Emergic: February 7, 2006 Archives

Tuesday, February 7, 2006

Mittal, India and Europe

International Herald Tribune has an interesting article on Lakshmi Mittal's bid to buy Arcelor and the subtle underplay that is resulting from it about India's emergence as a global power:

... the Mittal bid may give rise to a new image of India, and of emerging markets more generally, as a profound and sophisticated threat. European concerns partly reflect the unknowns of how Mittal Steel will apply its low-cost model to Arcelor's plants. Steel industry analysts say that Mittal Steel is far leaner than Arcelor and is likely to trim, but Mittal has denied that there will be any plant closings or layoffs.

Europe is also wary of the ascendancy of business models invented outside the West - whose inventors claim that they can operate Western companies better than Westerners do. In interviews, several India-based expatriate workers for European multinationals all argued that it was this deeper, high-end threat that worried Europe.

"This threat is stronger than the threat of" outsourcing, said Antoine Zenone, a vice president at the French cement maker Lafarge and the company's lone French expatriate in India. "We're no longer talking about keeping companies within the borders, but rather about preventing companies from coming in."

Emerging Markets | PermaLink | Comments (4)

---
Jérôme Rouch, a Frenchman and manager of Natexis Pramex International in India, said, "We don't realize that with 60 million people, compared with India and China, which is 2.3 billion, we are nothing. We keep moaning. We are cowering
---

As many have pointed out :-) eventually, no on is going to be white/black/brown/yellow - just "beige"!

Posted by Santosh

Rajesh:

I am part of list which have a lot of members from Europe. One of the journos on the list mentioned that he wanted asian members to provide information on what the Asians are thinking about this deal.

Why? Because the Europeans think that Mittal Steel is an Indian company even though it is based from Rotterdam.

And that is something they cannot take.

The IHT is right.

Suhit

Posted by Suhit Anantula

Mittal Steel a family business is very confident of where this company should be heading. The word is Udoyg , that's what Laxshmi and Aditya are doing. There are revolutinarizing the industry and the medium they have chosen to do it with is steel loha , along with energy iron ore.

Unlike like the Gates who needed a cheap cost to promote its product called Infosys , Gates and like him Andy Grove and even the Brits French Germans and others have got away by payin the overseas employees practically nothing and throwing red herrings of bringing jobs to India.

In Mittal Steel Laxshmi has shown that he continues to pay the workers overseas in some of the most protected unioninsed areas very well.
Its amazing to see that all the unions and their chiefs have nothing but praise for Mittal Steel. Please look up the tremendous severance and benefits package he made to the employees of Poland after nearly four years of taking it over. He did not make any large job cuts, but streamlined the company , raised the revenues and then offered severance pays which was acceptable to the workers. His Poland manager happens to be also a Bharatiya Viyay Bhatnagar.

What you see in him and in his family tremendous confidence and he has been like Gandhiji and Indiraji constantly focused in goals and attaining them with very good business practice.

There is no comparing him with anybody. I really admire him and his amazing son Aditya . Bless them

Posted by Kapoor from usa

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Posted by linda

The Next Indian Revolution

Santosh Dawara has a nice post complementing what I am writing in my Tech Talk series this week.

Emerging Markets | PermaLink | Comments (1)

Hi Rajesh, I feel almost silly for not having found emergic.org earlier :-). Got to trust Google more. Your experiences are rich and go way back to '92. I am only now treading the same path. Better late than never I guess!

Thanks,
Santosh

Posted by Santosh

PayPal vs GBuy

WSJ writes about the coming battle between PayPal and Google in payments: "PayPal must now contend with Google. The Mountain View, Calif., Web-search giant, which has terrified Silicon Valley with its ability to quickly create new consumer products and services, is developing a rival service called GBuy. For the last nine months, Google has recruited online retailers to test GBuy, according to one person briefed on the service. GBuy will feature an icon posted alongside the paid-search ads of merchants, which Google hopes will tempt consumers to click on the ads, says this person. GBuy will also let consumers store their credit-card information on Google."

Software | PermaLink | Comments (0)

Davos Conversations on the Future of Media

[via Richard MacManus] Richard Edelman puts together some nice quotes. Among them:

"Who is the biggest distributor of content? It is the consumer, who does not expect to be paid for this service but wants free in kind services. We also need to enhance individuality within each community."
-- Tom Glocer, CEO, Reuters

"There are five forces pushing the consumer to be involved with on-line media. Self expression/self publishing; Aggregating to relevant people; Sharing; Collaboration; Knowing where you are in the pecking order."
-- Yossi Vardi, venture capitalist, creator of instant messaging

General | PermaLink | Comments (0)

Gladwell on Profiling

Malcolm Gladwell writes:

When we say that pit bulls are dangerous, we are making a generalization, just as insurance companies use generalizations when they charge young men more for car insurance than the rest of us (even though many young men are perfectly good drivers), and doctors use generalizations when they tell overweight middle-aged men to get their cholesterol checked (even though many overweight middle-aged men won’t experience heart trouble). Because we don’t know which dog will bite someone or who will have a heart attack or which drivers will get in an accident, we can make predictions only by generalizing. As the legal scholar Frederick Schauer has observed, “painting with a broad brush” is “an often inevitable and frequently desirable dimension of our decision-making lives.”

Another word for generalization, though, is “stereotype,” and stereotypes are usually not considered desirable dimensions of our decision-making lives. The process of moving from the specific to the general is both necessary and perilous.

General | PermaLink | Comments (0)

TECH TALK: India Internet and Mobile: Internet Challenges

We would like to explore the salient challenges facing businesses predominantly driven by Internet & Mobile.

The Internet user base in India is said to exceed 35 million with two-thirds of that access coming in from cybercafes. I believe that for the Internet to play a significant role in our lives much of that access has to shift to homes. Only then will people start building their lives around the Internet. Availability of access away from home for a few minutes a day is not how the Internet usage will take-off, even though the user base may keep growing.

There are many bright spots on the Indian Internet. Jobs and matrimonial sites have done exceptionally well. Ticketing (both for railways and airlines) has taken off in a big way, as has online trading. But what’s needed for the Indian Internet is a positive feedback loop of an increasing user base and increasing usage – way beyond what’s there today. For this, there are four key challenges that need to be addressed: PC installed base, broadband availability, content and payments.

The installed base of PCs in India is growing from its base of about 18 million, but not quickly enough. That is primarily because of the ADAM problems that I have discussed earlier: affordability, desirability, accessibility and manageability. PCs are still quite expensive (the Rs 10,000 PCs are barely usable), the importance of the PCs in daily life has still not been driven home, access to PCs is still not ubiquitous to build connected lives around it, and finally, users have to be reasonably competent to manage their PC (especially to prevent viruses and spyware). All of these four problems need to be solved simultaneously.

Broadband is one of the big disasters in India. Not only do we need to redefine the lower speed limits of what what is considered broadband, we need to make it available to people rapidly and for an all-you-can-eat pricing. Currently, we have speeds well under the official limit of 256 Kbps masquerading as broadband. In places like Mumbai, it takes weeks to get a connection from the local telco (MTNL). The low entry price point of Rs 200-250 ($4.50-5.50) per month is only applicable if one limits downloads to less than 100 MB. Beyond that, it is metered. Without unbundling of the last mile, it will still be some time before the private ISPs can provide affordable broadband access.

The content and services available on the Indian Internet still leave a lot to be desired. Part of this is due to a historical accident – the funding window for start-ups in the space during 1999-2000 was too short for many businesses to get created. Even though there are signs that this is now changing with venture capital starting to flow in, India needs at least a hundred different start-ups to start building out the relevant content for domestic users.

Finally, we need payment options beyond credit and debit cards. It could be pre-paid cash cards or it could be via mobiles. What is needed is that both customers and merchants feel comfortable paying and accepting payments via the Internet. In the US, the combination of address verification and credit reporting agencies keep fraud in check.The same is not the case in India. Without the ability to complete transactions, the consumer Internet will remain more info-centric rather than a utility for people.

Tomorrow: Mobile Challenges

Related Entries: [All]
TECH TALK: India Internet and Mobile: What Others Say (Part 3) [February 17, 2006]
TECH TALK: India Internet and Mobile: What Others Say (Part 2) [February 16, 2006]
TECH TALK: India Internet and Mobile: What Others Say [February 15, 2006]
TECH TALK: India Internet and Mobile: Role of Venture Capital (Part 2) [February 14, 2006]
TECH TALK: India Internet and Mobile: Role of Venture Capital [February 13, 2006]

Tech Talk | PermaLink | Comments (4)

One of the reasons of the high broadband cost is that the incumbents like MTNL/BSNL dont want to share their copper with other private players. So each of the private players end up putting up their own cables across the buildings to reach the end users.

I recently ditched BSNL due to their 1 GB download limit and went with Tata Indicom Unlimited DSL service. They had to lay down a separate cable all the way from their server location to my residence, just for my connection. Thats a huge upfront cost, besides, I doubt whether that strategy scales.

Posted by Anand Jain

One Problem which every aspiring enterprenuer face in Mobile Internet Space is of Monopolistic attitude of every body in value chain be it OEM ,Telco or Portal . these channel are the retailer equivalent on internet and unlike real life retailer they do mind if we want to sperad our vendore base .

so any new venture is considered for partnership/ alliance only when you give an exclusive licence and content distribution . which limits the application footprint in terms of user base . i think this will change after the emergence of No Client-Truly web based - Telco & Handset independent application . but current mobile application frame work and Moblie internet access tech (WAP /GPRS ) are fairly limited in this respect.

another area of concern is that all the action in telelcom is in Bottom of Pyramid and you need to be Sunil B. Mittal or Ambani to do some thing there . but i guess a country like india with its limited venture backing capacity and risk averse apporach can support only a few ideas like Airtel or Reliance Infocom so a small enterprenuer is left with no option but to ACT as an provider of feed-stock of content to these medium and the margin you have mentioned here yesterday makes it very unatttractive for aspiring enterprenuer .

Only good thing is folks in india are ok with the idea of paying for mobile content . the free stuff mentality of Web is not there yet but who knows till when ?

any help ?
prashant
www.knowprashant.blogspot.com
any help

Posted by Prashant Singh

Main problems in bullet form:

1. Unbundling of last mile copper
2. Supply centric service providers "we build, and they will come"
3. Walled garden mindset by SP's, a partner is a supplier!
4. VC's lack industry/domain and above all operating knowledge in the industry they take a call. thereforem whilemaking investments ony 1/10 work. This can be made 5/10 with the right kind of people at the VC end. Not happening as of now.
I have met VC's in all forms at the MD level, and often am shocked at their naivety and real world experience howeber boring and unsexy that may seem when busy with big picture/big ideas stuff. This is tru in India particularly.

Sikha

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