All things must pass…fads and fashions explained visually

Been traveling the last few weeks, and forgot to post this fantastic infographic.

The WashingtonPost had a great online article about how electronic items track on their way from gee-wiz to junk. The infographic shows clearly how fads start, stall, decay and die! Added bonus is the story of Moore’s law at work in terms of falling prices of items as volume ramps up.

Link to WaPo article.

As proof, look at the sales of  “standard cellphones” which start off as being expensive and exclusive, and with the reduction in prices, slowly gain volume until the late 90s, when suddenly the market explodes and the sales volumes grow 10x in the next 10 years, while prices continue to come down. Eventually gravity catches up in 2007, and the market starts climbing down from it’s peak, never to return. Corded phones didn’t have such an explosive rise, and didn’t have such an explosive fall either.

Today’s hottest category is smartphones, but the smart money is already able to see that this will eventually boil over as well. What I found interesting was that there was no other *new*category of devices that can displace them in the near future- this means that the  smartphone category may not fall off a cliff, but may plateau.

10-year-rule The other sexy take-away for me was that all this talk of overnight innovation and success is not borne out by data. Very clearly, all these categories existed (see other charts on the link) for at least 10 years before they exploded. There was an interesting WSJ editorial a couple of weeks ago about how Steve Jobs’ genius was not his marketing savvy or finicky product design, which were both great attributes, but his slowness to respond to the market. The ipod entered the MP3 player market when the market was already mature. That meant that Apple did not have to create market, just transform it.

Enjoy!

The funda of farmer suicides

Posting [LIVE] from Peepli.

In recent years, there has been an increased awareness of the unfortunate rise of farmer suicides in rural India. By most estimates, about 200,000 farmers have committed suicide in the last 20 years, with the recent years averaging more than 17,000 a year. Grim statistics indeed. These suicides have largely been concentrated in the Indian agrarian states of Maharashtra, Andhra Pradesh, Karnataka, Madhya Pradesh and Goa.

“India lives in her villages“, as Mahatma Gandhi didn’t say. About 73% of the Indian population still lives in India, and a large majority of the folks are dependent on agriculture for subsistence. Many of these farmers are poor, manual workers and uneducated- very poorly equipped to compete in the world economy as they are.

The base post on farmer suicides was written by P Sainath, who is the editor for The Hindu, a big and respectable Indian newspaper. Through his award-winning reporting, he brought attention to this subject. Here is a great update post from Sainath on this.

So why are the farmers committing suicide? I am going to focus on two competing, yet reconcilable, narratives that have been put forward. One represents the extremely successful activist community, spearheaded by Vandana Shiva, and the other representing the views of a broader “economist” community.

Simply put, the activist viewpoint is that the greedy multi-national seed and chemical companies have colluded to create monstrous patented and genetically modified monoculture of seeds that cost the farmers their livelihoods, land and, ultimately, lives. Meanwhile, the global trade in seeds creates conditions that allows heavily subsidized American grain to rush into the market, lowering the effective rates. In other words, the rapacious Americans are to blame. This viewpoint has been very eloquently articulated by Vandana Shiva, who has appeared Al Gore-like in her presentations to a shamed-western-media. Here are a couple of great reads: Vandana-on-HuffPost, and here’s an audio post.

Rapid increase in indebtedness is at the root of farmers’ taking their lives. Debt is a reflection of a negative economy. Two factors have transformed agriculture from a positive economy into a negative economy for peasants: the rising of costs of production and the falling prices of farm commodities. Both these factors are rooted in the policies of trade liberalization and corporate globalization.

The other viewpoint takes a more scholarly approach to the grim data. The best point of view I came across was this research published by International Food Policy Research Institute. I initially assumed that this is an industry-funded-one-sided piece, meant to allow greedy seed and fertilizer companies to assert their point of view. I was wrong. This is a well researched and balanced piece of work. It combines a meta-analysis of several other lines of research. The truth, in their opinion, is more nuanced, though no less grim. The multinational seed companies are, indeed, selling patented and GM seeds that are terribly expensive.  The seeds give much higher yields with a careful selection of chemicals, and under irrigated conditions. In India, the farmers are uneducated on their proper use, and still depend on the monsoons for irrigation. This means that the farmers take debt to buy seeds that are essentially a gamble. The yields turn out to be poorer than the costs would justify. Crop failure results infrequently. This created a vicious cycle which ends, sadly, in the farmers committing suicides. Here is the 64-page report, which I recommend highly. Here is the chart that lays out the situation brilliantly on page 45. Too bad they aren’t as eloquent as Vandana Shiva!

Games countries play

As most people in India already know, the Delhi government is shakily preparing to host the Commonwealth Games 2010. Shakily because the city doesn’t seem any more close to being ready than when I visited in April, and January before that. While the closet is barely built, skeletons have already started to pop out. At an alarming rate. The joys of being the host to multi-national games. Woo hoo!

There are two events this past week that caught my attention. Number One was the past Sports Minister wishing for the rains. Why, you ask? Because, “firstly it will ensure a good agriculture for the country and secondly it will ensure that the Commonwealth Games are spoilt”. God bless the last remaining free-speaking-politician in India, but this is hilarious. Of course, the Commonwealth Organizing Committee Chief was quick to get the party brass to pull a gag order on his errant colleague, and has this to say about him… (had he) “continued as the sports minister, India could never have hosted the Game”. Political intrigue. Where would we be without it!?

Number two, the skeletons. The routine fare of desi anti-corruption brigade. The leaky roofs. The stinky pools. The “friendly” tennis court contract. It’s all showing up exactly two months before the actual event. Read this. If the corruption surrounding the IPL is any indication, this episode would get murkier very soon.

That calls for a separate post on the faulty economics of hosting multi-national games. Scores of research papers have been written about the lack of a “business case” for countries to play host to these expensive shows. The same debate is playing out as we speak in London, which is host to the 2012 Summer Olympics.

Here’s a summary of one report: (link here)

Cities vigorously compete to host sports mega-events because they perceive that doing so will enhance their image and stimulate their economies. International sporting events require substantial expenditures on infrastructure, organization and security and critically depend, therefore, on public subsidization. The ability of event promoters to secure public funds often depends on convincing a sometimes skeptical public that hosting the event generates economic profit. A motive for exaggerating the impact of a mega-event clearly exists. Our own previous examinations of mega-events, as well as the research of other independent scholars suggest that the true economic benefits are typically far less than the numbers touted by  promoters. Cities and countries would be well advised to more thoroughly evaluate booster promises of a financial windfall from hosting a sports mega-event such as the World Cup and Olympics before committing substantial public resources to such an event. Indeed, hosting these premier events may be more of a burden than an honor.

Here’s the IMF’s take on the story playing out in UK around the 2012 Olympics. (Link here)

London expected its 2012 Games to cost less than $4 billion, but they are now projected to cost $19 billion (Sports Business Daily, 2009). As expenses have escalated, some of the projects have been scaled back—for example, the planned roof over the Olympic stadium has been scratched—but the stadium will still end up costing more than $850 million, against the initial projection of $406 million. The government has been unsuccessful in its effort to find a soccer or rugby team to be the facility’s anchor tenant after the 2012 Games. This will saddle British taxpayers with the extra burden of millions of dollars annually to keep the facility operating. It is little wonder that London Olympics Minister Tessa Jowell said, “Had we known what we know now, would we have bid for the Olympics? Almost certainly not” (Sports Business Daily, 2008, citing the London Telegraph).

These events are white elephants. The facilities created for these events are rarely used again with the same vigour. Instead, the cities are saddled with a maintenance bill that they cannot afford.

Should have paid for another airport in India. Or a dozen. Just a suggestion!

IT Results season: How long will the Salmon season last?

As many of you know, I am working with Basab Pradhan on a book on Offshore Services. We’re offering an insider’s view into the industry, and explaining the workings of the industry as part of the book. In a recent post, Basab talks about the quest for higher bill rates, which is one in a series of recent posts leading up to the book.

The book is due out early next year.

Well, earnings season is upon us, and all the IT Services and BPO companies will be unveiling Q1 (of the Indian financial year) results this entire month. The financial markets are waiting with bated breath- this quarter will be a sign of how the rest of the year will turn out.

Many within and outside the industry have asked the question: Has competition and commoditization increased in the offshore services space, now that there are several large Indian IT Services companies? Competitive differentiation continues to be challenging, and companies are yet to evolve completely new ways of competing with each other. As of today, however, the investor presentations from the large companies seem mutually inter-changeable. The strategies look similar, and in fact, the sections on “competitive differentiators” read like they were minted in the same PowerPoint mill. Check out example one (page 10), and example two (full document).You’ll see a notable exclusion in the links, but you can Google the investor presentations from *all* the other major companies (!). They all say the same thing.

Reminds me of the famous “It’s different!” ad campaign for a ketchup brand in India…no one would say exactly “what” was different, but just repeat that “it’s different”. Same thing here, I suppose. “We’re a different kind of IT Services company”.

So, Is the party over for offshore companies? You’ll, of course, have to read the book to find out. But here, for this post, let me offer an analogy.

I was in Alaska on vacation a couple of weeks earlier, and the local tourist outfits were preparing for salmon-season. You can look it up online, but basically salmon like to lay their eggs in the exact same spot that they were born in. Every year, in July, the salmon start returning back to their source streams to lay eggs. When the season is in full swing, the streams are full of red colored salmon “climbing up” the stream, trying to find their way back to their original birthplace. At it’s peak, salmon can be seen jumping all around the streams in Alaska. Brown bears come down to fish during this season. Given the plentiful jumping salmon all around, the brown bear have to do nothing additionally in order to be successful at fishing. All they have to do is (1) stay in the stream, (2) keep their mouth open, and (3) wait for the salmon to drop into their mouth. It’s that simple. Here’s a great photo series that tells the story.

In many ways, the Indian IT Services companies have been the beneficiary of an offshore mega-trend. Over the last 10 years, offshore has moved from being a peripheral activity, performed by the trend’s “early adopters”, to being center-stage, when everybody is doing it. All large companies have had to respond to the pressure to offshore. Companies that were initially reluctant to join this rush to offshore, 10 years ago, ended up being influenced by the positive examples of companies who had offshored and reaped the benefits of cost reduction and assured delivery. A cascade effect was set into motion, as each new convert to offshoring influenced many others to join in, and so on. To be successful in this business, the large offshore IT Services companies merely had to (1) be in the market, and (2) have a willingness to sign deals, and (3) wait for the deals to flow in.The cost of sales for these companies is at its historical low, while the margins are still near their historical  peak. It’s logical- Why invest more in a sales force when the mega-trend is in your favor? The results have been no surprise: Other than one US based offshore company, all the other companies have grown within the same range, and have each stated similar “breakthrough strategies” all the while.

Is salmon-season over for the big bears of IT services? The results coming out this month will tell us if the big bears have learnt new hunting tricks. Or, are they still standing in the stream with their mouth open?

Photo credit: Peter Roundie on Flickr.

Companies covered: INFY, TCS, CTSH, ACN, WIT, PTI

PhD problem

The US can rejoice.  PhDs trained in the US are likely to stay back in more cases than not.  In this article in the WSJ theres data to refute the contention that Chinese and Indian PhDs are moving back to their home countries where opportunities abound.

62% of foreigners holding temporary visas who earned Ph.D.s in science and engineering at U.S. universities in 2002 were still in the U.S. in 2007, the latest year for which figures are available. Of those who graduated in 1997, 60% were still in the U.S. in 2007

Specifically, 81% of Indians who completed their PhDs in 2002 were around in 2007 (chart below).  One of the interviewees puts it well

“One of the most important things with an academic background is the work that you do, and is it exciting? I’m not saying there is no exciting work in India. Many people have gone back and started companies.”

Apparently things haven’t changed that much since I finished engineering.  Want to excel in technology? Go to the US.  Want to stay in India?  Do an MBA.

Great for the US.  Not so good for India.  PhDs are critical to the process of innovation and advancement of knowledge.  We need to find a way to get them back, and a booming economy is not enough.

The press hype about attacks on Indians in Australia

I just returned from a week-long trip to Australia. This was my first trip down under, and I was looking forward to talking with the cabbies on this trip. Usually Indian or African immigrants, cabbies all over the world tend to have compelling life stories and a unique perspective on the state of the society. I tend to meet punjabi cabbies in most US and UK cities, and get even more interesting tidbits from them because of the desi connection.

On this trip, there was this additional issue about the glorious Indian press, and their panic-laden-headlines (case 1, case 2, case3) about how Indians were under racist attack in Australia. It seems, going by headlines, that Indians all over the country are being selectively picked up for attack for their ethnicity.

It seems that ToI needs to make a study of statistics mandatory for the hysterical headline writers. If they’re going to lie so much, they may as well do it with a professional demeanor. Lies, damned lies, and newspaper headlines.

So in Brisbane, my cabbie at the airport was Ravinder Singh from Gurdaspur, Punjab. All of 25 years old, Ravinder was an MSc in IT, and was in Australia to do a course in commercial cookery. “Hmmm…sardarji wants to be a chef! Must have that punjabi flair for finger-licking food”. I thought to myself. However, inside that cab, this seemed odd. His culinary avocation was at variance with the smell of Subway sandwiches in the taxi (extra onions and double dose of bell peppers, from the smell of it). I pressed him to tell me more. Anything to get over the smell of stale bell peppers.

It seems that Australia is woefully short of hair stylists and cooks. I didn’t see many long-haired hungry people during my trip there, but I take the economist’s word for it. As a result, they are allowing foreign students in these subjects to come study in Australia ($23k AUD) for 18 months and then get a Permanent Residence. Many Indian students  (about 20,000 or so) had come to chase their Australia dream. The cookery degree was just a cheap way to get access to the country.

It also turns out that the Indian students who come for the PR tend to come from middle class families. Having spent their family fortunes in getting the cookery degree, they can’t afford to pay for expensive housing, and tend to find rental accommodation in shadier parts of the cities they study in. This makes them targets for neighborhood crimes. Not because they are Indian, but because there is crime in the parts of the city they live in.

Earlier in May 2010, the Australian govt has figured out they don’t need any more imported hairstylists and cooks. Now they need cardio surgeons and IT professionals. Yeah, right! Well, that puts the status of many people like Ravinder Singh at risk. Now they have put in their hard earned family money, but will have to go back home with a degree in cookery. No wonder they feel cheated.

And Hey! ToI. Here’s a quick lesson in mathematics: If the crime rate in a city is 7090 offenses per 100,000 population, then there will be 7090 cases of people being mugged, assaulted or killed. For a city with 100,000 people, some of the targets of these incidents will be Indian. If, say, 13 of these 7090 cases were against Indian people, would you still say that there are “racial attacks” on Indians? Maybe. But the question that would justify alarmist headlines is: “are there disproportionately more attacks on Indians in this city as compared to the general population”.

As for the cabbies I met in Melbourne, Sydney and Brisbane, I have to tell you that they were the happiest cabbies I met anywhere in the world. They were happy with the standard of life and their future in their adopted country. Thanks for asking!

Google Trend Midden

As I am famously about to say, you can tell a lot about a country by their Google Trends data. For those who came in late, Google has a service called “Google Trends” where you can track the hottest search items in a given region at a given date.The searches are already done…the trends data is just the left-over remains. Hence the title of this post.

A midden is (to quote Google):

eitchen midden: (archeology) a mound of domestic refuse containing shells and animal bones marking the site of a prehistoric settlement

Now that we have the definitions out of the way.

Ever since Amit and I started this blog, I have been observing  Google Trends data to see what catches Indian surfers’ fancy. I expected to see the usual stuff that a country with the world’s largest 15-25 year old male population would likely be searching for. I was surprised.

It turns out that the wise surfers of India are not interested in lewd offerings on the internet. Far from it. It turns out that my desi brothers and sisters are searching instead for two things that arouse their passions more. They search for entrance exam results, and cricket scores.

Over the last three months, the Top 20 searches on Google in India will contain about 10 items related to the entrance exam du jour, and another 8 items for the cricket score du jour. Check out the snaps below.

That leaves me confused and concerned. What happened to the celebrity culture in India? What about the TV shows? What, lastly, about the level of political discourse? Why are people not voting for these things with their fingers?

This slideshow requires JavaScript.

Data Post: How much do artists make online

In response to Amit’s posts on the future of music. Here is a fantastic post on how much artists make online. The data visualization is very well done! It talks about how many songs the artists have to sell on a specific medium in order to make “minimum wage”. Forget rock-star earnings! 😉

http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/

This image is based on an excellent post at The Cynical Musician called The Paradise That Should Have Been about pitiful digital royalties. (Thanks to Neilon for pointing that out). I’ve taken his calculations and added a few more.

Data Post: India’s cellphone subscribers and average revenue

Here’s some interesting data to sink your teeth into. I am sure you already know that India is the second largest mobile market in the world, and is expected to become toe largest market soon, as it overtakes China.

There’s some great quality data available on the telecoms industry in India. Some of the data is posted by the Telecoms Regulatory Authority of India (TRAI), and other data by the COAI (Cellular Operators’ Association of India).

The one that caught my eye was the data on the number of subscribers and the average revenue per subscriber. The ARPU, as it is called, is one of the lowest in the world, and falling. The worldwide telecom game really is to drive down the costs of operating a cellphone service in order to make money on a much larger subscriber base. This cost game is what’s driving the developing country mobile providers to merge into each other (as in the case with South Africa’s MTN’s attempts to merge with Bharti and Reliance).

Here’s a data table, complete with bars. Raw data is available online as well. As an aside, I had a tough time getting to build a useful XY plot. Some other time, perhaps! 😉

Explaining India’s Airport Gap

Following up my previous post on airports in India, I spent a fair bit of time looking for statistics on air traffic in India, and the airport capacity. The biggest scandal, in my opinion, is that India puts out pitifully low quality data on almost all spheres of public life. That’s another post.

Here, I would like to post my conjecture on why India’s infrastructure lags behind demand. The culprit is poor planning on account of problems with data, 5 year planning horizons, the approval process, and the natural time it takes to build something big.

Bad Data: It’s shameful that the Directorate General of Civil Aviation’s website lists the latest data as being  from 2003-04! That’s absolutely crazy! Rip Van Winkle would have better access to data. It’s no wonder that the airport authorities, and the ministers making decisions, have no reliable recent data to make their decisions. In a country that is growing as fast as India, having the latest data is the only way of knowing what the current situation is, and what needs to be done.

Look at the Hypothetical Chart below that tracks the annual demand and supply for passenger capacity at, say, Delhi’s airport. We are assuming that the planning team meets every 5 years to consider whether to expand the airport, and that it takes 3 years to bring new capacity online. Also assumed, is that the demand for capacity continues to grow randomly between 10-20% annually.

The obvious conclusion is that the planning team is chasing it’s own tail. By the time the new capacity comes online, the airport is already under pressure to add more capacity.

This is a very realistic description of the problem that India’s airports face. In the model above, between 2005-2020, the airport has adequate capacity for ONLY 4 out of the 15 years. In all other years, the airport is trying hard to catch up, but the incremental capacity addition falls short of the demand.

Here are a few links that I found useful for my research:

– Delhi Master Plan (unreadable website, but typical of sarkari websites)

– Air Traffic News Report

– Directorate General of Civil Aviation’s “latesht statistics” page (has 2004 data in Apr 2010)