Will India ever emulate Finland?

I moaned about the state of broadband in India here. Based on some more research I found that the performance of broadband even in metros are poor. Reliability is an issue, committed performance are not delivered, and getting premium performance to test high bandwidth applications is impossible.

Let’s see Finland which has a small population, but has always had a strong, liberal telecom sector.

Finland introduced laws which guarantee broadband to every resident living in the country. This is the first such guarantee anywhere in the world. Starting July 2010, every person in Finland will have the right to a one-megabit broadband connection as an intermediate step, says the Ministry of Transport and Communications. By the end of 2015, the legal right will be extended to an impressive 100 Mb broadband connection for everyone.

Will India ever introduce such a guarantee? It would be mind boggling to see what the innovative entrepreneurial Indians will do with powerful broadband access!

We could just catapult to world stage as Korea did in this decade and the way China is poised to do in the next decade. And honestly, I don’t understand what’s holding them back!

Cisco’s brilliant acquisition of Tandberg

Recent acquisitions by Dell and Xerox have something in common. Both acquired companies which are far away from their core competencies in an effort to find stable growth. They acquired predominantly U.S. centric IT services firms. I explained my disappointment with Dell’s acquisition of Perot Systems here. Xerox recent acquisition of ACS also evoked a similar thinking in me. It is very difficult for a pure play product / technology organization to blend well with a pure play services organization. The organizational DNA are too different, growth trajectories are quite different, organizational processes lend itself to little synergy. In short, I am not very high on such acquisition moves.

Cisco is different.

Cisco announced an all- cash offer to acquire Tandberg for $ 3 billion. Tandberg — a Norwegian company sells smaller and less priced video conferencing systems. This is a perfect fit for Cisco’s more expensive TelePresence systems which has been a great success. I think this is a brilliant acquisition since Tandberg’s gross margins is 66% and has clients in US and Europe. This acquisition would enable Cisco to sell the Tandberg products to companies which cannot afford the TelePresence. With this acquisition, Cisco would dominate the video conferencing systems for some time. More importantly the acquisition came in quite cheap since Cisco just paid 11% premium over Tandberg’s closing price.

Cisco has always acquired companies that in some way or the other generated more Internet traffic creating in turn demand for its core business — the networking hardware business. The way it is going to unleash its Unified Computing strategy will of course be interesting and one has to wait and see how it provides the synergy to the networking hardware business. Cisco’s ability to shake off entrenched players in fairly established market segments will also be evident in a couple of years.

Over the last 5 years Cisco has acquired 40 companies — both big and small and they have helped Cisco plug the gaps in the technology and product roadmaps admirably well. They also have had little problems integrating them into the Cisco model.

Cisco has $35 billion in cash which means further acquisitions are on the way. I only hope they don’t go with the flavor of the month and acquire another U.S. based IT services firms !

Nokia’s decline — indicative of a bigger upheaval?

Just as Apple announced stellar results, Nokia the leading player is showing signs of decline. It has the company of another marquee player in Sony Ericcson. I already described the impact that Apple and RIM are having on other players here. The latest market data just reinforces the view.

The Western Europe market in Nokia’s backyard and hence the trends here are important. The reason for the significant drop is Nokia doesn’t have the zing of the iPhone or the Blackberry and doesn’t have a great smartphone yet.

Now while the overall market has declined by 6% the smartphone sales were up 25% and about 1.7 millions were shipped. Of the 1.7 million, Apple sold 1.4 million and RIM sold 1.3. phones.

Now to add to Nokia’s troubles, it doesn’t have a significant presence in the U.S. though it has a strong presence in Asia , especially in the large markets like China and India. But with iPhone’s imminent launch in China and RIM’s increased efforts, Nokia has some tough challenges ahead.

The mobile device market is clearly headed for a major upheaval. With Andriod based phones to hit the market (18 models) and several service providers launching their own App Store, we will see interesting things happen.

Disclosure: I am a Nokia user and have admired their management style. One of my early blog posts was about Nokia’s amazing success in India here.

Apple’s App Store reinvents the mobile phone

Here are the impressive statistics on the Apple’s App Store based on Apple’s recent announcement:

Number of applications available: 85,000

Number of countries from where App Store is accessible : 77

Number of participants on the App Store : 125,000

Number of downloads : 2 billion.

“App Store has reinvented what you can do with a mobile handheld device, and our users are clearly loving it.” says Steve Jobs.

I talked about the game changing nature of the iPhone and the App Store here.

What is incredible is the rate of growth. From just 500 applications in July 2008, it surged to 15,000 apps downloaded half a million times in 6 months. 3 months later it had its billionth download and 35,000 apps. A further 5 months later both the downloads and the apps have doubled.

Well, I wonder what would be the growth trajectory of the App Store once iPhone is launched in China?

Now that every cell phone vendor has his own App Store the mobile operator is just left to be a dumb pipe.

Netflix’s “crowdsourcing” approach is a success

I have been following Netflix unique experiment to improve its Web site’s movie recommendation system. This week Netflix announced the winner of a three year contest with the winner BellKore comprising of statisticians, computer scientists, data mining experts netting a cool million dollars.

The rules of the competition was fairly straightforward. The qualification for the prize was that the winning team has to improve by at least 10% the prediction of what movies customers would like as measured against the actual ratings. The teams were grappling with a huge data set of more than 100 million movie ratings.

Over the past three years there have been 44,014 entries from 5,169 teams in 186 countries vying for the top prize

I think with this experiment and with Google’s experiment with crowdsourcing described here, there will be a significant shift towards innovation management. The fact that there exists more intelligence and wisdom and the collective effort outside the company’s eco-system has gained credibility. I expect many such organizations embarking on the contest mode to solve intractable problems.

There are a number of lessons that this contest brings about.

First, it indicates that there can be a marketplace for innovation where companies could post their product development challenges and for an interesting contest, the best brains are willing to compete. It sharpens their own abilities.

Second as the BellKore team and other teams demonstrated there is a willingness for disparate people to actively collaborate. While cooperation and collaboration within many organizations has been challenging, I wonder how such disparate people could come together and collaborate easily for a bigger goal.

Third, for people who believed in having an inhouse R&D and saw that as a competitive advantage, this experiment seeks to blow that myth away.

Note: Netflix Prize 2 would challenge competitors to recommend movies based on demographic and behavioral data.

U.S. Federal government to use the cloud and the App Store

Vivek Kundra — the Federal CIO and who is actively promoting the innovation agenda announced Apps.Gov. It includes a variety of business applications, hosting and social applications all housed in a cloud.

All the federal agencies will be able to buy the cloud computing applications and services and this will surely bring the cost of IT services in the federal budget. It is also a very innovative way of standardizing applications.

What Apps.Gov also ensures is that the government enjoys the same benefits that technology changes and pricing models have to offer to the consumer. The government also can reduce the cost of IT infrastructure like building data centers a, servers, storage. Some applications may even be free.

I do not know how he is going to handle the privacy and security issues, but I guess given the size of the federal IT budget, many vendors will come forward to build the standards needed for the Government to be their customer. Google has already responded by announcing that it would dedicate a part of its computing infrastructure to serve the federal government.

Sure, other vendors will follow.

All in all, this is a great initiative and something that other Governments should also consider.

Wikipedia wrestles with a growth and direction dilemma

Wikipedia has been an unqualified success of this decade. It is just not the product but the way they have created it. They spawned a new ideology, a new culture. In fact several enterprises have started to develop their content management and even the knowledge management practices around a wiki model.

However Wikipedia itself faces a deep dilemma about its growth and direction.

It started off as an encyclopedia from voluntary contributors and complete freedom to improve the content. Now, in its latest announcement it will impose an editorial review on articles. So, now the notion that everyone can change the entries is no longer true. In my view this is inevitable. A great ability to influence has to be accompanied by an equal amount of responsibility.

Currently they are doing a review about their culture and growth direction. I am particularly pleased that they are doing that because one of their commitments was to give a free encyclopedia to the world in possibly every language. They clearly seem to have lost sight of that.

The interesting thing is that Jimmy Wales — the man who created this movement and now an iconic figure is most critical about the direction itself.

Unlike corporations, Wikipedia is run by a Foundation which means that they have followers wedded to a particular cause. Changing the growth trajectory is not simply a matter of a CEO or the Board making a decision, but they would need to carry the thousands of volunteers with them — no easy task.

This would be an interesting organizational change to watch and learn from.

How to build a successful innovation team?

Recently I delivered a talk on business innovation. My main thesis was why that offers a competitive advantage and offers the best barrier to entry. There were interesting questions, but the question that flummoxed me was asked by a young MBA student and it went as follows: How to build a successful innovation team?

Not having worked in R&D or an innovation team, I had to admit my ignorance. I promised that I will think about it and revert. I asked several HR managers, consultants and even some innovation experts. I was not satisfied with most of the responses because they talked about examining past track records, achievements and so on. That doesn’t say much and I don’t necessarily agree with experience being a true predictor.. So here’s what I have come up with:

• Hire someone who doesn’t care much for stability, hierarchy, order and predictability. Every problem is unique and will need a different thinking approach.

• Find someone who appreciates and thrives on ambiguity. Ambiguity often has negative connotations, but to me to be able to appreciate the grey area and to live in the mental conflict zone is key to finding the breakthrough.

• A deep competency is good, but the person should be genuinely interested in other things. It is when you are looking at something else with genuine interest, a serendipity play converts the competency to a breakthrough.

• Have the ability to “abstractize” a practical problem and see a practical problem and hence an opportunity in an abstract thought. This calls for people who can have their feet on the ground and the head in the cloud and span the space between them.

• Finally and I think this is the most important: The last thing a team needs is finding another clone. Stop looking for something similar to what you already have. You need to fill gaps that are in your team and complement the competency and hence the more of the same doesn’t always make it successful.

(I am assuming that there exists some amount of passion, enthusiasm, respect for people and inter-personal communication strengths.)

It would be difficult to expect all this in an individual. However collectively the team should have these qualities. Whether they become successful or not is a different question. It depends on the mindset and a whole range of factors. But at least you know that we have a good capable team of cracking a problem.

Does anyone have a competency model to build innovation teams?

Mobile phones serve as catalysts for social media.

The mobile data services market is on an unprecedented roll. For the first time, wireless data revenue in the U.S. passed $10 billion in Q1 2009. Wireless data revenue in the U.S. itself maybe $42 billion by 2009 as per the respected analyst — Chetan Sharma who has provided details in his market update. The U.S. is now is the largest mobile data market, ahead of Japan and China. Verizon’s data revenues are close to $4 billion, just shy of NTT DoCoMo’s. The top four U.S. carriers figure among the top 10 global operators by way of mobile data service revenues.

I was curious to find out what could have led to the phenomenal surge. While there could be a few factors, in my view the single largest contributor has been the growth of social media. Let me explain:

As more and more people sign on to social networking platforms like Facebook, there is a compelling desire to share and be part of the communication. This naturally implies that more people are signing up for the mobile data plans which are far more profitable for operators. The key catalyst that contributes both to the social media and to the operator’s profit pool happens to be the ubiquitous mobile phone.

A simple, easy to use browser and a good camera on the phone is all that is needed. When the smart phone was invented, I bet no one saw this as a potential application. The iPhone showed what is possible and soon a variety of devices has made access to social media quite easy.

Now, mobile operators for a long time have tried to offer a variety of applications, but barring a few none took off. This only goes to show that managing a network and managing a application portfolio calls for different competencies. And suddenly when one was least expecting, there’s a big surge in mobile data services.

INQ Mobile — owned by Hutchinson Whampoa has launched a Facebook phone. In Hong Kong, where the INQ1 launched back in March, nearly 50 percent of its owners regularly use data services on a level that is four times higher than the typical 3G user base. Facebook usage is also 3-4 times higher than the average on other 3G devices on the 3 Hong Kong network, the company said. Soon we may have a Twitter phone as well.

So, we are back to where it all started: Carriers have become dumb pipes and the innovation is happening around the ends of the pipes — at the device level and at the application level.

So, like I normally say about innovation, the unintended effects of an innovation caused by seemingly disparate tributaries often causes a flood in an area that we least expected to happen.

Google and Apple are now confirmed rivals

If there was any doubt about the relationship between Google and Apple, the abrupt resignation of Eric Schmidt — Google CEO from the Apple Board should lay it to rest.

I wonder whether the FCC’s investigation of Apple yanking out Google Voice has something to do it. I wrote about their possible rivalry here, but before I could even conceive of possible actions, the resignation was announced. Coming to think of it, Google and Apple are bracing to compete with each other. Google’s Android which will soon be adopted by many device vendors will be in direct competition with Apple’s iPhone. And the Chrome OS will be competing with the Mac OSX.

But is this new? These moves have been going on for the past few years and while the conflict of interest wasn’t that sharp the yanking of Google Voice seems to have brought all that into the open.

I admire both companies. Both Steve and Eric are respected Valley veterans. They have been role models for me. Nonetheless I have to say they always had antithetical approaches to shaping the future of the consumer experience. Some day there was bound to be a conflict.

Apple believes in creating cool products, but being a walled garden. It has fans, not customers. Even though the iPhone is supposed to be open, every application must be approved by Apple. I had talked about the walled garden approach here and it seems to have worked very well for Apple.

Google has adherents. It believed in openness and its whole purpose (even for its Chrome OS) was to reduce the significance of devices in favor of applications that will reside in the cloud. And once the cloud becomes the organizing system, the devices — be it the phones or the laptops do not matter.

Google crowdsourced its innovation. Apple built an innovation value chain in-house. Both models were successful. Yet I think at the core there is a deep philosophical conflict which manifests as a fight between the open and proprietary approaches.  I wrote about it in the mobile phone industry here and hence am not surprised that a rivalry has come about.

The Google Voice episode is just the beginning. The FCC enquiry may reveal more.

And if the Google-Microsoft war and the Apple-Microsoft war, wasn’t interesting enough, we will see a third war — the Google-Apple war.