Technology, Venture Capital, Private Equity

Perspectives from an Indian VC

Archive for June, 2007

Will the idiot box turn smart some day?

Posted by Arun Uday on June 25, 2007

Every once in a while, I come across an article on how the television is going to become very smart in the future. It is one of those fantasies that just refuses to die. Interactive television, the merger of the TV and the PC, browsing while watching television, online chatting and sharing instantaneous feedback on TV episodes – every such conceivable manner of making this marriage of the “dumb” and the “smart” happen has been and is continuing to be attempted. But, my take is that unless certain key aspects of technological match making are understood, this may turn out to be a case of the priest being more interested in the marriage than the bride or the groom. Read the rest of this entry »

Posted in idiot box, lazy entertainment, PC, technology, television | Leave a Comment »

CK Prahalad v/s Porter – Who”ll win?

Posted by Arun Uday on June 18, 2007

Apart from the Five Forces model, which I discussed in my previous post, another of Michael Porter’s contributions to business economics has been the concept of  the “Diamond Model”, which describes the competetive strengths of a nation. One of the important arms of a nation’s “diamond” is the so called “Demand Conditions” of the local market. This essentially refers to how evolved and sophisticated the domestic consumer market for products and services is, which in turn will dictate how innovative the businesses catering to those markets will be. Its not a difficult concept to grasp. Most often, producers of innovations are cutting edge users of that genre of products themselves.  That explains why most of the mobile innovations come from mature consumer markets like Japan, Korea or Nordic countries or why web innovations primarily emanate from the US.  On the other hand, this could be a discouraging prognosis for innovation in emerging countries like India since that would essentially mean that once we are lagging the technology adoption curve, it would lead to a viscious loop where the market for the most innovative solutions will never exist and hence innovation never happen.

Read the rest of this entry »

Posted in c k prahalad, India, michael porter, technology | 1 Comment »

Can India become a manufacturing giant?

Posted by Arun Uday on June 14, 2007

The common refrain amongst most economic observers and commentators is “India will be the back office of the world and China will be the low cost factory of the world.” Even someone as distinguished as Steve Roach, the chief economist of Morgan Stanley advised that India stop trying to get into manufacturing and instead focus only on services. However, such notions of countries as large as India and China seem a little simplistic to me. Yes, there will be one sector which will always be the dominant one. However, given our size, even a smaller percentage of population or a smaller fraction of GDP coming from other sectors will be huge in absolute nos. Take the case of Indian manufacturing. The Indian manufacturing sector underwent a very painful few years in the early to mid 90’s when it had become very inefficient and uncompetitive.  As a result, manufacturers were forced to cut flab, exit unviable businesses and also lay off in large nos. Consequentially, what we have today is a bright industrial scenario, which seems to be matching the specatacular growth in services step for step. The IIP (Index of industrial production) numbers, which have just came in demonstrate just that. The 13.6% growth for April has been the highest in nearly a decade and augurs well for the prospects of the sector.  I also suspect that there could be vast synergistic effects between services and manufacturing that could get unleashed as we go along. For instance, engineering services (like product design and allied services), which has been a part of the outsourcing story so far is creating a class of skilled manpower who could easily carry over their expertise to high end manufacturing and also vice versa. Hence, I am inclined to think that India may end up carving a different niche for itself from China. It may not become the low cost mass manufacturing hub like China, but it could and probably is poised to becoming an end to end design and manufacturing hub for hi-end manufacturing.

Posted in India, manufacturing | 5 Comments »

Growing Print in India = Depressed Internet?

Posted by Arun Uday on June 11, 2007

Amongst the many things an MBA education aims to do, one of the most important is to acquaint the student with certain frameworks and concepts that come in handy to analyze businesses, companies and industries.  And one such framework that every b-school grad no matter which part of the wide world she hails from will almost certainly be aware of is Michael Porter’s Five Force model for analyzing industries. Probably, it is to corportate strategy, what Markowicz’s portfolio theory is to investing or the 4P framework is to marketing. Porter’s framework is a way of analyzing how attractive an industry is on a macro scale. For more, read this wikipedia article.
One of the “five forces” in Porter’s framework is what’s called the “Threat of substitutes”. A possible substitute for a product or service makes the industry susceptible for downturn or even ultimate demise depending on how much overlap there is between the incumbent and competing substitute and how attractive the choice of substitute is. In the technology world, we see substitutes wiping out incumbent technologies all the time. The best example of this was how the birth of the PC, which was (more than) a substitute to the electronic typewriter resulted in the death of the latter. Similar examples could be cited w.r.t CDs/Floppy discs, iPod/Walkman, Broadband/Dial-up etc. Read the rest of this entry »

Posted in internet, print | 3 Comments »

Now, wireless electricity!

Posted by Arun Uday on June 8, 2007

Came across this news article, which states that scientists at the MIT have discovered a new way of transmitting electricity without wires. While I believe that it may be some time (maybe even a long time, if ever) before it becomes mainstream and actually starts powering heavy duty appliances like heaters or washing machines, the immediate utility of this technology would be for stuff such as mobile phone recharging, laptop operations etc. It is not hard to conceive that this technology could in short time, find its way into airport terminals and hotel lounges for cell phone or laptop recharge.
As a technologist, the possibilities no doubt excite me. However, there is a flip side, which is – concerns on electromagnetic pollution. The technology is based on transmission of electromagnetic waves, and the side effects of pervasive use of this should be thoroughly investigated before we jump to adopt it. The fact that we are not going to be using this for just communication related activities, but for transmitting power would obviously imply that the radiation would be very strong. There are already various concerns being expressed w.r.t harmful side effects of cell phone related radiation. A simple Google search on this topic will yield innumerable articles on this issue. For instance, this video news snippet suggests that the death of bees in the US on a massive scale could be the consequence of cell phone radiation. I was also speaking to a telecom professional recently and he mentioned that the disappearance of sparrows in our Indian cities could perhaps be attributed to the same reason. (As an aside, I remember from my childhood days, we had a huge mango tree in our courtyard which used to be filled with chirping sparrows. Nowadays, there are nothing but crows squatting there all the time). In my opinion, this issue warrants serious research since wireless devices, WiFi/Wimax hubs etc are getting increasingly pervasive. And the very nature of this technology means that unlike other forms of pollution such as air or noise pollution, we can never see, feel, sense or smell any of what could be hitting us all the time. I think it is about time we have such issues thoroughly probed.

Posted in electromagnetic pollution, wireless electricity | 4 Comments »

“Investepreneurs” – The new VC model in town

Posted by Arun Uday on June 6, 2007

For some time now, I had intended to write about the tectonic shifts that the VC industry is currently undergoing. These shifts are the consequence of the changes in the base foundation on which the VC superstructure itself stands on, which is – the technology industry itself. Industry pundits, management gurus, entrepreneurs and VCs alike have been writing and debating on whats now come to be known as the “broken VC model”. The discussions particularly reached a frenzy on the blogosphere when one of the revered VC firms – Sevin Rosen, which is credited with funding the likes of Compaq and Lotus amongst others stopped midway through its fund raising exercise and returned the monies to investors citing “fundamental structural problems” in the Venture industry.
The crux of the issue here is what can be termed as the “Commoditization of the technology industry”. This commoditization has been happening at two levels:
a) At the level of infrastructural building blocks of the tech industry viz. h/w, s/w & bandwidth, and
b) Commoditization of skills, referring to a glut of qualified personnel, who understand the technology industry well enough to be able to take on the role of a VC.
Read the rest of this entry »

Posted in Guy Kawasaki, Investepreneurship, Truemors, VC | Leave a Comment »

RailTel and WiMax related announcements

Posted by Arun Uday on June 4, 2007

Two articles over the weekend that were important from standpoint of improving broadband connectivity in India. One was by RailTel, which announced its intentions to lease out its giant raliway telecom network to external clients. Railways has one of the most extensive OFC networks in the country amounting to 30,000 route KMs, a lot of which winds into the rural hinterland. Hence, effective use of this infrastructure could make vastly superior economic sense as compared to a greenfield rollout. As I mentioned before in an earlier post, one of the reasons for the stunted growth in internet in India was that – we seem to be caught in a circular loop where in lack of rural connectivity is stalling the development of localized applications and also vice versa. This may be one of the innovative parts to a solution that could help break that gridlock.
The other important development is w.r.t announcements by telco majors that they were finally preparing for a WiMax rollout in the country. There are still some issues w.r.t the exact spectrum band that are as yet unclarified. But, the fact that operators are going ahead with announcements gives hope that they see resolution of the same in due course. That should hopefully improve the broadband connectivity in cities significantly. I guess if both these announced plans go as per plan, we could see an improvement in internet adoption in our country.

Posted in broadband, India, RailTel, WiMax | 1 Comment »

Aerosmith – Brought to you by Accenture

Posted by Arun Uday on June 1, 2007

Was in Bangalore the last couple of days visiting some really interesting companies (surprisingly a couple of non-tech as well). The optimism in the entrepreneurial community there was palpable with all of them gearing up for strong anticpated growth. Little wonder that the Indian economy today reported another Chinaesque growth number for the just concluded financial year. Of course, as a part of our evaluation, we need to understand the risk factors as well and not surprisingly, on a macro level, the infrastructure problems was a common complaint there. However, if there was one concern that outweighed even the infrastructural challenges, it was the huge manpower crunch. One VC friend even complained that his secretary got recruited by a rival hedge fund for a salary that would be enviable for the best of techies! Read the rest of this entry »

Posted in India, technology | Leave a Comment »