high tech companies in CRM space, expenses for sales+marketing and administration are nearly the same as those earned from license revenues! A CEO in any industry typically ends up spending most of his time "syncing up" with the sales folks (you can argue he does that to get a feel of the market and be in touch with customer trends but the fact remains that sales and marketing are the most prominent fucntions in any organization). The fact remains that the person who is the first link betweent he company and the customer is of prime importance. In the case of the distribution channel, invariable the last channel intermediary is the most powerful. No wonder there is so much talk about the power of the search engines.

Even in planning one's career, it is of importance to realise this fact. I have seen that guys with previous experience in sales and consulting end up a couple of notches higher than the ones in engineering and design. The power of knowing your customer cannot be overstated.

How to choose the best mobile phone plan?

2006-04-20T12:54:00.000+05:30

www.yourbillbuddy.com is an excellent site that can compare all the existing plans avaliable and match them to your usage profile. The thing I liked most about this site is that you can upload all your bills in pdf format and then can get recommendations on the basis of actual usage, not some fantastic data that you believe is your usage pattern. I have seen folks who are in the state of denial (or blissful ignorance) about their actual mobile phone usage. www.yourbillbuddy.com is the site for you whether you make local calls, STD calls or a mixture of the same.

www.yourbillbuddy.com seems to suggest I can save around 440/= a month if I switch to Reliance 399 plan. Let me give it a shot!

Necessity is the Mother of Innovation?

2006-04-05T10:27:00.000+05:30

Interesting post by Charles and Jeff on IBM's new Data Hub here in Bangalore. Makes me wonder:

- The scale in offshoring services is the one that offers competitive advantages. TCS, Infosys and Wipro give IBM, Accenture and EDS a run for their money due to having a large number of employees in low cost locations. This is like the classic Detroit scenario - the big three carmakers have a majority of the market, while the others slog it out. So if you are a small sized service company, you find it hard to compete with these Indian companies as you do not have economies of scale.

- Accenture, EDS and IBM Global Services have ramped up aggressively in India. However they are still not close to the scale of the Indian Companies. They are faced with the alternatives of scaling further (TCS has more than 45,000 employees, Wipro has more than 42000) or innovating to compete. IBM employed 38,500 in India at the end of last year while Accenture has a measly 19,000 in comparison (I wonder if this figure of 38,500 is the total IBM India employee strength or just the services division - my take is that it includes a lot of other stuff like support, OnDemand, sales etc). Faced with this dilemma, what do you do to remain competitive? Try to turn the delivery model on its head, take away the inherent advantage Indian companies have.

- Is this really Innovation? I wonder. IBM will create reusable service components and leverage the "make once, reuse many times" approach. Will this be cost effective in competing with Indian Service vendors? Will the reuse of these components be higher quality stuff than people working on creating these for their specific customers in the first place? Will it be workable and cost effective at the same time? Lets see.

To SaaS or Not to SaaS?

2006-03-10T09:22:00.000+05:30

Interesting post by Charles Zedlewski of SAP speculating about the future of SaaS. He mentions the following "touted" advantages of SaaS:

- Quick to get started
– up and running in a day or two
- Cheap to install – no 12 month Big 4 implementation project
- Simple, no-haggle pricing - $xx per user, per month, all-in
- Simple to manage/monitor – i.e. hardware, datacenter, storage issues taken care of
- Always current – customers are always on the latest release of the product

I would like to add the following "real ones" to the list:

- Access to product and technology specialists: You can get access to the best people who can maintain and run your applications - including support specialists, developers and product functional experts. This cannot be done in an in-house setup without spending a lot of resources.

- Insulation against Shock: SaaS vendors, as they maintain multiple installations of customers across similar configurations, are proactively able to apply "learn one fix many" approaches to circumvent or eliminate problems that may arise in the future. Note that this is definitely more valuable than fixing the routine problems that arise. See here for how Oracle OnDemand does RCA (Root Cause Analysis) and proactive fixes. This point also includes the fact that the monetary loss due to outages and exceptions is always under control due to tight SLAs with SaaS vendor.

- Allow Bandwidth for Strategy: You cannot question the fact that SaaS frees up valuable management bandwidth to focus on strategic issues, rather than haggle with the vendors, stitch up SLAs, meet legal/regulatory requirements and hire/train IT staff.

- Best Practices and Regulatory Compliance: The SaaS vendor does this for you. Unless its imperative strategically to have an in-house setup, the SaaS vendor should be, in most of the cases, of value addition to your compliance and practices needs.

Moin Khan - Lost his Mind, Shut Up and Eat Crow.

2006-02-17T09:11:00.000+05:30

In India, its usual for politicians to answer questions with prepared statements: Q: What do you think of Mr. X's comments on your integrity (or Mr. X's recent charges)?
A: Mr. X has lost his mental balance. I respect Mr. X, but lately he has been under a lot of pressure and lost the sense of mental well being.

In this light, look at Moin Khan's columns on Rediff.

Indian Team lacks Balance:
"The tourists must be satisfied with their batting resources, but their main concern remains their bowling department. Even if the bowlers are given the benefit of doubt keeping in view the conditions in Peshawar, the bottomline is that the Indian bowling attack lacks the bite, penetration aggression and economy -- a combination that is so vital in limited-overs cricket."

Fact:
Pakistan totally crumbled against Indian Bowling and was not able to go beyond 80s without losing 4 wickets in the last three matches. This cannot be a coincidence, esp. if it happens 3 times in a row. India also won the one day series with one match to spare.

Beginning of the end for Tendulkar?:
"Maybe when he takes an emotional walk in the National Stadium in Karachi, the desire of continuing for a few more years with distinction and merit will be re-ignited. But for the moment, the Sachin I saw batting at Faisalabad was certainly a shadow of the Sachin who courageously faced and ruthlessly punished the greatest bowlers of the past decade."

and

"..Shoaib Akhtar literally exposed Sachin's present-day ability against quality fast bowling during a spell that will certainly be remembered for long."

Fact:
Shoaib got less that 5 total wickets in the three test matches he played. Sachin Tendulkar has scored 100, 42, 95 and 0 in the last 4 one day matches.

I wonder what will it take for him to eat crow and shut up. Or as they say: "When Knowledge is power, Ignorance is bliss.". Moin would do well to wake up from his blissful ignorance. I just hope that Rediff does not give him another chance at exposing his mental balance.

Journal of Research Practice (JRP)

2006-02-16T14:06:00.000+05:30

I would like to introduce The Journal of Research Practice (JRP).

JRP is an international refereed journal with a transdisciplinary focus, available in the open access mode, i.e., available free of charge to the readers. The journal is supported by a consortium of institutions drawn from different parts of the world. It is published electronically by the International Consortium for the Advancement in Academic Publication (ICAAP).

Professor Dr. D. P. Dash, who taught me a course on Corporate Planning, is actively involved in this journal. If you are intrested in research, submitting papers or even reviewing manuscripts, email him at dpdash@ximb.ac.in

Sachin in Pakistan : Hercules in New York

2006-02-02T17:48:00.000+05:30

First an apology for the apparently silly headline. However, whats being painted in the media after Indian team’s shameful loss in the third cricket test is all about Sachin Tendulkar’s “over the hill” state of career.

I am no cricket expert, and neither am I having any preset opinion about anyone. I just miss the Sachin of old. The way he batted in the 2003 Cricket World Cup in SA was a dream come true. The first ball six off Shoaib Akhter will always be etched in my memory. If a bowler had targetted Sachin earlier, he surely got a dose of his class. Warne, Fleming, Shoaib Akhter, Olonga, Kasprowicz are all testimonies of this fact. I know he is not upto par, maybe it’s the injury, maybe it’s the age, or maybe its both. I am just disappointed that he got out bowled two times. Good batsmen rarely get bowled, as if you are getting in line, you will be either caught or be LBW. I wish Sachin gets a good score and bats like he does – attacking and classy.

Economics 101 Revisited: Complements and Substitutes

2006-01-14T22:24:00.000+05:30

A while back, Joel Spolsky wrote a very insightful article on the topic of economic complements and substitutes. He mentioned open source as a complement to hardware. It is interesting to see that many people still believe in the "cult" of open source, rather than look at the economics of it (see comments here). I thought it may be very insightful to look at five recent (and past) developments from the lens of complements and substitutes. Just to refresh, smart companies commoditize their complements so that they can sell more of their product.

1. Microsoft vs. Netscape, and now Google
All of us know how Microsoft waged, and won a war against Netscape. PC hardware was the major complement to Microsoft's software, and Microsoft was in control of this situation with hardware vendors competing against each other, while Microsoft enjoyed its monopoly. Enter Internet and Netscape browser. Suddenly here was a new complementary product (browser) to Microsoft Windows which was being monopolized by Netscape, thus threatening MS. No wonder MS made IE free (commoditized the web browser) in order to protect itself.

The situation is the same with Google today. Google search is a product complementary to MS Windows and Office. Had there been no major player controlling the search market, it was fine for MS. Google enjoying monopoly in this complementary market is a threat to MS, as is Microsoft's monopoly in PC Operating System threat to hardware manufacturers' profitability. No wonder DEC was swallowed by Compaq, Compaq by HP, and IBM sold off PC business to Levono. No one was able to sustain profits in a market where a major complement was fully monopolized.

2. iPod success story
I remember reading somewhere a quote from Sony's top management which ran like this: "The genius of Steve Jobs is not to create iPod, but to combine it with iTunes." Sony already had a similar product in shape, but were not able to commercialize it. iPod and iTunes are complements. Jobs has commoditized iTunes. If someone has the reference to the quote, please let me know.

3. SAP and Big Consulting Firms
The success of any ERP product depends on complementary Consulting Firms. SAP depends on the big five consultancies for capturing marketshare and delivering successfully, at the same time it is not able to commoditize these complementary consulting firms. No wonder SAP talks that "best of breed is dead" and one should not go for expensive ERP implementations that involve lots of consulting bandwidth. One can argue that SAP Netweaver is trying to "commoditize" consulting effort by making it more and more easier to integrate all the pieces together, taking away the higher margins consultants charge.

4. Google Pack
One strategy to make more sales is to bundle complements with your products. Thus a CD player may come bundled with 10 movie CDs, or a cellphone bundled with free talk time. Amidst all the noise, another angle to view Google Pack is that it is bundling all the complementary products which are anyways free. Just makes it easier for Google to make more Adword hits when people use its search toolbar while they get hold of all the complementary software in one place (the Google Pack).

5. Oracle ERP and Database
Oracle's CEO recently announced that it will certify its Fusion platform with other Middleware like JBOSS and IBM Websphere. It was also announced that it may certify other databases too with Fusion. Middleware and Databases are complementary products to ERP. It is economic sense to commoditize them if you want to sell more Fusion (or SAP's Netweaver for that matter).

Another angle to this thinking is substitutes. You can deal with substitutes by enhancing your value chain, or making switching costs high. More on that later, if people show interest.

Search Engines: Leeches or Simple Commission Agents?

2006-01-10T13:56:00.000+05:30

In a recent post, it is argued that search engines are fundamentally changing the economic landscape and leading to economic asymmetry.

Basically the search engines are just intermediaries. Okay you can call them hypermediaries, but basically they just end up driving visitors to your site, or put another way, “charge a commission” on every transaction. When I say charge a commission, I mean that in the Internet space, most transaction for the Online Businesses originate from these search engines, and they charge you per click fee. The per click fee is minuscule, but then all traffic driven to your site in not a sale, and if you add it up, basically you are paying a commission on each sale you make to these search engines. This fact is also illustrated by Nielsen’s post albeit he is not using the “commission” term per se. I don’t think this aspect is fundamentally different from many businesses we know of. As a case in point, Nike is acting as an intermediary when it gets shoes manufactured from an outsourced outfit in Indonesia, and charges a “commission” (in terms of a premium over cost of manufacturing) on the sale. The analogy is Nike can “direct” the customers to purchase the shoes in the stores, which the shoe manufacturers in Indonesia cannot do by themselves. It is a different thing (can also be a scary thing) that Nike has a stranglehold over the lives of these manufacturing outfits. It is clear that today search engines have a stranglehold over all sales you can make online. Unless you feed them their commission, you cannot get any sales.

What happens when search engines compete with each other? Well Nike competes with Reebok, but it doesn’t change a thing for the manufacturer. The intermediaries are still able to charge a fat “commission” on the manufacturing price. The only difference in the model is that in case of search engines, the businesses get direct customer interfacing. In case of Nike, it is filtered. In both cases however, they are no good without the (hyper)mediary.

I think that its an imperative strategic initiative for businesses to break the stranglehold of search engines and find ways and means to bypass them and reach their customers directly. If you cannot reach your customers directly and rely too much on a single channel, you cannot win.

The future of Indian BPO, KPO and IT Outsourcing

2005-12-28T10:17:00.000+05:30

In India, Business Process Outsourcing (BPO) is the sunrise industry. Sample the following facts:

- BPO firms are growing at a scorching pace.
- Last year’s sale was $16 billion, three-quarters of which was exports. 2008 sales projections are expected to reach #21-24 billion as per NASSCOM
- High value activities like stock-valuation, insurance underwriting and paralegal are being routed to India in addition to the call centres and low-value data work.
- Indian BPO outfits contribute 4% of Indian GDP and employ one million people (includes software and IT contribution).
- BPO “captives” like GE and Citibank are forced to sell out in order to remain competitive with the other Indian firms.
- The IT and PBO industry employs around one million people.

All in all, it seems a pretty rosy situation to be in. India is by now a known and established IT power. Add the fact that Indian companies like Infosys and TCS are opening up global centres and buying up companies in Europe and Asia, one can feel reasonably secure and optimistic with the present state of affairs. However, some of these things warrant a closer look.

India derives 55% of its GDP from service sector. Agriculture contributes around 28% to the GDP while nearly 70% of the population resides in the countryside and is engaged in it directly or indirectly. If we look at the poverty and socio-economic situation of the rural population, it is clear that they are not in a position to consume most, if not all the services that are being generated by the economy. Indian economy is graduating directly from agri-based to service oriented without the intermediary manufacturing industry support. One may ask, how are BPO and agriculture inter-related? BPO and IT are export oriented, while agriculture and manufacturing are primarily catering to the domestic demand. BPO contributes just 4% to the services kitty. What is the relationship that can be established between the two?

India offers huge economies to the foreign firms. However, why are the “captives” selling out? Citibank to Polaris, GE to Genpact, Dun and Bradstreet to Cognizant, Deutsche Bank to HCL – the list of captives selling off is large. On the other hand, big global IT companies like EDS, Accenture and IBM are ramping up rapidly in India and have adjusted to the cheap competition from India by locating themselves here. At the same time, Indian BPOs are rapidly climbing up the value chain of the work ladder – from low end to higher value.
Let us see what BPO mean to India. Can it help India become less poor? The answer to this lies in the fact that all the consumers of the BPO outfits are either foreign firms or the clients of foreign firms. Without being jingoistic, it is clear that this operation is in no way contributing to the domestic demand and supply. What about the trickle down effect of the economy? Yes that is a factor, but only when the domestic consumption attains a critical mass. With 70% of the population languishing in the villages with bare sustenance consumption, this is not going to happen anytime soon. We can all argue endlessly about infrastructure, corruption and bureaucracy, but the basic motors that run the BPO boom in India are powered by the global consumption needs. India faces a threat in outsourcing from Asian economies of Phillipines and Indonesia, in manufactruing its way behind China and in IT Russian and east European block’s threat looms large. The selling off of captives is a clear indicator that foreign firms are able to leverage better costs from the market, rather than by owning these specific assets with themselves.

Let us take the case of Elcoteq, a Finnish firm that makes mobile phones for Nokia and other companies in Tallinn, Estonia's capital, having a workforce of around 3,000, modestly paid and fully local. The business model of Elcoteq is struggling, as due to increase in labour costs owing to increase in prosperity, it is no longer competitive in comparison to China. Since Estonia is a small country with a population of 1,415,681 (as per 2002 estimates), Elcoteq has faced the full cycle of growth, boom and decline already. And this is just after a decade of its operation. The boom in the economy lead to increase in buying power, and quickly eroded the purchasing power parity that was itself the source of the competitive advantage for outsourcing in Estonia due to lower wages. On the other hand the product company Skype, which is also based in the same location, have been gobbled up by eBay for $2.6 billion. The diffference is that Skype helps eBay maintain its competitiveness in eBay’s home markets and ends up serving the home consumers, while Elcoteq offers no such competitive advantages and thus firms like Nokia may end up looking elsewhere to outsource their production. In the end, outsourcers like Elcoteq are treated as replacable commodities and are only in favour till they offer cost cutting and pricing advantages. Once this advantage is lost, the foreign firms will either stop outsourcing or end up scounting other favourable territories for the same advantage.

It is true that costs are only one component of the overall picture. However, it is easy to lose sight of this in view of the issues of intrastructure or availability of talented manpower. They all matter, but ultimately the driver for outsourcing is cost advantage which is leveraged by purchasing power parity. The Economist states (in “The Place to Be” Nov 11 2004):

In the longer term, India's success at winning global white-collar work will
depend on two things: the supply of high-quality technical and business
graduates; and, more distantly, an improvement in India's awful
infrastructure.

This is true only under the assumption that costs will continue to remain lower in India. Since India is a large country in size and population, it may be possible to maintain regional balances by developing clusters with progressive better infrastructure. However, this is just delaying the inevitable, as the case of Estonia suggests. India has a large population, a lot of competitve advantages in factors of production, and high momentum. But is it sustainable? We can postpone the inevitable, but cannot avoid it totally in the long run. An Infosys or TCS may survive, but will the Indian BPO and IT economy survive in the overall run?

Whats there in a name?

2005-12-26T12:09:00.000+05:30

I thought over it for a long time....most of the hits I was getting on my blog were from either peope searching for "statistics for dummies" or "random number" in search engines. At the same time, "Constant Random Musings" is really an oxymoron (you cant be constant and random at the same time), though it was well thought out in advancce and wasnt giving me any sleepless nights. I feel Nitin's Blog gives this Blog a better perspective. Comments are welcome.

Online Advertising - Why should Microsoft Bother?

2005-11-30T13:31:00.000+05:30

This article contains a review of the following Articles from the Business section of the November 17, 2005 issue of the magazine “The Economist”:

The latest in memoware
Classified calamity

Since its inception, Microsoft has been known for its market leadership and extremely ruthless competitive spirit. The company still controls the operating systems of nine out of ten desktops worldwide, and has regularly crushed any competition that it has faced challenging its dominance. In 1995, though it was slow in responding to the threat posed by Netscape, it emerged victorious by adopting a series of measures that eventually forced Netscape to be acquired by AOL. It must be remarked that in the last few years, the prime objective of Microsoft has been to “shape” the adoption of software and the growth of Internet in a way to protect and nurture its monopoly, rather than create newer, pioneering products and services that themselves “shape” the software industry and Internet. Thus it cannot be surprising to find Microsoft missing the Internet wave in 1995, and now belatedly responding to the threat and challenges poised by “Web 2.0”.

How is the web-based software impacting Microsoft today? The following are some of the key points that come up:

Service Based Offering: The threats to Microsoft are primarily from service-based offerings. The examples of service-based offerings can be Internet Search (Google), Online Collectibles (ebay), Online Classifieds (Craigslist) and Online Maps (Mapquest, Google, Yahoo). All you need a web browser, irrespective of the operating system you run, and you can get your task done. Technologies like AJAX are breaking the stranglehold of the Desktop on the rich User Interfaces (AJAX is the technology that allows for rich user-interface demanding applications like Google Maps or Amazon’s A9 run effectively inside a browser). It is interesting to note that the Economist criticizes Microsoft for inventing AJAX in 1998, but failing to exploit it further. It is more likely that if AJAX was developed and refined further by Microsoft, it would be the threat to the dominance it enjoys in the Desktop arena. It is more of a strategic choice, rather than the failure to extend technological breakthroughs.

In pure economic terms, the service-based offerings can be considered to be complementary products. Thus Google Search is a complement to Microsoft Windows (or Linux), and at the same time, Microsoft Windows is a complement to Yahoo’s email service. The availability of Yahoo Email at a commodity price (free) encourages more people to buy Microsoft Windows for sending and receiving emails. However the whole idea of complements is that one always tries to make its complements available for free or at commodity prices. If CDs are available for a commodity price, more CD players get sold. In the case of Microsoft Windows, the complements are already available for free (in most cases) and it is an advantageous situation for Microsoft, but not for its competitors. The competitors delivering the complementary products cannot charge a higher price, and at the same time, in order to grow, they need to move Microsoft Windows to the commodity side of the equation. By delivering the web as a service (from web based email today to web based word processors tomorrow), that is what they are exactly trying to do: make the operating system and word processor a replaceable commodity. These service-based offerings make the choice of Desktop and Office tools immaterial, threatening Microsoft’s stranglehold.

Sustainable Business Model of Competitors: Companies like Google are challenging Microsoft’s might. Google obtains its revenues exclusively from Internet Search Advertising. This model, pioneered by Google, shows that although it costs a few pennies per click for advertising, the power of technology makes it feasible to collate these individual clicks, and a million clicks do turn out to be sustainable revenues. People make billions of clicks on the web every day and each click entails the delivery of value and thus an opportunity to make money. A penny isn't a lot of money in itself, but when you start gathering millions or billions of them, you've got a business. Microsoft’s monopoly does not give it any strategic advantage to arm-twist these companies on pricing, bundling or delivery.

Disintermediation and Hyper mediation: These online intermediaries like Google and online classifieds advertisers are leading to disintermediation and hyper mediation. Newer online intermediaries disintermediate the traditional newspapers for classified advertisements, and at the same time create new powerful hypermediaries in themselves. They practically control what and who gets seen, and what gets sold. Search advertising that sustains the revenue models for Google and Yahoo is accounting for a large chunk of online advertising (upto 40% of the market). In addition to creating powerful intermediaries (Google, Yahoo) who control the way products and services get highlighted, online advertising is something that Microsoft does not have much of a control on. Its online service MSN still lags behind the ones provided by Yahoo and Google, and repeated attempts to shore it up and refine it have proved futile.

To summarize, the above discussion highlights the fact that even seemingly unrelated developments like shift in classified advertising from print to the web and attempts by Microsoft to compete against web based software can be analyzed using a common scale of competitive analysis. The move of classifieds to the web strengthens the positions of players like Google to act as intermediaries. This makes it tougher for Microsoft to dislodge these service providers as they are able to create sustainable business models around their search and advertising position, further fortifying it and then graduating to attack Microsoft’s monopoly in the Desktop and Office productivity arena.

Can Microsoft Office be Open?

2005-11-23T12:15:00.000+05:30

Microsoft has announced that the XML formats for Office will be released to developers, and ultimately made to ISO Standards. I think this is just hogwash. M$ will never make its formats compatible with OpenOffice and the reason why it is announcing this is that it is facing severe pressure (ex. Massachusets) for an open document format. Probably what will end up happening is that the document formats released by M$ will be standardized, but not interoperable. It will probably like the ANSI standard for C Language where the programs can be written in a standard format, but various compilers will interpret them differently, and thus one will continue to be locked into the same vendor (in this case, M$).

Google - Nothing Succeeds like Success

2005-11-21T14:10:00.000+05:30

Google is the most hyped up company on the web (Myspace doesnt even come close). Everyday there is some mention or the other about the technology they use, the products they are planning, the processes they follow, the innovation they nurture, their overall prowess and above all, a philosophical angle to their work. In a way it is not surprising. Nothing succeeds like success. At the same time, it reminds me of the hey day of Netscape (when it nearly challenged Microsoft), or even the boom days of 1999-2000 where Internet was slated to change your life forever.

There are many companies that are creating more and more fascinating technologies each day. Oracle in pioneering the database technology each day. Even Microsoft, which really has only invented copy-paste, has done a lot of work in the Office area. Linux is an example familiar to all. However, none of these are all out there so to say unlike Google, where each beta or trial release of their product is for every one to see on the internet. Yes Google folks are good, but they are not Gods. And Never will be (I am hazarding a prediction here). I will give the Google folks due credit for their work, but the idea that these people will help humans achieve the abstraction levels in which they are just ideas devoid of any mortal carcasses is a bit ahem too raw to digest.

Some Pearls from Drucker

2005-11-12T20:35:00.000+05:30

Drucker's quotes live on:

"Marketing is a fashionable term. The sales manager becomes a marketing vice president. But a gravedigger is still a gravedigger even when it is called a mortician - only the price of the burial goes up."

"One either meets or one works."

"The only things that evolve by themselves in an organization are disorder, friction and malperformance."

"Stock option plans reward the executive for doing the wrong thing. Instead of asking, 'Are we making the right decision?' he asks, 'How did we close today?' It is encouragement to loot the corporation."

Drucker termed Wall Street brokers "a totally non-productive crowd which is out for a lot of easy money."

"When you reach the point where the traders make more money than investors, you know it's not going to last"

"The average duration of a soap bubble is known. It's about 26 seconds. Then the surface tension becomes too great and it begins to burst. For speculative crazes, it's about 18 months."

Statistics for Dummies

2005-11-09T16:35:00.000+05:30

In his recent posting, Nick Carr makes the following observation:

"
IT companies are always throwing around seemingly precise statistics claiming to show that their hardware or software is associated with competitive advantage or superior financial results. As far as I've been able to discover, the research is almost always dubious. Either the methodology is flawed (tiny or biased samples), or the research is carried out by the company itself or some sycophantic supplier. And rarely are the full details of the study divulged. IT buyers shouldn't pay any attention to such faux statistics.
"

Interesting. Assuming that people who buy any Software or Hardware are capable (can question and dig deep into the research facts), have multi-million dollar budgets, and consider IT to be a strategic investment (not like ordering supplies for office or buying a toothpaste where you can live with vendors screaming for attention and differentiation with false claims), why does this happen in the first place?

I mean to ask this simple question:
Why do buyers of IT software and services tolerate, or live with all that is dished out ostensibly as market research or statistics? Or do they simply believe all of it or most of it?

This should make an interesting analysis, unless you want to hear my version ;-)

The trade-off on Mediocrity

2005-10-19T01:44:00.000+05:30

In his new post, Nick Carr proposes an interesting law:

Here, then, is what I'll propose as the Law of the Wiki: Output quality declines as the number of contributors increases. Making matters worse, the best contributors will tend to become more and more alienated as they watch their work get mucked up by the knuckleheads, and they'll eventually stop contributing altogether, leading to a further fall in quality.

What you can do in order to save projects like the wikipedia from turning into moronic proclamations? One option, as Carr suggested, is to impose some form of centralized control. This is also what is done with open source projects, wherein a lot of effort is made to ensure that the crap is weeded out. I feel that this form of control is more cumbersome to implement. It is not about the debate if a few people are more equal than the rest, but the loss of expertise which is utilized in checking and approving what others have done is sometimes too overwhelming, especially if everyone contributing considers himself to be an expert. At the same time, it is against the basic tenet of "horses for courses". You should not, in an ideal world, use your best people to do work that can be done by others, and fritter away their energies which could have been spent better doing more worthwhile things.

Another option is to form a select band, or a "club" of contributors. Entry is by invitation/reference only, and thus quality is more or less under control. This makes me wonder about the viability of such an option for a project like wikipedia. Can you have a few people who know the best about all the things for a project like an encyclopedia? Probably not. However, if you talk of a project like Linux, the answer can be a resounding yes. The fact of the matter is that the most important contributors to projects like Linux are people who are few in number, and they are the ones who really contribute the most. One needs to have this "core", and really leverage their skills. Of course its nice to be open and let others contribute, but ultimately, its the "core" that matters. This was something similar to what I commented in my post when I said that just being open source doesnt mean anything.

The Price is always wrong, and will be.

2005-10-13T14:02:00.000+05:30

Software vendors have always been criticized about the way they price their product. The very nature of their product development (which is so unlike manufacturing mass consumption items - here they create the product just once, marginal costs for additional copies are practically zero) coupled with the changing nature of the industry have meant that there is no right price for software, and neither is there a consistent pricing policy. This point is supported by Nick in his latest post. However, some of the things mentioned there don't make sense.

"Server software, for instance, is typically priced according to the number of processors that the software runs on, regardless of the actual utilization of the software. Applications tend to be priced either per processor or per user, again independent of how intensively the software is actually employed. " (Nick's Blog)

The fundamental premise to this discussion is whether software is a product or a service. If it is a product, you can never arrive at the right price for it. Imagine buying a 100 BHP car and paying for only 60 bhp as you cannot use power beyond that. Imagine buying a jeans on per usage basis rather than the usual cost basis. Imagine paying for a villa only on the basis of the number of rooms you occuly regardless of the number of rooms that exist. Imagine buying a Intel processor and paying only 30% of its price as that's the whole computing power you will ever use in your life (I guess even 30% is an astronomically high figure). This kind of fantastic pricing has never happened, and I wonder if it will ever be. By the way, the last example is what should happen in the "right" scheme of things as per Nick.

Once you consider software or server hardware as a product, the price is wrong, and it will always be. We simply haven't evolved to pay for products on a per usage basis, and that is true since time immemorial, and I wonder if this will change due to software or internet, or for that matter, open source.

If software is a service, yes you can charge for it on a per usage basis, like the phone, or electricity. Now that's an interesting thought:

"Ultimately, large networks (or "farms," or "grids") of physical servers will be virtualized, with their combined capacity allocated to various applications based on moment-by-moment shifts in demand. The usage of every piece of software, moreover, will be able to be tracked precisely. At that point, all the traditional methods of software pricing - whether per-processor or per-server or per-user - go out the window. Software fees will be based not on generic theories of usage but on actual usage. You'll have software meters just as you have electricity and gas meters." (Nick's Blog)

Electricity, gas and telephone are good, but wrong comparisons. All of these are mass consumption items that are also needed by businesses as their inputs. They are unfair comparisons for software as a service, as software as a service is not needed by most of the masses for their day to day lives, but needed more by businesses as inputs. I can agree that one can talk of email from Yahoo or search from Google as a software that is a service needed by most, but if you look closely, the premise of discussion in the posting above is server and application software like CRM or Databases, and they are never going to be on the same plane of mass usage as phone and gas. Its only for commercial software that the pricing is an issue, and I wonder if it is ever going to change.

ICC World XI - Mincemeat by Australia

2005-10-10T12:28:00.000+05:30

It was such a disappointment to see the best of the world getting slaughtered by Australia in the Johnny Walker Super Series. I was personally expecting a better show but the result was beyond my wildest imagination. They were the best, but were made to look like the rest. I wonder if the result would have been different had India been playing... I mean maybe we would have lost with better margins!

I think the real reason for the loss was the way Shaun Pollock was made the Captain. I think Graeme Smith will definitely do a better job in the Test, and Pollock was too nice a guy to inspire and motivate the folks. I think it would have been a better choice to have Lara (irrespective of his failures) or even Dravid would have had been a better choice. One thing is certain: After slamming the selectors his entire life, Sunil Gavaskar has finally tasted his own medicine. I hope we have better team selection the next time.

Google + Sun - is 1 + 1 Eleven?

2005-10-09T22:01:00.000+05:30

Google and Sun recently announced a partnership. The aim is to synergize (make one plus one eleven), but really what is needed is just to outsmart Microsoft and the rest doesnt matter. However some points are worth a mention:

-Google toolbar is to be clubbed with Java downloads. Microsoft already licenses Java, and it will bundle it in its browser and Windows, thus eliminating the need for it to be downloaded.
-What Sun gains out of it is a questionable. Just joining forces with Google isnt going to help them. I wonder if the deal for hardware supplied to Googleplex is the driver for this agreement (short temr perspective), rather than any calculated or percieved business advantage. Partnering with Google is in no way going to help OpenOffice break the stranglehold of Microsoft Office, or atleast I dont see a reason for it to do so.

Shiva Nataraja Statues in Bronze

2005-10-06T22:26:00.000+05:30

Shiva. The ultimate God. Amazing Designs in Shiva Nataraj Statues Here.

Marble Inlay and Pietra Dura

2005-10-03T11:07:00.000+05:30

The Wikipedia Page with details on this amazing craft has been updated recently. Our folks are also manufacturing a lot of amazingly beautiful stuff in this style nd its an AWESOME add on for home decor. Take a look at Marble Inlay and Pietra Dura here!

Platform Mania

2005-10-02T13:46:00.000+05:30

I have lately been seeing some posts in the Blogs as well as media criticizing the vendors for ERP/CRM Suites trying to lock them into their proprietary formats. Nicholas Carr's Blog Posting has the same rant, and so do many of the open source and Salesforce.com's AppExchange promos.

What is a platform? It can be anything, from a hardware, to a specific software container. Thus for Linux, Intel Processor is a proprietary platform. Similarly for AppExchange Developers, Salesforce.com's technical architecture is a proprietary platform. It is of importance to note that Open Source software platforms still run on proprietary hardware and/or software (like Linux running on Intel hardware and/or IBM 390 series) and there is practically no way to go completely free from the clutch of the vendors.

Coming to ERP/CRM Suite, Larry Ellison announced in Oracle OpenWorld that Oracle, in its Project Fusion, will certify its software on all standard containers and none of them will be proprietary (keynote available here for download). Oracle Fusion has already been certified for IBM Websphere and probably down the line JBoss and others will follow. What this essentially means is that Oracle is trying to break its stranglehold of the platform so as to say, and is planning to really differentiate on the quality of its software, which will run on any specific open standard complaint platform. Larry also spoke of a possibility where the customers are also given the choice of picking any other database for their applications and not be tied to the Oracle Platform. This strategy can be attributed to leapfrogging and disruption (as this blog suggests).

I still wonder why people feel that

" it's not only the "serious software firm" that produces useful code" (Carr's Blog)

As I mentioned in my last post, it is only when capable corporations lend their muscle to open source movement that it becomes enterprise strength. Till then it remains more of a novelty or a niche, but not of a class and capability that can make it a commodity.

"How would you feel if your mechanic handed you a 125-piece wrench set rather than actually fixing your car? What if another mechanic then walked up to you with his tools and started arguing with the first guy about whose tools were better? You sure wouldn’t feel like either of them was going to help you with your problem, would you? Yet that’s exactly what software vendors are doing today as they engage in their platform wars – much to the detriment of their customers and the industry." (Carr's Blog quoting Greg Gianforte)

This is too simplistic an analogy. Unfortunately even after more than a 100 years of evolution Car Manufacturing is not taking a commodity route. Manufacturers have specified vendors and unique specs. If it was a commodity approach, the "best designers in the world" (whoever and wherever they are) would have designed an engine that would have run on any chassis and gearbox, making it a real plug and play components. We would have a choice on which engine, which wheelbase and which electrical circuits to choose and the only reason mechanics existed was to assemble the car, and do nominal fixes.

Finally a disclaimer. I am not against open source. In fact, on the contrary, I think it is of great value. At the same time, we need to get out of the herd mentality with our thought processes about what it really is and what it can do.

Any Change for Salesforce.com's Appsexchange?

2005-09-28T16:54:00.000+05:30

Salesforce.com recenlt launched its AppExchange platform. This was also commented on by Nick in his Blog. I was however surprised to see him (and other industry watchers) so optimistic about it. Bacisally AppExchange will allow other companies to develop and deploy their open-source(?) Apps on the Salesforce.com proprietary platform. Its a Microsoft approach to software development (you have to use their platfrom), or as Henry Ford would have said if he were alive today (with due apologies to his Model T quote) : "You can run any app here as long as it is only designed for Salesforce.com platform".

Larry Ellison in his keynote at Oracle OpenWorld made a very interesting point - Linux is industrial strength today not because of some radioshack developers working the days and writing code for it in the nights, but because many corporations like IBM, Novell and Oracle have embraced it and extended their intellectual capital to make it enterprise ready. A poor cousin to Linux like Salesforce.com, who is already under pressure from other CRM vendors, and neither has the wherewithal nor the capabilityto match the features the other vendors (SAP, Oracle) are adding daily, has no option but to try leveraging the open source community and gather whatever remanants it can. I doubt they will get anything worthwhile other than the crumbs, with due respect to Nick's post. I personally pooh-pooh their idea and dont have any spare change for them.

Competitive Advantage and IT

2005-09-27T12:35:00.000+05:30

In his latest Blog posting, Nick Carr points out some differences of opinion with Irving Wladawsky-Berger, IBM's technology strategist who has posted an article on standardization and commoditization leading to innovation.

I feel :

- Standardization of processes leads to a lot of Management Bandwidth being freed up for creative tasks and innovation, rather than conformance to standards to be able to communicate between vendors, suppliers, customers and your employees.

- At the same time, standardization doesnt give you any competitive advantage. If you use the same standard IT processes and systems everyone else does, what makes you unique? Nothing. Its here that you have to come in and innovate, add on top of what you already have in order to gain some advantage. And that I guess is what Wladawsky-Berger implies by innovation. And this is exactly what Carr means when he says "IT doesnt matter" (for standardized processes).

We can walk through history for an example to this. Take the case of a typical ERP/CRM implementation today. In the early days of IT and Internet, in the early 90s, most companies were hiring staff (or outsourcing) to build an IT infrastructure and processes that tailored to their "way" of doing things. Over a period of time, this IT infrastructure development and maintenance work got so standardized (and the ERP/CRM suites grew so rich in functionality, communication standards and "best practices") that most organizations found it more useful to simply customize the standard ERP/CRM suites. They even went ahead and started outsourcing the infrastructure related operations to vendors like IBM and Oracle OnDemand as they were not offering any competitive advantage to them. From being a fad that offered immediate results, ERP and CRM implementations have turned into long term commitments for continual improvement.

Thus implementing a standard IT offering doesnt make you competitive. Its how you add and innovate over it is what makes you stay ahead in the game. Dell is a classic example - it consistently sets the industry standards for the most efficient supply chain without having implemented any vendor's standard supply chain management suite.

- Finally Carr says that "...Wladawsky-Berger implies that standardization will only occur for those processes "where differentiation brings little or no incremental value," but that's hard to believe. Indeed, from an economics standpoint, the greatest value will come from standardizing processes where there are currently large discrepancies in performance.."
This point can be debated at length. I will personally back Wladawsky-Berger's point. Its not easy (or even possible?) for a vendor like IBM to continuously offer the best IT infrastructre, with a software that has the industry standard best practices and tailor it fast enough to meet the needs of a customer's specific businesses. I guess its all about speed and though the duration for a sustained comptetitive advantage will be reduced, it is still prudent to aim for it and achieve it by innovating. Comments are welcome.

Long Tail Dynamics

2005-09-26T10:37:00.000+05:30

Nicholas G. Carr publishes a nice Blog on the future (as he sees) of the IT industry. He recently published an interesting bit on the Long Tail of a product mix as applied to IT. I was wondering about some of the things in that article.

First of all, the long tail in Remix Music is something the industry in India has been aware of since the last few years. Due to the shortening attention spans caused by multiple TV channels, these comapnies have nearly flogged to death the old songs and classics into cover versions and sexed up remixes. So much so, many of these long tail products have entered the short head as the best selling albums. An article suggests three reasons for this: low cost investment, multitide of TV channels to telecast the remixed videos and Venture Capitalist like risk taking capacity among Music Companies.

At the same time, I disagree that all the AdSense and Amazon Promos can be classified as Head Phaking as Mr. Carr calls it. I will hazard a guess that a retailer like Amazon and auction site like eBay will make most of its margins from the short head, rather than the long tail. Its the short head where the economies of scale are - in terms of margins as well as attracting more site visitors. Many Google AdSense programs will be more targetted to let people find products and services related to their search words, rather than piggy back the short head ones.

I agree with Mr. Carr's statement: "Achieving success, though, requires considerable artfulness." Thats perfectly true. As they say, imitation is the best form of flattery, but pure imitation doesnt take you anywhere with phakes.

Free for all Media Circus for Cricket Spat

2005-09-26T10:07:00.000+05:30

The recent spat between Chappel and Ganguly has leed to a lot of media comments. The strangest thing is that the TV News Channels and print media are running Opinion Polls to gauge the mood of the public. I understand that India is a democracy and Cricket is a team sport, but hell, what does an opinion poll have to do with the way the team is picked? By that logic, we should vote for the team selection and the appointment of the Captain! I can enev dogest that after a match, these people run a poll to show who was the "Culprit of the Match" (Match ka Mujrim) as a lot of people are invloved with the match. I strongly feel that some matters should seriously remain private....or atleast beyond Opinion polls!

I look forward to the Johnny Walker cup. I hope Australia play well and its a nice contest!

Google Ahoy! Browser Wars!

2005-09-21T15:21:00.000+05:30

With the rise of the Google promise of making search easier and thereby life easier, here is a parody on what intelligent search can do to you:
Google and Car Keys

Another interesting way to settle the browser wars:
IE or Firefox?
Wish all people were so level headed and used these to settle disputes.

Hmmm Saurav Ganguly

2005-09-17T22:45:00.000+05:30

It seems Saurav was asked by Chappel to step down before the first test in Harare. It is surprising considering the camraderie these two had earlier! But I still think that though Gangulay is at the end of his career, there is no one suitable to replace him. We can blood youngsters but they should show some potential atleast. I guess players like Azharuddin and Siddhu lasted such a long time as there was no one to replace them or seriously trying to upstage them. Thats the biggest irony of Indian Cricket - its unlike Australia where the selectors ask you to get going before you know you are down the hill. Dont believe me? Ask Alan Border, Mark Taylor or Steve Waugh!

Ahh these Celebrities

2005-08-31T20:46:00.000+05:30

I am sure many of you would have heard the rumors about Aamir Khan and his son born to an Englishwoman.....this makes me wonder aloud. These are the days of AIDs and morality is at a premium still. Sample this:

Cricketer Viv Richards has a daughter Masamba with Neena Gupta.
Cricketer Imran Khan's daughter with Sita White, who he was always denying as his own, has finally been accepted.

The interesting thing to know is that these folks have been living normal lives, with their family and kids, and there has been absolutely no issues. I wonder if Richards and Imran have ever even bothered about how thier kid was, other than maybe offer enough money for maintenance. If you ask Aamir, he will say spending time with kids is his top priority and he loves being with them. At the same time, he is simply not willing to accept his own child!!!

I wonder if morals are only for the middle class!
Comments?

2005-08-23T13:10:00.000+05:30

I really look forward to the Johnnie Walker Super Series in Melbourne and Sydney this October. The Test of the World XI was announced today and I am sure it should be an exciting contest - definitely worth waiting for!

2005-08-23T12:26:00.000+05:30

The website has been redone - seems much cleaner and powerful to me now. Comments are welcome.