Why not switch to open source innovation?

Just as I was wondering a Joint Innovation Model (JIM), I found this analogous post by Nick Carr in a Linux context. He says

“Of the many thousands of changes that have been made to the Linux kernel over he past three years, fully 73.2% came from employees working on behalf of their companies. (Three companies - Red Hat, Novell, and IBM - accounted for 28.4% of all the changes.) Only 13.9% of the changes came from volunteers without a corporate affiliation, and the remaining 12.9% of changes came from developers whose affiliation is unknown”.

Part of the reason is understandably, loss of control. But the fact remains companies are in denial about the value of open R&D collaborations and stick with in-house innovation models. Indoor initiatives don’t attract creative visionaries and passionate teams. However as R&D budgets come under increasing pressure the cost of control and proprietary development will become unacceptable.

Open initiatives not just facilitate knowledge gathering and application, it helps knowledge brokering. This feature is clearly not available in the traditional silo model. While deep understanding remains valuable, it’s utility is multiplied when blended with information and achievements from outside. It saves a lot of R&D $ since they don’t try to boil the ocean. Just do the incremental bit and bingo, you’re there !

For IP vendors of course, a move in this direction could mean unspeakable nightmare :)
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Will iPhone replace blackberry?

Since the iPhone went on sale last summer, amid long lines of shoppers and media adulation, the contours of the smartphone market have begun to shift rapidly toward consumers. An industry once characterized by brain-numbing acronyms and droning discussions about enterprise security is now defined by buzz around handset design, video games and mobile social networks.

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R.I.M.’s greatest challenge in a consumer-driven smartphone industry may simply be creating devices that people admire and covet as much as the iPhone. Despite the faithfulness of its flock, R.I.M. is not there yet.

Why are they missing the point? iPhone has so many apps on its face that if the user uses it to slowly thumb-type an email, he’s locking himself out of other terrific features that iPhone has to offer. RIM Blackberry all the while, is an alternative dispatch outfit.

What say you?

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Consensus on outsourced infrastructure

With outsourced processing and storage (Amazon S3 and EC2, Google App Engine) getting cheaper by the day, IT startups have a lot going for them. Low startup capital for one.

The question is, will that shrink VC capital available to startups? Not likely seems to be the consensus.

Ask me. I would settle for less certainly. Just what I need to feed my staff, some essential marketing spend and early customer visits. Go for everything that helps dilute less and less stake. Any day. I have Ed Roberts, founder and chair of MIT Entrepreneurship Center for company who says "More startups may, however, get funded by angels or angel groups who have less money than the venture capitalists".

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It's Google. Super cool.

Google may or may not be evil. But God loves Google. So don’t bitch it.

Ask comScore. Google’s first quarter earnings call didn’t have much in the way of theatrics, but a serious brush back pitch was delivered to Comscore.

The brass at comScore and others are working hard today to explain how the implications of its initial report were given a distorted reading in the first place and that apples are being compared to oranges and such, but again, the market hears the headlines and jumps. While Google stock is in the process of posting a one-day gain of about 20 percent, its biggest ever, comScore shares, rightly or wrongly, are taking a credibility penalty in the form of a 2 percent dip.

Nobody crosses Google. Nobody.

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Can social media alter customer behavior?

Does social media (blogs, wikis, podcasts and other UGC) alter customer behavior? Can marketers frame a strategy around such expectations?

Harvard Business School professor John Quelch once said, “The purpose of marketing… should be geared to changing and reinforcing customer actions rather than customer attitude.” Paul Dunay recently revisited this quote and "feel it still holds true. But in the age of social media, it is likely to come under siege." Traditional media is being seen as interruptive, irrelevant or just plain clutter.

I found some interesting comments -

Tom Baker - I think that the day of identifying segments, targeting those segments, and positioning a product offering for a segment are about over as this process is a "from us, to you" sort of process. I see a change where successful companies of the future will be that which listen to their consumers and quickly adapt their offerings to match what they want. Perhaps a dawning of the "true" age of marketing rather than the age of promotion we have been stuck in for the past few decades.

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Elaine Fogel - It sounds great in an ideal situation, where those companies that can turn on a dime can benefit. It's much harder for product manufacturers and importers that need lead time to change their offerings. They would need to do the due diligence and research ahead of time to gain a pulse on what their customers want - within reason, within their product lines, and with the ability to make a profit.

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Vigyan Verma - The key is to make the brand communication relevant to the life of the consumer without sounding overbearing.

Interesting nuggets, all. I wonder why they take customers lightly. Influence of social media can be strong only if it is driven by mass adoption. Except in say US or Western Europe, most people use internet for very basic stuff like checking email, make online reservations or search for jobs. Assuming social media has the power to alter customer behavior and expecting companies to adapt to the new wave is a bit presumptuous if not incorrect - at least not immediately. What say you?

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IBM's Racetrack memory

I like IBM for its old fashioned steady slogging ways. Not for it the glamorous proxy wars, wasting tons of money to buy dying assets. Let Microsoft waste its time and energy to buyout an indecisive Yahoo, forgetting its own enterprise software expertise and in the process ceding some precious market share as well.

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IBM has its priorities cut out - like new tech research. This is ultimate digital storage revolution. Imagine how expensive data storage used to be just a few short decades ago? In a few years, the volume of digital entertainment we'll carry in our pocket will start taxing our capability to consume it. But that's the promise of a new digital storage technology - "racetrack" memory - being developed by IBM. It uses the spin of electrons to store data in a system that's much faster, cheaper, consumes far less power and more reliable than today's flash memory. An iPod or similar device powered by racetrack memory would likely hold a half-million songs or 3,500 feature-length films, while holding charge for over a week.

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"The promise of racetrack memory -- for example, the ability to carry massive amounts of information in your pocket -- could unleash creativity leading to devices and applications that nobody has imagined yet," said Stuart Parkin, the IBM fellow who led the research. IBM says the technology should be out in about 10 years, so start assembling that monster media collection :-)

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When Cool means useless

Ok. So you will kill and mow down people to get that ultra cool gadget. But how much of it you ever come to use? And why are those basic stuff that you need missing?

Mike Elgan has a go at it. I quote –

“Flashy new technology always gets attention. But after the chatter fades, users are often left with frustration over products' failure to do basic, common-sense functions.

I was reminded of this widespread phenomenon this week when Toshiba's digital products division announced what it calls "sleep-and-charge USB ports." Basically, Toshiba will sell laptops that charge your USB gadgets while the laptops are in sleep or hibernate mode.

Wow! What a spectacularly unspectacular-but-welcome feature! Toshiba actually noticed that travelers often need to charge cell phones and other devices all night, but they don't want to leave their laptops running. Why didn't USB charging work like this from the get-go? And why are so many high-visibility products missing seemingly simple and basic features?”

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I look up the number of buttons in my MS-Word application. I may not have used 90% of it, ever. Still repeat versions do carry all of those and consume my precious storage.

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The Chinese ringtone

Move over Nortel, Motorola, Ericsson, Nokia-Siemens and Alcatel. It’s Huawei, ZTE from China storming into Indian telecom equipment market.

Their bargaining chip? No marks for guessing - a 10 to 20 per cent price advantage over European and American competitors and growing engineering capabilities. Huawei sold equipment worth $700 million last year and expects to more than double the revenues from India to $1.5 billion this year. The company has bagged a $500-million order for GSM mobile equipment from Reliance Communications (RCom), the country’s largest CDMA player that is shortly rolling out GSM services.

Hey, what about national security issues? Shut up. For now, it’s pricing power. Everything crumbles before economics, silly! That’s the Chinese trump card.

Here’s the famous line from competition - “[Chinese] have serious issues on servicing their network, plus as they increase their service support staff, their costs will go up. You can’t continue to dump prices and sell for long,” said a senior executive of one of the largest European telecom equipment-makers.

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"So, what's the discount?" - No answer.

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Virtualization gets "sticky"

Virtualisation likely will result in considerable market disruption and consolidation over the next few years.

It “is hardly a new concept; storage has already been virtualized — albeit primarily within the scope of individual vendor architectures — and so is networking. However, as both server and PC virtualisation become more pervasive, traditional IT infrastructure orthodoxy is being challenged and is changing the way business works with IT” – says Gartner vice-president Philip Dawson.

MokaFive, a desktop virtualization company, will make its formal debut today by offering a virtual OS on Windows, Mac OS and Linux that can be embedded on a USB key and run in an offline mode. It enables remote and guest workers to gain access to applications and/or the corporate network without compromising security. With MokaFive, you can easily create secure virtual desktops that isolate your network and applications from the threats of any unmanaged, third-party computers. Besides it helps disaster recovery, sandboxing, testing and in setting up a virtual mobile workforce.

An entire desktop in a USB stick ! Did you say “mobility”?

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Mixed future for Indian outsourcing

The general feeling amongst the IT and BPO industry is that growth may slowdown but will not stop altogether.

Reflecting gentle buoyancy amidst widespread gloom, Adventity, the BPO/KPO outfit which presently has seven centers in India, plans to foray into two Tier II cities over the next 8-12 months with an investment of 2.5 million dollars each.

TCS, a major IT outsourcing vendor has recently inked a multi-year contract with Chrysler.

Smartly outwitting the local vendors that are focused westwards, IBM is experiencing “strong double-digit growth” in India, with the SMB segment generating about $500 million in revenue, accounting for half of its top line - making India the fastest-growing SMB market globally for IBM. Though its marquee clients include Bharti Airtel, DLF and Idea Cellular, it is keen on projecting an image that it is not just focused on serving large Indian companies.

So it’s not totally hopeless for India’s IT vendors. But gone are the days of 45% growth and labor arbitrage. Now it’s time they move on to VAS, improved efficiency, get far less dollar dependent and think of geographic spread of services to save their margins going forward. It’s time they start challenging IT architecture orthodoxies and begin to bet on everything – virtualization, change management, data centers and utility computing. But they better be quick before nimble startups upstage them.

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Way to go, Satyam!

Readers of this blog must be pretty much used to my beating up India’s SWITCH (Satyam, Wipro, Infosys, TCS, Cognizant and HCL Tech) outsourcing vendors. Aligning IT with business strategy has, once again, become a top issue for companies worldwide. Despite the SLA requirements that IT outsourcing vendors will help clients develop IT strategies that deliver measurable business outcomes, clients don’t get to see much on the ground in terms of process/productivity improvements or LOB consulting insights.

But there seems to be a subtle shift happening. Or it could well be the beginning.

Hyderabad-based IT outsourcing vendor Satyam has signed up with Central Institute of Plastics Engineering and Technology (CIPET), an autonomous training and application research institute under the ministry of chemicals and fertilizers, for developing new engineering plastic materials through an industry-institute collaborative approach. The collaboration is part of Satyam's strategic initiative of developing a global ecosystem of alliances to provide total engineering solutions to its customers.

This is getting closer to the “end-to-end” services that most vendors profess they offer. Vendors should complement their rich portfolio of assets and processes with new services that provide greater insight into business performance. This is becoming particularly important as companies face new challenges in a variety of areas. IT vendors’ longevity depends on the quantum of load they take off the back of clients and upon themselves, acquiring capabilities on the run. In that we get new vendor efficiency metric – a combination of speed and magnitude of such offtake that ends with faster and effective post-process delivery with visible productivity improvements the client by itself couldn’t have hoped to achieve.

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