NYT writes about a technology success story - video game maker Electronic Arts. Its shares closed at an all-time high recently. The company is preparing to release a new online game soon: The Sims Online.

The game is an Internet version of the Sims series, which is one of the most successful video games of all time and has an usually high number of female players. In it, players oversee their online characters as they go to work, build a home, and develop relationships. In the online version, players will be able to interact with one another over the Internet, conceivably creating a virtual world where people play out real-world pursuits.

Rajiv Gupta, co-creator of Hewlett Packard's ill-fated E-speak and now CEO of Confluent, offers some reasons on why E-speak failed - lessons which we all need to keep in mind in tech companies:

I focused more on the technology than on the business context in which the technology would be applied. It's a classic mistake that people make, and I fell into the same trap. I'm seeing that (mistake) being made by others today. So, for example, we focused on the architecture being very plain and rich, but didn't focus as much on usability. We focused on changing the world, but focused less on helping the world see the value. We didn't appreciate the fact that the world wanted to change not as fast as we wanted to move.

The Customer's Revenge is the title of a Forbes story which says that "for 20 years businesses obediently bought into every new release that high-tech vendors foisted on them. Never again. Their new reluctance bodes ill for a long-awaited rebound." Continues Forbes:

High tech is in deep trouble, and that owes to more than the economic downturn. The doldrums will end eventually, but for years to come tech vendors could be hampered by basic changes in how businesses spend $375 billion a year on technology and what they demand from it. Part of the problem is an industry that has innovated to the point of self-annihilation. Hardware and software makers pushed ever shorter product cycles and provided ever more power for the same or lower price, flooding customers with capacity. But many big customers have gone the opposite way, slowing and extending their own buying cycles and focusing on how to better use what they already own. Perhaps worst of all, some big spenders have lost their lust for the promise of new technology. Amid this customer ennui, no Next Big Thing--the fabled "killer app" that drives every boom--has yet emerged to offset it.

Here's a model of the future: "Web-based software from Salesforce.com competes with Siebel Systems, and every business that "rents" usage from Salesforce avoids having to buy a server to run Siebel's code. Salesforce serves all of its 5,000 accounts from two powerful Sun 6800 systems that together cost $1 million. That means its customers didn't have to buy 5,000 servers costing $10,000 apiece. Net loss to the industry: at least $49 million. And counting."

Is ther ehope? "Tech has bounced back sharply from downturns in the past, and it may yet do so this time. Reengineering fueled the tech market in the early 1990s, and the Web craze stoked tremendous growth thereafter. The question is what future feature might take hold. Intel--which keeps its own PCs about 15% longer than in the past--hopes a new wave of "multitasking" will chew up future processing power and says desktop video could help. More than half of corporate PCs have only one-fifth the processing power of today's high-end chips. To multitask, they'll need more."

The writing on the wall for tech companies is clear. They've overshot the needs of their present markets. They have to get out of their comfort zone and open up new markets, touch new users, and create new applications.

Writes Forbes about the challenge that Douglas Burgum (former CEO of Great Plains which Microsoft bought) faces - boost sales by $10 billion in ten years:

Says his boss, [Jeff] Raikes: "The goal is about what the world will be like in 2010. You won't pick a doctor, lawyer, contractor or insurance agent unless you can electronically communicate with them. Small and medium-size businesses will embrace the Internet."

The focus Burgum has is on SMEs. We too want to create enterprise software for SMEs - the ones in the emerging markets who will not be able to pay for Microsoft's products.

I like the point made by Raikes - imagine what the world will be in 2010. Many-a-time, we fail because we don't think or dream big enough or far ahead. The first step to build the future is to envision it.

Joshua Walker of Forrester Research offers some advice:

Swap out Web and email server hardware. Applications like Lotus Domino and Apache Web server are prime candidates for a migration to Linux. Although costs will stay nearly constant in terms of software licenses, hardware costs will decrease significantly in moving from Unix to Intel hardware. An enterprise-scale Intel-based server from Dell Computer, for example, costs less than $10,000, while entry-level servers from Sun will run at least $15,000.

Migrate database servers. Both of the leading database vendors, Oracle and IBM, have pledged allegiance to the penguin platform. So feel free to make the move, knowing that you'll still receive the same level of support and services.

Replace development boxes. Now that there are a number of Java IDEs (integrated development environments) that run on Linux, companies should give their developers cheaper Intel boxes running Linux, instead of pricey Unix workstations. And since Linux is a derivative of Unix, training costs will be minimal.

From HBS Working Knowledge comes an interview with Mark J. Cotteleer on ERP, a segment in which companies poured $47 billion last year. Says Cotteleer about two success stories:

Cisco represents the classic, accelerated implementation approach. They claim to have implemented ERP in nine months for 15 million dollars. Cisco had many advantages as they embarked on their initiative. They were much smaller then than they are now, and had a relatively simple legacy environment. However, at the time they were also experiencing exponential growth and the failure of their legacy information systems. They did many things right to get the system selected, implemented, and stabilized in a relatively short period of time.

Tektronix faced a much different implementation challenge. As an older company, primarily a manufacturer of measurement instruments and color printers, they faced a much more complex legacy environment, a more diverse product family, and a more geographically distributed implementation rollout. Tektronix provides an excellent example of how functionally and geographically phased implementation can work.

Tech Talk: Who will be the early adopters of this solution?

Deviant Entrepreneur: There are two types of markets for the open-source-based thin client-thick server (TC-TS) computing solution. The first is what I call as a “sustaining technology” market, and the second is a “disruptive technology” market.

As a sustaining technology, the TC-TS solution is an incremental technology for mainstream markets, whose attraction is primarily that of (a) cost reduction (b) virus protection (c) use of existing hardware, and (d) simplifying management by centralising it on the server.

As a sustaining technology, there are three conditions under which the TC-TS solution will be adopted by existing computing users. First, it becomes a replacement for the Microsoft Windows-Office desktops, necessitated by the need to switch to legal software. Second, it is driven by a desire to extend computing to more people in the organisation. Here, the motivation is to make the people:computer ratio as close to 1:1 as possible. Third, new hires can be given a thin client desktop, thus cutting down on the infrastructure cost for expanding staff. This can apply to new offices or branches where computing has yet to make its presence felt.

In the replacement scenario, one will run into strong user resistance – they are likely to have been using the Windows platform for a long time (either legally or illegally with pirated software), and will be highly opposed to moving to what they consider as an inferior, second-grade platform.

Two factors can aid the transition in this segment: a push from the top management because the cost savings can be very significant, and the creation of innovative applications (an example is the Digital Dashboard) which can help improve productivity for thin client users.

The second type of market is where TC-TS is treated as a “disruptive innovation” – here, it is used to open up new markets which previously could not afford computing because of its high cost. This is akin to the mass market of consumers who cannot afford to pay Rs 200 (USD 4) for a pizza but will pay Rs 20. This is the Invisible Market because it does not exist as of today. This is where disruptive innovations make their entry.

Consider educational institutions keen to set up computer labs. Now, for the price of 3 new fat desktops, 10-12 of the thin clients (with a thick server) can be provided. The same computer lab concept can be extended for setting up community centers in rural areas. This is the way to now bridge the digital divide. Providing a TC-TS solution in segments like schools and colleges also empowers users to create applications for the local markets, which can further drive adoption. TC-TS becomes the foundation for enabling computer literacy everywhere, and opening up new worlds for people who’ve never experienced computing.

This is the base that emerging markets need to create. Computers can automate routine tasks (imagine the impact in government workflow) and help make people more efficient and productive in whatever they are doing. It also creates an electronic flow of information – via email and documents. This is the grassroots revolution that can help emerging markets “tip”.

We have seen this with cellphones in countries like China and India (and in fact, much of East Asia). Cellphones have connected people who were living in islands, providing them with new opportunities for conducting commerce. Computers have the power to do the same. They are the tsunami which the people at the bottom of the pyramid in the emerging markets need to leapfrog.

Tomorrow: The Home Market