Thursday, December 08, 2005
Saturday, December 03, 2005
A slum dweller has substantially reduced cost of living as compared to a legal resident. The total cost of working for a legal resident includes rent for property, facilities like water, electricity telephone, cost of travel etc. There are also long-term expenses for maintenance of the facilities they use. For a slum dweller these cost do not include the major heads of rent and in some cases cost of travel is also reduced. The maintenance is almost as negligible as the rent. Due to these cost advantages the slum dwellers are able to work at much reduced wages as compared to the legal residents. This has cascading implications.
Firstly, this prevents any increase in the cost of labour in the city. Alternatively the labour costs may also reduce. This allows the city to retain its cost advantage over other competing areas. Corporates and revenue contributors do not feel the need to shift base to the newer areas, the newer areas do not get adequate returns on the investments. But as this is only a pseudo‑advantage it actually strains the infrastructure of the city. Investments in the infrastructure generate more jobs and more jobs attract more people. This goes into a degenerating spiral till the area cannot take any more modifications to adapt to the increasing demand.
While superficially it seems that the cost of living of only the lower end of the wage spectrum is affected, a peek at the economic mechanism reveals how this affects the entire range of incomer earners. It reduces the cost of living by making maids, drivers and other services available cheaper than it would have been possible otherwise. In its absence the pinch of increasing costs would have felt earlier creating a trigger for economically rational action.
The political impact of this is even greater. The local legal residents are not able to compete against this new workforce that enters this local markets. This forces the local labour force to move out of their “homeland” leading to “son of soil” movements. The fact that the political parties promoting the “son-of-soil” movements themselves are promoting slum rehabilitation schemes shows the hollowness of the intentions on both grounds.
The major political impact is of the vote-bank politics. The work force that migrates into the city needs a support structure and political leaders exploit this need to gain a hold in the area. The fate of the politician depends upon the number and not their legality (which can often be purchased by politicians themselves). The politicians therefore are in favour of migration into the area rather than out of it. This gives a situation the last push down the spiral out of which recovery is rather impossible.
Rational action assumed as a solution for slums is enforcement of laws against encroachment of private and public places. When this rational action assumed is broken the system fails miserably. The system needs to be redesigned so as to be fail-proof in such circumstances.
Slums have an effect to lower or maintain the cost of labour in the city. This effect is short term and has a detrimental effect on the investments made in the city in the long term. Over the long term these investments are less profitable than investments in economically viable legal locations.
Artificially decreased cost of living denies the lesser developed areas to get a share in the limited investment capital available. This means Bihar and other lesser developed states should be more keen to eliminate the slums in metros and urban areas than the metros themselves.
Slum problem can be tackled politically or economically or both. Political solution would be to restrict the right to vote to locations where they have a valid house. Economically, taxation could be increased for investments in congested cities and metros. This will make investments in congested cities unviable thus allowing development in towns and cities other than those already congested. However we also need to ensure that there also a pull from other cities for such investments to come through.
There should be a great interest from the central government to make sure that congested cities do not get the investments for the greater good of the economy as a whole. Developmental bias is certain to clarify the same.
Thursday, November 24, 2005
There is suddenly a spate of launches of Low-Cost Airlines in India. Each Airline claims a fare lower than the lowest. If this really continues soon Air travel will actually be cheaper than walking!! (kidding of course).
I have been thinking about how these airlines continue to survive. Recently, I read about the discussion on how Low Cost Airlines can be viable and it triggered some thoughts.
Actually to look at the viability I believe, we can look at Transport operators (cargo-trucks) model. They have the kind of Hub-&-spoke model that Dr. Krishnan is talking about. In fact the viability of the model actually lies in the hub and spoke mechanism.
For people-carriers though, there are slight problems as they have to break their journey and that consumes time. The viability of these low cost airlines must come from other revenue streams. Air-Cargo offers a good alternative.
I am not actually aware of the percentage of the revenues from Air-Cargo but I know that the local inter-city buses make a significant revenue from transport of cargo. A bus (in India) usually carries around 1-3 tons of cargo in addition to the people and their luggage. This cargo is typically mail and small goods. Similarly, I would expect Air Cargo to actually contribute significantly to the revenues. Typical Air Cargo is Mail (again!) and perishable goods. An airline based on this duel revenue model will most likely survive.
Monday, November 14, 2005
Friday, November 04, 2005
There are far many number of channels today than I can care to recollect. And there are absolutely no programs that can make me watch through the commercials till the program begins again. Invariably I switch the channel and find something more interesting. I wanted to see the channels of similar profile co-ordinating the timing of the ad-spots so that even if I switch to other channel of the same profile I should see the same ad. Not so yet! I think channels should sit together and set-out rules (for say coordinating ad-spot timing)so that they can assist the marketer to reach their targets.
Friday, October 21, 2005
For more than 30 check-in counters they have 4 security check counters and 7 Boarding gates leading to one Bus pickup platform! (Thats right there are no aerobridges!!!) Now anyone will tell you that these proportions seem to be TOTALLY wrong! They did not read "The Goal!". What a shame that all this investments have yielded almost nothing!!!
So much for infrastructure!! And to think of it Mr. Prime Minister wants to make a Shanghai out of Mumbai!!!
Monday, October 17, 2005
I have found Sinatra and Elvis quite unbelievable. The songs are really good and best of all I can understand the lyrics when they sing!!! Now that reminds me, I have to go out to buy another Frank Sinatra CD! See you soon...
Saturday, October 15, 2005
I am back after juggling a job and a long distance courtship (which happily ended in marriage) I now have the "proverbial" breathing space. So many days have passed that I realise my ICE post is no longer relevant (God that industry moves fast!!) So I am chucking it and moving on to here.
currently I am tracking the blogs on IIPM after what I read about Gaurav's post. Will be back with some more ideas. So see you soon...
Sunday, May 08, 2005
In the last articles we had examined how some of the issues with Communication revolution are resolved. Now, will it be possible for the communication revolution to hit us as hard as had been predicted? Again I do not have the answers.
Yet, when I observe the ICE space evolving in the Indian context, I see a clear dichotomy of evolution. Service Providers are seeing great business models in the application segment. Hence they are pushing applications to the consumers. Some of the very basic applications have been a hit. “TV on the mobile” has not really taken off but downloading ring tones has been a money spinner. Consumers are accepting some and rejecting many applications. The service providers and instrument manufacturers are eager to understand what the next money spinner could be.
I believe the key to the success of new applications rests with the device. Let us look at the device in more detail.
A device is a piece of equipment we use to access the bandwidth. These devices are tools for processing information, communicating tools or entertainment platforms.
Components of the device
Any component can be disaggregated into:
- Memory / Storage
- Human Interface
- Power unit
- Network Interface
A significant development is happening from each of the devices getting a piece of silicon in them. Things from alarm clocks to washing machines to cars to televisions everything has become “smart”.
If you look closely, you will realize that in devices where there was enough space and supply of power people have thought of putting a processor. Nanotechnology is making these chips smaller and faster and cooler (lower heat generation). This is assisting the development.
Applications can be developed for devices that have a general purpose processor with an operating system. The Application based business model will imply that environment will favour these devices. In fact, many of the applications that currently use special purpose processors (Fuel timing chips in cars) will start using this business model. But just wait before you start dreaming about the kind of possibilities.
Memory / Storage
As with the processor chips, memory chips are getting smaller. Sure, but there is a difference. Let me bring your attention to the different business models. They demonstrate the evolution discreetly.
Your Mobile Service voicemail, which is a form of storage of information, resides on the network, but your SMS messages need to be stored on your device. Have you thought why?
Well the simple answer is that Voicemail was bulkier than SMS and memory in the device was scarce so smaller size application moved to the device first. So does this mean that eventually when we have “a lot” of memory all the data will sit on our mobile phones? I guess not.
The key question one needs to ask is what happens when the bandwidth access speed becomes so fast that we can access most of the application on the fly. To answer this, look at the email. Email for most cases is stored on central servers.
What I am stating is that there are various models, the email model wherein data stays on the server, applications stay on the mobile. There is SMS model, where in the data stays with the person and the application goes to the server.
Where what is stored is decided by the bandwidth available at your disposal. Consequently, as the bandwidth increases, we might shift towards fetch as you need models.
The components that I am discussing below are a little far fetched. I am not sure if they will happen as there are some economic / strategic / competitive reasons for suggestions not happening. If you know any reason what are the reasons these would not happen please write to me.
I will however, continue with the series of components of the devices. The next being the human interface.
Human Interface is something wherein we are able to interact with the device. This is also an area where least development has taken place. The reason is just that collectively we take a lot of time to learn the new ways to interface with machines. In one sense “driving a car” is an interfacing function and so is interacting with a computer.
But beyond the weirdness, if you simply concentrate on computer – human interface, you will find discrepancies. For example, computer screen is now our primary media, yet we type documents in A4 format. Does that make the documents more readable?
Mobile phone manufacturers are telling us that we should watch television on the mobile phone screen. No one asked me am I comfortable watching it.
There are some developments worth noticing. People have put television screens in cars, behind aircraft seats and possibly wherever they could. Also the projection technology is improving substantially.
What can drastically alter the interface aspect is the internetworking of all these interface technologies. Like your laptop keyboard can be used for your mobile. And your television can show the photo you just received on your computer. We get the hint with the new software that comes with the cell phones these days that allow you to peek at the Cell phone contents thorough your computer.
So it means that we will use what ever screen we have in close proximity to us. The software that will allow for this versatility will have to hit the market. But there is a strong case for such internetworking to happen.
Sounds weird doesn’t it? But there is no reason it should not happen. And though it has already started sounding magical there is more.
Identifiers are those parts of devices that enable the network to know your identity. The SIM card in the mobile phone is one such identifier. On the computer there is a login-password mechanism that is used as an identifier.
As is well known the identifiers are key to security! (PUN intended) In fact a lack of developments in convenient scanners has limited the growth of the online transactions. It is primarily why Bill Gates is tracking security closely. That is why he is such a visionary.
There are two / three elements in the security environment. One is scanning the user input and second is transporting it across the bandwidth securely.
Public Key Infrastructure promises to deliver this very functionality. Coupled with a hand held reliable finger-print scanner, this will transform the way we conduct business. I think we need to watch for a day when hand held scanners can be connected with or embedded in a cell phone.
There will be a substantial discontinuity in terms of electronic transactions when that happens.
Yeas of course there is still more.
Every device needs power. Mobile devices carry their power pack along with them, rest of them are plugged to the wall because of power.
Improvements in battery technology have allowed us to have longer battery life out of a smaller battery. It has allowed us to have lot of applications running on our mobile devices.
Battery has played a critical role in the number of applications the mobile device can take. The better the battery the more applications you can load on it.
Charging technology has also improved. Apple has made some progress in this area by making the iPod charge while we play the songs from it.
Yet, have you noticed that the device manufacturers do not have a standard battery packs. Each device comes with its own charger and its own socket. We cannot use a Nokia charger with Samsung Phone, or we cannot use a cell phone charger for a laptop. If these devices have interchangeable power plugs, it will mean a lot more convenience for the consumer.
When we will see a movement in that direction is God’s guess.
We have seen how the different components of the devices can change and unleash a new wave of applications. At the outset some of the thoughts may seen outrageous, but it is not that far fetched.
For example, the power units of computers are standardized across motherboards so it is not unrealistic to expect that we can have a standard for power plugs in mobile phones. These are changes that have happened and will happen sooner or later.
The way forward
In the next article I will examine what are the different kinds of functionalities that can be added into mobile phones as an example. I will propose a hypothesis that there is a convergence in devices as well in terms of components. I will also give you examples where components are added to the device to create better value and also examples where components are sold separately to create value.
Please let me know what you think on this. Your feedback is critical and will enlighten me. And do check back again to read about the new devices and the future of ICE.
Sunday, April 17, 2005
Communication and Technology revolution has flummoxed many in the so-called "real" world. On one side, more people are comfortable in downloading ring-tones and watching movie trailers. On the other, there are others who are still wondering about what happened to the future when the refrigerator would talk to the online grocer and order groceries. In the business world the top management is scared that their ERP solution will become obsolete even as they roll it out. But will it actually happen is a question to which there is yet no answer.
I am as confused as everyone else. Yet, in the following these are a series of articles detailing some aspects of these issues that may provide an answer. I have read some literature on these issues from various sources and Telecosm by Gilder is something that I would like to recommend. Yet the views expressed in the following articles are my own and may be wrong. I invite you to please provide me valuable feedback and opinions on these.
The Issues with Communications Revolution
We all expected that communication revolution that started with the Internet to invade every aspect of our professional and personal life would hit us soon. We all waited but it hasn’t come yet. There are reasons that are apparent in the hindsight. Some of the prominent ones were:
1) Lack of Cheap bandwidth
2) Lack of last-mile access Infrastructure
3) Lack of Ideas.
The applications thought possible, during the peak of the 2001 tech bubble were conventional applications. Like “movies-on-demand”, a lot of these applications required bandwidth that is simply not available. Some applications like Internet based real-time ERP faltered because bandwidth across international borders was absent. This connectivity was essential as the businesses became more and more globalized.
But as of now, a lot of band has come up. There is a lot of fiber very close to where you are sitting and reading this article now. A significant gain has also been because of the price discovery of the fiber bandwidth by the service providers. Service providers now see fiber-optic cables as information pipes and are focusing on capacity utilization. This seems to be common sense wisdom and they were focusing on these earlier. But there is a key difference. I will highlight it as we come to it.
Last Mile Access Infrastructure
Last mile access was unavailable. By this I do not mean that we had no solution to last mile connectivity, but that it was expensive.
Often the accessing equipment could be used for little else. The desire was never urged on by a need. This is exactly what mobile-phone revolution has done. The coming of age of 3-G mobiles has given the mobile users different ways and means to be connected. The revolution has changed the lifestyle of people making them comfortable carrying a device with them 24X7.
Only two other devices in human history have created such a powerful change, first being wristwatches and second being the Walkman. Yet the key aspect of the mobile revolution is that now people carry with them in the form of a mobile phone, a processor, memory and a modem. And they carry it 24X7.
This has subsidized (mentally) the cost of getting the last-mile-access device with you.
Lack of Ideas
The foremost problem was the lack of ideas. Of course business has a way of weeding out the bad ideas sooner or later. But there are a lot of things that are starkly visible. Like for example, what Gilder says in Telecosm, we have voice networks (Telephones) carrying data (Fax) and we also have data networks (Internet) carrying voice (Internet Telephony).
Similarly we have different business models running on same “bandwidth”. Like we pay per minute for calls on mobile phones, but FM radio on the same device is free. Some of the data (voicemail) is stored on remote server, some on device (SMS, voicemail). Some data (PIM data) that ideally should be on a remote server is replicated on different devices; where as some data that should ideally be on the device we need to download (MP3, Songs).
Problems are solved…
But all these problems are getting sorted out. And a new reality we all were anticipating is emerging. But it is not something that we envisaged. The new reality is mix of partly things that we anticipated and partly of something totally different. So what is the new reality?
In the next article we will examine the future gadgets that can exploit these developments. We will also examine which gadgets can succeed and what infrastructure can profitably come up to serve the new information applications that will thrive in the new world.
Monday, April 11, 2005
Here are somethings that, if they pan out well for both the countries, should make the world sit up and take notice. Are the current development being undertaken keeping in mind these things or are they simply a matter of chance. That question has a great bearing on the outcome of this "joining of forces". In the case of former there is a very high chance that things will hot up in Asia in the coming decades. In the case of latter, well its a far stretch.
Please let me know your views.
- Roughly 50% of India's GDP comes from the services sector, whereas roughly 50% of China's comes from manufacturing.
- India has a large english speaking (fluently) population. China is facing that challange.
- Indian development is spear-headed by private players, givernment is acting as a facilitator (or a hindrance) whereas Chinese development is more government sponsored and private players enjoy a comparatively marginal role.
- Currently China has got more people in the working age-group than India, however India will have more people in the working age-group than China over the next 30 years.
- If you look at Indian manufacturing its geared towards more of short-run multiple variety products. China on the other hand is very large runs and few variety products.
- China has well established infrastructure whereas India is facing that challange.
- Indian Banking (Development Funding) System is the best in the world whereas China is sorely lacking in that department.
- China has a structured sports program compared to a nearly non-existent one in India.
- All said and done China has better regulation and possibly implementation than India which lacks in both adequate "appropriate" regulation (with abundance of "inappropriate" regulation) and a lack of enforcement (and enthusiastic enforcement of "inappropriate" ones)
- India has the potential to be the kitchen and office of the world. China has the potential or almost is the factory of the world.
- India and China each have nearly a billion people.
- Both have ambitious space programs, military programs, missile programs.
- Both have strong traditions that have a similar psyche.
- Tea! (May be China does not have "cutting" yet!)
- Both have a similar inclination towards saving v/s spending.
- Strong Family systems are seen in both cultures.
- Corruption is a rampant problem in both the countries.
- Strong tradition has given a strong art, crafts and culture possibilities. Chinese have marketed those very well but yoga and aurveda could well change the face of art and culture like what tai chi and feng sui have done for China.
INDIAN UNIQUENESS (DONT KNOW ABOUT CHINA)
- Religion and the sheer multiplicity and co-existance of many religions and beliefs. (Dis-regarding Modi's and other politically motivated rioteers)
- Movies and by far the greatest movie producing machinery ever put in motion (again disregarding some of the overused furniture like "couch" and "beds" and also "make-up vans")
- Cricket or its existance as an industry that drives the global cricket economy (Forget the lack of vision seen in under-representation at the ICC, or the "arranged" Indo-Pak affairs that go around)
- Tourism and abundance of the "tourist potential" places.
- The variety of Cuisines of India, I am not sure if China (or the world) have as much variety.
DONT KNOW IF THAT IS SO:
- Language (Its difficult for each other to grasp the other language however India could have an advantage in swiftness to learn new language whether or not we exploit it is other matter) Bring a udipi guy (or a Punjabi or a Gujrati or anyone else for that matter) into remote chinese village and soon you will know how soon Indians can learn any language in the world.