DI Live! IT Executive Insights

Digital Investor's news roll & commentary

Sony software - can a basket-case be bought back to life?

I was surprised to see Sony's Howard Stringer say that Sony's turnaround effort "is centered around tapping younger software engineers to boost product development".

The move is expected to strengthen product offerings because younger engineers are more familiar with the digital age, and because software development is becoming more important for gadgets, Stringer told reporters in Tokyo.

That's a healthy sign since in my humble opinion Sony's software, with the exception of the PlayStation and PSP's is real crap.

Stripping all the crud off your VIAO is the first task of anyone buying those machines - of course a lot of that baggage isn't Sony's but that that is only adds to the incompatible cludge of half-baked Sony software.

The same article quotes Sony President Ryoji Chubachi, saying "We had become self-indulgent in growing smug in our technological powers".

That's true - but smugness is probably not the cause of the software cludge that Sony turns out - its just incompetence from an engineering company who has grown from conscious competence in engineering products to unconscious incompetence in engineering software.

It's a not uncommon disease - look at Motorola, Nokia, GM, Siemens - they all suffer from it as well.

Somehow from Sony I expected more, but that was before I experienced my first two VIAOs!  Why did I buy two, when I was disappointed with the first - - good question - because I expected more from Sony!!  Fool I am.

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What's your view of Asia's potential dominance in mobile and software development?  Post your Comments.  How can I help? Email me; Call (Australia) +61 403 345 632 (direct); +1(817) 382-4453 (SkypeIn USA); +852-8199-0189 (SkypeIn HK);

"We hired Walter to complete a technology audit, but he gave us much more -- he has the ability to identify business opportunities that benefit all sides, creating networks of customers, suppliers, investors and intermediaries. His breadth of knowledge and willingness to push himself beyond the brief are tremendously valuable." Zenon Pasieczny, Director, Saphet Capital Management

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Asia sets the stage for massive mobile and software leadership and sales

Two items in Finance Asia's A Week in Tech caught my eye as particulalry important signals for the West and countries such as Australia.

In Korea The Ministry of Information and Communication (MIC) revealed its grand plan to construct a "mobile paradise,'' a special district, where people will be able to enjoy a seamless service from the world's latest wireless technologies next year.

Dubbed the M1 (Mobile No. 1) project, the special district is kind of a free technology zone that will create a new mobile environment and be the testing area for up-and-coming wireless platforms. Included in the available techniques will be all mobile broadcasting systems like DVB-H developed by Nokia, Qualcomm's MediaFlo and the home-grown digital multimedia broadcasting.

The place will allow individuals to use for free every next-generation telecom platform such as time division-synchronous code division multiple access (TD-SCDMA), WiBro and a global system for mobile communications (GSM). Under the programme, MIC said it aims a 100-percent mobile literacy here as well as substantially expanding the country's presence in the global market.

An MIC official said the new project is looking to come up with products worth W576 trillion ($591.6 billion) by 2010 and create additional value of W266 trillion ($273.2 billion) within the same period.

That's an astounding objective, but such objectives have been set by Korea and the MIC before, and met.  Korea has developed major planks of its economy around such bold moves and it looks like the pace is excellerating, leaving in the dust countries where IT and telecommunications rank low on the political agenda.

China is on the same path with software, as we have mentioned before, and Finance Asia reports:

With software companies in China’s Henan province accumulating nearly Rmb5 billion ($621.1 million) in sales revenues during the past five years, observers are saying the software industry in the area has become one of the fastest-growing industries in the country. Observers also say the industry exhibits the most potential. From 2000 to 2005, the software industry in the province posted an average of 50 percent growth in sales revenue every year. The province has four software parks, and serves as host to more than 400 software developers. Henan province said it aims for targeted sales revenue of Rmb20 billion for its software industry in 2010.

This is also the tip of the iceberg as China sets itself on a path to chase and pass Indian in software development and services.

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What's your view of Asia's potential dominance in mobile and software development?  Post your Comments.  How can I help? Email me; Call (Australia) +61 403 345 632 (direct); +1(817) 382-4453 (SkypeIn USA); +852-8199-0189 (SkypeIn HK);

"We hired Walter to complete a technology audit, but he gave us much more -- he has the ability to identify business opportunities that benefit all sides, creating networks of customers, suppliers, investors and intermediaries. His breadth of knowledge and willingness to push himself beyond the brief are tremendously valuable." Zenon Pasieczny, Director, Saphet Capital Management

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The internet as the database

In a previous post The Power at the Edge of the Network Regroups I refered to what Scott McNealy said a long time ago that "the network is the computer" (McNealy kicked off Sun's user conference, SunNetwork 2002, beating a drum to the same mantra the company has held during its 20-year history, "The Network is the Computer.")

This has become now become a truism, and the question now is more around "what sort of computer?".

And an equally interesting view, perhaps a more general substitute, is the concept of "the Internet is the database".  And the question, is "what sort of database?".

Steve Ballmer, when recently asked in Sydney "What do you see as the main disruptive technologies coming on to the radar screen in the next 10 years?" replied:

Firstly, I think people underestimate the ways in which the software business will re-engineer itself based on the assumption of internet-based resources and services.

Most things today are still smart devices in corporations talking in HTML to websites. The notion of looking at the internet as a big server that all PCs can talk to – that revolution and what it means in the way people find and use information, communicate with people, build those relationships – I think people might underestimate that at this stage.

Just take health care. I met Minister Tony Abbott and we were talking about health care, and I am not making a particularly Australian prediction, but I believe the way this electronic medical record thing will be solved is that eventually people will be in charge of their own medical records, which will be securely stored and managed and shared with doctors through the benefits of internet technology.

The internet will help break down these silos of information. It's as much about web services as anything.

This is the Internet as the database, an intelligent semantic database linked by "web services".

This sounds like a concept without much practical application at present.  But just like McNealy's comment changed people's world view and how they then went about engineering applications and architectures, the shift in world view in designing and developing around "the Internet is the database" is even more disruptive and profound.

Technorati Tags:
Ballmer disruptive IT architecture web services

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How do you make a reference architecture which includes open source an effective part of your IT strategy?  Post your Comments.  How can I help? Email me; Call (Australia) +61 403 345 632 (direct); +1(817) 382-4453 (SkypeIn USA); +852-8199-0189 (SkypeIn HK);

"We hired Walter to complete a technology audit, but he gave us much more -- he has the ability to identify business opportunities that benefit all sides, creating networks of customers, suppliers, investors and intermediaries. His breadth of knowledge and willingness to push himself beyond the brief are tremendously valuable." Zenon Pasieczny, Director, Saphet Capital Management

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Russia should become IT leader by 2010

A comprehensive program aimed at creating a network of Silicon Valley-type centers in Russia to develop information and high technology products for export is crucial to making the country a leader on the global market for high technologies, said Information Technologies and Communications Minister Leonid Reyman.

Information technologies account for more than 10% of leading countries' GDP, while the volume of the global information technologies market stands at $915 billion, making it larger than the world oil sector, Reyman said.

Russia now accounts for a mere 0.2% of the global market for information technologies, he said.

It is also planned to establish a commercial venture fund to finance information technology projects, he said.

"The state should show its long-term interest in this area, thus encouraging more investments," the minister said. A total of 18 billion rubles in budget funds will be invested in the program in 2005-2010.

This program is expected to raise the volume of Russia's information technology market to $40 billion, bringing high technologies' share of GDP to 5%."

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More on Industry Strategy and IT/Telco Services at www.digitalinvestor.com.au

Related Blogs: (see Categories, top left)
How and Why India's and China's World Class Outsourcing will Continue to Grow - here
Can you trust China with your Software IP? - here
China's Own 'Goldman Sachs' - Not Just a Nation of Cooks and Engineers - here
The Coming China Private Equity Bubble - here
Venturing into China in IT Investments - here

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What do you think will be Russia's most effective positioning in becoming a global IT leader as compared to China and India? Post your Comments.How can I help? Email me; Call (Australia) +61 403 345 632.

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The Coming China Private Equity Bubble

Venture capital conferences in the U.S. or Europe over the past year have all buzzed about China. Investment in China comes with risks, and while some firms are comfortable that they can handle the risk the fact that many will not invest under the current conditions succinctly illustrates the challenge.

Even though the investment regime has been liberalised many experienced Asian VCs like George Hara of Defta Partners believe that China remains an insider's game and the name of the game is unfair competition against the foreign venture investors.

And almost all others would agree that if not all than at least a large percentage of the opportunities are only manageable by insiders.

At the same time the "fear and greed" syndrome about China haunts VCs. They fear missing out and being beaten by their competitors, and their greed drives them to want to get in early to get the highest multiples.

China is attractive from a venture capital perspective because it is the number one market for cell phone handsets, the number one market for fixed line subscribers, the number two market for cable subscribers, the number two market for PC ownership and the number one growth market for DSL. Another important factor is China’s deep talent pool, a key condition for venture capital. China is second only to the US in terms of number of PhDs produced annually.

Thus China is an irresistible magnet for the money becoming more freely available again for investment in early-stage companies. This means that there is inevitably going to be a strong flow of funds into China chasing deals.

Bear in mind that China is already a bigger venture capital investment market than every other market in the world except California, Massachusetts and the UK. Zero2IPO tracks incoming VC investment – which is expected to be about $2.5b this year.

But local companies with high quality management and teams already have access to knowledgeable Chinese investors. These are Taiwanese and Hong Kongese and overseas mainland Chinese who know their way around the provinces, the officials and the dealmakers within China.

This means that the truly foreign money will have to chase the best local deals, not the other way around.

In this competition history has shown that proper process is often the victim - and that the results are inevitable. A fair proportion of foreign VC investment will go into higher priced deals that are put together without proper process and diligence, and into lower priced deals that are second-rate opportunities from the start.

Of course the major global funds such as 3i, the Carlyle Group and Intel, plus the regional specialists such as Walden International and WI Harper, know what they are doing. But this leaves a huge bandwagon of followers and increases the fear of missing out among those followers.

At the ETRE conference in Cannes in October China again loomed large, not the least because the next Asian cousin of ETRE – ATRE – will be held in Beijing next year. What emerged at ETRE is that Chinese companies are developing, perhaps faster than expected, with global potential and these are the magnets for VCs.

However there is another "fear" that haunts VCs, aside from the fear of missing out. That is the fear of an economic downturn in China and the effect on the technology sector.

In April this year at ATRE in Shanghai those knowledgeable about such matters were confident that the Chinese government was very adroitly managing a soft landing. It was doing this by slowing consumer spending, and putting the brakes on major construction and infrastructure projects across key provinces.

At ETRE this topic was not on the agenda but in private conversations it seems that the outlook for a controlled slowdown is not so certain. Major strains are expected in the economy over the next 18 months including from water shortages, power shortages and labour problems.

In this case, with regard to attending to and further regulating private equity the government is a long way from focusing on this issue and less likely to attend to it in the near to medium term.

Therefore "fear and greed" syndrome of VCs will almost certainly lead to a PE bubble, and its subsequent bust, in an environment where the insiders game protects only those who know how to arrange their risk through insiders' connections.

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For specific business commentary on telecoms see:

i-mode Business Strategy at www.imodestrategy.com
Australia's 3G Party and Why Hutchison 3 is Attractive to Telstra's i-mode Strategy
Ca va? DoCoMo's i-Mode Clone Grows Quietly in France
Telstra's 3G Decision - Where the Analysts Missed the i-mode Play
Redesigning the i-mode Sales Process for Success - Part 3 Creating Excitement
As It Happened - i-mode History - Exploding the myths of a well-planned birth

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Complete and Free Articles on Broadband and Asia at www.digitalinvestor.com.au

Asian Broadband Cooperation Leads Standards-setting
Presentation to the Australian Telecommunications and Network Applications Conference 2003

What do you think about the potential of a PE bust in China for a large number of foreign VCs? Post your Comments.

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How can I help? Email me; Call (Australia) +61 403 345 632.

Is Microsoft Re-inventing Itself Again to Win the Search War?

In a recent post I speculated on why Microsoft won't feel particularly threatened by a Gbrowser - Google Browser.

In short because with in-depth knowledge of the operating system and then moving to a thin-client web-services implementation with a deep personalized image availlable from any access point MS is potentially well in front.

In the kind of brain drain not seen for a while in Silicon Valley, newly-public Google Inc. is hiring key technologists left, right, and center - including away from Sun, BEA, and Microsoft. Speculation is increasing that the "Project X" the new recruits are being tasked with is a rival to IE, a Google browser —Linuxworld September 21, 2004

Of course Google has hired plenty of brains who can emulate and replicate and improve MS's base knowledge and technology. The difference is that MS is focused on operating systems and user interaction with the OS and web as their core business, while Google is focused on its mission "to organize the world's information and make it universally accessible and useful".

What will the MS attack in the browser battle look like?

Consider this dialogue from ZDNet's Between The Lines blog, where Jason Kottke is quoted with his idea of a Google "Toolbar++" with a "search pane that watches what you're browsing and suggests related pages and search queries or watches what you're blogging and suggests related pages, news items, or emails you've written". He speculated that these would be powered by "JavaScript-powered desktop-like web apps".

Kottke's view was challenged in the Reader's Comments by "Tero" who said:

I do not think they are building Java script clients to their services. It just does not work that well.

What I really think they are doing is somekind of thin client interfaces based on Java Applets and XML, usable with any browser.

You just download a very small Java applet (the interface runtime), and it draws the page based on the XML sent to it.

Applications based on this act like regular desktop applications, but they are essentially just web applications. You do not have to install anything manually on your machine since it really runs on the server.

- Comment by Tero — Friday, September 24 2004 @ 7:33 am

But wait!! The Browsers Wars are more correctly termed the Browser Battles, because the war is not about the browser but about search and then about search and ecommerce. This is where Google faces Amazon and A9 (or is it cooperates with Amazon and A9?), and is Microsoft's weakest front in the war.

A reinvention of Microsoft around search and a new thin terminal environment will not be a surprise, in fact it is almost a necessity. The big surprise will be in how they connect that with ecommerce.

A9Forum.com - discussing the A9 & Amazon ecommerce ecosystem.

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If you are interested in Social Networking see my blogs:

What is Social Networking Anyway?
How to Build your Linkedin Business Network
and see Clay Shirky's A Group Is Its Own Worst Enemy

What do you think about the browser/search war? Do you think that MS will re-invent itself to win the search and ecommerce war on the desktop? Post your Comments.

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How can I help? Email me; Call (Australia) +61 403 345 632.

Has A9 destroyed $16 billion of Google's market value?

On October 1 Amazon's market cap stood at $16.62 billion, and Google’s at $35.15 billion – making a difference of about $18 billion in round figures.

That difference is the same size as Sun Life Financial or Northrop Grumman or Sara Lee or the ANZ Bank of Australia or Avon Products or Duke Energy. It’s quite a lot of capital value.

But Google is a search engine and A9 is a search engine, so what's in the $18b?

Of course all search engines aren't created equal.
Ask Jeeves! has a market cap of less than $2 billion despite the fact that it has rolled out new search features as good as Google's and A9's. One new feature in particular, myJeeves, allows users to store queries and results, mimics some of the functionality in A9.com.

At the top end of the scale Yahoo! has a market cap of $46 billion despite Google's challenge, and shows no signs of wilting. Yahoo! is much more that a search engine, with more than 25 World Properties and relationships deeply into global commerce initiatives and search-related online marketing services provided through its subsidiary, Overture Services.

Clearly commerce has emerged as a key component of search, and the combination of Web search, product search and comparison shopping will drive the battle and determine the winners in the search engine world.

Google is a cash flow king based upon its Adsense targetted search advertising revenue, which topped $1.32 billion for the first six months of this year. In fact in September after a briefing Wall Street Analysts upgraded the stock, so they buy a story which the world is yet to see.

Google leads in advertising but how about ecommerce?

However it is not clear that it leads in other ecommerce aspects of search and whether it has a sustainable lead in served advertising - even thought it certainly proved the model. (More that proving the model, it also proved that superb technology in the administration end can make an entirely self-help global ad-serving platform – something we take for granted but which is truly mind-boggling.)

But Amazon has also come a long way since the dot-com crash and represents a huge ecommerce engine and has something that Google lacks – an understanding of the buying habits and preferences of its customers. Tying this with a search engine is a spectacular move and one that cannot be emulated organically by Google.

Google has declared itself to be focused on their core of search engines, so it is hard to see how that can step out of that mould and save face according to their own declaration of corporate values.

- see this blog Google Defies it's Own Philosophy?

So how good is A9 as a search tool?

The first thing to note is that A9 uses Google's search index, which Amazon is licensing as part of its distribution deal for placing Google's AdWords on Amazon.com. And to tap into A9's personalisation you have to register with Amazon – so who's not?

As a first glance A9 throws the clean simple look of Google and the new MS search page out of the window. It's cluttered, or more correctly jam-packed with features, most of which can be buttoned off and on the page.

In fact the only time I use Google now is when I have a desire to see a clean sweep of images, and for News —Walter Adamson

The most immediately useful and different feature is the ability to store bookmarks online, and of course to import from IE. This is great because you can share between work and home and other places without using the same computer. Saved searches at A9 can be dragged and dropped to an online bookmark.

This backend shared system also brings into a play another interesting feature whereby searches from any site such as two machines logged into the same account share search histories simultaneously. And all searches made at the Google URL, while the A9 toolbar is active, are also picked up and included in the A9 search history.

The A9 toolbar loads up on all the features with bookmarking, ad and site blocking (why do people make such a big noise about Google introducing ad blocking?), and history plus a few extra neat functions. One is the highlighter to mark search items on a page - I've found this useful, and the second is the ability to form a List of searches based upon bookmarks or recent searches and then click through the list forward or backward.

The toolbar also allows instant access to other searches such as Amazon books, all Amazon products and Google itself. But the real power comes when examining search results.

The search results page loads up on related features

The search results page can optionally display websites, books, images, movies, reference, history bookmarks, and a URL diary. The latter is a crude page annotation of limited value but with some interesting potential if contextually mined, of huge value actually because it reflects what really interests people at a site.

Perhaps like Clusty they'll also add a Gossip category and a "do it yourself" category in the future.

But for now what is there is plenty and also plenty useful. For example the history tells you how long ago you visited certain sites and did particular searches, which sometimes jogs the memory.

Having the images on during a search is useful for me because sometimes I am looking for photos to include with an article I am researching. The reference is handy to have on when you are searching and wanting to understand something complex such as “Gaza strip” – try it now!

In fact the reference section is powered by GuruNet which has been around for ages and in various forms, the last Atomica if I recall correctly, and always a great service but without a home. A9 is the home and the making of GuruNet – it has very high value information within its enormous database.

On the A9 homepage itself there is a Discover option – obviously work in progress and a real beta, but a fascinating attempt to try to predict from your search habits sites that are likely to be of interest to you. What is really needs is an alert for a site above a certain threshold of interest.

How's the overall experience?

Very good, very fast and the features actually have some value, and can be easily turned off and on.

In fact the only time I use Google now is when I have a desire to see a clean sweep of images, and for News! I am often searching just for news and A9 needs a News window.

A9's a nice browser but where's the threat to Google?

Google has Groups, Froogle, blogging, photo albums, its social networking and the launched Gmail and the forecast Gbrowser.

A9 has Amazon, or should that be the other way around, and Amazon is the largest online shopping mall on the planet, and it has millions of registered users and knows their habits. If you think about A9 from a business perspective, it's quite ingenious - not just to cash in on the AdWords it displays, but to sell more books, CDs and other products.

The two big issues and threats to Google are these – firstly Amazon does not care about the search engine per se.

They built all A9 in a year and apparently didn't need the legendary geniuses-only hiring practice of Google. A9 is a front-end to assist profiling their membership and selling goods and services from their own ecommerce infrastructure. Google cannot build what Amazon has - a global branded ecommerce infrastructure – if they did tried they would be off their core anyway. This means that Google building a browser is incidental to Amazon’s strategy with A9.

The second major threat is that building a better browser is now passé.

Microsoft knows more about operating systems than anyone else on the planet – in sheer volume at least – and their next release of browser with search will build on that knowledge to their own unique advantage. Some commentators have downplayed this because they see this integration as being a tight "upgrade only" future, but I think that it will be the opposite.

It will very thin and service-based and "unintegrated" in the monolithic sense of IE today. The release of new search and browser services will align with a slimmed-down desktop and the capability to take the same image everywhere.

This means that browsing and working from any location will become the seamless experience that Google is not likely to offer in the same timeframe. At the same time it will deeply mine the interaction and preferences and setttings of the user with the operating system, including preferences for certain media types and entertainment.

Who will change?

Will corporates switch to A9? Probably not because corporates aren't members of Amazon and they are late-adopters of Google - it will stay enrenched as the search engine with IE.

Will consumers change for the A9/Amazon combination, and personal professionals? I think so, a fair number and certainly enough to worry other search engines and portals like Ask Jeeves and Yahoo! The SME/SOHO world can change quite fast, and they bring huge purchasing power and huge search needs. If A9 bought out a Firefox toolbar then we would really see some interesting changes in the dynamics in these least committed groups.

What's left for Google?

Don't loose any sleep! Google has 70-80% of the world’s search traffic – an amazing feat – for example 70% in Canada, 80% in France, 77% in the UK – and it spends $0 on advertising.

A Web browser that would meld Google search, Gmail free e-mail, Google's Blogger Web publishing software and popup-blocking technology could be a prospective winner for the company, industry analysts say. Analysts predict Google will have greater earnings from Gmail ads than from its search engine ads since they are more direct and concentrated.

The Google team are clever, rich, and successful and they are not going to go away. But I'm still not sure how they can keep that $18 billion excess over Amazon from going away.

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If you are interested in Social Networking see my blogs:

What is Social Networking Anyway?
How to Build your Linkedin Business Network
and see Clay Shirky's A Group Is Its Own Worst Enemy

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For specific business commentary on telecoms see:

i-mode Business Strategy at www.imodestrategy.com
Australia's 3G Party and Why Hutchison 3 is Attractive to Telstra's i-mode Strategy
Ca va? DoCoMo's i-Mode Clone Grows Quietly in France
Telstra's 3G Decision - Where the Analysts Missed the i-mode Play

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Complete and Free Articles on Broadband and Asia at www.digitalinvestor.com.au

Asian Broadband Cooperation Leads Standards-setting
Presentation to the Australian Telecommunications and Network Applications Conference 2003

What do you think about the browser/search engine war? Do you think that A9 can effect Google's real market value and that MS can attack successfully into search and ecommerce? Post your Comments.

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How can I help? Email me; Call (Australia) +61 403 345 632.

User Experience Builds Content and Leadership in Ubiquitous Communications and Technologies - Korea

Japan, Korea and China have a combined strategy to lead in the setting of defacto standards for two important technology areas - 4G wireless and home networking. Their motives are driven in part by the desire to make these technologies available in the market quickly, faster than any traditional standards-setting process, and to have the standards strongly reflect experience from early experiments which are now underway.

A recent article brings this strategy to light. It highlights the effect of broadband "beyond the wires" and in everyday social use. The article also highlights the continuing debate, in the US at least, about the Korea success being mainly due to a tight geography and demographics - which merely deflects inexpert readers from understanding the deeper underlying causes and the deeper impact for economic wealth generation.

CNET News.com July 28, 2004
South Korea leads the way

"Many U.S. executives and policy makers are quick to dismiss the disparity, noting correctly that South Korea's densely populated areas have made it easier for telecommunications companies to offer extremely fast service to large numbers of people. But even with such geographic and demographic differences, the United States can learn some valuable lessons from South Korea's experience in jump-starting a broadband powerhouse.

"I think there are quite a few lessons," said Taylor Reynolds, an International Telecommunications Union analyst who recently completed a survey of Internet and mobile services in South Korea. "Most of the growth is tied to effective competition, which you don't see in a lot of places in the United States."

And even more interesting is the reach of this ubiquitous communications into everyday life. This reach brings into question the official status of Japan as the world's leading broadband nation - which it is according to the ITU criteria.

For example a recent Japanese Government report highlighted that "Japan's broadband subscribers at the end of March 2004 reached 14.95 million, and the monthly fees are much cheaper than those in other nations. Price comparisons show that the monthly fee of US$0.09 per 100kbps offered in Japan was also the least expensive among all nations."

This is certainly true, but the reach and pervasiveness of broadband in Korea is much more intense than in Japan. So while Japan may be the leading broadband nation, Korea is the leading "broadband people". The CNET article illustrates this reach:

"Citizens can get "video on demand" online, often even with high-definition video, for less than Americans pay to rent a DVD. Low-income students use high-speed Net connections to take free tutorials for the national aptitude test, an SAT-like exam that can determine college admissions and future job paths.

Online gaming is a massive cultural phenomenon, with three TV channels dedicated to the subject and good players attaining the fame of American sports stars. In addition, South Koreans spent more than $1.6 billion shopping online in the first quarter of 2004, or about twice as much per capita as U.S. residents .

"The vision of a broadband society is already here in Korea," said Eric Kim, executive vice president of global marketing operations at Samsung Electronics. "We are two to three years ahead in wireless broadband, and people are using it, too."

Eric Kim was a key influencer at this meeting that I attended on a small island of the coast of Japan, where Japan, Korea and China formulated their strategy for leading in defacto standard-setting for home networking and 4G.

Policy makers and industry leaders in other countries might observe that Korea leapfrogged the "traditional" paralysing effect of companies not investing because they don't have or understand content - Korea built the infrastructure and then the content evolved.

"In many ways, the most important question answered in the country's grand broadband experiment has been one of demand. Broadband progress has long been delayed in the United States and other countries as a result of uncertainty about how much interest consumers would have in paying for the expensive infrastructure needed for high-bandwidth services.

As a result, entire industries have been paralyzed for years by a classic Catch-22, as content companies and network carriers waited for one another to make the first move before investing in broadband products.

This infrastructure and national experience of broadband fuels the strategy of settiing and controlling important future standards, particularly for 4G wireless and home networking. This is a goal of Japan, Korea and China, and Korea is well advanced.

"The government's goal is to have 10 million households with (complete) home networking by 2007," Yong Duk Yoon, a vice president at Samsung's Advanced Institute of Technology*, said in an interview in this related article South Korea's house of the future on CNET.

The role Korea has taken in adopting broadband, through active Government policy and intense competition, has build a level of national experience that is unsurpassed elsewhere on the globe. Their collective attitude reflects that of Softbank Broadband in Japan where they have aggressively rolled-out leading edge high-speed broadband following a strategy of "experience first, content second" (see the importance of this strategy in mobile internet Lead with Design, follow with Content, the Power of the i-mode Handset Strategy for Telstra).

This shared experience is the basis of being able to understand and take the lead in setting very effective and market-driven de facto standards for the two key targets of home networking and 4G wireless. And from this Korea, Japan and Chiona will be able to drive whole new industries see Broadband in the Home Drives an Entire Industry. This is the point that decision-makers and policy-setters in many other countries, including Australia, seem to miss or be incapable of interpreting.

- from my website How Korea Built the Broadband that America Wanted

* Established in 1987, SAIT is Samsung's main research institute.

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Complete and Free Articles on Broadband and Asia at www.digitalinvestor.com.au

Asian Broadband Cooperation Leads Standards-setting
uKorea and the Remarkable Dr Chin
Presentation to the Australian Telecommunications and Network Applications Conference 2003

What's your take on the content versus experience argument holding back broadband rollouts? Where does the key challenge lie and how can the hestiation best be broken? Post your Comments.

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How can I help? Email me; Call (Australia) +61 403 345 632.

Open minds, management authenticity and self-awareness lead Siebel's strategy into hosted CRM

When James Harkin rose to speak at Paul Budde's Roundtable* I was expecting a CRM sales and marketing overview for the telecoms industry. What I heard was far more impressive, as it touched on one of my perpetual hot topics for IT company executives.

James explained how Siebel, as successful as it was in the enterprise space, came to grips with what it was not when it decided to enter the "software as a service" market.

All too often I've seen IT company executives blithely decide to enter a different segment of the industry, with different dynamics and requiring different competencies, and different sales channels and cultures, and even different R&D budgets and focus, just because it appears to be part of the "IT business". This is all the more a problem when a company has been successful in its chosen segment.

In many cases it is not even a case of informed misjudgement, but one of ignorance of the industry dynamics outside of their segment, and inflated egos.

Siebel clearly recognised that they were a software products company - and obviously that self awareness included a deep understanding of what it means to be a software products company.

Therefore, to enter the hosted services market they needed to do something for which they had no experience and for which they were not suited. They then set about to construct a business ecosystem that would allow them to enter the managed services business. This in effect would be an extended corporation, almost a virtual networked corporation in the sense of Cisco's John Chambers.

This may seem obvious, but in practice such clarity and openness of thinking is rarely achieved. This is also especially impressive in Siebel because it emanated a reputation as a "we can do it all" corporation.

Siebel's strategy was a high dollar strategy, meaning it took a lot of money to support it. By building a strong vertical CRM applications set, it attacked a substantial number of markets in which it wanted to be the only player, reinforcing the "we can do it all".

To the great credit of its leaders it was able to recognise its "as is" strengths and weaknesses, and was able to dispel the "we can do it all" reputation, and come to grips with a new business model in which it was to rely totally on partners for joint success.

The partner it chose was IBM, with the strategy dubbed "CRM for everyone".

IBM has overwhelming credibility as a hosted service provider, and as a "on demand" utility services providers, and as a trusted name as a guardian of the hosted CRM customer data. These attributes were lacking in Siebel, particularly the lack of expertise and competence in running hosted services.

The Siebel-IBM OnDemand CRM service is a strategy to provide cheap customer relationship management software to users who are unable to implement the more expensive and complex enterprise version. This is also a large shift in the previous strategy and a large addition of new competencies is required - a substantial part of which is supplied by IBM's salesforce.

Seems simple to be so self-aware and to make such a clear decision?

Not really - in fact in my experience it is uncommon.

Take for example in the Australian market in the 1990's when BHP Information Technology a 2000 person services company tried many times to convince Mincom a software products company to come to a joint arrangement to promote our combined solution. Mincom, being a typical smaller and successful business, told me that "a dollar was a dollar" and they would chase every service dollar they could get. This led to them eventually thinking that they had a good professional services business, but ultimately they stumbled through lack of focus on their core product. After a string of reorganisations, new CEOs, and failed capital raisings, they are hopefully going to do well. I believe that their lack of ability to understand their core was a significant contributor to them failing to reach their full potential in the 90s. Mincom's sales have now regained about the same level as in 1998.

Take for example the Kaz Group, recently acquired by Telstra, who purchased Aspect Computing - a really excellent software development company. Kaz was an outsourcing and managed services company. I could never conceive of how they could combine the two businesses successfully. Even if they overcame all the cultural hurdles and different business dynamics for each, they would always face an insurmountable hurdle in the management attitude towards and necessity to fund R&D for two totally different business profiles. And in any case they could not afford to fund real R&D in both sectors - it was not sustainable even if they had convinced themselves that it was feasible.

Kaz's share price declined by 80% over the period from that purchase, reaching a low of 10% of their previous highest value in the year before the Aspect acquisition. Kaz was snapped up by Telstra in April 2004, for AU$333m at $0.40/share, giving the founders a 100%+ profit but returning a loss for the shareholders who came in on the prospects of the Aspect acquisition - see my blogs Telstra's Queer Eye for a Kaz Guy and Tactical Success batters against Strategic Intent as Telco buys IT Services Group.

In the case of Kaz's share price we could charitably say that the market was efficient, but I doubt that this 'efficiency' was anything to do with an understanding of the basic flaw of the merger.

That is why the Siebel story to me was very impressive. It lifted my respect for the company because to be realistic about your successful business is and what it is not requires open minds, breadth of view, clarity of insight, and extreme authenticity in the sense of GE's Jack Welsh. That's something to respect!.

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*At Roundtable with Paul Budde and Industry Experts: Expanding through a virtual company. Sydney, June 24, 2004.

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