iPad - the device for the gaaks.

Most of us have become experts at seeing what isn't, so we miss out simple 'what is' facts. The other problem that we face is that of wanting everything, everytime, everywhere.

Apple's latest creation, the iPad, has underwhelmed the tech media and analysts; they are unable to see why somebody would use a large smartphone or an inferior laptop. Many others are aghast at the iPad's lack of Flash support or multi-tasking. That there aren't two cameras to support photography and video-chatting has let down a few more. Of course, some can't get over the "i" jokes and worse still, the "pad" jokes.

I beg to differ. I see here (and in a few other such devices) an opportunity to expand the market for digital services. Take it beyond the tech workers and fans of gadget blogs, take it beyond the home and office use, take it beyond the developed markets. I firmly believe that iPad has the opportunity to define its market, not as a large smartphone or as a cheaper/smaller laptop but as the primary digital device for the GAAKS, as against the geeks! (More about the gaaks, later.)

Broadband penetration remains relatively low in several emerging markets, not only because of supply constraints but also because prospective customers do not see value in the service. The primary interface device is a computer that is as "complex" as it is expensive. Most kids and senior citizens (all 45+ would qualify!) that have not received "formal" IT education would not venture to use a computer without assistance. Even when they do use a computer, it is rarely for its computing or processing power but really for the purpose of communication, media consumption and sharing. Finally, the keyboard is the most counter-intuitive input/control device that puts-off even highly educated people, leave alone those that aren't.

It is obvious that the next Broadband access device has to be developed using the same principles that have made mobile phones and media players accessible to several billion people worldwide. Simple and intuitive user interface that helps in communication/sharing and digital media management. A device that two-year old kids can manage and so can 60+ old grannies. Something that the neighborhood aunty will find as appealing as students focusing on their courseware. Something that the average-J can use to be more productive at work. Move over geeks, we need to serve the grannies, aunties, average-j, kids and students. The GAAKS.

Using a few personal, albeit anecdotal, experiences, let me outline needs of the gaaks in the context of a digital device:

Grannies: Simple visual control-interface, limited need for typing. Big, bright screen; large icons. Mostly photos, videos and music. Reading books. The occasional video chat. Home use.

Aunties: Cool looks. Fit in handbag. Idiot-proof controls (Oh, did I delete something!?). Music, videos and photos. Calendar. Facebook. Mail reader and forwarder. Home + nomadic use.

Average-J at work: Portable. Simple but secure. VPN/Exchange connectivity. Mail, Calendar & Contacts. Notes. Presentations (on-screen or projector). Document editor. Corporate apps. Occasional media (IT rules permitting). Mobile use.

Kids: Rugged (4-feet drop proof). Delete-proof. Intuitive physical & visual interface. Music, videos, games. Education apps. Occasional books/comics. Anywhere the parents want a silent kid.

Students: Cool looks. Portable (fit in a ruck-sack with other assorted stuff). Social networking. Music, videos, photos & games. Camera or camera-phone interface. Search. Reading books & making/sharing notes. Everywhere use.

(I have described generic / average usage scenarios. There are bound to be exceptions in each of these categories. Have also not included stuff that can be done using pretty much any mobile phone: yakking, texting, FM radio, etc.)

Which device is more likely to serve these large user segments: a laptop-variant or an iPod Touch variant? Remember, most of these people already have access to a mobile phone, so they have basic voice and narrowband connectivity. A bigger, brighter and more capable iPod Touch or an iPhone appears to be more relevant to these users than a laptop or a netbook. The iPad may not yet address all these requirements but from a hardware perspective, it appears to have all features (except a video camera for chat: surprising but not a deal-breaker). The interface and software are almost ideal for the gaaks; a few rough edges should get resolved through software upgrades.

Us geeks will still buy the iPad because, well, we just have to have it. It will add to the bag-load of devices and accessories that we carry with us everywhere. The significance of the recent Apple announcement is that a whole new, untapped market is about to open up. What they call "blue-ocean" stuff in management consulting parlance. More power to the gaaks.

New Year Wish for the Indian Telecom Sector

One thing that the telecom industry seeks in 2009 is the establishment of a predictable regulatory and policy environment. The Indian telecom sector has grown at breakneck speed in the last ten years since New Telecom Policy 99; we have achieved much more in the first decade of deregulation in the telecom sector than any other country has. The overall policy framework has supported entry of several new operators, a dramatic reduction of tariffs and consequently, an exponential growth in subscribers.

However, this rapid growth has also been accompanied by frequent changes in policies and regulations related to the conditions of entry of new players and operations of existing service providers. And in a number of cases, these changes have been preceded by or led to controversies and often, legal battles. Not only have they created confusion amongst operators and investors, but also failed to address the problems.

One of the oldest surviving issues is that of customer choice for long distance calling. In spite of a 2002 Telecom Regulation Authority of India (TRAI) directive to all operators to implement carrier access code within 3 to 18 months, customers are still awaiting this choice. And strangely enough, the TRAI dropped this Directive recently citing non-implementation as the reason! Those operators who invested in long distance licenses on the assumption of direct access to customers have had to since the reset of their business plans.

Similarly, about two years ago, the TRAI recommended the introduction of resellers in the International Private Leased Circuits segment; this licensing change was brought about purportedly to bring international bandwidth prices down significantly. Yet, not a single reseller has been licensed to date! Perhaps, there was no real or urgent need for the introduction of resellers, or customers have been deprived of more choice and lower prices.

Global benchmarks and experience suggest three major changes that can help create a more robust and predictable regulatory environment. Firstly, in order to truly implement the underlying purpose of bringing TRAI into existence, DoT must be mandated to accept and implement TRAI recommendations in totality and immediately. Worldwide, the policy and regulatory functions rest with one agency, thus leading to certainty of policy direction. There is no reason why only a handful of TRAI’s nearly 30 “recommendations” in 2008 should get accepted. 

Secondly, TRAI must be given powers to penalise errant operators. There have been several instances of non-implementation of Trai orders but the regulator has been unable to do much about this. Finally, TRAI should be staffed with professionals with technical, economic and regulatory skills, including those with international experience and private sector participation. Today, TRAI attracts only government officials on deputations or after retirement. Not only are they often conflicted, but also lack the appropriate capabilities to develop forward looking policies, proactively anticipating technology and market trends.

Investors, both international and Indian, have pumped in tens of billions of dollars into the vibrant telecom sector in the last few years. Gains due to exponential market growth have managed to compensate for the disadvantages of an uncertain regulatory environment. Over the next couple of years, in an uncertain economic condition and with relatively slower growth, predictability of the regulatory environment will be necessary to attract further investments.

(This article appeared in the Financial Express on 28 Dec, 2009.)

Succeeding in the New World

It is well accepted today that many of the global economies are facing a slowdown. The combined effect of the mortgage crisis, energy prices and consequent meltdown of Wall Street has taken its toll on even the resilient economies of China and India. The financial services industry is worst hit; other sectors including IT, auto and retail are also on the downturn.

To beat a recession, companies must manage through it with minimal injury, usually through cost cutting. However, it is also a time to emerge stronger for the morning after, by growing into new markets, strengthening supply chains and developing innovative business models. Whatever be the strategic objective, communications technologies and services can play a critical role in helping corporations navigate through the uncertain times as well as prepare them for tomorrow.

Conserve: Traditionally, businesses have focused on cost reduction during a recession, usually, by going after G&A and marketing costs. Global expansion and collaboration do add new administrative and marketing costs and create a situation where businesses have to find new avenues of improving profitability. There is also a need to be increasingly conscious of the impact of business activities on the environment; conserving energy and carbon emissions, along with costs, is the primary mantra in current times. The emergence of hosted or managed services for communications services and applications enables businesses to expand their capabilities without many of the associated costs and overheads.

Enterprise applications including ERP, messaging, and security offered by service providers ensure that all stakeholders can have a seamless experience, irrespective of location and access mechanism. Managed services like messaging and security, not only reduce operating costs but also free up valuable capital resources. The managed services model creates greater focus on core, market-facing business strategies and processes by letting specialist service providers manage the non-core activities. Similarly, data center consolidation and outsourcing can provide major savings through scale of real-estate, power and management. Further, virtualization provides ‘multiplier’ savings in terms of capex utilization, flexibility, power efficiency, disaster recovery efficiency, etc.

There are also several customized “cloud” services to address the demands of specific industry verticals. For instance, hosted contact centers enable mid-sized BPOs to scale their operations with limited up-front capex and pay as they expand their business. Services like public Telepresence rooms, in addition to their power of collaboration, provide considerable savings in cost, eliminating travel and other associated expenses as well as providing other intangible savings in carbon emissions and employee productivity.

Collaborate: Developing countries, growing at over 8.6% p.a. over the next five years, provide significant new market opportunities for large corporations that face demand saturation in the developed countries. This rapid growth in addition to the fact that 80% of global population will be in the emerging economies, makes these markets a must-enter for most multi-nationals. Global expansion will result in globally distributed teams based on the availability of best resources to run global businesses. Supply chains, downstream and upstream, tend to be spread across countries but need to work seamlessly as an integrated, virtual unit. Managing people across locations and building a shared organization culture is the biggest challenge for companies in this new world. Moreover, it is critical that companies create real-time collaboration mechanisms across the extended organization for the creation of new products / services and taking them to market ahead of competition. 

Global Virtual Private Networks (VPN) using MPLS and Global Ethernet solutions enable the creation of secure, multi-location wide area networks with high levels of scalability and flexibility. Bringing new offices online or increasing bandwidth between them or implementing a new application globally has become almost as simple as installation of a plug and play device.

Additionally, businesses can choose from a variety of platforms, including high definition video conferencing (Telepresence), next-generation content delivery networks and converged services, to engage more effectively and in real-time with their stakeholders. It could be a BPO that wants its engagement managers to brief their clients in North America and Europe using Telepresence, face to face every week instead of waiting for the monthly on-site reviews; it could be a fashion products company that uses a content delivery network to provide web-based, video training to its sales teams and agents across Asia the day prior to launch of its next best-seller. It could also be any company whose leadership and management teams use unified communications systems to engage and work as a single team, across multiple priorities, geographies and time-zones.

Innovate: It took the “telephone” nearly hundred years to become a globally adopted and mainstream product. Today, new services and products are launched in days and reach the peak of their life-cycle in just months. The rapid shortening of the consumer adoption cycles creates new opportunities and challenges. The willingness of customers to try and accept new products (and providers) enables companies to enter new markets and challenge incumbents. On the flip side, companies now have very short time-windows to launch services and recoup their investments, before an alternate product comes along or consumer preferences change. Simultaneously, the saturation of traditional markets is forcing businesses to identify new segments that were hitherto untapped or were not suitably targeted. This also requires the identification and adoption of new and/or more appropriate channels that can create the time, cost and focus advantage of reaching a market. The Internet has been at the heart of most innovations in recent years; it continues to be so, particularly with the re-invention of the www as Web2.0.

High bandwidth backbone and access networks and huge cost effective storage are providing the impetus for digitization and online distribution of most forms of content and information. Education – knowledge management and training, in the corporate context – can now be disseminated in a highly interactive and customized manner, across multiple locations using IP-based training and conferencing solutions. Content providers can reach their customers much faster; for instance, an online gaming company with an appropriate CDN solution can deliver new games 4X to 10X times faster than without.

Voice and basic data communication enabled the first wave of outsourcing – contact centers and transaction processing; with advanced video communications facilities, BPOs can create now seek to outsource activities that require intense, face to face interaction and collaborative knowledge sharing. Wireless and mobile technologies have also helped expand the reach of services to markets that were earlier out of bounds. Banks, particularly in emerging markets, can now use mobile ATMs with wireless connectivity to open up whole new, untapped rural markets for financial services.

Businesses have a variety of choices, both in terms of services and service providers. A communications service provider can be more than just a vendor. In the context of the shift to managed and hosted services, the communications provider should be one that has domain expertise and can provide customized business solutions rather than just network connectivity or infrastructure. In these times of uncertainty, it is also important for IT managers to partner with service providers that are financially robust. There are only a handful of communications service providers that have a truly global presence in voice, data, IP and managed services. Given that telecom is still a reasonably regulated industry in most countries and that scale, infrastructure ownership and domestic presence have a crucial impact on service delivery capabilities, IT managers will need to make the trade-off between global coverage and in-depth, local presence in key markets / destinations. 

The world has seen more changes in this decade than it has ever seen in the past. The next few years will probably accelerate this change, in political, economic and social spheres. Collaboration and innovation are the heartbeats that will drive this new networked world. It is a world where the strategic adoption of communications and services will play a decisive role in differentiating winners from the also-rans.

This has appeared as an article or an interview in various publications: 

MIS Asia

TMCNet

Asian Channels (doc version)

Emerging Markets Calling...

The Indian telecom market has not only grown at a scorching pace in the last 5-6 years but also created some world-class companies that have now emerged as potential global challengers. There is now great level of excitement amongst investors, customers and bankers worldwide about the next moves of the Indian telcos. Whether it is mobile mergers or submarine cable builds or Wimax investments, India appears to be in the thick of things.

 

Over the next few years, growth in telephony will be driven by emerging markets in Asia, LatAm and Africa. These markets, with low teledensities, have been using wireless / mobile technologies to leapfrog several generations of telecom.  Emerging markets are also leading the growth in data and bandwidth consumption partly driven by increasing Broadband penetration but more importantly on the back of growing enterprise connectivity. These markets, typically growing 6-10% p.a., are now attracting attention from MNCs as growth or revenue opportunities, and not just as cheaper alternatives for back-office functions.  We are also seeing the rise of the new multinationals, from India, China and other rapidly developing economies, creating the reverse, outbound flow of investment. An obvious consequence of this economic activity is the need for improved cross-border communications and networking services. 

Some of the Indian telcos like Tata Communications made significant investments in global submarine cable networks at a time when most western telcos, smarting from the excesses of the previous decade, stayed away from the game. The previously under-supplied regions of Asia, including India and Middle East and Africa are now the hot-beds of cable laying activity, with Tata Communications alone involved in at least half a dozen projects simultaneously. We are also now moving up the value chain through investments in new networks (MPLS and Ethernet) and the creation of managed services like managed security, hosting and collaboration, with investments of several billions of dollars. Not only do we have the advantage of growing local businesses, we also bring with us a distinct knowledge of operating in the complex business, regulatory and policy environments of the emerging markets. As Indian companies and multi-nationals seek to build and expand their presence in this new world, they have greater comfort in partnering with those that have global capabilities but are locally superior. 

Indian telcos may have the disadvantage of a relatively small home market - the Indian enterprise market is about $5Bn in size compared to most western markets that are 4 to 20 times larger. Being small and late to market however is possibly our biggest strength. Determined to make a mark and without the burden of legacy networks and systems, we can seek to successfully take on the larger, more established and usually bureaucratic competitors. In particular, as relative new entrants, we can focus on innovation around new services capabilities and commercial models. At the same time, ownership of the core transmission and IP infrastructure provides us the ability to create distinctive network or cloud based managed services. Our managed security offerings, for instance, combine superior technology platforms with the strength of a global, Tier-1 IP network. Similarly, the ownership of a global MPLS network and a unique private plus public room business model have translated into a world-leading managed Telepresence service.

Indian telecom companies are not yet amongst the largest in the world, perhaps we will never be as large as some of the big players from the US and UK. However, in several segments and markets that have the highest growth potential in future, one can safely expect us to play a leading role. As developed markets age and slow down further, India and other emerging markets will become the center of gravity for the new world of communications. We can proudly say “hello” to that. 

(This article also appeared in the Annual issue of Communications Today in October 2008.)

India@75: What can India Inc. achieve in 15 years?

Vision has been defined by some as the setting of bold and audacious goals. Prof. Prahlad has indeed set India some challenging goals for 2022, one amongst them being ‘30 of Fortune 100 from India’. Given that today not a single Indian company makes it to the list and only 6 feature in the top 500, it is indeed an audacious goal. At the same, it is not unachievable. Five of the top 20 global companies in 2008, by market capitalization, are already from emerging markets. Fifteen years to 2022 is a long and adequate time in today’s world for Indian companies to break into the Fortune 100. 

One of the major reasons cited for Indian companies not being large enough compared to global peers is the relatively small size of the Indian market (the US pet food market size is as big asIndia’s entire FMCG industry, etc.). The trick, however, will lie in identifying opportunities that can leverage our inherent strengths and the rapid economic growth that we are experiencing. By 2022, India would be the third largest economy and will contribute nearly a billion strong workforce to the world. The market should provide adequate (volume) scale to create globally leading business models. Even today, the Indian mobile market is next only to the Chinese, in terms of size, and is growing faster than any other market worldwide. An additional challenge inIndia is to consolidate what are typically highly fragmented and unorganized markets. Leadership, in the true sense, in the home market is essential to achieve the scale that the Indian market can provide. Simultaneously, we also have to be prepared to access and compete in international markets if we truly want to achieve global leadership. 

The key task for Indian firms is to leverage the power of the billion in creating globally competitive businesses. In order to eventually become globally leading, we need to first focus on benchmarking ourselves to the best in the world, on service level, cost and productivity measures. This is important for Indian companies so as to even remain competitive in the domestic Indian market which is seeing the entry of several international players. Tata Steel became the world’s lowest cost steel manufacturer several years before it commenced its global ambitions. 

Being globally competitive will not be sufficient to achieve leadership. Successful firms lead through innovation, backed by open organization structures & culture and significant investments in research. We lag on both counts, more so on the latter. We have relied far too long on licensing technologies, reverse engineering and services models; now is the turn for us to create products, technologies and business models that will be replicated elsewhere. If over 80% of global incremental mobile adds are expected in emerging markets, who better to lead the implementation of profitable, low cost mobile business models than Indian operators? Why cannot India, a broadband starved country, drive the adoption and lead the growth of WiMax and other wireless broadband technologies? Thus, Indian companies are better advised to seek and succeed in opportunities in other growing, emerging markets rather than rush to the large but static markets of the developed world. 

The next few years will be at the same time challenging and full of opportunities. Several markets, including USA and UK, are reeling from economic slowdown and financial crises. Consequently, most MNCs are seeking to grow into India (and other emerging markets) making these markets more competitive. We have to defend our domestic turf, not by creating entry barriers but by taking on global players head-on. At the same time, weak global markets are throwing up interesting acquisition opportunities at attractive valuations, opening up new markets in USA and Europe. This will enable our companies to also enter and take the fight to the global markets. Indian companies will have to master this block (at home) and tackle (abroad) strategy to win in the emerging world order. 

So, can we get to 30 of Fortune 100 by 2022? My bets are in favour of us succeeding. BCG’s New Global Challengers report has already identified 20 Indian companies that have the potential to challenge and change the world. We have to just find ten more.

(A version of this article appeared in the Outlook Business June1-14, 2008 issue.)