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MSFT: BUY; SYMC: SELL?

Posted on Thursday, Dec 1st 2005

Microsoft releases a Beta version of its security product, OneCare, in direct competition with Symantec and McAfee, both of which are in tight spots now. Security is a must-have category, and a huge, growing market.

I admit, I quite like the steps from Microsoft, recently. Here is a good analysis of the MSN business and its prospects that I tend to agree with. The Online Advertising market is validated now, and on a huge growth curve. Ready for Microsoft to swoop in and capture a portion. It’s also a very profitable business.

Xbox is probably not going to be a huge profit generator, but a good strategic move.

The next 2-3 years would be interesting to watch, and see how Microsoft executes on its promise.

In the process, certain companies could, likely, be rendered irrelevant. How does Symantec / McAfee maneuver now? Calls for some phenomenal leadership at those camps …

Featured Videos

Decomcratizing Broadcast Audio

Posted on Thursday, Dec 1st 2005

When I was growing up in India, Television had not yet penetrated the market. The radio, however, was a major contributor in our entertainment consumption. One of my favorite genre, then, was the RadioPlay. I even produced and acted in a couple of these later, in the mid nineties. But, it was a MAJOR effort.

I am delighted, therefore, to see the uptake of Podcasting as a medium, and how easy it is becoming to record & distribute audio shows via Podcasting. Here is a pointer to a professional Podcast kit.

Time is in short supply, else, it would be such fun to play … plays, poetry, interviews, speeches, …

Window Shopping

Posted on Tuesday, Nov 29th 2005

The post-Thanksgiving market is waiting eagerly to see how the e-commerce & advertising revenues pan out this year. By all accounts, Consumer Internet is back with a vengeance.

Today, an online marketing client (a consumer electronics company) mentioned that they are seeing huge jump in Click Rates, but the numbers are not yet converting into Sales. Translation: Online Shoppers are window-shopping, thereby, making the online advertising companies richer.

Om writes a good piece here on how the traffics, eye-balls, and ad dollars are playing out.

Counter argument on valuation by Allen Tsai.

Nonetheless, Google shares dropped. Biggest drop in a while. Jittery market, reacting to bloated stock price. Nothing unusual or surprising.

Google’s vulnerability, at the moment, is its complete reliance on AdWords and AdSense, and no Portal offering. Search Engine Marketing + Content Matching is, presumably, only going to be 30-40% of all online advertising. The rest will go to prime real estate a la Portals, Personalized venues, etc., the equivalent of prime-time television.

I’d like to see a breakdown at the end of this holiday season on how the ad dollars were distributed by application.

Video FAQs

2005: Year of the Balance of Power

Posted on Sunday, Nov 27th 2005

We have been watching the 3-Disc TV Series, Napoleon, recently. There is a scene when Napoleon challenges his friend, the Czar Alexander of Russia, on why Austria is being allowed to arm itself and build a competing power. Alexander says, like Napoleon’s Foreign Affairs Minister, Monsieur Talleyrand, he too believes that there needs to be a balance of power in Europe.

Not surprisingly, this makes Napoleon fly off in a rage!

This year has been a year that has underscored several such balance of power developments.

In Politics and in Economics, the US dominance has been partially normalized by China and India, both emerging superpowers.

Close to home, in high tech, Google’s absurd rise has stopped Microsoft in its track, posing an alternate power block that challenges many existing assumptions.

In Silicon Valley, Google and Yahoo have even started challenging the power that Venture Capitalists have commanded thus far against entrepreneurs, and by encouraging entrepreneurs to bootstrap their startups, followed by exiting into one of the two (or into one of their competitors).

In this strange rebalance, Microsoft accuses Google of being arrogant, as do the VCs. Amusing, this turn of tides …

And one last balance of power example : the dominance of mainstream media has been shredded by the emerging democratic new media publishing trends and their supporting infrastructure that has rapidly matured this year (Blogs, Podcasts, Video-on-Demand, Microcontent, Micropayment, acceptable DRM standards, viable ad-supported business models, etc.).

As 2005 draws to a close, and we enter the holiday season, this is my Thanksgiving message: Let competition and innovation continue their march. Let David’s defeat Goliath’s, then become Goliath’s, only to be defeated by new David’s. Let Capitalism continue to provide the framework supporting this cycle.

Let us keep building.

Definition of an Entrepreneur

Posted on Friday, Nov 25th 2005

“It is not the critic who counts,
not the man who points out how the strong man stumbled,
or where the doer of deeds could have done better.
The credit belongs to the man who is actually in the arena;
whose face is marred by the dust and sweat and blood;
who strives valiantly;
who errs and comes short again and again;
who knows the great enthusiasms, the great devotions and spends himself in a worthy course;
who at the best, knows in the end the triumph of high achievement,
and who, at worst, if he fails, at least fails while daring greatly;
so that his place shall never be with those cold and timid souls who know neither victory nor defeat.”

— Theodore Roosevelt

Nostalgia

Posted on Thursday, Nov 24th 2005

America is a relatively young culture, and hence traditions are fewer than others such as Europe, India, or Asia … but Thanksgiving is one of the finest traditions in North America. Families and friends get together over abundant food and warmth, to ring in the holiday season. There is no gift giving like Christmas or Valentine’s Day (Alas! Merchants), no card-sending (Alas! Hallmark) … it is just a day of closeness.

It is not a holiday that I grew up with, and Turkey, by and large, is a tasteless meat! However, after 16 years in America, I have come to appreciate the holiday, and respect its significance in this young culture’s tradition firmament.

My traditions were Durga Pujo (worship of the goddess Durga), Lakhsmi Pujo (worship of the goddess of wealth), Kali Pujo (worship of the goddess Kali, and the festival of lights and fire-crackers), Saraswati Pujo (worship of the goddess of learning and the Arts), Dol (festival of colors), Poila Baisakh (Bengali New Year), Bhai Phnota (Brother’s Day) … many other pujo’s and parbans. In our family homestead at 34/1 Elgin Road, many of these were also occasions for fun, food, and warmth … the whole family of 25-50, multiple generations, multiple branches of the family tree – would gather …

Caught in the quarterly cycle of our business, I miss most of those.

Tonight, however, a tinge of nostalgia compels me to write a few lines.

An ode, that’s all.

No regrets!

n-logue: A Great India Bet

Posted on Tuesday, Nov 22nd 2005

India is a complex market, but in rural India, the complexity escalates significantly. And yet, imagine the power that a company would command having cracked the rural India communication / information market?

n-Logue is a contender for such power.

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n-Logue’s business model has been inspired by the success of long distance Public Call Offices (PCO) model and the Cable TV Operator model in India. The 950,000 PCOs, which are roadside booths offering telephony services, account for about 25% of the total fixed line telephony income in India. The success of these ventures proved that demand aggregation, a basket of services approach and local entrepreneurship could combine to make a rural internet cum telephony kiosk operationally viable. These principles are the foundations of n-Logue’s approach.

n-Logue leverages local entrepreneurship and resources at two levels: the taluk level (county) and the village level. At the taluk level, n-Logue partners with a local service provider (LSP), who co-invests in an Access Center (The switch and base station infrastructure of the corDECT system, which can provide last mile wireless connectivity to 1000 independent subscribers, and that can provide about 500-1000 internet/telephone connections). Each LSP provides internet connections to subscribers over an area of 3000 sq. km (radius of 30 km). On an average, the coverage would include 2-5 small towns and about 400 villages. The LSP, typically a local entrepreneur, is a project partner to n-Logue and shares the risks (investment) and rewards of the project.

At the village level, the LSP enrolls rural entrepreneurs to become kiosk operators, who provide telephone, internet and a host of other services to the end customers the village population. Each kiosk operator invests about Rs. 50,000 ($1,000) in kiosk infrastructure, which includes a corDECT subscriber terminal, Pentium/Celeron PC with a color monitor and multi-media, a digital camera, power back-up, local language software, relevant applications and a printer.

n-Logue’s investment requirements are modular i.e. the investment model comprises of a series of access centers each of which can exist independently and become viable. The total investment per access center is about Rs. 4.5 m ($100K) which includes corDECT hardware, software, base station and repeater towers and also implementation and service launch related expenditure. The investment is phased out over 2 years and is shared by the LSP partner.

In this model, n-Logue breaks even once about 7000 kiosk operators are fully functional, which could be easily achieved with about 50 to 75 LSP projects. Each LSP breaks even once it has about 150 kiosks or connections, each contributing revenues of Rs. 750 – 1000 per month ($15-20 p.m.). The kiosk operator breaks even at about Rs. 3500 per month ($78).

Achievements are as follows:

  • n-Logue has completed 31 projects by March 2005.
  • A total of over 1500 kiosks have been set up. This is led by an increasing ramp up of projects to 40 planned by Nov 2005.
  • Presently over 30% of kiosks already earning over Rs 3500/($78) per month. The highest monthly earnings recorded was Rs 20,000/($450) in a month in Jan05 at a kiosk in Tamil Nadu.
  • Over 70% kiosks are heading towards break even in a 6-9 month period of going live.

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n-Logue’s intent is to provide internet and telecom access to reach 700 M people, which include 350 M untouched by telephony, and the company has been incubated at the TeNet Group at IIT Madras.

The company is raising money. If you want to see the Prospectus, please email me.

Harry Potter continues the run

Posted on Monday, Nov 21st 2005

You know, by now, that I am a huge Harry Potter fan. Well, we saw Goblet of Fire yesterday. It was a lot of fun, and looks like the fun has translated into a huge box office success already. $101 Million+ opening weekend, one of the best in history.

Harry Potter has been a wonderful cultural phenomenon, one that has created a delightful and magical vocabulary for its International following to instantly connect around the stories, the films, the characters. Rowling has given kids (and adults) of this generation a truly original gift for which millions around the world remain grateful and bewitched.

Such a cultural phenomenon comes around only once in a long, long time. Potter’s last remaining book, and three remaining films, will keep us enchanted for another five years.

And then?