Engineering the next revolution

Future Tech

During my recent visit to the US, I found myself standing on Sandhill Road at Menlo Park. Sandhill Road is at the heart of the world's venture capital industry. Almost all the leading VCs have their offices there.

It is one of three elements which make up the Silicon Valley ecosystem. A few miles away is Stanford University, whose mix of professors and students churn our start ups year after year. And then there is the famed Valley culture, which encourages and amplifies innovation and entrepreneurship. While it rewards success handsomely, it also does not look down on failure, seeing it as a milestone on the journey.

As I stood overlooking the freeway and the mountains in the distance from the Sandhill perch, my mind wandered to the eternal search that drives the innovation system. What is going to be the next big thing? Web services? Broadband wireless? Convergence?

Two thoughts struck me as I stood there. One, the epicentre of the next revolution is likely to be in the emerging markets of the world. Two, the driver for this revolution will be affordability, rather than the next big technological advance. Let me explain.

In the developed markets of the world, the various technological waves came sequentially "� computers in the 1980s, local area networks in the late 1980s, client-server software in the early 1990s, the internet in the mid and late 1990s, and wireless and broadband in the past few years.

One of the key drivers was Moore's Law, which states that processing power at fixed costs doubles every 18 months. As computers became cheaper thanks to falling prices of chips and peripherals, it created a positive feedback loop that drove their adoption across various industries.

Now, the same mix of cheap processing power and high bandwidth is working its way across the developing markets. There is one important difference, though. In the developed countries like the US, the various phases of technological enhancements were sequential, giving consumers and businesses time to adopt and adapt. However, in emerging markets like India, these are all happening simultaneously.

Consider what's happening in India. Cellphone adoption is increasing at over two million a month, leading to a user base of over 50 million by the end of 2004. Decreasing prices are driving computer adoption higher "� this year should see sales of over 3 million computers. Wireless data connectivity is available in hundreds of cities. Cable companies, telephone companies, power companies and internet service providers are all working to provide high-speed connectivity to homes and businesses.

So, in India, even as we benefit from falling prices, we are having to adjust to a world where the same ubiquitous envelope of computing and communications is rising around us.

This, according to me, is the next big thing. As nations develop, an unprecedented opportunity exists to create solutions for the next billion users from countries like India, China, Brazil and Russia. The challenge for entrepreneurs is to catalyse and capitalise on the technology-led development process that these countries are going through.

Once again, consider India. Even as we get taken up with offshoring and outsourcing opportunities, we need to understand that a focus only on services will not transform India. (To put this in focus, less than 0.1 per cent of Indians involved in IT related services are currently involved in providing software and other business process services to international organisations.) As India develops, agriculture needs to become more efficient, thus reducing the labour force involved in farming. This surplus has to be absorbed in production. This means that the production of non-manufactured goods (such as handicrafts) and manufactured goods will have to expand and become more efficient to be able to absorb the surplus labour from agriculture and provide higher incomes.

Affordable technology solutions can help in compressing time and in speeding up the development process. Information and communication technologies can help in providing much-needed access to markets. India can benefit from the technologies developed to accelerate the education of its people and the modernisation of its industries.

The challenge for entrepreneurs is to think on how to create solutions in this context for the twin engines of future growth "� rural India and small- and medium-sized enterprises.

The developed markets of the world are like the countries of Europe in the fifteenth century. The developing countries like India and China are like America waiting to be discovered. Entrepreneurs are like the intrepid explorers who set forth from the Old World to discover new lands for conquest.

For the VCs on Sandhill Road, the emerging markets are a world separated by many a continent and ocean. Even as they ponder on the future, Indian entrepreneurs have the opportunity to shape history "� only if we begin to start looking at the market within.

Rather than trying to only focus on providing services to the rest of the world, we need to start producing hard and soft goods for Indians to use and leverage. India, its IITs and other engineering institutions and its entrepreneurs have the opportunity to create the platforms for the next markets.

(Rajesh Jain is managing director of Netcore Solutions Pvt Ltd. His weblog is http/www.emergic.org. He can be contacted at rajesh@netcore.co.in)