The Firefox Challenge

The New York Times writes about the competition that Internet Explorer is facing from the open-source web browser:

Firefox 1.0 was released on Nov. 9. Just over a month later, the foundation celebrated a remarkable milestone: 10 million downloads.

With Firefox, open-source software moves from back-office obscurity to your home, and to your parents', too. (Your children in college are already using it.) It is polished, as easy to use as Internet Explorer and, most compelling, much better defended against viruses, worms and snoops.

Microsoft has always viewed Internet Explorer's tight integration with Windows to be an attractive feature. That, however, was before security became the unmet need of the day. Firefox sits lightly on top of Windows, in a separation from the underlying operating system that the Mozilla Foundation's president, Mitchell Baker, calls a "natural defense."

For the first time, Internet Explorer has been losing market share. According to a worldwide survey conducted in late November by OneStat.com, a company in Amsterdam that analyzes the Web, Internet Explorer's share dropped to less than 89 percent, 5 percentage points less than in May. Firefox now has almost 5 percent of the market, and it is growing.

Symantec's Acquistion of Veritas

The consolidation in the software industry is starting to happen. After Oracle finally managed to acquire PeopleSoft, Symantec is set to buy Veritas. WSJ writes on the significance:

Symantec Corp. agreed to acquire Veritas Software Corp., combining security and data-storage technology to create the world's fifth-largest software company in an all-stock deal initially valued at approximately $13.5 billion.

The combination is intended to give Symantec -- best known for its consumer software that protects personal computers from viruses, worms and other security threats -- the heft to vie with software-industry giants such as Microsoft Corp., International Business Machines Corp., Oracle Corp. and SAP AG for a greater share of slow-growing corporate technology budgets. The rash of viruses, worms and hacker attacks, along with increased regulatory burdens, have put security software and data-storage systems at the top of the shopping lists of many technology buyers.

The deal reflects the convergence of security and data storage for disaster recovery, regulatory compliance and other functions. For example, corporate e-mail systems need to scan incoming messages for spam and viruses, distribute the workload of the computers that process e-mail and maintain archives of old messages to comply with regulations.

Corporate customers want to reduce the "complexity and cost" of managing technology, and "drive efficiency with fewer suppliers," said John W. Thompson, Symantec's chairman and chief executive.

IBM-Lenovo Deal

Knowledge@Wharton takes a closer look at the deal in the context of two trends: "the increasing commoditization of technology and the emergence of Chinese companies as global players." The article also looks at the view from China:

Within China, the deal has both its critics and its supporters. Fang Zingdong, chairman of blogchina.com and a well-know IT critic in Beijing, calls it "a magnificent acquisition … The new Lenovo becomes a major global player in the PC industry overnight instead of struggling for generations." Lenovo is getting "IBM's first-rate products, technology, brands, market, channels and management," he says.

Zeng Ming, professor of corporate governance and M&A at Cheung Kong Graduate School of Business in Beijing, is "cautiously optimistic" about the deal, saying it "symbolizes Lenovo's efforts to strengthen its competence in the global market." As for other industries in China that might benefit from such deal, he suggests that "it must be a mature, global industry where Chinese companies get the cost advantage and have no technical barriers."

Wang Fanghua, professor of strategy and executive vice dean of the School of Management, Shanghai Jiao Tong University, sees these types of future deals in the high-tech, retail and automotive industries where Chinese companies have achieved a certain size and are well positioned to enter the global market.

Innovation and Disruption

The New York Times writes:

Cable is taking audiences from the television networks. Telephone giants are losing business to the Internet. Wal-Mart has forced Toys "R" Us to consider exiting the toy business. From the goliaths of industry to the smallest of niche firms, American companies seem to be in the grip of unprecedented industrial upheaval.

"We've always had a lot of turbulence in technology, but now turbulence is going beyond technology companies," said Adrian Slywotzky, a managing director of Mercer Management consulting. "In the next few years we will see more of that."

Indeed, technology is changing what a book is. New digital techniques to layer meta-information onto texts have created Internet-based interactive books, a potentially revolutionary breakthrough for fields like high school education.

The gale of innovation and industrial reorganization is a product of two major forces. The computer and its more recent application, the Internet, are seeping into every nook and cranny of the economy, and are being used by companies across the board for an expanding array of purposes.

Net Communities and Politics

News.com reports on the fifth annual Votes, Bits & Bytes conference:

The panelists said the most valuable lesson online campaigners may be able to garner from Web-based companies is that building a sense of trust remains at the center of winning loyalty from customers or political followers.

To Tod Cohen, deputy general counsel for government relations at online auctioneer eBay, the reason why eBay has been so successful is linked inextricably to the morals expressed on the company's business card-size ideology outline. The values card, the brainchild of company founder Pierre Omidyar, includes reminders that people are generally good, that they usually treat others the way they wish to be treated, and that the company strives to foster an open, honest environment among its customers.

Esther Dyson observed that while the notion of building trust on the Web is key to furthering online politics, the utopian idea of a "global village" where people are completely upfront with each other is "implausible." However, she agreed that sites such as eBay and Craigslist make up a valuable template for politicians as they search for ways to attract supporters online.

"eBay itself is politics," Dyson said. "It changes how people view themselves in relation to institutions. The sense of empowerment is the same as in viewing politics online, and the idea of sharing feedback gives people a sense of empowerment. The major difference is that business is about controlling information, and politics is about disseminating information."

TECH TALK: India Trends: Outsourced Services

The other big development of the year has been in offshoring and outsourcing. One look at the financial results and recruitment plans of the Indian companies in this space is enough to give an indication of the solidity of the growth that is happening. What’s interesting is that the bigger software companies seem to be growing faster (in percentage terms) than the mid-tier ones. Also, the global IT majors are stepping up their hiring in India. In IT-enabled services (business process outsourcing), companies are also starting to look beyond just call centre services. The BPO outfits are increasingly becoming more focused on building out expertise and scale in a few business processes. A refrain heard often is to be the “ADP” (Automatic Data Processing, Inc.) of the process – implying that just like ADP has standardized and dominated the outsourced payroll business in the US, they want to do the same for the specific process. This is where labour arbitrage combined with on-demand computing platforms can bring significant benefits going ahead.

The Economist has more:

India's IT industry is growing at a vertiginous rate. Last year the industry notched up sales of $16 billion, three-quarters of which went abroad, according to NASSCOM, the lobby group. By 2008, says NASSCOM, annual sales are likely to surpass $50 billion. The big firms are hiring about 1,000 graduates a month straight from Indian technical colleges.

India's BPO industry is younger and smaller, but growing even faster. Last year its sales were $3.6 billion; by 2008 they are expected to reach $21 billion-24 billion, says NASSCOM. About 70% of the BPO industry's revenue comes from call-centres; 20% from high-volume, low-value data work, such as transcribing health-insurance claims; and the remaining 10% from higher-value information work, such as dealing with insurance claims. But the BPO industry is more fragmented than the IT business, and could change shape rapidly.

The best Indian IT and BPO companies are aiming not only to lower the cost of western white-collar work, from software programming to insurance underwriting, but to improve its quality as well. Firms such as Wipro, EXL Service and WNS are applying the same management disciplines to the way they provide services that GE applies to its industrial businesses. Tasks are broken into modules, examined and reworked to reduce errors, improve consistency and speed things up.

In the longer term, India's success at winning global white-collar work will depend on two things: the supply of high-quality technical and business graduates; and, more distantly, an improvement in India's awful infrastructure.

India is increasing part of not just the IT but also the services value chain of global organisations. Indian companies have demonstrated that they can not just start but also scale. India’s share of the global pie is still miniscule leaving plenty of room for growth. Provided, we can, as the Economist points out, improve our education system and infrastructure.

Tomorrow: Computing, Internet and Broadband

Related Entries:  [All]
TECH TALK: India Trends: Looking Ahead [December 24, 2004]
TECH TALK: India Trends: Made in India [December 23, 2004]
TECH TALK: India Trends: Computing, Internet and Broadband [December 22, 2004]
TECH TALK: India Trends: Mobile Phones [December 20, 2004]
TECH TALK: Tech Trends: India Action: Build Infrastructure to Support BPO [July 29, 2004]