Information Technology (IT) in India- the challenges, Future Scope

The Indian information technology sector has been instrumental in driving the nation’s economy onto the rapid growth curve. According to the Nasscom-Deloitte study, the IT/ITES industry’s contribution to the country’s GDP has increased to a share of 5.2 per cent in 2007, as against 1.2 per cent in 1998.

Further, the IT and BPO industries are poised to clock revenues worth US$ 64 billion by the end of fiscal year 2008, registering a growth of 33 per cent with exports expected to cross US$ 40 billion and the domestic market estimated to clock over US$ 23 billion, according to a study. Simultaneously, the Indian IT services market is estimated to remain the fastest growing in the Asia Pacific region with a CAGR of 18.6 per cent.

India’s IT growth in the world is primarily dominated by IT software and services such as Custom Application Development and Maintenance (CADM), System Integration, IT Consulting, Application Management, Infrastructure Management Services, Software testing, Service-oriented architecture and Web services.

 

Challenges and Positives:

Can we stay Competitive? In the recent past we have seen that the Globalization 3.0 has resulted in Outsourcing and Off-shoring spreading to various other countries like China, Vietnam, Philippines and the Eastern European countries. In the wake of such competition can we still remain competitive? The answer is pretty much yes. We know that our assets are the talented pool of people who are not only competent technically but also linguistically better at English compared to the other competitors. Also the government support, labor pool, infrastructure, educational system, cost, political and economic environment, cultural compatibility, global and legal maturity, and data and intellectual property security and privacy give Indian IT companies and edge. But contradicting this is the Nasscom survey, which states that majority of the graduates coming out of the colleges today are unemployable. We need to introduce training programs in colleges to train the talent pool of students not only technically but also on soft skills. The training should also be imparted to the faculty to generate a better equipped talent force. These measures have already being taken by the IT companies, which also helps in reducing the training costs incurred by the IT companies after recruitment.

Dependency on the US: In the wake of the Sub-Prime crisis and subsequent economic recession in the US, the companies there started cutting down costs and one of them being IT expenditures. Because the majority of the IT companies in India have an export driven business model and majority of it is to the US, the companies have been facing a lot of heat. Some of the clients of these IT companies have gone bankrupt; some others have incurred heavy losses (Citigroup, Bear Sterns, and HSBC etc.) The IT companies should therefore explore options in Europe, the western Asia and Asia-Pacific and reduce direct dependency on the US.

Though it seems paradoxical but recession in the US is only going to make the Industries over there outsource more, primarily to reduce their costs by efficient application of IT, cheaper labor and cost effectiveness.

Indian IT firms outsourced and Off-shored! : It is observed that competitive markets have emerged in Latin America, Eastern Europe and South East Asia. Moreover there are emerging economies present in these areas like Brazil, Russia etc. The IT companies have already forayed in these countries for two primary reasons: First, it provides them to take advantages of cost-effectiveness in these areas due to new talent pool, Lower wages and greater advantage by making their exports cheaper and competitive. Second, places like Mexico have emerged as a major outsourcing and offshore development centre for the IT companies due to the proximity to their major business clientele in the USA. This not only provides cost-effectiveness, but also helping the client in round the clock service providing environment.

Rupee Appreciation and FII: In the wake of US crisis it was observed that the rupee appreciated due to the weakened US economy, Federal bank interest cuts and subsequent FII inflows in the country. Due to this IT companies in India incurred lower profit margins. On the flipside it surely gave them a wake-up call to effectively utilize the resources and bench strength. FII inflows and FDI in the IT sector surely helps in rolling out further expansion plans but excess FII also make the exports incompetent. So the govt. should take steps to manage excess FII inflows into the country and hedge the export driven sectors against the rupee appreciation.

IT SEZ’s: To further make the IT fraternity competitive, the govt. should take steps to develop IT Sez’s. This will reduce the excess tax burden on these IT companies. Moreover STPI (Software Technology Parks of India) have already enabled the IT companies and new startups to carry out the documentation and licensing and tax payment hassles through a single window system. Moreover the govt. should also relax norms for DTA (domestic Tariff Areas) to promote IT spending in the country itself at a lesser cost leading to development of the country.

Diversification In Verticals: In the wake of US crisis, one of the Indian IT company suffered major drop in profits because majority of its clientele in the BFSI (Banking Financial Sector and Insurance). This was the sector which took the brunt of the recession. And the company’ BFSI clients cut down on their IT spending leading to lower profits. Thus the companies should balance their presence in various verticals which will surely make them immune to unforeseen events.

Telecom and 3G: The roll out of 3G of mobile phones in India should be seen as a positive development for the IT companies. In the long run it is going to provide basic communication facilities in the rural areas of the country. Unlike the US where 3G brings luxury, In India it is going to provide basic communication and broadband access to the rural youth. This will result in dissemination of information and creating further talent pool for the country. We have already seen the IT industry moving to Tier-II and Tier-III cities to tap local talent and maintain cost-effectiveness. Moreover Growth in Telecom industry also demands greater IT application in terms of VAS (Value Added Services), Telecom Billing Solutions, IVRS etc.

Domestic Markets: Dalian in China has been growing as the major IT hub there. If actually compared China’s IT spending is five times that of India, most of it being domestically. This could be also seen in the organization of retail sector in China showcasing the presence of Retail majors like Wal-Mart there. Hence IT companies should also focus more on the domestic markets with major projects lining up inside the country as well for instance the Railways ERP project, the BSNL systems integration, networking projects, IT work from ministry of finance and private telecom companies, banks and others are offering multi-year contracts that are over US$ 100 million. Moreover multinationals have been lining up in India further strengthening the IT growth in India.

Capgemini, Europe’s largest consulting and computer services firm is gradually moving its internal support services to India.

After sourcing IT applications from some IT firms last year Wal-Mart will now expand its existing operations given India’s impressive IT capability to cover more firms and augment its work in the United States.

Intel-the globally renowned chip maker is looking to invest more than US$ 1 billion in India over the next three years in partnership with Indian and foreign hardware firms to prepare light weight personal computers.

Cisco posted over 100 per cent year-on-year growth in its SME business in India.

Oracle is expecting over 100 per cent growth in India for its CRM business on the back of increased technology awareness and need for cost-effective customer servicing.

Yahoo! Inc and Tata Sons subsidiary firm Computational Research Laboratories (CRL) have entered into a joint agreement to make available-EKA, a supercomputer (the fourth fastest) in the world for cloud computing research in India.

Dell India witnessed 80 per cent sales over last year with revenues to the tune of US$ 700 million.

World’s leading chip designer firm ARM is expanding its India design centre to make it the largest outside Britain.

IT biggies like Microsoft, IBM, Cisco, Oracle and a host of other IT entities are working overtime to tap the smaller and medium businesses.

Conclusion: Thus we observe that the Indian IT industry has been facing some challenges but if effective steps are taken then it will surely help it to remain competitive in the future as well.

 

Why Engineering? Which branch is good? – For me or for the world? A rogue engineer’ analysis of the hidden side to everything in engineering!

It’s that time of the year when thousands of souls are lining up on the crossroad trying to determine which road to take! I was too four years ago; when I was in a similar situation after my class XII. Ok atleast I knew I was going to do engineering. But I was confused what branch is apt for me? Do I choose the branch depending on the demand and worth of the branch or will that not matter and I can make my own choice depending on my own interest. What do I really want, everyone came up with their own advice, infact I wasn’t even listening to anyone, I had developed a misconception and was thinking only about it, which is may not be such a wrong thing to do at such a point of time. This is what I intend to explain through this post!  Read on \m/.

Why engineering?

Is it because you want to be the next Jack Kilby or Thomas Edison? Want to do a PhD in the subject?  These guys know it all what they exactly want. They do not require this manual! (More importantly these are the kinda guys we so badly want)

Is it because you think engineering is a good career option and you not very sure what after and want time to decide your future course of action but you want to learn a lot of things and do good. (My kinda guy)

Is it because you’ve heard B.Tech + MBA helps you secure your career totally and land you a job in the world’s best company ruling over these godforsaken engineers, getting them do all the work while you take away all the credit! (Both literally and monetarily)  (Most of the people take up engineering these days because of this factor which is not necessarily wrong)

I took up engineering now what?

1^st year 1^st day: Come in the dim witched lecturers and asks us for our intro and future plans! If only I had a future plan?  No points for guessing 70 percent of the class went for the third reason in the previous paragraph and so was the percentage in most classes. I was as usual for the second reason but I just said that I wanted to do an M.Tech just for the heck of answering a question whose answer I did not seriously know that point of time(though I do not want to do it now!)

What engineering branch do I choose? Which is the best?

If you are type 1 you know it all, you know the branches which interest you, go grab it! For example in our first year I had a classmate who would design robots (from scratch), in our Computer Aided Design Classes when we guys used to design simple figures with great difficulty, some geek gods used to design airplanes and submarines. (That counts for some geekiness, and it was more depressing than inspiring because even though you want to be you can’t be a geek like them, they are born that way. After all who designs robots and airplanes three months into engineering, we can only attempt its not difficult but still hats off to them)

If you type 3 you need to choose the branch which makes a good combination with an MBA degree. Mechanical is by far the evergreen branch serves the best with MBA. Then come in the Electrical branches ECE preferably, EEE sucks (did not find a better word) no explanation required here! Since your focus right from start is to do an MBA choose the branch you’re comfortable with it! I know a Sardar from my batch who can’t write a program for calculating the area of square in C language (the simplest program you will come across), but he wants to do an MBA and he took up ECE! So that counts for some bravery, sincere advice join a branch where you will be able to score a good percentage and show up the future employers that you rocked in engineering! For the good ones who can carry on the pressure and can definitely do well no qualms, you guys will definitely do well irrespective of the branch.

If you type 2, this Post is dedicated to you guys.

Electronics and Communication Engineering J what I am): By far the best. If you interested in designing computer chips, if u think you are fascinated by how a cell phone works, how the battery power lasts for so long for some devices and not for some (Nokia Vs Sony Ericsson), want to know what is this fuss about 3G, CDMA vs. GSM, want to design an Automobile safety system, a collision avoidance system, Program a chip and put it on a robot to make it work the way you want, Design protocols that decide how the data will be transmitted across the free space or through optical fiber, then ECE is for you.  Future scope: Immense, with companies setting off shore campuses for R&D in India there will be immense demand for EC engineers. Boom in the Telecom sector and then new Fab city (for silicon wafer fabrication and manufacturing chips for first time in India) ECE is here to stay. Moreover ECE guys are versatile can be fit anywhere.

Companies:

EDA: Cadence, Mentor Graphics,

Semiconductor Design and Fab: Nvidia, AMD, Intel, Infineon, Freescale, Bosch

Telecom: Huawei, Alcatel-lucent, Ericsson 

 

Electrical and Electronics Engineering: If you in the IIT’s its ok. If other colleges this branch I don’t consider a very good option. Major part of your engineering life you are running a Motor or an Alternator first trying to understand how it works then its efficiency and then how do I transmit the power. That’s it your life stops there. You hardly learn things which are in demand today. Under the pretext of electronics all they learn is SCR and UJT (if that counts for a field as vast as electronics) Still I know a friend of mine who learnt a lot of things on his own like robotics, microcontrollers and embedded systems and is working on quality product stuff. There is always room for learning everywhere.

Civil and Mechanical Engineering: (We go hand in hand): My personal favorites, if you are the kind of guy who is inspired by the modern marvels on History channel. The unique design of the Hong-Kong airport, PETRONAS tower or the Bruj-AL-Arab hotel inspires you and you like watching extreme engineering on discovery channel. Or if you heard that Mahindra Scorpio was designed by an Indian engineer who was 23 year old! If you want to design the next gas guzzling Hummer for the US marines or the fuel efficient and the cheapest car on earth Nano! Or if you fascinated by Michael Schumacher and feel you should design a faster car for him so that he can remain competitive even @ the age of forty, or if you want to know that the site of the world trade centre is good enough for a building that giant size, then these branches provide you the opportunity to do so!

Biotechnology:  If you think that you did not get a seat in a medical college and you can compensate it with a degree of B.Tech Biotechnology, this ain’t true. The b.tech biotech guys just study the applications and they hardly know the undercurrents. It is better go do a B.S in genetics or microbiology. What B.Tech biotech does provide you is a diverse understanding and application of biotechnology in diverse field ranging from protein engineering to Industrial processes of producing a better quality beer to a way to understand means to protect the ecology, or even design a drug but in a generalist aspect! So if u thought you will be working on stem cells and producing new dollies (the cloned sheep) you’re mistaken, this is one branch where a PhD is a must and requires immense hard work dedication and research unlike other branches. So if you can burn the midnight lamp and read those big fat books (which I’ll rather use as a pillow or a dumbbell) like doctors do, this is the one for you!

Chemical engineering: If you think you are good at organic chemistry, or want to design high pressure boiling chambers, or think that you have better ways to treat the chemicals coming out of the industries to save the environment, or you think you are fine with the smell of Hydrogen Sulphide this branch is for you.

Computer Science: The most sought after branch. This should not be necessarily seen as related to coding! Engineering. There is lot more to it. If you interested in operating systems, think windows sucks and Linux rocks and you think you have the creative genesis to design cool applications. Moreover there is web designing, Distributed Computing (getting a lot of computers together and make them solve a common large problem i.e. a cheap way of making your supercomputer), Networking and designing optimum algorithms for fast processing this is the branch you are looking for! Basically you got to have good logical skills and work on it.

 

In general there is more to engineering than only Studies. There is a lot of room for personality development, meeting people from different diversities (if you in a nationally reputed college) and taking part in different activities. Thus engineering rocks no matter how you see it!

 

P.S : if u have any queries please post a comment, i’ll get back to you.

BLACKBERRY Vs INDIA! – The Impasse

On 2nd of July, in a complete turnaround of its previous stance, the Department of Telecom (DoT) said that there was no threat from blackberry services and the government had no objections if an operator wanted to offer these services. This comes after an impasse of almost over two months. So what was the reason for the impasse and what has finally emerged as a viable solution for both the sides? Let us have a look. 

What is blackberry?

Blackberry is broadly identified as a PDA (Personal Digital Assistant). It is designed and marketed by RIM (Research In Motion), a Canadian firm. It is a wireless hand-held device introduced in 1999 which supports push e-mail, mobile telephone, text messaging, Internet faxing, Web browsing and other wireless information services. Further features are: Large, high resolution screen to provide ample workspace; vibrant display supporting over 65,000 colors; available memory for application and data storage; Java development platform based on open standards; integrated attachment viewing; exceptional battery performance; tri-band hand-held, operates on 900/1800/1900 MHz GSM/GPRS wireless networks, allowing for international roaming between North America, Europe and Asia-Pacific.

Why the security agencies are concerned?

The Indian security agencies have concerns that the data generated by the blackberry is not only difficult to monitor and intercept, it’s even tougher to decrypt the generated data sent over the network. The security agencies feel that this could be used by the terrorist organizations to their advantage in exchanging vital information pertaining to national security and could pose a serious threat.

Under India’s Information Technology Act of 2000, the government has the right, under certain circumstances, to intercept electronic communications for security reasons and in the national interest. Security agencies say that terrorists are increasingly using the Internet and applications such as e-mail to communicate with one another.

The security agencies have some primary problems with the blackberry:

1.  The BB uses a 256 bit encryption which is by far one of the toughest in the world to break through. The present operators providing such services offer 128 bit encryption. Moreover the security agencies have the only the capability to break through a 40-bit encryption in their armor.

2.  Most of the data that is sent through the BB is routed through its server in USA and UK. The security agencies want that since it is difficult to access these data because of multiple reasons pertaining to sovereignty, diplomatic and security reasons, the proposal is that all data generated by the BB’s in India should stay within the country. And for this RIM has to setup dedicated servers in India itself.

3.  RIM should provide means to the security agencies to monitor the data, by either providing the master key to the database, or let the security agencies monitor it by bringing down the encryption level.

What RIM says? 

 

 

1.  RIM says that providing a 256 bit encryption is the USP of its blackberry model. The very reason that it provides such robust security feature is the reason it is being used by the corporate in exchanging important confidential business mails. Bringing it down to the level demanded by the security agencies will hurt its basic business model.

2.  Second, RIM says that setting up server in India will make other countries where it is operating (operates in 135 countries) demand the same. This will greatly hurt its business propositions and it is against any such demands.

3.  Then RIM feels that snooping through the users BB by the way of sending a SMS and that will automatically install itself and either let know the encryption key being used would greatly reduce the QoS and the device may behave abnormally (performance) and the user may get to know that he/she is being snooped.

4.  RIM also makes it clear that the decryption key for any data sent is not even known by it because the device which sends the data itself generates an encryption key and can be decrypted by the user to which the data is intended. And there is no such master key which the security agencies are demanding.

5. Most importantly RIM says that majority of its clients are corporate companies, and these are used by people in the higher hierarchy in these companies, so RIM has proposed that their monitoring was not of concern and the real problem in monitoring would require the individual clients. The RIM is therefore working out technological changes to help the security agencies in monitoring these individual clients.

So each side has put their point of view with the DoT, security agencies and RIM are working together to find out ways for monitoring the data and help it covert into understandable form. Hopefully this impasse seems to be breaking.

 

CARRIER SELECTION- what is it, what are the operators saying?

The latest buzz in the Indian Telecom industry already complaining against TRAI and DoT for the delay in rollout and licensing of 3G in India and has come under yet another regulatory order from the governing authority. The TRAI wants to introduce carrier selection in the India. So what is the fuss all about? Let us have a look.

Carrier Selection:

This enables a telephone subscriber to decide which operator it wants its call to be routed through when he/she is making an ISD/STD call. So say I am a Vodafone customer staying in Hyderabad and want to make a call to someone in Delhi. Unlike now where I have to stick to my present service provider (this case Vodafone) and it (my present service provider) decides how my call is routed and charges a specific amount for the call. In the carrier selection process I get to choose my own operator. This can be done by prefixing the code of the operator which I want my call routed through and whose network I’ll be using before the number to be dialed. My choice will primarily depend on two factors:

1.  Cost – operator providing cheaper call rates may be preferred

2.  Quality of Service – operator providing better QoS like voice clarity, low echo, and low latency and jitter.

So once the customer decides upon his option he’s free to use the particular operator.

This however should not be mistaken for MNP (Mobile Number Portability) where the customer uses the same number but has shifted to another operator. In Carrier selection I’ll be still under my service provider for normal call and value added services but for long distance calls I can choose the operator for carrying the voice calls. 

What’s TRAI’s Vision?

TRAI, yes the Telecom Regulatory Authority of India which has been bullying the telecom players for quite some time now. TRAI feels that the adoption of American system of carrier selection in India is largely going to help the subscribers. It also sees a general increase in competition thus pushing the prices further down. It will also spur further innovation in terms of better long distance communication and facilities (QoS). Thus TRAI believes the end user will be greatly benefitted.

What the operators have to say?

The operators believe that the present regulations being introduced by the TRAI is unfair for multiple reasons

1.  The present long and short distance call rates in India are already cheaper than most markets in the world. The call rate is generally in the range of 80 paise to Rs. 1.60. Out of this around 65 paise goes for the carriage, 30 paise is the termination charge (fixed by the operator) and rest is what goes to the operator. Therefore service providers think that they are already operating on a thin margin and there is minimal space for further reduction in call rates.

2.  Second, when the scheme of carrier selection was first introduced in early 2000 there were very few operators in the market. The scheme would have been feasible at that time encouraging competition and driving down call rates. Presently there are twelve Mobile Service providers operating in the market. Thus the service operators hold an opinion that they are already enough players to have good amount of competition and keep the prices as low as possible.

3.  Third, the cost required for setting up the Intelligent Networks for Carrier selection is huge. Rather than bringing down the cost, setting up these infrastructure and extra capital flow may lead to increased call rates. Moreover already the Telecom billing system is still maturing; there is no fool-proof system for correct billing. Due to this Mobile Telcos lose out on some revenues. Moreover increased burden in terms of setting up extra IN (intelligent networks) may tax heavily on the service providers.

4.  Finally, one more point to be taken note of is that most of the players which have a considerable customer base are already long distance players (barring Vodafone). And the competition has already driven the prices low.

The Mobile operating space is already very competitive courtesy a significant number of players in the market. Moreover they already are operating on thin cost margins. The Regulatory authority should therefore concentrate on 3G regulations and future innovations.

Increased Interest Rates and Inflation – Good for some, bad for many?

While Idea has been spicing up the Mobile market in India, and while the spice in the Indian Consumers food is missing courtesy increased commodity prices, the Reserve bank of India has hit out further by increasing the repo rates (the rate at which the RBI lends out money to the other banks) and the Cash Reserve ratio (CRR, the minimum amount of cash stocks the banks must maintain). The logic RBI gives is that it is going to tame the liquidity in the market by squeezing the excess cash floating in the market.

But is it what we really require? The RBI seems to have a notion that the current crisis is demand pull inflation where too much money chases too few goods. Rather the case right now is that of Cost-Pull inflation wherein the companies have to increase cost of commodities as a result of increased input costs like hike in oil prices, raw materials, basic metals and increased tax rates and import duties. This is very similar to what we have been observing off-late where the prices of inputs which go into manufacturing of these commodities have grown over the time. While the appreciating rupee saved us from the wrath last year, this fiscal the rupee has depreciated as well.

The policy of the RBI is going to lead to stagflation (high unemployment and economic slowdown).

1.   The current food crisis led to government completely banning export of major food commodities and completely decreasing the tariffs on imports. This would surely hurt the revenues of the govt. and also the overall economic growth to some extent.

2.   Moreover the RBI on increasing the rates has resulted in greater difficulty for the corporate sector to get loans from the govt. in terms of debts, moreover the markets are difficult to get the cash flowing to these corporations due to the increased alienation of the market by the investors due to inflation (as seen by the continued downward trend of the markets). This will only lead to companies shunning economic expansion and further slowing down the economic growth of the country.

3.   The increased interest rates are going to hit the general public by and large. Due to increase in the repo rates by the central bank (RBI), the banks are going to increase the primary lending rates which will be generally ranging from loans for homes, automobiles and even study loans. The consumers taking loans at this time should take a loan on floating rates so that when this inflation is finally tame and the rates are finally decreased they still don’t keep paying the same as they will be now. Moreover consumers already facing the music due to increased rates and EMI’s should try to increase the duration of payment in years to bring down the EMI.

4.   The biggest sector that is going to be hit by this interest rates hike is the Real Estate sector which is so susceptible to the market interest rates. As the customers are going to stay away from taking loans and buying the property the sector will generally slowdown. Moreover the big corporations are just going to wait before rolling out any expansion plans, so cutting down on infrastructure and further slowing down this sector. However because this is going to drive property prices slightly lower in most markets, it is not going to be a particularly bad idea to buy properties right now, probably on floating rates.

5.   Another sector which is particularly going to suffer is Automobile sector. Already the input costs like steel have gone up, the oil prices have gone up keeping consumers away from the roads and now the increased rates will surely slow down the sales, and most of the CEO’s won’t be able to achieve their targets.

6.   However as the lending rates will go up, so will the rates at which banks borrow from individuals and companies. So the particular debt-free cash rich companies are going to gain. Moreover this is generally going to make the market less attractive. Moreover as Markets are meant to give you better returns than the banks especially in terms of maintain the purchasing power of your money over the years. Moreover more and more people are leaving the markets; FII’s as well who are anticipating a general economic slowdown. However this should be seen as the best time to jump-in the stock market.

7.   Moreover the cap on FDI will generally keep away the investors from investing in the country due to a nominal appreciation only, so the cap must be increased. We observed that FDI cap in Real Estate in India has gone up leading to a lot of infrastructral investment and economic activity.

8.   At the same time the depreciation of the rupee has to be controlled in the wake of increased international oil process. This will further help in taming the inflation. Some export oriented sectors will be affected but then the present situation demands a more balanced approach.

As the lending rates increase and the liquidity crunch prevails, will generally tend to economic slowdown. However the RBI and the govt. must try to find out better ways to balance the rising inflation and economic growth of the country.

NOKIA SYMBIAN SYMBIOSIS

The greatest news of the week seems to be that Nokia is going to completely buy out the biggest mobile OS maker Symbian. Nokia which already held a 48 p.c. stake in the company is going to buy out the remaining 52 p.c. So what? Is it a raw deal? What does Nokia want to do with the new deal in picture? Let us have a look.

Symbian: Symbian was a company which until now designed operating systems for mobile devices. The Os was largely proprietary meaning that no one else could use it without the permission of the Symbian consortium. Yes, the Symbian consortium (Symbian Ltd.) was established on June 24 1998 as a partnership project between the big bosses of the mobile space Nokia, Ericsson, Motorola and Psion, to exploit the convergence between the PDA’s and the Mobile Phones. Soon other players joined the consortium like LG electronics, Samsung, Panasonic, and NTT DoCoMo. 

What was the aim of the Symbian consortium? The Symbian consortium aimed at developing a unified closed source OS which the members could use with some modifications pertaining to the user interfaces and development of device drivers for proprietary hardware boards. The organizations joining the consortium after paying a particular license fees which would entitle them under the Eclipse License and they could use the OS.

Market: Symbian OS is the leading OS in the ’smart mobile device’ market. Statistics published February 2007 showed that Symbian OS had a 67% share of the ’smart mobile device’ market, with Microsoft having 13% through Windows CE and Windows Mobile and RIM having 10%. Other competitors include Palm OS, iPhone OS, Qualcomm’s BREW, Google Android and SavaJe.

Current Trends and the OS (open sourcing) of OS’s (operating systems): Over the years Nokia has been the leading mobile phone manufacturer in the world. Infact every 4 out of the 10 phones sold in the world is a Nokia. But the general trend over the years in the Smartphone market has been shifting to a more ready to market device. This has led to the focus on software development for the Smartphone’s. However the developer community was not too happy. Despite the software being licensed out the developers had tough time adapting themselves to different user interfaces wherein Symbian has long served as the underpinnings for several palmtop interfaces, including Nokia’s own S60, Sony Ericsson’s UIQ, and NTT/DoCoMo’s MOAP (Mobile Oriented Applications Platform). These varying user interfaces were a problem. This is where the developer’s started shifting to the open source movements like LiMo (Linux Mobile) and then Google came out with Android. The Symbian Foundation will unify those user interfaces, which will likely make application development easier and more consistent across a wide range of phones. This is exactly what Google wants to do with Android: unify the mobile Linux community behind a consistent interface that’s compatible across a wide variety of phones and available under an open-source license. According to sources at Nokia, code will be released to the public for the first time in either the last quarter of 2008 or the first quarter of 2009. All of Symbian OS and its development tools will be made available by 2010. At this time, Nokia and its Symbian Foundation allies plans on releasing the program under the Eclipse Public License 1.0. In short, Symbian and its major interfaces are well on their way to becoming a completely open source operating system and development platform. This spells potential trouble for Linux embedded systems. Google, faced with delays in its own Linux-based Android platform, made the best of things in its response to Nokia’s news. A representative for Sean Carlson, Google’s manager of global communications, said, “Openness fosters innovation, benefiting consumers. We’re very pleased to see other major players in the mobile industry moving in this direction.”

Winners and Losers: 

1. Apple can be seen sailing through the Smartphone market through innovation. It has already created a niche market for itself through technical prowess. So it is highly unlikely that its proprietary software policy will affect the sales. It can continue to innovate and attract new customers. Thus Apple is going to remain largely unaffected by this deal.

2.  Symbian is been running on 60% of the mobile phones worldwide courtesy Nokia and since majority of Nokia’s phones run Symbian it’s obvious that Nokia does not want to lose out in the race and wants to be the market leader and develop Symbian to match the other upcoming competitors like android and the Limo. Moreover unifying the various platforms and open sourcing is going to make the developer community stick to Symbian Os and help in fostering innovation and better software for Nokia users. The developer community which was being wooed by the Open source Linux Mobile community and the Google’s fully open sourced Android are now going to stick to Symbian. Thus Nokia clearly emerges as the winner out of this deal. It is going to lose out on some revenues though the licensing but it is going to earn through other means like lower development costs and faster innovation.

3.  Google and the Linux community which share the same ideology will be losing out due to increased competition and largely because the LiMo is still very unorganized, compared to symbian which has a dedicated developer pool working towards a concerted goal. It is still Even-Stevens for them.

4.  The odd man out remains to be Microsoft and the Canadian based Research In Motion (RIM). They have for long been closed source and charging high amount of licensing fees. Microsoft’s share of 15% is sure to decline. Because unlike earlier the price to develop and time to market mobile software and Os is going to come down drastically with the opening up of Symbian and presence of other open source players like Google and LiMo. These have already brought down the cost to almost nil. So obviously companies are going to stick with Nokia-Symbian which would provide a cheaper solution and support than MS or RIM. So Microsoft Corporation clearly stands out to lose and will have to come out quickly to maintain its declining market share.

Thus Nokia-Symbian symbiotic existence and opening up is not only going to help the developers world around to innovate further without worrying about the platform and licenses, improve the time to develop and finally help bring down the prices . This will ultimately bring down the price of the mobile phones and the ultimate winner will be the end user.

 

 

An Apple a generation steps up the innovation – latest developments around 3G model and the iPhone sales issue

In 1984, there were personal computers but then Macintosh was launched and it gave us the Graphical User Interface (GUI) and revolutionized the concept of PC’s through iconic innovation! This was Generation 1; I’ll call it Epoch I.

Epoch II: Before 2004 people knew and heard digital music but then iPod came into existence and the rules of the game were changed. iPod provided us with ubiquity and the way we live the music. 

Epoch III: Before 2007 people used smart cell phones, heard music on the move, even surfed the net through these gizmos, but iPhone changed the rules of the game again. It integrated everything into one device, not only made it attractive, user friendly, easy to navigate but more importantly started the beginning of a new era of innovation.

Exactly Apple has been changing the way the game is being played. By introducing innovative products in the market through focused and dedicated approach, Apple has been bringing cool products to the consumer market. And these products are not only smart but also simple for the common man to use. This mix of simplicity and smartness defines the way Apple plays the game, and with each new product marking the start of a new generation and fuelling fresh innovations in the market.

iPhone and its business: with the launch of the iPhone Apple has created a buzz in not only the music and computing industry but it marks the entry of the innovation giant in the field of telecommunications. At the launch iPhone was available in select markets of the world with full available facilities to be used. Moreover the company released the iPhones with only the AT&T network to be used for the next one year. Second, the company did not allow third party to develop software to be running on the trendy iPhone. These factors led to a lot of negative criticism and to some extent affected the sales of the new gadget.

Surprisingly before the launch of the new 3G model, a few months back Apple came out with the SDK (Software Development Kit) for the iPhone enabling many third party companies to develop and market software for the iPhone. This gave iPhone a much needed breakthrough and helped improve sales, which had slowed down after the initial craze subsided which had sent the sales sky high. Till now Apple has managed to sell about 6 million iPhones and has targets of selling 10 million by this year end. So how is Apple going to manage it? Let us check out.

Cool features of the iPhone 3G: the 3G model boasts of a GPS (Global Positioning system) which enables the phone to track its exact location. Apart from the user friendly nature of navigating through the touch screen iPhone, it also supports 3G, i.e. the third generation of mobile systems. 3G brings along with it high speed data transfer ability, thus enabling live streaming video, faster internet access etc. Moreover another striking feature is that in case of theft iPhone completely erases all the data (which could be sensitive) present in the memory.  

Apple’s business model for iPhone 2G: Initially, the iPhones were being licensed through AT&T in a deal which entitled AT&T to share with Apple some of the monthly usage fees of the iPhone users. This helped make Apple profits through not only sales of the phone but also its usage. AT&T benefitted from the increased customer base, and with the number of value added services iPhone supported, it would help AT&T in a greater way.

 Apple’s business model for iPhone 3G: with the release of the 3G model Apple has come out with a new set of business model, it has effectively reduced the price to around 199 USD to boost the sales in mass market by making it affordable. Industry experts feel reducing the price below this would have consequences not good for Apple in a mass market model. However the deal is still not pinching Apple that much! Why? In the new deal the iPhone is going to be released worldwide in around 70 countries with the local mobile service providers promoting it. So how is Apple gaining despite cutting down the cost of the iPhone considerably?  Unlike the 2G the service providers are going to subsidize for the cost of the phone and in return they are not going to share the monthly usage fees with Apple. In this way Apple is going to lose out on some profit it could have made but it wasn’t boosting the sales so much. With the reduced cost of the iPhone and mass marketing by not only Apple but also the MSP’s the iPhone sales are going to improve and Apple is going to profit from the subsidy provided by the MSP’s. Whether it is a win-win situation for both Apple and Msp’s has to be seen. But surely Apple has adopted a strategy the major handset players like Nokia and Samsung have adopted and hopes to boost its sales.  

Apple has always been the harbinger of innovation, while we wait here in India for the release of the 3G iPhone, somewhere in the silicon valley, Apple is already gearing up for Epoch IV.

 

TOYOTA – The Global Brand

 The brighter side of the world’s most respected Automaker

“If people started living at the South Pole, we would want to open a dealership there. “

                                            -Fujio Cho, President, Toyota Motors March 2002.

In January 2004, leading global automobile company and Japan’s no.1 automaker Toyota Motor Corporation, replaced Ford Motors as the world’s second largest automobile manufacturer. Started off as spinning and weaving company in 1918, so what exactly resulted in this historic turnaround?

Toyota’s history dates back to 1897, when Sakichi Toyoda started Toyoda Automatic Loom Works (TALW) in 1926 for manufacturing automatic looms. This concept of designing equipments to stop so that defects can be fixed immediately formed the major basis of Toyota Production system (TPS) and later became a major factor in the company’s success. In 1933 the automobile division was launched and the first passenger car was rolled out.  Sakichi’s son Kiichiro Toyoda during a visit to Ford motors USA to study the US automotive Industry saw that an average US worker’s production was more than the Japanese. He realized that to compete globally the Japanese productivity had to improve.

Advent: After returning to Japan he introduced several innovative methodologies in Japanese Industry. JIT: Just in time production was adopted in assembly line system, where each unit produced only as much was required by the next in line unit thereby reducing the cost of inventories and excessive workforce. During the next few years many innovative methods were applied, but due to World War II and Japan’s direct involvement hampered the growth prospects of the company. However after the World War, the banks helped in reviving Toyota. Throughout the next decade Toyota carried out extensive expansion and sales. It setup distributors in the Middle East (Saudi Arabia), in the North America in the El Salvador and finally forayed into the US market through its subsidiary. It also setup its first overseas production in Brazil and over the next few years developed a vast network of overseas plants and R&D units.

Globalization Policy: Toyota motors policy of globalization, was internally interpreted as global localization. The company believed that by setting up plants in the company’s major market would help them cater to the customers better. Moreover they setup R&D facilities in loyal and potential markets where they hired local engineering talent. This helped them understand the requirement of the particular market better and also come out with the desired product. By early 1970’s Toyota was the no.3 automaker in the world. Its model Corolla launched in 1965, by 1974 had become the largest selling car in the world.

Losing Ground At Home: Meanwhile as Toyota was gaining ground in overseas market its sales in domestic market was on the decline courtesy Honda, Nissan etc. The company then turned to its dealer network which was already the best in the country that time. The company took initiatives to have a better communication with its dealers. It offered more incentives to increase sales and encourage them to attract more prospects for test drive. It also observed that some dealers were based close to each other and even displayed the same models. It took steps to provide them with different models for sale to reduce unnecessary price competition. Also it decided to take a strict stance if the desired targets were not met. The company also started investing heavily in advertising. These steps helped it stop its decline in the local market.

Gaining in the US and Europe: While Toyota was losing some ground on home turf it was making huge strides in offshore markets. The oil crisis in the late 70’s and early 80’s led people to move towards fuel efficient cars. Japanese automakers were always working on automobiles with increased performance and fuel efficiency. It was quickly able to capitalize on the crisis and achieve path breaking success in the US. Moreover the company had rolled out car models in almost all segments; ranging from small segment, to luxury sedans, SUV’s to mini trucks! Thus marking its presence in almost all segments of the auto market.

Breathing a fresh lease of air: In the late eighties and early 90’s a market survey showed that the average age of Toyota customer base was in the age group of 45+.  Analyst felt that despite its attempt to appease the young population it wasn’t able to brand itself. This resulted in massive brand building attempts, the company embarked on a massive restructuring campaign and started a new company Virtual Venture Co (VVC), to design and sell cars that appealed to the youth. VVC adopted many unconventional sales strategies to improve the Toyota brandname among the youngsters. For a small amount they offered free test drive on the latest Toyota models. It built an $83mn amusement park, where it displayed Toyota’s vision for future models and also allowed people to design their own cars. To breathe a fresh look in the dealerships, Toyota launched on-site pizza parlors and playgrounds at the dealers place to attract the young customers and present a fresh and appeasing look to the company. The company also rolled out various models like Vitz compact, FunCargo etc. which were basically in the entry level segment. It even offered cash rebates to the buyers of these models.

Innovation: Toyota has always been involved in providing better technology and fuel efficient cars. In 2003 Toyota unveiled the new hybrid gasoline sedan Prius. It was the world’s first vehicle that could park itself. It had an electronically operated steering wheel that guided the car when reversing into parking lanes.

Business Practices: Toyota look global policy resulted in establishment of a number of offshore manufacturing plants, R&D centers and sales offices. However each unit sticks to the fundamental company’s business practices. All the units practice the principles of KAIZEN (continuous improvement), PDCA (Plan, Do, Check, Action), Pokayoke (mistake Proofing), JIT and Construction of Cost Competitiveness (CCC)

Markets: For long Japan, North America and Europe had been the major markets for Toyota. The company always focused its approach to launch new and technologically advanced products in these markets. Moreover cater to the aesthetics demanded by the customers. The company launched a small car Yaris which improved the company’s brand image in the European market. The company is now looking towards the emerging markets like India and China for its expansion.

Future and Global Vision 2010: Despite the speculation that the global auto markets have saturated, Toyota still aims to become the largest automaker in the world and achieve a 15% market share. It’s optimistic that there are emerging markets like India, China, Brazil where economic activity is growing leading to rising income, moreover people moving towards owning their own cars. The carmaker wants to tap these markets.

Thus Toyota has been the most valued brand for quite some time, may be for times to come!

MVNO- MOBILE VIRTUAL NETWORK OPERATORS-Business Requirement

Definition:

MVNO’s are generally classified as operators which do not have their own network equipments and they may not have the required licenses to use a frequency band. They simply lease or buy network usage time from the existing network operators and resell it. They however do it by adding value services to the end consumer. Their business model seeks to make profit through these value added services.

Some of the other probable definitions explain a MVN operators as providers of mobile and voice data services without actually owning the access right to the spectrum they use. Consequently MVNO’s can be described as sub-groups of Mobile Service Operators. The radio capacity used to provide these services is obtained through commercial agreements with the licensed mobile network operators. Another definition of MVNO’s differentiates them from MSO’s in terms of technology (network components owned) by the MVNO like the Mobile Switching Centre, Home Location Register (HLR), and Intelligent Network (IN). 

Players:

Virgin Mobiles (UK) was the world’s first MVNO. It was actually the fastest growing Mobile operator at the time of launch adding a million customers in 19 months. MVNO’s market is basically being targeted by the already existing business houses having brand value in domains other than telecom, like ESPN mobile and Walt Disney, though the latter did not meet with much success.

Business Value Analysis:

As the telecom sector grows and more number of players enter the market, we observe the gradual reduction in rates due to increased competition. The race is always on to increase the average revenue per user (ARPU). Now we understand that setting up a telecom infrastructure is an expensive process moreover in emerging markets the roll out of infrastructure should be quick enough to achieve the desired market capitalization. We observe that major big telecom players shed huge amount of money to buy licenses to operate their services.

The main aim is always to make use of 100% capacity. But in ideal case we observe that resources are vastly underutilized. Now the existing network operators are losing out of revenue due to this. This is one reason why the incumbent operators give out some portion of their allotted airtime to these MVNO’s so that Network operators can get returns on everything they have invested. Thus say they have the capacity to provide facility to 10 users at a given time but only 5 users are actually using it. So they lose out on the revenue of 5 users and the resources are underutilized. So rather than going for unutilized sources they share it with MVNO’s so that the full utilization takes place and increase the ARPU.

Important Lesson:Let us first break up a telecom market into say the urban and rural sector. We observe that that mobile penetration is pretty good in urban areas and scarce in rural areas. Now we also know that call rates are almost the same for all operators in urban areas due to heavy competition and huge customer base they target. Now to achieve a higher ARPU in urban markets they have to come out with ways to achieve higher returns. For this they have to provide value added services. We generally observe that these big telecom network operators may not have the required expertise and workforce to work in these areas and may require huge investments. This can hamper their growth in some ways as investments are high. Moreover to setup such a unit is time consuming. These network operators having already invested heavily in setting up infra and buying spectrum look to MVNO’s to solve their problem. God Sent: MVNO’s suffer from the same problem, they must be eyeing the telecom market but they may not have the required capital to buy spectrum, moreover may not be patient enough to roll out the infrastructure. Now both the network operators and virtual network operators turn to each other to solve the problem. Generally the MVNO’s are business houses which may be huge names in other sectors. They tie up with these NO and provide these Value added services. The branding may generally be done in the name of the Virtual operator because that may create a buzz and generally attract a huge following. Thus in urban markets the MVNO’s create a niche. They target specific areas and age category. Like the Virgin Mobile provides ringtone features, music sharing among peers, caller tunes etc. and attracts lot of young population. Now these value added services attract customers to these new MVNO’s. End result: the MVNO’s profit by repackaging and selling talk times brought from the Network operator. Due to the saturated market and limited resources to invest in new innovative services, to create a brand and following out it among customers, to increase ARPU, and net utilization of its resources, the Network operator shares some part of its spectrum with the MVNO. This leads to achieve higher ARPU, indirect profit by utilizing the brand value of the MVNO and thus overall increased customer base. Thus it’s a win-win situation for both.

In rural markets the penetration is not that great. Moreover there are lesser number of players in the market. The rural markets may also not demand these value added services. Thus the MVNO’s may not be interested in delving into these areas; moreover the branding may not work. The NO may also not have a very high end, large user supporting infrastructure in these places unlike they have it in urban areas where spare facility is provided to avoid problems of congestion. Thus rural markets may not be a viable option for MVNO’s. 

Key Points:

The major benefit to traditional mobile operators cooperating with MVNO’s is to broaden the customer base (sell additional MOU’s) at a zero cost of acquisition.

• It is likely that incumbent mobile operators will continue to embrace MVNO’s as a means of deriving revenue to offset the enormous cost of building 3G networks.
• As more MNVO’s expand in the marketplace, they are likely to first target prepaid customers as a means of low cost market entry themselves.
• Most regulating bodies are in favor of MVNO’s as a means of encouraging competition, which would ultimately lead to greater choice and lower prices.
• With the advent of the MVNO, many incumbent mobile operators will evaluate the opportunity to offer supplementary MVNO services of their own. To do so, exiting mobile operators will use their established branding, service knowledge, and supplier relationships to complete against independent MVNO’s.
• In the case of Tata Teleservices and Virgin Mobile we see that Tata Teleservices is not a big name atleast compared to bigger players like Bharti Airtel and Vodafone so it has tied up with Virgin /mobile to promote Its own services by using Virgin’s Global strategy, brandname, and fresh value added services

ISSUES:

In some countries like India where FDI in Telecom sector is limited, MVNO’s have to be a joint venture, mostly with a national network operator. Moreover the tax policy has to be reduced so that the MVNO’s can actually make significant profit to exist in the market and to companies to see it as an economic viable option.

The introduction of MVNO’s is resisted by incumbent operators in some countries which have a monopoly, or which have plans of introducing their own MVNO’s because of the existence of strong brand name, customer base, time and revenues to invest in future value added services that the customers will receive.

Moreover MVNO’s setup will be a problem in areas where mobile penetration is less and still there is scope for existing companies to increase their customer base by reaching out to these people rather than trying to pull customers from other mobile service providers by luring them through value added services. Countries like India and China are examples.

There are multitudes of other things which are associated with MVNO’s like regulatory issues etc.

These may be regulatory, governmental etc.

MOVING TOWARDS OPEN SOURCE

Off-late there has been a new kind of buzz about the open source and free software taking up the proprietary software structure. Each side has their own story to say. Who’s right? What works better for us?

What the OPEN SOURCE GUYS have to say?

The free software movement guys seem to be inspired by the notion that software must be free and available to all for free as well. It relies on Open source to enable them to provide the community with the best possible software. The guys who represent them are the GNU for example. Richard Stallman who happens to be the founder for FSF (free Software Foundation) believed in the idea that open source was a technically superior way of developing software.           

 Now there’s a difference between these open source guys and the FSF guys. They differ in the context of distribution of this open source software. Now looking at the example of APACHE, a popular open source web Server program that was developed by a community, which entitled anyone to use their software, build upon it and sell it provided they acknowledge the contribution of APACHE community in the process. The basic aim of the community was that each individual wanted to show his technical prowess in the community by trying to write a superior code.

 Coming to FSF, they hold an opinion that Open Source will enable large amount of people to benefit by the use of free software and free people from the clutches of big corporations who are bullish and want every last penny from the person who is using the software. Moreover they feel sharing of knowledge through code is going to enable almost anyone to understand the code and learn the intricacies of high level code design, in one word spreading of knowledge, which would otherwise not be possible if the individual is working in Microsoft and wanted to know how windows was designed.

To enable all this they have come out of something called the GNU GPL (General Public License). Unlike the licenses which come along with the proprietary software this enables people to use the software, make unlimited copies of it and pass it on. (The complete opposite of what proprietary software does and as if we give a damn about it!!!

 

What Microsoft and Closed Source Guys have to say?

            Microsoft has a lot to worry about it? In fact it has drawn some of these open source folks behind closed doors of the courtroom as well. (More on this later). MS believes that for quality software to be produced you require the best people to be working on it. It says that to consistently and rapidly innovate one has to pump in huge amount of revenues to keep up the good work by remunerating the people who spend days and nights developing the software.

Besides they feel that software development is not the only thing, one has to provide product support to the customers who are going to buy it.  It takes a dig at the Open source guys saying that the open source movement is run by this huge force of volunteers around the globe who work ,share their knowledge and code through the internet. Moreover, it ridicules the fact that there are guys who are working through the day say selling pizzas and writing code in the night to sustain themselves. Now say something goes wrong with your software you are searching for the guy who sells pizzas. They also feel that in this ever demanding economic scenario this kind of a system is going to fail. They also just seem to find it really tough to understand how open source is going to fetch revenues and sustain further innovation.

 

What Is Actually Happening and what I have to say?

In the recent years we have seen more and more companies are coming forward to promote open source. The companies are hiring geeks and also some non-geeks to develop open source software. This is really pushing this movement to gain momentum.

1. The main aim being cheaper to develop because according to GNU GPL anyone can make use of previous work and develop upon it without reinventing the wheel.

2. Literally wiping out Piracy.

3. Because some are against Microsoft’s Monopoly and want to make the playing fields leveled. They are really fuelling this movement.

 

SILVER LINING:

1. Now the point that companies have started investing in open source software the movement has become more organized in the sense that it has caught the attention of the industry and given it a sense of direction. The work which was done voluntarily is being done in a more organized way.

2. Let us touch upon one more point LINUX, the entity which is so much associated with open source, has been developing rapidly to take on MS proprietary OS’s. More companies are investing in Linux.

a. Some for tailor making it for their own requirements, Linux provides better safety has to be seen technically in number of ways, by no of ports it leaves open, the robust file system,

b. The huge pool of team whose working almost anywhere around the world can come up with solution for any problem in no time unlike MS windows where the design is known to only a selected few and if there’s a problem then only those guys can come up with a patch.

c. Linux comes cheaper. Say I buy MS windows I buy ten different packages. E.g. MS Office. Now this can weigh heavy on my pocket. Linux comes with all these features inbuilt and at a cost one-fourth. (some distributions even come for free).

d. With rapid development, Linux OS is no longer for the Geeks but with Desktop Environments like the Windows or the Mac, it’s certainly a force to reckon for the Apples and the MS’s.

 

3. Off-late the companies like Intel, AMD, Nvidia have come out to support these open source community so that they can develop the device drivers and software to be run on their architectures. Moreover Linux consumes lesser power and makes use of lesser system resources unlike Microsoft’s OS’s which come with a tag that one must have a minimum of the maximum that’s available in the market!!. Thus Linux making better use of available resources.

4. Moreover Linux companies have started Commercial distribution of Linux OS. These companies do not charge for these licenses, but charge money only for support and services they would be providing. Thus helping in penetration of Open Source Movement.

FINAL WORDS!!!!

Well a lot has been said and done about open source… I feel that with this movement one thing that truly comes out is spreading of knowledge. Now say with Linux a guy anywhere around the world with a computer of minimal resource can learn and develop software. The Open source Movement suppresses monopoly so ultimately prices come down, user is benefitted and so are different other people get to do work on interesting stuff even though they are not in MS and employment is generated in some way and improves technical innovation due to competition.  The Linux OS does have to improve with respect to windows but so windows as well. Looking at one more aspect is that a site called sourceforge.net has almost 80,000 open source software’s available for download. Now that counts, Open source Movement has come of age.

Life on Earth Is Beautiful… and so is Earth.

LINUX consumes lesser Power.. Go GREEN.. GO LINUX

SAVE THE PLANET.