Asia Futurama - What Next in Our Life?

A copy from my journal in Facebook

Somehow - I strongly believe that we in Asia have an opportunity to build the next Black Swan, a company that in 3-5 years can be as important as Google is being seen today. Keeping a perspective of the future world that we want to create is necessary so that we make the right decisions as we work towards building it. The three key building blocks for my thinking about the future are broadband, mobility and emerging markets. Broadband will enable on-demand, net-native services. Mobility will empower users with computers in their pockets. Much of this future will begin and spread faster in emerging markets because they have very little legacy.

The opportunity lies in putting these building blocks together and creating an ecosystem of focused enterprises which can build out elements of the future. This is what I think of as the Emergic Enterprise Ecosystem. I am trying to have the best of both worlds - be an entrepreneur AND build the ecosystem. Starbay Development Limited is my 1st entrepreneurial endeavour - focused around incubator of mobility and software-as-a-service, with a focus on emerging markets like Southeast Asia. The Emergic ecosystem is about taking some of the other disruptions and getting greater leverage.

I did not start off thinking like this or with a master plan. These ideas have evolved in the past year. My goal is to make a positive difference to the middle- and bottom-of-the-pyramid in emerging markets through the appropriate use of technology. In doing so, I believe we can also build out the next Black Swan from Asia to the rest of the world.

Sample in China, we have one of the world's largest populations. And amongst all the enterprise that Asians have been known for, it will be good to also build one of the world's largest corporations in the next decade. Ambitious, yes. Earlier, it would have taken decades to build the next-generation conglomerates. But now, disruptions provide an opportunity to compress time. Google has become the largest media company (by market capitalisation) in about more than 6 years. We in Asia should set ourselves the goal of doing so in even less. Let us embrace Aggregate and Brainstorm Coming Disruptions, leveraging Entrepreneurship to Focus on building the next Googles.

Hear me, Asia... China...India...Malaysia...Singapore...Indonesia... others?

The East is Rising

I recently read e-book entitled "Extreme Competition" by Peter Fingar. It is very interesting to view based on current real situation and topic that I want to discuss. Anyway, today's world looks very different from the vantage point of where I currently reside here in Kuala Lumpur, Malaysia. It is a world full of infinite opportunities as companies seek to leapfrog the legacy of decades of slow development. It is a world with youthful energy and money being unleashed as one navigates the branded malls and restaurants coming up all over. It is a world where mobile phones connect people who never used a landline befor - and perhaps will never use a desktop computer, opting for more advanced mobility and wireless devices of all manner.

It is also a world where the services juggernaut in urban Malaysia is complemented by the largely agricultural rural economy, where hundreds of millions still live in plantation area. It's a world where the old still exists and, at times, even dominates the new. The contrasts may be stark, but there is one thing that is ubiquitous in this country: Optimism! For the first time in living memory, there is a belief that tomorrow will be better than today - from lot of Malaysian banner. That perception alone can make all the difference. I see not just the Old Malaysia of yesterday, but the New Malaysia of tomorrow. It is Malaysia that will be built in a world of extreme competition, and extreme opportunities-powered by transformations and disruptions.

Disruptions are technological shifts that can provide opportunities for newcomers to take on incumbents?and perhaps usurp their power. It happens all the time. Today's king is not guaranteed to be tomorrow's emperor. I have seen this in history and politics, and I also see it in business. While at times, incumbents hasten their downfall by questionable decisions (in retrospect), at other times entrepreneurial start-ups, with some luck, race their way to the top. While there is no magic formula, understanding disruptions and key trends is crucial for success. This is the journey Peter Fingar takes us through - from business process transformation creating real-time enterprises, to the combined buying power of the billions in the world?s emerging, underserved markets. Today's world is one of complexity, but a thorough understanding of the underlying principles can help in reaching new markets and customers.

I am a strong believer that there is a tectonic shift taking place in the world. The East is rising. And with a reverse brain drain of talent taking place from the West, innovations are now starting to flow from the world's emerging markets - with the potential to blowback to the developed nations. Today's non-consumers are becoming the new battleground - because their delight will shed light on the economic future of all nations. What is needed is an understanding of the present to build a vision of the future. Extreme Competition provides the needed framework to peer through the fog of today, and unravel the contours of tomorrow.

Next question - What is the benefit for us?

What is Digital Infrastructure in Indonesia?

The internet and mobility buzz are back! There's a buzz among entrepreneurs as venture capital companies are putting money into companies focused on the regional Asian market. Online advertising (display, search and classifieds) is growing. Users are starting to spend on transactions - going beyond ticketing. What needs to be done to ensure that the boom isn't just a transient bubble?

There are, in reality, two Internets - segmented by the access device and the type of connectivity. Sample in Indonesia, PC-based wireline Internet has about 20-30 million users (ref. data from APJII - Indonesia Internet Association), with a majority of the users using cybercafes. With only 4-6 million computers in Indonesian homes, this Internet is still a long way from becoming a utility in people's lives. The mobile-centric wireless Internet can potentially reach a significant portion of around 150 million cellphone users in Indonesia. However, the reality is that other than voice, there are only two services which touch a large fraction of this user base - SMS and ringback tones (sample of Value Added Services). The mobile-as-Indonesian's-computer paradigm still has a long way to go. Looking at it another way, for the real boom, the wireline Internet needs more devices (home computers) and the mobile Internet needs more services. What will it take to make both happen?

Somehow, to solve the device problem, one needs to rethink computing in a world where broadband exists - and thus make computers affordable and manageable. For this, the answers lie in borrowing two ideas from the mobile industry - create a device that costs very minimal and combine it with a reasonable monthly service charge, and make the device simple to use without requiring its owner to become a technology expert!

The solution to these twin challenges lies in thinking 'thin' computers for Indonesian homes - connected over DSL or cable to servers over high-speed networks. All the computational processing is done at the server-end, and the network computers become simple 'on-off' devices - without compromising on the performance that current desktop computers offer. To make the mobile Internet a reality in Indonesia, two changes need to happen, and they have to be driven by the mobile operators since they are the 'gatekeepers.' First, an open publishing platform is needed to allow anyone to create a mobile website that is accessible by everyone - just like on the PC Internet. Next question - HOW?

Second, mobile operators need to change their billing philosophy for value-added services. The bulk of the revenue that users pay must be given to the content providers. Mobile operators should, instead, charge for packet data flow through their 'pipes.' At a broader level, just like NTT Docomo did with its i-mode service in Japan in 1999, Indonesian mobile operators need to encourage the creation of a value-generating ecosystem. Taken together, these innovations can help build Indonesia's digital infrastructure, create a framework for other emerging markets to emulate and provide a large domestic market for companies to finally think Indonesia First... well, as one of the biggest market potential in Southeast Asia.

Because of the low home computer base in Indonesia, people largely use cybercafes to access the internet, paying between Rp.1,500 - Rp.10,000 per hour. Broadband access in Indonesia has been slow to grow - in part because most new investments have focused on the mobile infrastructure. But the bigger issue has been that the new home computer market is only a couple of million. That severely limits the target market for broadband providers. (Yes, there are about 5-10 million computers still not connected by broadband. If these people have not gotten broadband access to the Internet now, then I can only surmise that either access is not available or they have no reason to get one). Of course, broadband in Indonesia is not really broadband YET. Although the advertised bandwidth may be 256 or even 512 Kbps, actual speeds are often a fraction of that. Furthermore, since access plans often have very low data transfer limits, broadband in reality is at best an (almost) always-on narrowband connection.

Internet has myriad services. New sites keep popping up daily. It is almost trivial for anyone to create an Internet presence. So, even as services mushroom, the growth of the Internet in Indonesia is hobbled by the lack of connected access devices. The starting prices of computers have come down and income levels for the middle-class have gone up. Yet, people have not adopted computers like they have done with mobiles. I think there are two reasons for this beyond the affordability dimension. First, they lack desirability; they are not "must-have" devices. And second, they are perceived to be complicated to operate.

One could argue that the new generation of mobiles are in fact multimedia computers. While that's partly true, the experience of the big keyboard and display of a computer cannot be replicated with today's mobile devices. One can imagine "teleputers" - mobile phones which have the ability to connect to external keyboards and to large external displays. But that's not available today and perhaps lie some years into the future...or may be tomorrow? Again, next question - what's needed for the PC-based Internet to take off in Indonesia is a solution that combines the affordability and the manageability of mobile devices? With such a solution, it will be possible to take computing to another 100 million Indonesian homes in the next five years.
There are around 80 million mobile users in Indonesia, but only just over 1% of them use their mobiles for Internet access. Of course, not all mobiles have the ability to access the Net, but from a technology standpoint, I would estimate that at least more than 50% of the phones in Indonesia on GSM and CDMA would be able to access the Internet. And yet, few of us do. We seem quite happy just using the mobile for phone calls and SMSes. Some of us use the operator portals to get ringtones, wallpapers and games. But that's about it. Where is the campaign? Again chicken and egg situation that I will discuss in other topic.

There are a number of reasons. First, while CDMA phones have a convenient "easy button" (press the button) to access a portal, the GSM phones need some extra configuration to get connected over GPRS. Second, mobile operators want to keep the users who do get connected within their walled gardens. So, they become the gatekeepers for the services. So much so, it is almost impossible for any independent service provider to create a portal that can be accessed by all users who have active data connections. Third, short-sighted pricing plans for data ensure that the ones who do want open access will have to pay a high price for it. In addition, no one in Indonesia is really promoting the mobile Internet. Mobile operators are busy focused on new customer acquisition - after all, every new $3 ARPU (average revenue per user - per month) customer adds anywhere between $300-600 to their market cap! The handset makers like Nokia, SonyEricsson and other fancy mobile devices focus mostly on features that are native on the handset - like a great music experience. The mobile value-added service players have still not gone out and determinedly create independent off-deck brands which attract users - presumably, because they know few can access them as of now.

Put it all together and we have a mobile Internet that has neither users nor services. Can the mobile become like a magic lamp - fulfilling all our wishes? What are these wishes? Sample, when again latest Nokia N95i ad asks if "is this is what computers have become", why don't we feel like going out and buying one? Is there really an opportunity for mobile data services beyond the downloadable ringtones, wallpapers and games?
For the mobile Internet to happen, mobile operators need to believe that Data, not Voice, will change the direction of the ARPU trajectory - assuming of course that ARPU matters. In Indonesia, currently, everyone is happy focusing only on the minutes of usage...even for FREE! A time will come - in the not too distant future - when voice will go to zero-margin - and then to zero (although some operators already playing that campaign). It is for that world that mobile operators need to learn from the PC Internet - that creating an open platform can foster innovation in a way no closed environment can. Indonesian mobile operators need to think of themselves as running two businesses. One targeted at top and middle Indonesian, and the other at bottom of the pyramid Indonesian. While the latter has huge growth potential (an untapped market of 270-300 million Indonesianns in the next 2 years), the former is stagnant, addressing a saturated market with flat ARPUs and little growth. All of the mobile operators' strengths are in building out the user base in Indonesia.

They have done this very well in the past few years and continue to do so. They also have plenty of work left in this regard - hundreds of millions of Indonesians left out of the telecom revolution are finally going to get connected. Creating the infrastructure to get these millions on the network is a huge challenge. In doing so, they need to rethink their role for the existing user base. This user base has been 'mobile' for a few years now and are hungry for new services. Indonesia has a world-class wireless data infrastructure but it is barely talked about. By closing their walled gardens, the mobile operators are making a big mistake. This user base can pay a lot more - after all, there were many who paid Rp.1,500-1,800 per minute for phone calls (GSM). Somehow, they have money to spend. But the services available to them are limited - even though for many, the mobile is the primary or even the only interactive device in their lives.

Mobile operators need to do two things to make the mobile Internet a reality in Indonesia for the first user base. First, they need to open up their data networks so consumers can go to any website they desire. Second, they should encourage the creation of a cornucopia of services by creating a business model which has more favorable revenue share terms for the service providers. Mobile operators can still make a lot of money - and I would argue, that this will be a magnitude higher than what they do today - by billing consumers for data traffic on open access. In other words, instead of thinking of themselves as "media" and worrying that they will just become "bitpipes" - mobile operators need to think of themselves as "services pipes". If they do this, consumers will see them as the genie that made the mobile into a magic lamp.

There is a lot at stake for Indonesia to grow more. The Internet is core and necessary digital infrastructure if we are to continue to develop. Home computers and mobiles are the two necessary devices which will become the windows to the world of services. Even though we are not there yet, forward-thinking organisations and entrepreneurs can take us there.

Next question - regulatory issues? Anybody want to continue this?

Next Generation Mobile Phones

Among all the topics that I have covered in my journals, one of the lesser covered areas has been that dealing with mobile phones. There is a simple explanation for this - until recently, the age of my cellphone was 2 years! I lived frozen in time when it came to my mobile phone. For me, it was a useful communications tool - but just that. I used it to make and receive voice calls - few and far between. I found sending SMS to be major pain, somehow. (I may be a two-finger typist on a keyboard, but I am a fast one at that! The cellphone keypad (especially my SonyEricsson W880i)- well, I just couldn't find myself writing shorthand English or doing it fast enough).

When I accessed the Web recently on my mobile phone and configured my google mail application to access my personal email account, I could not but feel the same sense of exhilaration that I had sensed when I first browsed the Internet more than a decade ago using Mosaic from a friend's house in the Indonesia. This is another new world that is emerging, and for all that has been talked and written about the world of mobility, we are at the start of a revolution which will have far-reaching implications.

This is not just about voice and communications, and the freedom to do talk and SMS from anywhere. Just like the functionality and use of PCs was completely transformed with the emergence of the Internet, so it will be with mobile phones. Until now, for the vast majority, the phone has been a communications device. In fact, even more than the 'personal' computer, it is the mobile phone that is the truly personal device. There is nary a place that owners go without their phone. I have seen people walk into my office for meetings carrying only a phone and nothing else (not even a pen or a watch, leave alone a writing pad).

From a time when I was barely connected (a computer at home and office; no notebook) to now when I have become arguably one of the most connected people has been a short ride. I have a Sony Vaio UX Series UMPC notebook running Windows XP. It has three forms of in-built connectivity: Ethernet, dial-up and Wi-Fi...cool gadget!

Now, the question is - will the mobile phone become the next platform - like the computer? This, according to me, is a narrow question and focuses only on the device. What is important is to consider a view of the world that is based around services rather than devices. In that context, I don't think it is possible to think of the mobile phone in isolation from the rest of the computing, communications and content world.

What is inside today's desktop computer will move to the server and what is inside a cell phone will power tomorrow's network computer. The networks will be IP-based. Voice will become yet another service over these digital networks. The mobile phone will be our constant companion, and will be complemented by the availability of network computers with large screens.

Services will occupy centre-stage. From commPuting to computainment to communicontent, it will be a world that will converge at the back-end (server-side) but will diverge at the front-end (multiple devices). While there will be no convergence across these screens, the convergence will happen at the back-end with respect to the data store. We will have different views to the same set of data across these devices. Today, this is not the case - all three devices have their own private worlds they operate on.

What I see happening is integrated access to our data and desktop across the three screens that are present in our life. The future will be about data on servers accessible across multiple devices. In developed markets, the screens will be those of the TV or Game Console or PC or mobile phone. In emerging markets (especially for the next users), I think it will just two screens - a multimedia-enabled network computer on desktops at home and work, and the mobile phone. What matters are the services that are delivered to the users.

Service-centric computing is a form of computing (used in a broad sense - like information processing) which is focused more around the user's real world rather than the cyberspace. It has a common back-end store to store the user's context (time, place, information, people). It allows a user to do five actions independent of device on the same data store: publish (write), subscribe (read), search, alerts and share. It thus breaks the artificial barriers which separate the user from his data - by actually separating data store from the service functions, we make the data more accessible.

While the mobile phone is likely to have a much larger user base than computers in emerging markets for some time to come, there are tasks for which the computer is ideally suited and the inherent limitations of the cellphone become obvious. But that in no way diminishes its use or capability as a personal device. Thus, even as the computer provides access to the world outside, the mobile phone provides us a view of our world. Both are needed and important in their own place.

Now what will be next? For me, I just can't go without my mobile phones...

China in The Future

Another copy from my Facebook journal -

Somehow, I just imagine - in emerging markets like China, there are five elements that need to come together to provide an end-to-end solution for computing and connectivity.

First, build a city-wide wireless mesh network. This will provide the connectivity fabric and provide an alternative to getting DSL or cable (or waiting for WiMax).

Second, use a variety of access devices to connect to the network. These could be PCs or network computers. We will also see mobile devices like the brand new Nokia or SonyEricsson and phones with Wi-Fi built in connecting to the mesh network.

Third, provide a backend computing and storage grid. This helps centralise computing and provides for seamless mobility for users. It also makes computing much more affordable and manageable.

Fourth, provide applications and content from a centralised grid to users over the wireless mesh networks.

Finally, use advertising to reduce the price that users have to pay for the service. The key is to be able to offer the base service for no more than $10 a month for the entire solution (device, connectivity and services), with additional revenue possible through value-added services.

This is what will make computing and the Internet take off in China. At minimum fees a month, computing will become much more affordable. The wireless mesh networks help in rapid deployment. Customers can buy the access device (PC or network computer) independently and 'plug' it into the wireless envelope. China needs to rapidly proliferate broadband and computers across homes, schools and small- and medium-sized enterprises.

The use of network computers along with city wireless networks is a giant step in bringing tomorrow's world to life. From a laggard in broadband and computing, China can be a leader in this space - and a beacon for other emerging markets.

Next questions - when and where?

Battle of Giants - West vs East (Long Journal)

It has been a fascinating year in 2007. A number of events have focussed attention on the Internet and the future. I had originally intended to write a column to look at ten years of the Internet and mobile phones in Southeast Asia. But I'll take up that discussion later.

The first was Baidu's IPO. Baidu is China's leading search engine. The perception that it is "China"s Google' set the stock on fire on its opening day as it rose from around $30 to over $150. (It has since settled at around $80 giving it a market cap of $2.5 billion.) Baidu raised over $100 million. For a brief period, it seemed like the dotcom heydays once again as discussions on revenues and profits were set aside. Investors who perhaps missed out on Google's IPO last year don't want to be left out! Another, Yahoo invested a billion dollars and handed over its Chinese operations to the local Alibaba management in return for a 40% stake in Alibaba. The deal valued Alibaba at $4 billion. Alibaba's flagship site is a marketplace for SMEs - helping Chinese SMEs sell to others in China and globally. Alibaba also operates two other sites: Taobao is a consumer auctions sites (in direct competition with eBay in China), and AliPay, which is a payments and settlement service along the lines of PayPal.

I have followed the fortunes of Alibaba since its early days. I liked the idea of an SME marketplace very much. At that time, Global Sources was the leader in the print media in helping connect SMEs. Alibaba raised a lot of money and went through many ups and downs in its journey. (There are two Harvard Business School case studies on Alibaba's early days.) Alibaba has crossed one mountain - another lies just ahead.

The battle for the China Internet market has been joined in earnest. Google may have a small stake (around 3%) in Baidu but will no doubt be looking for a bigger slice. eBay, which was also rumoured to be in the race to acquire or partner with Alibaba, will be contemplating its next move - hoping to ensure that the history in Japan (where Yahoo is the leader in the auctions space) does not play out again in China. For now, at least, the two events together put the spotlight firmly on the potential of the Chinese Internet. There are over 100 million Internet surfers and broadband penetration is increasingly rapidly. Baidu joins the likes of Sina, Sohu, Netease and Shanda in monetising the growing user base. The mobile users base in China is at over 350 million.

But, next logical question is: what is the end-game? Where are we heading towards? I can think of the answer from a the "Mirror Worlds". Mirror Worlds are what David Gelernter proposed in his book of the same name in 1991. (Another related theme is the Metaverse idea put forth by Neal Stephenson is his 1992 book "Snow Crash").

Today, I use Google as the window to the world of information. But search is just one way to navigate the web. Consider the analogy with a printed book. A book has 3 ways to browse it: table of contents (think of this as a directory or outline), index (the equivalent of search), or jumping to a page (typing a specific URL or finding it, quite literally, via a bookmark). On the Web, the index/search option has become the primary mechanism. For example, if my passion is science fiction, I am likely to have created a set of links and comments on books and ideas which would also be relevant to others interested in that topic. Others can 'include' my directory and build further.

Mirror Worlds are, quite literally, a replica of what I see happening around us. With a mix of user-generated content from their mobiles along with webcams and sensors, it will be possible to almost recreate the real world in the Grid. Mirror Worlds are, thus, microcosms of all that we see around us as updated as the real world that they resemble. They are accessible to us through screens on the devices we have our mobiles, computers, and perhaps, networked TVs.

This, then, is what I read in last year (2007). Emerging markets like China is where the future of the Internet lies. Google's actions only highlight the need for a Google for Emerging Markets - one that has to emerge from these markets themselves. That is the next big opportunity. This New Internet is going to be significantly different from what we have seen in the past decade. The time to get started to building it out is now.

What next?

Next Generation of Computing

Just for thinking - wondering, right from using regular desktops in cybercafes to owning (or renting) cheaper desktops and network computers to using mobile phones to connect over wireless networks, the next billion users will have something they have never had before in computing: choice. That's perhaps the best thing to have happened from the attention that is being lavished on the "bottom of the pyramid". Having said that, not all solutions are equal. My bet is on two solutions to emerge winners over the coming years: mobiles and network computers. The common thread to both is the dependency on a network.

To understand why I think these network devices will emerge as winners, it is important to understand that the problem with today's computing solutions is not just about affordability. It is also about manageability. Complexity in computing has increased, not decreased, over the years. Users have to become their own system administrators to ensure their computers stay clean and secure. The next users are not going to be as savvy as the first set of users in managing their computers.

Into this brave new world, the disruption to be leveraged is the world of communications. Both wired and wireless broadband networks are being deployed in emerging markets. Given the importance of Internet access and the coming era of software-as-a-service, the computer's role is now more of a window to the world of information residing in the network.

In addition, almost every new user of computing in developing nations is likely to be already using a mobile phone. After voice, SMS, and not email, is the preferred form of communication. Buddy lists are not maintained in instant messaging clients on PCs but on the mobile. The mobile as the user's first interactive "personal" device in emerging markets is a very different scenario from the developed markets, where it was the PC which came first.

Tomorrow's world will, therefore, revolve around computing and information which happens in the network (the "cloud"), with the users having access to two devices: a small screen mobile phone which they carry with them all the time, and a bigger screen desktop-based terminal which connects over a broadband network to which they have intermittent access. Both devices have their strengths. The big screen is better for applications which are input-output-intensive and require multimedia. The mobile is with us all the time and can be used during life's empty moments.

This is not to say that the OLPC and other initiatives will fail. I think they will succeed in specific areas but they will not become the mass-market successes that emerging markets need. For that, my bets are around the mobile for internet access and network computing. So, happy surfing!