At the intersection of technology, finance and the Pacific Rim.

Monday, September 25, 2006

Cheap Revolution

Forbes has an interesting article on what they term "The Cheap Revolution". Cheap hardware, web access, and open source software, they contend, will change the landscape of enterprise computing. Not just change the landscape, but blow it away.

In class we have learned of Moore's Law. In addition, we have also read Clayton Christenson's remarks about radical innovation or technology advancement being coopted by the incumbents. The telecom world (especially the operators) is Exhibit One for this phenomenon.

There was a panel discussion on venture capital (which I hope to show later in the course) in which an investment banker from Morgan Stanley contended that not much was happening in the enterprise space--to which Vinod Khosla, the eminent (and arguably the most successful) VC argued vehemently to the contrary. In some industries, we have seen revolutionary advances (e.g. digital media and devices) in a consistent, incremental way while in the enterprise developments seem to proceed in a glacier like way. In large part this is due to the end customer-- large beasts with terabytes and petabytes of data, the corporate treasures which all must be carefully integrated and accessed in an orderly manner. Yet at some point, the dam breaks (witness the near collapse of IBM in the early 1990s) when cost performance numbers can no longer be ignored by even the most conservative customer. We could very well be due for another such shift and the slower the change over the years, the faster the breakage occurs.

Tuesday, September 19, 2006

LBOs and Technology

Technology and Leveraged buyouts previously were oxymoronic--meaning that they just did not happen except in rare instances. The reason is that technology companies were thought to be too volatile to take on much debt (necessary for making an LBO work from an investor perspective). All that has changed with the recent announcement that a group of private equity investors have agreed to acquire Freescale Semiconductor (formerly the semiconductor business of Motorola) for nearly $18bn. For details on the deal, refer to this article.

Sunday, September 17, 2006

India and China

Whenever possible, in our course, we will try to cover the rise of India and China. Two interesting articles last week appeared. One was in the International Herald Tribune and details the state of the Indian cellular market: it has become the fastest growth market (in terms of subscriber additions) in the world. The second is an article in the New York Times on Baidu, the dominant search engine provider in China. What do these trends mean for the incumbents in the US, Europe, Japan, Korea and elsewhere?

Friday, September 15, 2006

Apple Feedback

I hope you have had a chance to see the Steve Jobs presentation below. It is always interesting to compare how you perceive the presentation vs. how other pundits and commentators view it. David Pogue of the NY Times and a well noted tech commentator had this headline about Job's product announcements: New at Apple: Smaller iPods, Bigger Ideas.

About the same time, Microsoft was detailing more about their Zune music player that they will also be introducing shortly. The timing of their Zune news was not coincidental, of course. As the differentiating feature of Zune vs. the iPod, the NY Times notes:

"With the Zune, Microsoft said, users will be able to wirelessly send other Zune owners a full-length song, which the recipient can listen to three times within a three-day period. After that, the recipient will need to buy the song to play it again."

So do you think Microsoft has a chance? Is this feature enough to cause people to buy?

Wednesday, September 13, 2006

Apple at the Core

Steve Jobs yesterday announced a series of new products. I encourage all of you to see his presentation in San Francisco yesterday. You will get a good understanding of how fast technology moves--how it shrinks the physical, and gets better with more (storage, processing power, functionality etc. etc.). Also you will see many of the attention to fine details that makes Apple what it is--the focus on how the customer would want in the product and also the little design changes that can have a big impact on the functionality of the product.

Steve Ballmer must be chewing his shoes in frustration. So many engineers and so hard to force feed them with the elegance that Apple brings to its products and style. So what do people think of the $299 iTV that will be coming out in Q1 of next year. What are the risk and what is the upside? We will discuss this a bit tomorrow in class.

Monday, September 11, 2006

Steve Jobs and digital entertainment

This week marks the return of classes and I will be teaching IT Industry Analysis. S o for the next few months, this blog will focus on developments in the industry and their impact on our lifestyle and way of doing business.

Apple is set to come out with a new set of Mac products. Rumours are that it will be aimed at the digital living room--a space where Microsoft has tried for ten years but failed to capture. John Markoff, the noted tech columnist in the NY Times, writes:

With an enticing invitation proclaiming “It’s Showtime,” Mr. Jobs last week touched off speculation about how far Apple will go as it takes its next big step into digital video.

So what can we expect from Apple. On wednesday, we will cover this more. Any ideas on what Apple will do (or should do)?

Saturday, September 09, 2006

Why can't you walk and chew gum at the same time?

It has been some time since I last wrote. Last week I was in Cebu, Philippines to attend a conference hosted by a leading wireless equipment vendor. It is a relatively small ($200Mn in revenue and listed on NASDAQ) company based in Israel. The purpose was to ask the vendor this very question. They had been providers of wireless equipment to our project in Bangladesh. Their equipment performed very well--Bangladesh can be a difficult place for equipment to operate--surging and ueliable electricial power sources, and the rain--when it rains it pours, sometimes distorting the signals. And their equipment was generally acknowledged to be the best. But they seemingly could not provide accurate forecasts to their shipment dates and logistically they have been so mixed up--characteristics that can be hazardous to the health of a young network communications provider. Without equipment, you cannot grow; without growth, you cannot fund in the future; and without funds, you stagnate and wither away. The Company is like a basketball player that could do a 360 degree spin slam dunk, but cannot dribble the basketball.

And their conference was run the same way. Buses did not run on time; cocktail parties started an hour late; and trips that were supposed to take 30 minutes took one and a half hours, resulting in late dinners etc. Your habits show up in big and little ways. How can a company treat customers this way and still survive? One reason may be a product focus vs. a customer focus-- technically brilliant engineers who seemingly do not have a feel for commerce--useful but not long-term players. But there may be another reason: entrepreneurial companies tend to be highly democratic in their processes--everyone has an opinion and each is valued on their own merits (admirable traits). So hierarchy tends to be flat and management processes can become chaotic. The parts "do their own thing" and do not act until they are persuaded to do otherwise. Thus in a global context and organization where people do not know each other, things can get "not done"-- trains don't leave on time, and shipment dates are missed.

All of this means that as you grow a company the people, culture and core values of the company loom in importance. As you bring people from different cultural backgrounds into the organization, tender care must be made with selection and integrating them in tightly to the organization--otherwise the wheels don't move and the concentrated energy that is needed in an entrepreneurial organization is dispersed--frittered away.