Can India Exploit Chinese Frostiness to Secure More US Tech Investment?

india flagXi Jinping and Narendra Modi were both in the US recently to press the flesh and do the diplomatic rounds, but I think the latter will have returned feeling more positive.

As explained in my latest for IDG Connect here, Beijing has, via tightening regulations, antitrust investigations and even more restrictive censorship rules, been making the Middle Kingdom an increasingly hostile place for foreign – especially US – tech companies. It was never easy – foreign firms have always had to team up with a local partner to have a crack at the huge domestic market, with all the risks that entails. But now it’s even more difficult.

So enter India – a nation of over one billion and with the world’s fastest-growing economy. US firms have had a much better time there historically. Foreign direct investment is very much OK, and even in those few industries which are less welcoming – retail, media, telecoms and banking, for example – successful partnerships with local players are possible.

The start-up cash pouring in from Silicon Valley and elsewhere is staggering – dwarfing that in China already, according to Forrester research director, Ashutosh Sharma. In the last quarter this reached $6bn from private equity alone, he told me. What’s more India can boast:

  • A suspicion of China matched only by the US
  • A nominally democratic political system based on rule of law, making its regulatory environment more predictable, if still overly bureaucratic
  • A young, tech savvy, increasingly well educated, and affluent population

On the minus side, however, it has dreadful mobile connectivity and poor broadband penetration.

“The size of the country in terms of populations makes it difficult for any government to strike a right balance between pursuing growth through investments versus leaning towards more socialistic policies,” Sharma told me.

“This dithering on policy initiatives since India liberalised its markets in early ’90s have cost them time which has manifested in poor physical and virtual infrastructures.”

A large, “digitally dark” population which doesn’t speak English makes it hard to justify investments in digital media, he said.

“However all indications are that this is temporary because at the pace innovation is happening both in terms of affordability of mobile devices, data connection, and local language solutions it won’t be long before a major part of India is digital,” Sharma added.

As mentioned, the regulatory framework is still over complex and bureaucratic, although this too is apparently changing.

“The pace of simplification and speed of execution has improved since the new government has come in place,” he said.

It will take years before India even comes close to the $600bn in bilateral trade the US and China enjoy. But that trade is massively unbalanced, comprising mainly of Chinese imports to the US. This is not the case with US-India relations.

The winds of change are blowing, and they’re blowing to the sub-continent.

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Is this the beginning of the end for Twitter?

twitter logoWith the long-time-coming resignation of CEO Dick Costolo, the continued lack of profitability and the reported slowdown in growth of monthly active users (MAUs), there’s been a lot of talk recently about the decline of Twitter. So is the firm just treading water until it’s acquired, or does it still have fight in its belly?

These are some of the questions I’ve been asking a range of social media analysts of late for an upcoming feature for IT Pro in Hong Kong. The answers were surprisingly positive for the firm. And I can summarise them thus:

  • The firm certainly made mistakes in the past, by failing to develop a revenue generating business model early enough. It hasn’t helped that several founders have had fingers in other start-up pies
  • It’s still true that outside of marketers and media types, not many people use or “get” the service
  • It’s been slow too to offer big brands a genuinely rich ad engagement platform to get their teeth into
  • Its failure to tackle the problem of online abuse and trolling on the platform continues to concern many people
  • It’s never managed to come up with an effective plan to challenge rival messaging products like Whatsapp, or photo-based social networks, like Instagram
  • In Asia things are even tougher, given the strong local rivals, the need to localise in so many different flavours and its exclusion from a market of 6-700 million internet users (yes, that one)

“The problems with Twitter right now are around its growth. Today Twitter’s user base isn’t growing as fast as the company would like, and compared to the other major social networks the growth of Twitter’s user base isn’t at all comparable and could be classified as slow,” Gartner research director, Brian Blau, told me.

“It’s clear that Costolo has to take some of the responsibility as he has been at the helm of the company for long enough to leave a lasting imprint. Given that the CEO has resigned at this point it’s clear that there’s some amount of responsibility that he is taking for the situation that the company is in today.”

However, the company can still turn things around, according to Ovum principal analyst, Pamela Clark-Dickson.

For one, it added 50 million MAUs from Q1 2014 to the same time this year – an 18%v increase – and its revenues went up by 74% to $436m, with ad revenues growing 71% to $388m, she told me. Quarterly losses have also been reduced from $511mn in Q4 2013 to $162.4mn in Q1 2015.  

It’s therefore still too early to write off the Silicon Valley poster child, she said.

“I think that Twitter has a solid financial base on which to build, but I think that in 2015 the company does need to focus on growing its user base into new markets/demographics, and it needs to continue to provide its brand partners with the tools and data that they need to increase their engagement with Twitter users,” Dickson-Clark added.

“If Twitter can’t successfully execute on these two key requirements, then user growth will continue to dwindle, and brands will turn elsewhere. And at that point, Twitter may become an acquisition target for another company that has the vision and the resources to revitalize Twitter’s business and bring it back to growth.”


Intel Outside: the story behind Edison

edisonI’ve just written up for The Reg a news story based on one of the most interesting interviews I’ve done since moving here to Hong Kong: Intel Labs China’s chief scientist, Randolph Wang.

There wasn’t enough time to put everything in that piece so here’s the unabridged version (unfortunately without pics as most of the gadgets mentioned here have never formally been shown to the public).

Wang joined the labs around three and a half years ago but spoke about the recent launch of Intel’s SD card-sized computer Edison with the zeal and excitement of a start-up founder.

This is probably pretty accurate, since he told me the labs function “more like a start-up” than part of a global chip behemoth.

He walked me through the process by which Edison was developed in those labs, by as few as 10-20 people on average, with the focus on “creating something new”, not reliant on preconceived notions on buzzwords; of “going to work, playing around and having fun”.

It started life apparently as an actual smart SD card which they plugged into an off-the-shelf camera and went about seeing what applications they could run on it.

The idea of a “slave device” soon became limiting, however, but they decided to keep the size, pluggable form factor and self-contained design and work with that.

“Over time we got rid of the constraints, so the SD card could be born to tell the device about it – to be a master not a slave,” he said. Eventually they got rid of the final constraint by building devices (30-40 odd of them) themselves to fully exploit the potential of Edison.

At this time the idea was not just to build simple, box-like prototypes but, in partnership with Tsinghua university’s industrial design department, to “build something beautiful”.

He told me about a pair of “crystal speakers” made of a transparent material where the light inside responds to the music being played, or of a smart bird feeder – as described in The Reg article – which recognises which bird lands on it, takes and pic and sends an alert out to the owner if it’s an interesting breed.

Another project he was keen to promote was the porcelain cup demoed by CEO Brian Krzanich on stage at CES last month.

“There’s an LED matrix embedded in the cup wall that allows the cup to display subtle info or alerts. At CES, our CEO Brian Krzanich demonstrated that the porcelain cup was working with the baby monitors (also powered by Edison) developed by Boston area start-up, Rest Devices,” he explained.

“If the baby’s respiration or temperature info is abnormal, the cup displays alert info. Alternatively, one can put applications in the cup so that it displays current temperature, or current Intel stock price, or as I was saying, with a pair of cups, the boyfriend cup lights up when the girlfriend puts coffee in her cup.”

What excited him so much was that the cup was made in a town called Jingdezhen, which has been making ultra-thin, high quality porcelain for over 1,700 years. Being so thin enables the light to shine through better, he explained.

Wang continued:

This is a remarkable story of marrying 2000 year old craftsmanship with the latest silicon technology. But it’s more than that. The town, though famous, is located in an impoverished area. One of the things talked about by the proponents of the “Maker revolution” is the idea of spawning new industries and generating new wealth at the most unlikely places, because the democratising effect of the “Maker phenomenon”. There’s a local “porcelain research institute” that we’re collaborating with, who see great potential in producing a new line of porcelain married with the latest cutting edge Intel technology to open new markets, thus breathing new life into an ancient local industry.

This kind of thing is not the end but the beginning for Edison, and with true SoCs, in which everything including Flash and DDR memory is on-die, set to land in a couple of years there’s the potential for the micro-computer to be made even smaller and cheaper in future.

The strength of the project will, however, depend on how developers take to it, Wang concluded.

“Each Edison-powered device is meant to house multiple applications that users can download into them and third-party application writers could write for. And these things can work together,” he said.

“We’ve tried to do something with the best intentions but I’m fairly certain that the best is yet to come and probably not from inside but outside.”

From Intel Inside to Intel Outside in a few short decades.


Google: ‘Start-ups can save the world’

eric schmidt“Entrepreneurship is the solution to all the world’s problems,” according to Google executive chairman Eric Schmidt, who was in Hong Kong today to launch a new program to foster greater start-up talent within the Chinese SAR.

Schmidt’s visit was something of an anti-climax in the end. Media were not invited to ask any questions and what we finally got from the Google man after a half hour delay was less than insightful.

He trotted out the usual argument that more innovation and technical invention will likely gravitate to this part of the world because there is a “numerical advantage” in terms of graduates with degrees in STEM subjects.

Several times he also repeated the notion that “the native underlying Chinese culture is entrepreneurial”.

“We all know this, it’s been true for 1000 years. It’s a great asset of Chinese history,” he said.

The inference here is that the region and its people should be more inclined than most to producing innovative technology start-ups.

However, we heard very little about why that’s simply not happened thus far, in Hong Kong at least, although Schmidt did acknowledge that there wasn’t enough of a VC industry here and that, although entrepreneurial, the locals are also culturally afraid of being “different”.

Google’s announcement today – a program of mentorship and incubation with the Chinese University of Hong Kong – is surely yet another indication that the SAR government has singularly failed to foster the kind of innovation that can start local and grow internationally.

It’s a view I’ve heard time and again – even from successful international technology companies who came to Hong Kong with an impression of a hi-tech city and found instead something much less mature to work with.

The conversations at most local tech conferences I’ve been to are still at a “what is the cloud?” stage. It’s difficult to believe sometimes.

When asked whether Google was thinking of founding a formal incubator project even Schmidt had to admit: “You don’t have a big enough software industry. Your lack of software … will hurt you in terms of your global ambitions.”

The one year project announced today is unlikely to change that much.

We don’t know exactly how much access to Silicon Valley “mentors” and help with start-up costs local entrepreneurs will get as part of the initiative, but at first glance it seems like a pretty good way for Google to cream off some of the best of that limited Hong Kong talent.