Global gets local

This IS disruptive innovation….

Global travelers have been consistently gouged by telco carriers (like AT&T, T-Mobile, Vodafone and others) when they make or get calls on their mobile phones by way of steep roaming charges. Fearing that travelers normally use a calling card, but then nobody knows how to reach them. Now that bastion is set to change soon.

Early next month, a small company called Cubic Telecom will release what it’s calling the first global mobile phone. You can have upto 50 local numbers so that your customer in London can dial your local London Number (at the cost of a local call) and your Cubic phone will ring in Bombay. What I like about it is I can just slip in the $40 SIM card they give inside our existing GSM phone (including iPhone in place of AT&T card) and roam anywhere in the world. There are several other features that you can find in the NYT story here.

David Pogue who ran the story says "If nothing else, this ingenious melding of the cellphone and the Internet should strike fear into the hearts of the giant corporations that are currently bleeding travelers dry. This is how the last great overpriced pre-Internet racket will end: not with a bang, but with a SIM card.

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You should know going in, too, that the company responsible for tearing down this bastion of outrageous roaming rates is a little group of 13 people in Ireland, with vast experience in calling cards but none in cellphone sales. Its plans are ambitious, disruptive — and incomplete. Several pieces of its system have yet to be slipped into place, including tech support, customer service, documentation, Internet data plans and domestic calling rates. But what the heck—here’s a $140 phone, or a $40 SIM card, that can save you thousands of dollars a year. Depending on how many international calls you make, it could pay for itself in a week or a month".

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You Be the VC...?

Micro VCs galore. They come in all shapes and sizes. Who knows, someday they might even upstage the established juggernauts....

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Y Combinator, TechStars, Plug and Play and now PARC are just some of the organizations that pair investing with an incubator environment for small startups. New York-based Bang Ventures, a self-styled investment firm, not a VC, is launching a online social network called “You Be The VC,” where startups submit their business plans then compete for funding. The public can vote on their favorite companies, then Bang will fund the top three companies with $15,000 and a host of other incubator services. It also includes social networking features so contestants can also meet each other and network.

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T-20 cricket has been an instant hit... more so since Team India grabbed the first world cup. Will UBVC do it to the role models...? Crossing fingers.

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Tempting Zuckerberg

So it's not really a shocker to hear that Microsoft, lacking a foothold in the social scene, is considering a substantial investment in Facebook, which has designs on becoming something like a Web operating system. What has raised some eyebrows -- and some red flags -- are the numbers being bandied about. According to the Wall Street Journal, Microsoft is talking about taking a 5 percent stake in Facebook at a price between $300 million and $500 million, which, on the top end, would value the social site at a whopping $10 billion. And should Google pursue its own rumored interest in a piece of the Facebook action, the bidding could push that valuation up by $5 billion more.

Will Mark Zuckerberg, (official founder of Facebook) be able to hold back this time…?

That kind of money buys a lot, not all of it good. Facebook offers growth, a flexible platform, continuing innovation (a beta IM client is coming Friday), and a whole lot of the page inventory and sticky users that advertisers crave. But it also brings a running dispute over its creation, privacy concerns, and, as of yesterday, an investigation by the New York Attorney General's office into whether the site does enough to protect users against sexual predators.

So are those big numbers totally out of line? Apparently not, if you broaden the definition of value. There's a lot of strategic value beyond the pure financial value in an investment like this. There's not a lot of a zero-sum games, but there's only one home page. There's only one thing that is the first thing you see. ... That's what I think is the strategic value, and I think Microsoft needs it more than Google" - as Jeremy Lew of Light Speed Venture partners says.

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I am not too sure about that. May be I am from the old school. I still believe bidding frenzy should never outdo valuation math.

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This one is for the masses

Way to go....

I am beginning to like it. Low cost innovation for the third world or just simple computing for the masses.

I am referring to the initiative of Chennai-based IT company, Novatium Solutions, that announced a strategic tie-up with Mahanagar Telephone Nigam Limited (MTNL) for the launch of its Nova netPC, a breakthrough in utility desktop delivery for as low as Rs. 399 ($10) a month (not exactly). Novatium’s Nova netPC is an affordable and simple desktop that is reportedly very user friendly. They say it can be operated like any household appliance at the touch of a button and is quite affordable. The Nova NetPC home user package is available for only Rs. 1,999 ($50) (plus taxes) without the monitor [monitor available at an extra cost of Rs 3000 ($75)] in addition to a monthly subscription starting at Rs 399, including a 30 hour Internet access.

The technology is called Cloud computing – extricating the OS and all its application software from the desktop, host it from a central server and offer it up as a service to multiple clients. The clients neither have to own and maintain storage hardware like a hard disk and CPU at their end nor worry about data security. The most important benefit is of gaining instant computing power without spending too much upfront.

But I feel they can go a little further on its economics. When even many basic services like college admissions, booking a railway ticket, Board / University Exam results services going online, those at the bottom of the pyramid earning under $1 a day too need cheap internet access. They will have ambitions to educate themselves beside their children. The true purpose behind such laudable initiatives – taking computers to the masses - would be achieved only if the cost of minimal hardware (keyboard, mouse and monitor) is kept lower still. It should also be made available as a service or at least on some pay-as-you-go basis. Wider adoption of the net eventually improves the operating margins (eliminating agents in travel services) of many a service provider and Novatium should tap them either for sponsorship, working capital and infrastructure support. The Government can sure waive excise duty, sales / service tax for such mass initiatives. It should bring down the costs further and that should make it a win-win model for all.

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Towards a better IP regime

Despite the increase in Intellectual Property (IP) disputes beyond national borders, there are no established global rules on international jurisdiction, applicable law, recognition and enforcement of foreign judgments. This situation has resulted from weak investigative processes adopted by authority granting the IPR, that blames it upon the multitude of applications that gets lodged with it every day. Poor archival and retrieval systems also complicate the process all the more.

Currently, the process to grant patents begins when an application, describing the invention in painstaking detail, is submitted to the patent examiner, who conducts a search for “prior art”. Prior art can be any previous evidence of an invention: an academic article, schematic, photograph, data set, or nearly anything that demonstrates a similar concept. Searches for prior art must be as exhaustive as possible. If prior art is missed, the patent authority risks approving spurious patents, leading to lawsuits and requests for post-grant examinations.

A clear testimony to the inadequacy of investigation (of existence of “prior art”) process preceding grant of IP rights have been clearly exposed by Peter Calveley’s questioning the USPTO’s grant of Amazon’s infamous “one-click” patent.

Advancements in information technology have been successfully decimating the problems presented by bulk data to a significant extent. On that score, I’ve always argued that the magnitude of problems faced by authorities granting IP does not lean on bulkiness of data or its archiving / retrieval processes, as much as it should be in its analytics and interpretation of available (prior art) data.

A new website called Peer-to-Patent intends to harness the power of online collaboration to streamline patent review. By creating a community around each application, the site facilitates public discussion and lets people upload relevant information. The United States Patent and Trademark Office (USPTO) is currently involved in a limited trial of Peer-to-Patent, with the hope that it will bring openness and transparency to a review process that was previously limited to communication between the applicant and the examiner vetting the patent.

How long before we see one in India? Couldn’t we use something like that ? You bet.

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BBD or not; Larry Ellison is in no hurry

Larry Ellison never shoots from the hip. He is quite level headed and makes sure that he’s never caught with his pants down. I am referring to his casual dismissal of SAP’s SaaS offering – Business By Design (BBD) – by saying that it’s not going to make a lot of money.

But the fact is that he owns NetSuite, a SaaS ERP provider that is prepping an IPO. If Ellison really thought there would be no money in SaaS ERP he wouldn’t own NetSuite. But Ellison’s comments, which were delivered (transcript) after the company’s solid earnings report, do reveal Oracle’s strategy. Oracle isn’t going to try and replicate what SAP has done. Here’s Ellison’s strategy: Let SAP figure SaaS out and crow if the rival fails. If SAP is successful–it probably will be over time–Ellison buys NetSuite from himself.

Here you got what Ellison had to say about the growth strategies of Oracle and SAP and the SaaS market.

Simply put, Oracle will just buy NetSuite when the time is right. Sure, there are corporate governance hackles to be raised since Ellison is basically buying his own venture, but that’ll be worked out with some independent committee and a healthy premium. So when folks figure out this SaaS thing, Ellison will answer with another acquisition.

If BBD fails, he can start a grapevine and say Henning Kagermann, CEO of SAP was a daffy professor who bullshitted his way into a project that never made any sense in the first place, and predictably failed. But I have this question for you Mr.Ellison - costing a tenth of your economics, why would you think BBD will fail...? Wouldn't you agree it'll make up in volumes what it loses in the width of its margins...?

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Thank you, Mr.Kagermann

So, SAP has unveiled its Business By Design (BBD) program – the latest on-demand offering from its stable aimed at small businesses, that runs on SAP's own servers and be accessible over the Internet for as little as $54 a month.

Now it remains to be seen how soon or long does it take for CEO Henning Kagermann and his team to leverage BBD for his $13 billion company's efforts to expand its customer base from the current 42,000 to 100,000 by 2010, in particular customers with 100 to 500 employees.

They say it carries a new risk. I am not sure how much of a risk it is even if partners, VARs, SIs, and others get less enthusiastic, since end users can download and install BBD by themselves. But then, that’s also the idea – to eliminate middlemen and cut some costs in the process. In the final tally, it isn’t how MANY partners someone has, but how good they are at supporting their customer’s goals that count. I’m a lot more impressed with vendors who have a few hundred of the right partners than with the “army of ants” strategies, where the number of partners is very high, but it turns out there are thousands included in the count with minimal skills and very thin relationships to their partner.

Customer first, any day. Thank you Mr.Kagermann... hope BBD leads to customer delight !

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"Make the high mountain bow its head; make the river yield its way."

If entries of LCCs like Southwest Airlines in the US and Air Deccan in India drove airfares down to the floor and shook up the smug industry majors from their cocky slumber, it was the entry of SaaS operators like Salesforce and Netsuite that did enterprise vendors like SAP, Oracle, Microsoft, IBM and HP in. As bloggers showered huge praises on SaaS vendors’ pricing model and beat up that adopted by enterprise gorillas post after post, they knew their bluff had been called. Good friend and fellow blogger Vinnie Mirchandani draws a parallel to EDLP model of Wal-Mart in that superb post.

Now I hear SAP is taking a page out of the playbooks of Salesforce and NetSuite, a company majority-owned by Oracle Chief Executive Larry Ellison that filed in July to go public. The news is that SAP will unveil on Wednesday a line of business management programs to be delivered over the Web. Microsoft and other large software companies are also starting to make a similar shift.

Pricing and delivery innovation combined with power of blogosphere – deadly combo to bring down monsters what years of customer harangue couldn’t…?

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Now, you can divorce your desktop

I am drinking in all of it…every last drop. Bottoms up…!

Technology and globalization have cleared a path for advancement that’s right there under your feet—if you’re willing to take the first step. The rewards have never been greater for those who act. But many are reluctant to act for fear of the unknown.

Hardly did we hear enough of SaaS applications and their fantastic economics that broke the back of many an enterprise software vendor, “Cloud computing”--the idea of relying on Web-based applications and storing data in the "cloud" of the Internet--has staged a grand entry threatening even hardware vendors. Way to do business on the road...? Now software companies are making entire Web-based operating systems. Built to work like a whole computer in the cloud and aimed at a wider audience, these browser-based services could help those who can't afford their own computer.

I am referring to Desktoptwo that seeks to bridge the digital divide. “You can bring your desktop too” goes the slogan. Desktoptwo uses a number of open-source applications, including Open Office as its productivity suite. The Web-based operating systems bring together a selection of integrated Web-based applications that typically run with Flash or Java. Users can choose to save data locally or on the Internet.

Shall we say, gone are the days when vendors charged clients a bomb for monstrous applications and then topped it up by annual maintenance contract, upgrades and consulting charges that added up 22% of cost of the original application every year?

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Pimp your I / O

The VMware euphoria is far from over…. In fact, it’s just begun. At the VMworld, 2007, a three-day conference that opened Tuesday at San Francisco's Moscone Convention Center, hype and gimmicks galore.

Founded four years by VMware, the Palo Alto-based pioneer of virtualization, VMworld's progress illustrates the virtualization phenomenon. When it debuted in 2004, it drew 1400 participants that had ballooned to 11,000 yesterday. Think of it as the Burning Man of "virtualization," an esoteric software field that has rapidly bloomed into a full-fledged industry, involving both powerhouse companies like Microsoft, Hewlett-Packard and Intel as well as a fresh crop of start-ups.

Start-ups, meanwhile, are looking for their piece of the action. 3Leaf Systems, based in Santa Clara, came out of stealth mode in May. It used VMworld to announce new software that it says dovetails with virtualization to simplify data center management.

Xsigo Systems, a Sunnyvale-based start-up and potential competitor of 3Leaf, used VMworld to showcase its technology, a combination of hardware and software that it says will simplify management of input/output.

Xsigo's marketing gimmick was free T-shirts, including one that said "Pimp Your I/O." That’s some spunk, be it in the Virtual world.

I figure that’s how they get people to take their T-shirts, not to be confused with their tagline….

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Devices are cool ; Batteries aren't....

I am really curious or even annoyed a bit, you can say – having to recharge my cell phone, MP3 handset and other portable devises frequently while traveling. Even as numerous next gen applications develop in the multi-media and wireless space, the basic accessories like batteries haven’t kept pace. How many power cords should I carry? If it’s overseas, one has to carry adapters for all of them too.

In my line of business, I get to meet a lot of startup and expansion stage entrepreneurs. I get to see quite a lot of business plans in wireless mobile applications / contents, which is a very crowded space, besides those from other industrial applications. But I am yet to see some smart founder coming up with a technology for a self-charging battery or at least a long lasting one that needs to be charged only once a month or so, that allows use of new gen applications / portable devises with multi-media capabilities. Battery life is the #1 handset problem, especially in rural areas where there is limited access to electrical outlets. Wireless phones have become the primary communication tool in areas where it is too expensive to lay cables for wire-line phones and Internet access.

Absolutely virgin territory. No competition. Unfortunately no ideas. Too bad, Gordon Moore didn’t go beyond transistors…

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Farmed out sourcing or Farmed Outsourcing ?

I had this dilemma while titling this post. Should I call it “farmed out sourcing” or “farmed outsourcing?”

I was reading this article in Business Week that raved over a new model of outsourcing adopted by Anantara Solutions of Bangalore. To battle the rising wage costs / attrition / shrinking numbers of employable engineering talent in India, Anantara has adopted a truly global model of breaking up and farming out pieces of work to any corner in the world that has the requisite supply of qualified talent at affordable economics – that once India had. Even as it just has 40 employees on its rolls, it has an ecosystem of 25 other companies including Russia, China or Singapore, with a total of 2,500 employees that are specialists in everything from Java coding to software testing. Resultant cost savings are huge in this break up, farm out, re-integrate and deliver model. Rather than having huge fixed costs, like TCS, Infosys, and Wipro, Anantara pays for value received--and billed to clients. That is incredible leverage.

This trend of farming out sourcing, is indeed the kind of innovation that would sustain the fortunes of India’s IT vendors in the long term. This may partly compensate for their own inability to develop deep domain expertise in client businesses (to take on global majors IBM, Accenture and EDS that have begun their dance on home turf) besides near absent investments in its own R&D (that explains the fat margins) to develop patented innovations in on-demand product suites that delight many an existing and potential client spectrum.

I like the BW expression “disrupting the disruptors” ! It also means importing competition to India’s overhyped bulk of downright mediocre IT talent that got away with fatter pay packets just because of excessive demand. Indian workforce needs a few hits like this badly, just to regain the semblance of modesty that they were once famous for, but long forgotten.

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That's a bit rude

Call it downright rude – or is it? We are talking about 33% price slash of the 8G iPhone here – down from $599 to $399 in 60 days flat. The hottest tech product of the year driving it up the wherever of its early adopters…

Now El Jobso comes up with a consolation. A $100 refund for those who camped long hours to get their mitt on the gadget that now feel ripped.

But did Apple have a choice? The technology has become almost a cottage industry – recent testimony came by the way a rookie 17year old picked the AT&T lock and traded the unlocked iPhone in for a cool NISSAN 350z car.

Are you considering buying one now that the prices have been slashed? My advise – wait… Soon your cornerstore guy will assemble one for you for $100 or even less, just that the label will bear his name even as the functionalities will be in tact. I mean, it’s way too overpriced even now…

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"Daddy, I just wanna watch TV"

Alright, it's time for some reality check.... Are we wired a bit too much?

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This is the question Larry Magid too had dealt with at his blog. Excerpts –

"I’m not exactly sure who “they” are but I seem to remember that they told us technology would make our lives easier and more efficient. I’m not so sure. Let’s start with our TVs. I’m old enough to remember when TV had two dials - a volume control and a channel changer that let you go from channel 2 to 13. The high-definition TV in my living room is connected to a satellite receiver/personal video recorder with hundreds of channels and several levels of menus. The TV itself has infinitely more controls than the old ones and scores of optional inputs. But there’s more. To hear the TV you have to turn on the audio system, and because I also have a DVD player and an Apple TV but only one optical audio input, I sometimes have to unplug one device and plug in another.

Then there is the gaggle of remote controls. In theory, I could consolidate them with a universal remote. But with new types of equipment coming out all the time from companies that barely existed a couple of years ago, it’s hard for universal remote makers to keep up. Of course there are always the super-universal programmable remotes like Logitech’s Harmony 1000 but do I really want to spend $499 on a remote and invest the time to program it from a PC or a Mac?

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Several years ago I conducted a family training session to teach everyone how to use our new AV system, to which my daughter complained, “Daddy, all I want to do is watch TV.”

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Are we done with internet?

Mark Cuban says internet is dead and boring, because it has stopped evolving. Cuban argues that had it been evolving, it will not allow new applications as are being developed over it now, until it firms up. It’s possible only because it has rigor mortised.

Anything that is frozen or stable could well be, boring. Think of Antarctic ice. That applies to any successful, time-tested and widely adopted utility. Isn’t TV, iPod and even iPhone boring now?

Anything that has outlived its novelty is boring. But has internet? In many ways, as Phil Wainewright says, the Internet cloud is one great global SOA — still very rudimentary in many ways, but flexible enough to accommodate different levels of sophistication, and evolving fast. Wonder what Phil and his ilk would think of Cuban’s theory since they feel SaaS is still evolving within the cloud. I am tempted to think that the evolution of basic internet has hit a pause mode to facilitate growth of its derivatives like SaaS applications that have just begun to sprout. IMO they have a huge potential to attain a full blown multi-tenancy nirvana aspired by so many vendors.

Do you think Cuban’s off his rocker on this one? Me thinks the wheel's evolution may have slowed, but it's far from done, and complete.

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Some useful startup guidance from stalwarts

Least I expected the publication of this interesting article in USA TODAY ( gives a low down on the stellar startup incubation initiatives of Paul Graham’s Y Combinator and Seth Levine’s Tech Stars) to stir up such a debate.

[I wish IAN and Mumbai Angels should take note and expand their scope of activities.]

What followed was real fun. Seth Levine has been quoted in that article questioning the clarity of limits of Y Combinator model on startup costs and has his own take on how much cash startups at various stages should be using up. To that, Paul Graham gave a riposte by way of an illustrative essay (woof…it’s more of an algebraic model) explaining a method to decide whether to accept angel investment and if so, how much of your company to cede to that Angel. It also deals with how much of stock grants that you can make to a new employee.

Seth Levine is clearly flustered with the fallout. Here he sets the record straight and swears towards the end never to give another telephone interview after the one he gave to the daily.

Coming back to what Paul says – “if you trade half your company for something that more than doubles the company's average outcome, you're net ahead.” Fair enough. But the question that confounds most startups is this - Given that outcome is futuristic, how to judge the growth impact upfront? Not many answers except to go by pure instincts….

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