NW Venture Voice has a post by Martin Tobias on his visit to India:

- The Indian economy is firing on all cylinders. Auto sales, pharma sales, real-estate, outsourcing and IT jobs are up double digits YonY.
- India's growth is accelerating even as China comes on line.
- Indian companies are moving up the value chain, especially in IT. There is a consolidation going on at the top of the IT outsourcing business by Wipro, Infosys leaving the middle market and small players looking to product development for growth. Look for Indian companies to get into original branded software product development in a big way (look out America).
- The bio/pharma sector is probably hotter than the IT sector. A partner in a leading executive recruiting firm said he has triple the number of searches going on in bio/pharma versus IT.
- The VCs that only visit Bangalore and think the India story is only about BPO are missing the mark.
- The Indian government is serious about divesting state owned enterprises (the old bedrock). Twelve new ones are being offered in the next three months.

The most interesting one to me was the fact that every day in the Economic Times of India was another article on an Indian IT company moving up into product development. And details of all the government programs to support this. While the culture of development is significantly different from the culture of a call center, it is probably just a matter of time. The recruiter I was talking to said most of his "C" level hires are returnes from America and Europe. Salaries go MUCH farther in India. India produces more computer engineers than America. It is only a matter of time before this combination of American trained management and inexpensive raw talent starts to deliver really cool products.

While I didn't spend alot of time looking for investments or talking with potential partner companies, it was clear to me that there is WAY more going on in India than most people are considering. I advise every start-up I work with to consider what their strategy to leverage India and China is. It can be as simple as outsourcing QA/testing or call center. It can be as complex as outsourcing all development and selling into the local markets. Whatever the strategy, the CEO who doesn't leverage the growth and market efficiencies going on in India/China does so at his peril.

The Register explodes some of the myths in light of "Microsoft's determination to demonstrate that Linux is less secure than Windows":

- Windows only gets attacked most because it's such a big target, and if Linux use (or indeed OS X use) grew then so would the number of attacks.
- Open Source Software is inherently dangerous because its source code is widely available, whereas Windows 'blueprints' are carefully guarded by Microsoft.
- Statistics 'prove' that Windows has fewer, less serious security issues than Linux, that Windows issues are always fixed, and that they are fixed faster.

InfoWorld writes: "Four big technology challenges face IT managers who work at small to medium-size businesses. And guess what? The challenges look a lot like the ones confronting large organizations: VoIP, SANs, Gigabit Ethernet, and security. Few IT shops, big or small, would be crazy enough to tackle all four issues at once. Together, all this new technology may have reached the critical mass necessary for SMBs to think seriously about a network overhaul."

David Emberton writes:

Most people in the industry still think of broadband as a class of connection, whether it be fast DSL through Cable to a T1. But in reality, broadband as a generic term will soon become disconnected from the technical specifics, and come to represent a particular kind of content. A space beyond the hypertext web that consumers refer to by name.

Allow me to paint a (somewhat inadequate) word picture:

“It’s off-broadway, for TV.”

In the same way that off-broadway plays are the poor/weird cousins of premium theater, some things are appropriate for regular TV broadcast, and some aren’t. Whether it be short, cheaply made, or interactive, there’s just a certain class of content that lends itself to being browsed on a computer rather than watched on TV. The point is that broadband is definitely not just text websites delivered faster, or even text websites with a few bells and whistles added. It’s TV-on-demand, but also on-a-budget.

Let’s imagine it another way. If you’ve flown in the past few years, internationally at least, you will have encountered in-flight entertainment systems and movies on demand. These types of systems are typical of what I’m describing except instead of full-length films, “broadband” (as a mental concept) will be associated with anything under 5 minutes or so. High budget productions might last longer, especially commercials like the Volvo V50 example, but on the whole it will be quick and easy to digest, and tied together with a kind of interface that we really haven’t seen yet.

So what can you do to take advantage of the emerging broadband market? Start studying short features; DVD extras, cartoon shorts, interactive CD-ROMs. Figure out how to make disparate pieces of DV content fit together and interlink in ways text pages can’t. Find yourself writing down scripts, counting words, and figuring out what TV and movie people have already learned about stringing pieces of video together.

Mostly though, pay attention not to what software companies and entrenched geeks think, but what teenagers and children are actually saying and doing. Young consumers are key, and what they’re saying is… “that’ll end up on broadband.”

Slashdot has a discussion on which VNC software is best. It is relevant for us since VNC is one of the ways to deliver a virutal desktop from the server grid to network computers.

News.com writes about JBoss's release of the open-source workflow engine:

Baeyens said this release of jBPM does not have a GUI (graphical user interface), as the development team initially concentrated on creating a powerful work flow engine. A version of the product with a GUI will be released in the first quarter of 2005.

The market for work flow engines is fragmented, with no single vendor able to handle all process requirements, according to a report from research company Gartner called "Creating a BPM and Workflow Automation Vendor Checklist." JBoss hopes to exploit this fragmentation, and its developers claim that jBPM will be cheaper to implement than other market offerings and has been designed to handle all requirements.

Wil van der Aalst, a professor at the Eindhoven University of Technology and the author of various books on work flow management, said work flow vendors have traditionally had a hard time making an impact in the market, both because of cost and a lack of understanding by management.

"It is very difficult to explain a work flow system to management, as it doesn't solve just one problem," van der Aalst said.

At present, work flow engines are mostly used by large organizations such as insurance companies and banks, according to van der Aalst. But he points out that work flow engines are often a component of other systems, such as those devoted to ERP (enterprise resource planning) and product data management, as well as call center software.

Van der Aalst said JBoss may also face competition from within the open-source community, as there are more than 20 open-source work flow projects, including YAWL, an engine on which he is collaborating.

Steve Ballmer’s $100 PC dream so users will pay for software like the lower-priced Windows XP Starter Editions and AMD’s $249 reality are important harbingers of change when it comes to thinking about the emerging markets. A $100 PC as envisioned by Ballmer may be too restricted in what it can do – and the purpose will be defeated if software adds on a significant amount. A $249 computer with a limited set of applications is not a disruptive innovation. The problem in both approaches is that they show a distinct lack of understanding about the reality in emerging markets and the expectations of the next users. What will hobble the IT majors from coming up with the right solutions for the emerging markets is their legacy – they have multi-billion dollar businesses in the developed markets which need to be protected. It is the classic “Innovator’s Dilemma.” The need is for real disruptive innovations.

Even as we look at what is needed, let us first look at the realities in emerging markets:

The 10-90 Chasm: The top 10% in the emerging markets can use developed market solutions (not just in technology but in everything else). There is a chasm that separates this group from the next 90%, which needs locally developed (or relevant) solutions at completely different price points. To develop these solutions, one has to start from scratch, not tweak existing solutions. This is exactly what the Tatas did when they built their IndiOne hotel in Bangalore and priced rooms at Rs 900 ($20). This is exactly what they are doing when they want to create a car for Rs 1 lakh ($ 2, 200).

The 1-9-90 Split: Even among the top 10%, there is the problem of piracy when it comes to soft goods – be it music or software. The result is that a company like Microsoft has only a 1% share in most emerging markets. Piracy has 9% and non-consumption 90%.

Price(Intel+Microsoft) = Low Constant: What this means is that the total spend that can happen on computing is a low constant. For Intel to make money, it has to limit spend on software – this is what is happening with the PC makers deciding to bundle Linux with their desktops. [The fact that Linux has a lifetime of barely an hour on the desktop and is quickly replaced with pirated Windows reinforces the previous point.] For Microsoft to make money, it has to reduce the spend on hardware.

The ADAM Challenges: I have written earlier about the four key challenges that need to be addressed in markets like India – Affordability, Desirability, Accessibility and Manageability. Most solutions tend to first focus only on the affordability mention. So, Microsoft is trying to offer Windows XP in Hindi (with limitations) at about half the price point of the standard edition. AMD is trying to address affordability and manageability with its PIC, but doesn’t go far enough on both fronts. [$249 is still too expensive, and a local hard disk is asking for trouble in terms of support.]

Leveraging Broadband: Computing in tomorrow’s world cannot be disassociated from communications – it is about “CommPuting.” Emerging markets are going to leapfrog to always-on connections – be it over cable, DSL or wireless. In fact, I would argue that the problem is not the lack of availability of broadband in emerging markets, but the lack of the endpoints – low-cost computing devices and the services (software and content) located at the right places along the broadband pipes.

Focus on the Middle of the Pyramid: Even before we get to focusing on the “bottom of the pyramid,” there is a “middle of the pyramid” that we need to pass through. While the poor of the world are large in numbers and have been made into an attractive segment by CK Prahalad and others, there is a huge opportunity in the middle in the emerging markets. Think small- and medium-sized enterprises, educational institutions, upper- and middle-class homes before we think about the poor.

Think Systems: The mistake that is made many times in trying to solve problems is that the focus is on a silo, rather than the whole system. Addressing one issue and solving it is not good enough – what is needed is a radical rethink across the entire value chain. This calls for not incremental and iterative thinking, but radical and disruptive problem-solving. Similarly, when talking to enterprises, the focus needs to be not on adding another few computers in the next year, but on asking them how they would do their business differently if all the employees had a computer on their desktops – tomorrow!

So, what should the likes of Intel, AMD and Microsoft be doing for bringing Massputers to the world’s emerging markets?

Tomorrow: Emerging Market Solutions