The world is in the middle of probably the most exciting period of economic progress in History. With three billion new producers and consumers joining the global capitalist system, the opportunities for long-term investment should be fantastic. How does that effect us here in the ICT business?
Reading this article last Friday -
Power Architecture, Part 2: Drawing In Developers - we began to wonder if it was too little too late. This appeared a couple days later -
Ubuntu Mobile and Embedded Edition. Intel is striking back at the core of the matter.
Does Intel fear $100 laptops? In the meanwhile, will IBM ever really challenge Intel? IBM is stuck half-heartedly promoting Power Architecture while
needing Intel to even involve themselves (
read exist) in most of the hardware, software and consulting services they offer. Maybe, it's time to get back for the future.
power2people insideThe
EFIKA and
Open Client have opened up the opportunity found in the next generation of computing. Let's think about this...
Globalization and technology have driven a transformation in the business model of international companies. The traditional value chain of any business consists of three quite distinct issues:
1) the conception and design of a product or service
2) its manufacture or preparation
3) its delivery and marketing
The traditional business model stressed the second link in this chain – the manufacturing process. This was the point where businesses located their key competitive advantage (
consider the Model T).
Globalization and technology have totally transformed this analysis. The production part of the value chain is the part the most susceptible to low-cost competition from emerging markets such as China. This has made manufacturing less desirable and thus many first world companies have increasingly outsourced the manufacturing of their products and sometimes even their services (software development, accounting, customer service, etc.) to emerging markets. When companies do this, they convert themselves from
sell everywhere and produce everywhere, to become
sell everywhere, but produce nowhere. IKEA, Nokia, and Dell, sell everywhere, but produce nowhere. General Motors and Unilever still operate more traditionally.
The newer companies no longer see their core competence in the middle (production) part of the value chain. Instead they create a platform on which they place products or services which they have designed or invented and brought in cheaply from producers in emerging markets. They distribute their products and services at much higher prices to relatively affluent consumers, first in Europe and America but increasingly all over the world. This outsourcing process has been well understood from a business management perspective, but it also has huge macroeconomic implications which have not even begun to be considered.
The part of production outsourced is typically the most volatile and capital intensive part – industrial employment, capital spending and inventories. So, with the outsourcing of labour and capital-spending from America and Europe to Asia, Eastern Europe, or Latin America, a lot of economic volatility has also been outsourced. In effect, cyclical fluctuations have been transferred to the third world from America and Europe. You can see that this reduction in the economic volatility of the past 15 years. Computing and the Internet really got going about at that same time.
Demand is going to create a huge opportunity
as everybody everywhere takes a step up the economic ladder. The silicon design and integration capability required to serve up the manufacturing necessary to support
everyone everywhere is going to be the valuable piece again. It was a good idea to buy Freescale for billions. Freescale is going to be worth a lot more because it will hold a competitive advantage in this space for a long time. In the meanwhile, the EFIKA and the Open Client are here at the right price and with just enough performance to take competitive advantage of Freescale's most valuable resource (#2). We can manage the rest (#1 and #3). We have lots of folks who want to participate. There are many Dells to come. So, just hold on - it is going to be quite a ride...
The Community is the Computer -
a Super Computer.
Go Zig!R&B
