Thursday, August 16, 2012

Found while following Apple/Samsung antics

A long, long time ago, I put my feet up and imagined what could happen given the trajectory of several technologies.  I'm not claiming anything, but I continue to be chagrined about the dysfunctions of the US patent system and the definitions of "novelty", "obviousness", "prior art", and "skilled practitioner".

This was published in 1998 (click near the page number for larger view):







































Now, back to my popcorn.

Tuesday, June 19, 2012

Scratching the Surface

It requires a certain critical mass for me to emit a blog post.  Yesterday's unveiling of the Microsoft Surface devices has prompted copious product commentary, but I think the big story has little to do with speeds and feeds, or competition with Apple.

The Surface announcement is the best demonstration of the systemic weakness of the Wintel ecosystem, ever.  While multiple sources of pressure have been building to strain this long-standing duopoly, Microsoft's decision to manufacture its own tablet device may well push the water over the edge of the dam.

In addition, as a Microsoft shareholder, I'm concerned about the impact of this announcement on the company's overall performance.  More on that later.

First, the industry impact.  If we set the wayback machine far enough, we can go back to a time when personal computer manufacturers actually added substantial value beyond the semiconductor components supplied by Intel and its competitors.

A company called Compaq, for instance, distinguished itself in the business market by spending significantly on R&D to make Intel-based hardware reliable and serviceable enough to be taken seriously by enterprise customers.  They were able to charge a premium for their work.

Compaq's competitors, like Dell, were happier to take Intel reference designs, which were not quite as robust, bend some metal around them, and compete on price.  Intel and Dell responded by labeling Compaq solutions "proprietary" and simultaneously adding features into their reference designs, reducing their value to commodity levels.  Dell and its ilk won.

Intel was also working hard to migrate more and more value of a PC into its chips.  They were fairly successful at this, ultimately capturing most of the value in a PC and leaving table scraps of margin for their OEM partners.  Years ago I imagined that Intel might just go ahead and put the OEMs out of their misery, but it dawned on me that Intel was brilliant in outsourcing the misery - why would they want it?

The other winner at the head of the PC food chain was, of course, Microsoft.  They basically collected a tax on every Intel-based unit sold by every company except Apple.  Life was good in Redmond.

Meanwhile, at the end of the value chain. PC companies were fighting over increasingly smaller scraps.   The shakeout killed Micron, Gateway, and, ultimately, Compaq.  IBM had the good sense to see the handwriting on the wall and rebuild its company around services.  Now HP and Dell are trying to catch up.

Meanwhile, Wintel-based product design has suffered from a combination of consumer malaise and OEM fear, resulting in underspending in R&D.  Above the chip level, Intel has maintained a leisurely  R&D pace, with the ultrabook reference design a recent example.  But, as we all know, Apple spoiled the party by creating a new category and nailing it with the iPad and its app ecosystem.  Android tablets piled on.  Wintel OEM response has been ham-fisted at best, partially because neither Intel nor Microsoft was ready with a fast response.

But Wintel OEMs are also fighting for their survival, are being pulled in multiple directions from external and internal forces, and are shedding resources like clothing on a hot day.  Microsoft must have felt that, left to their own devices, it would take so long for OEM partners to come around that it would be impossible to play catchup.

In addition, Microsoft could do the same bill of material arithmetic everyone else was doing and conclude that, for some devices, ARM had a place and an Intel premium was not worth paying.

The result - Microsoft takes matters into its own hands.  It uses an ARM processor to compete on price, and an Intel processor to ride its Office monopoly.  These are not dumb moves.

But,  Microsoft has hit its OEM partners squarely in the face.  This is not a Zune. nor is it a Microsoft mouse, each of which could have complemented an OEM product.  If successful, Surface devices will take lots of dollars away from mainstream OEM products.

Intel probably views the ARM-based Surface as a minor annoyance.  They have seen Microsoft move to other processor architectures before (NT on Alpha, anyone?), and know they can usually play the long game and win business back.

But the PC OEMs are a different story.  I'd hate to be at HP while I watch the last vestiges of any proprietary advantage in tablets with WebOS walk out the door.  I'd like to think that Google might use this event as a reason to really woo PC OEMs with a non-balkanized version of Android, but I'm not holding my breath.  Besides, Google would have to come up with a unified Android app marketplace that OEMs could white label, and share revenue.  That could happen.  And pigs could also fly.

It's no sure thing that Microsoft will make Surface work.  But let's suppose they do.  As a MSFT shareholder, I can therefore look forward to some increased revenue, and lower gross margins as hardware gross margins become a more significant part of the Microsoft product mix.  And I'm wondering, why in heck isn't there a new arms-length company being formed to do this, so margins aren't diluted across the enterprise?  Intel continues to outsource value chain misery, and here is Microsoft jumping to take it on.

For an outside observer, the new array of moving pieces created by this announcement is awe-inspiring in its complexity and unpredictability.  The Surface announcement party may be over, but the real fun in Wintel-land is just beginning.

Tuesday, April 17, 2012

Rational Economic Behavior and the Internet: Why You Want to Pay Per Packet

Originally published in 2010.
Verizon has raised my rates since then.  Grrr.
This bolsters my argument.


It’s always dangerous to give me spare time, an Internet connection, and a calculator.  I have been thinking about this particular issue for many years — any kind of “all you can eat” model has always struck me as suboptimal, and my reaction to the growing popularity of flat rate Internet connection pricing based on connection speed is the same as my reaction when Pets.com offered free shipping on 50-pound bags of dog food back in the day: buy all you can, ‘cause this deal can’t last.

Internet customers (at least in the US) seem to have figured this out.  Their usage of bandwidth continues to grow at very high rates while flat-rate pricing is the norm. This is rational producer and consumer
behavior; there is neither disincentive to produce “fat” content or applications nor disincentive to consume them. This has been a lurking but invisible problem in the wired world, where bandwidth is relatively cheap. But the problem has become visible recently in the wireless world, where bandwidth is more expensive (because it is more scarce). We have all seen reports of wireless carriers struggling to keep up with network demand created by the latest smartphone or media application.

It costs real money to upgrade networks to keep pace with this demand, and those costs are ultimately borne by the subscriber. So in the US, we have carriers trying to raise their rates to offset increases in capital and operating expenses to the point where consumers are beginning to push back, and the shoving has come to the attention of the Federal Communications Commission, which has raised the possibility of treating Internet network providers as common communications carriers subject to regulation.

I believe that flat-rate pricing is a major source of problems for network carriers and consumers. In the carrier world, the economics are known but ignored because marketers believe that flat rates are the only plans consumers will accept. But in the consumer world, flat rates are rising to incomprehensible levels for indecipherable reasons, with little recourse except disconnection. Consumer dissatisfaction is rising, in part because consumers feel they have no control over the price they have to pay. This is driven by their sense of pricing inequity that is hard to visualize but comes from implicit subsidies in the current environment. The irony is that pay-per-use pricing solves the problem for carriers and consumers.

The Current State
Let’s do some arithmetic. I went to the statistics page on my router, where it reported that in the past 47 days I had sent and received around 15 million Internet packets. I rounded that up to 20 million,
then derived the following:

         - 20 million packets in 47 days
         - 425,532 packets/day
         - 12,765,597 packets/month

How big is a packet? Like many questions, the answer is, “It depends.”  After a little research, I determined that my average packet size was somewhere between 557 and 1,500 (an average rich-media packet size) bytes. Then I made some assumptions about my traffic:


         557 bytes (60% of traffic)
         - 1,500 bytes (40% of traffic)
         -  934 bytes (weighted average packet size)

Now I had an average packet size, and I had my packet traffic per month. So how many bits is that?

         - 7,474 bytes (weighted average bits/packet)
         - 12,765,957 packets/month
         -  95,412,765,957 bits/month

Whoa, that’s a lot of bits. Let’s scale it down to manageable significant digits:

         - 90,993 Mb/month
         - 11,374 MB/month
         - 11 GB/month

This exercise revealed that, in a typical month, I shipped about 11 GB over the Internet (the vast majority was downloaded but for this discussion we will focus on total traffic). Verizon, my provider, charges me about US $64.99 per month, or about $2.17 per day for 25 Mb/sec download speed.2 Some of you might say, “Hey, $2.17 per day is cheap.”  My response is “Compared to what”? Let’s take a look on what I actually consumed:

         - $64.99/month
         -  $2.17/day
         -  $5.85/GB transferred (actual)

Is $5.85 per GB a good or bad deal? Let’s compare that price based on actual usage to the theoretical price I could be paying if I used all of my monthly bandwidth:

         - 26,214,400 bytes at 25Mb/sec peak rate
         - 3,276,800 bytes/sec
         - 11,796,480,000 bytes/hour
         - 11,250 MB/hour
         - 11 GB/hour
         -  0.0107 TB/hour
         -  0.2575 TB/day
         - 8 TB/month

Now, all the carriers disclaim their peak performance numbers; they can be degraded by traffic congestion, phases of the moon, whatever. Let’s pretend that I could actually see the above (and, to be fair, my FiOS service has been generally reliable). That would mean I could transfer 8 TB in a month, compared with the 11 GB that I actually transferred.  That changes the transfer price dramatically:

         - $64.99/month
         -  $5.85/GB transferred (actual)
         - $0.008/GB transferred (theoretical)

Clearly, I should be consuming more. Even rounding up, the price gap between $5.85 per GB and $0.008 per GB is substantial. And herein lies the problem. Since the rate I pay is flat, everything in the gap between 11 GB and 8 TB looks free to me. But I assure you it does not look free to Verizon. If every FiOS subscriber tried to download 8 TB a month, cries of panic would echo throughout the land. A similar exercise for wireless data plans would show higher prices but a smaller gap between actual and theoretical because the theoretical limits are lower.  Some wireless carriers explicitly prohibit extended peak bandwidth use for just this reason.

A Monthly Bill I’d Like to Get
What if, instead of increasing the maximum download speeds for a flat rate, a carrier tried this: pay $0.0000025 per packet — period. The resulting bill would be:

          - $31.91 for 11 GB transferred/month
          - $63.82 for 22 GB transferred/month
          - $22,979 for 8 TB transferred/month

A pricing strategy like this might lower the monthly bill for an average customer as well as allow for some increased consumption without breaking the bank. It would provide the consumer a way to lower costs just by reducing consumption. There would be a substantial disincentive for order-of-magnitude increases in consumption; if the data were really that valuable, this would prove it. Otherwise, consumers would have to think of options:

         1. Do without.
         2. Find a way to make the data more efficient.
         3. Find a cheaper substitute.
         4. Get someone else to pay.

All these options are used by producers and consumers today and form the basis of advertiser- and business-supported messaging. There is no reason to suspect that a motivated advertiser wouldn’t pay to transmit its car ad to a serious prospect. Web site and content creators would be obliged to consider data transmission costs and build more efficient products — or offset their higher costs with direct payments, advertising, or some other explicit subsidy. Carriers could use variable pricing per packet to adapt consumer usage to network capacity variances and expansion.

This past June, AT&T, wireless provider for Apple’s iPhone, became the first major mobile phone company to stop offering new smartphone customers a single monthly price for unlimited Internet access.3 That may signal an industry shift to charges based on how much people use their phones to access videos, music, and data. AT&T expects the new pricing to boost sales. Verizon followed in July.  Newcomers to AT&T can pay $15 per month for 200 MB of data or 2 GB for $25. AT&T says 65% of its smartphone customers use fewer than 200 MB per month, and 98% use fewer than 2 GB. Just 3% of AT&T’s smartphone customers account for as much as 40% of its data traffic. With the limited airwave spectrum available for wireless broadband, other providers may switch to usage-based pricing, including Sprint and T-Mobile. Other businesses may be getting the message as well. Silicon Alley Insider recently reported on the rumored new Apple iTV with the headline, “Apple's New iTV Could Finally Force ISPs to Give Up on All-You-Can-Eat Internet Access and Jack Up Your Bandwidth Bill.”

In short, rational economic behavior would prevail in a pricing environment free of implicit subsidies. This would prove beneficial to content producers, content consumers, and the infrastructure providers that move the bits around. When I look at the problems created and looming by current flat-rate pricing — and consider the advantages of usage pricing — I believe it’s only a matter of time before usage pricing becomes the standard.

In the meantime, use all the bandwidth and transfer all the bits you possibly can. 
This deal is too good to last.


Footnotes:
1 - Slaptijack. “Average IP Packet Size.”  
      Facebook Note, 18 March 2010 (www.facebook.com/note.php?note_id=377237673965).
2 - Verizon offers Web mail and other services for this price. For simplicity, I have ignored all bundled 
      services in this example.
3 -3  Lieberman, David. “New AT&T Smartphone Users Won’t Get One-Price Net.” USA Today
     4 June 2010.
4 -Frommer, Dan. “Apple’s New iTV Could Finally Force ISPs to Give Up on All-You-Can-Eat
     Internet Access and Jack Up Your Bandwidth Bill.” BusinessInsider/Silicon Alley Insider, 
     23 August 2010 (www.businessinsider.com/appleitv-metered-broadband-2010-8).

Friday, October 14, 2011

Remembering Steve Jobs

I was lucky to have had the opportunity to meet and work with Steve Jobs when I was an analyst on Wall Street covering the PC industry.  Mine was a lone voice arguing that Apple could recover from its "beleaguered" state prior to Apple's acquisition of NeXT. Steve's return with that acquisition added an ironic dimension that evolved into one of the great corporate turnarounds in history.

While I had engaged him from a distance through Apple investor relations and conference calls, my first one-on-one meeting with Steve came just after Apple had reported its first profitable quarter since his return. Apple had scheduled an analysts meeting in Cupertino, and all of us dutifully shuttled out to hear what Apple management had to tell us about the company's plans for the future.

When I was introduced to Steve, he recognized me from my public efforts on Apple's behalf, and thanked me for my support during Apple's tough times. Those of you who know me can imagine my response. Figuring I might never get the chance again, I told Steve, "Thanks for not f**king it up."
My host wilted. 
Steve grinned.

Shortly after, Apple included a quote from me in a press release announcing its advertising strategy for the iMac. This was one of the only times a non-Apple voice was included in an Apple corporate release, and I'm sure it would not have happened without Steve's approval. While many have described Steve's darker side, many of us can cite examples of gracious behavior like this.

I remember vividly Steve's personal demonstration to me of Mac OS X prior to its announcement, and his focused energy directed at convincing me that the "lickable" new Aqua interface was the greatest thing in the world. Many have seen Steve live on stage or in a video announcing new products; I can only say that it was even more impressive up close, and I enjoyed all my professional interactions with him throughout my tenure on the Street.

When I heard of his passing, my immediate thought was:
Talent hits a target no one else can hit;
Genius hits a target no one else can see.
-- Arthur Schopenhauer
Schopenhauer didn't live to see Steve Jobs, but maybe he predicted him.

Wednesday, August 31, 2011

Remembering My Dad

My father died yesterday.  It wasn't a complete shock - 20 years ago he was diagnosed with prostate cancer and treated with then-new therapies that bought him more time than anyone expected.  He used that time well.  This year, cancer returned in a much more aggressive mode and won its battle for dad's body.  His family was fortunate to be with him in his last days to say goodbye.

My mom, brothers and sister filled dad's hospital room with stories and laughter to the point where nurses were poking their heads in to see the party — and we encouraged visitors to add their voices to the conversation.  Over the course of many days, I was reminded that my siblings each had a unique relationship with dad, but all of those relationships were based on the same values we learned by repeated example:  curiosity, integrity, loyalty, uncompromising excellence and love.

Dad's varied accomplishments in life derived from his unwavering adherence to those values.  They enabled him to become an outstanding competitor, leader, craftsman, husband, father and grandfather.  My mother's expressions of love and loss for her partner of 57 years were an equally compelling commentary on the meaning of marriage.

I loved my dad.  I miss his presence already, and will remember his lessons forever.










Monday, May 17, 2010

Thoughts on Bill Gates' Legacy



Written June 25, 2008 for SearchWinDevelopment.com
I met a traveler from an antique land
Who said: "Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk, a shattered visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
`My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!'
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away.


--Percy Bysshe Shelley, Ozymandias
I sincerely hope that Bill Gates' legacy is yet to be created, because what passes for common wisdom about his contributions to the computer industry will either fade from memory or be relegated to the arcana of business scholarship.

Readers may raise Microsoft as an objection to my argument. My trite reply is: Thomas Watson and Google. The former built a computing colossus but has faded from everyday IT awareness faster than most would have predicted. The latter is the current darling, a young star yet to experience the ravages of success and time.

People talk about the "genius" of Bill Gates. I find this an overly fawning accolade when I compare him to Einstein, Feynman, Hawking and their (rare) ilk. There is no "Gates algorithm" left for computer scientists to ponder. Yet, he was an unequivocal business success. Is there a different dimension of perception or behavior that warrants the genius label when applied to his accomplishments in the industry?

Maybe. Unlike Einstein's quest for a theory of general relativity, Gates had plenty of competitors racing to make small computers pervasive. But he came from a socio-economic background that enabled him to aggressively follow his dream. He had family connections that put him in contact with the highest levels at IBM at the time when the IBM PC was being developed. He had the great sense to say "yes" when IBM asked if his company had an operating system for their fledging PC. He was, shall we say, shrewd, in his acquisition of MS-DOS. He was equally shrewd in his proposal to IBM that allowed Microsoft to resell DOS to IBM's competitors. And he was triply shrewd when he convinced PC manufacturers to pay for DOS regardless of its residence on their PC products. The fact that the U.S. Justice Department was asleep at the switch during this period made this last move ultimately effective for Microsoft's development. If this be the definition of business genius, then Bill qualifies in spades.

When the Justice Department finally took action against Microsoft, the company had the opportunity to remake itself into smaller, more agile pieces. It did not. Perhaps Bill's biggest business failing was not seeing why this might be a good thing. Microsoft is struggling today, in part, because of its bulk. Furthermore, the bloom is off Microsoft's rose, so the public market has a higher tendency to punish the company for its perceived missteps. This punishment cannot be meted out to the division or product line that is truly responsible, so value is destroyed across the entire enterprise.

IBM is hailed as a company that recovered from the brink of death, a place where many feel Microsoft, at current course and speed, could be headed. IBM's recovery only happened after a parade of less-than-capable CEOs drove its Board to bring on the highly-capable Lou Gerstner. Perhaps Microsoft has not had enough CEOs to develop a corporate sense of what defines inadequacy at the top. Therefore, I suggest another candidate for Bill's biggest failing is his long-standing and apparently continued support for Microsoft's current CEO.

Where my respect for Bill Gates is unbounded is in his decision to use almost his entire fortune for the common good. Unlike so many Silicon Valley "successes" who seem to require personal fulfillment by recreating Japanese palaces or building ever-larger sailboats, Bill's actions in the future could make a real difference in the lives of millions of people and the planet we all share. That legacy might endure.

Saturday, May 8, 2010

A (Different) Passage to India

Written July, 2007

Though I have traveled extensively, the Indian sub-continent had escaped my footfalls.  So, when a company upon whose Board of Directors I sit was contemplating an acquisition, which included an Indian facility, I enthusiastically volunteered to make the visit to determine if the operation was as described.  Arrangements were made for my departure to Mumbai from New York at 8:30AM on a Monday morning, returning in time to report prior to the closing of the transaction.

Or so I thought.  My youngest daughter had thoughtfully borrowed some travel books on India for me to read, and I finally got around to examining one while sitting in my car around 5PM on the preceding Friday.  I noted with interest a section headed “Passports and Visas”, anticipating that it would include a lengthy description of requirements for those other than myself.  Silly me.  The words on the page read, “every US citizen traveling to India must have a valid passport and visa”.  Panic ensued.  Hasty phone calls to my sponsors and hosts surfaced conflicting information about how long the visa process would take, putting the finely tuned schedule at risk.

Monday / Tuesday

On Monday morning, I took my baggage and headed to the Indian consulate in New York.  I was prepared for the worst.  My mood was not improved by lugging two bags around in the pouring rain, or milling about the dripping subterranean entrance to the visa office waiting for a consulate employee to provide a token to allow me to stand in line.  Nor was I encouraged by the horror stories shared by my fellow millers.  However, by 9:30 in was in line, paper number in hand, by 9:45 I handed over my passport and some cash, and was told that I could pick up my visa by noon. 

I ducked into a nearby coffee shop to kill time and stay dry, then returned to the consulate to retrieve my visa and met my driver to head for JFK for an 8PM flight.  My mood improved considerably when I discovered that a business class ticket on British Airways entitled me not only to use of the well-stocked lounge, but also a complimentary massage.  Since it had been a while since my last business class trip, I thanked airline competition for this and took full advantage. 

Bolstered by the massage and several bloody marys,  I finally boarded the plane at 8PM for my 8:30 flight.  Once again, I was stuck by the changes in business class travel since my last trip.  I had read about the “flat bed wars”, where airlines competed for business on the totality of their seat recline, and was eager to benefit from that skirmish.  However, I was not prepared for what I encountered next.  Instead of the familiar two-by-two seating, I was delivered into a maze of the airline equivalent of cubicles, one of which contained my seat.  Moreover, my seatmate (cubicle mate?  pod mate?) faced me, separated by a motorized divider reminding me most of the “cone of silence” from the old Get Smart television show.  I cannot say this is a complete improvement.  For me, what little benefit comes from sitting in an airplane seat for ten hours or more is the chance to interact, even for a short while, with my fellow passengers.  This new configuration effectively eliminates that interaction.  It also turns the flight staff into contortionists as they try to pour drinks and serve food over and around the partitions.  As I was watching a glass descend from a disembodied hand over my divider, I had a flash of empathy for my daughter’s guinea pigs at feeding time.

On the other hand, if sleep is your priority, this setup delivers.  Unless you or someone else has to make a trip to the rest room mid-flight, in which case you are either a hurdler or hurdlee, given the lack of pathways resulting from closely spaced prone or supine bodies.  Moral:  get the aisle pod, or practice your gymnastics before you leave.

My outbound flight connected through London Heathrow without incident, but probably set a record for longest distance between connecting gates.  Ensconced in my new pod, I was enjoying the view of (for me) new territory, when it dawned that shortest route from London to Mumbai would probably take us directly over Baghdad.  The red line on the moving map display confirmed this, and I was relieved when we veered left and then right as the pilot negotiated a path between Mosul and Tehran toward our destination.  Finally, after about 18 hours elapsed time from JFK, I could see the lights of Mumbai and we touched down at around 1AM.

Wednesday

The target of my sponsor’s intentions uses a cheetah as its corporate mascot.  This made to easy to spot my driver, holding a stuffed one, in the throng at the arrivals point.  On the short walk to the car, I noted that the temperature (high) and humidity (high) were as described in my daughter’s book, and was thankful for the air conditioning in the car.  We left the airport, and headed for my hotel.  On the way I was able to catch a few glimpses of the local area, which reminded me initially of my visit to Peru years ago – the same kind of bi-modal wealth distribution was apparent after passing the Intercontinental Hotel and a row of humble shops within five minutes. 

Darkness and jet lag prevented me from further detailed viewing, but I did note the increased vegetation as the trip proceeded – then a checkpoint with oil drum barriers and collection of what I hoped was a toll.  Past the checkpoint, we were escorted by a pack of enthusiastic dogs who followed us for half a kilometer or so.  After encountering another guarded gate, we proceeded up an assortment of paved and unpaved roads until we reached the hotel.  Check-in was uneventful, my room was nicely appointed (although the large flat-panel television on the wall required the application of a hotel slipper in its mount to become parallel to the wall), and I was quickly asleep in a rather comfortable bed.

Morning was a slightly different story.  I drew the curtains and took in a panoramic, if not attractive, view of the major construction under way around the hotel and building skylines on the horizon in all directions.  The weather appeared partly cloudy – pleasantly surprising because this was supposed to be monsoon season.  I was to have water poured on that naive observation soon enough, but meanwhile I was having a bit of trouble getting my shower to pour any water at all.  So I resorted to the tub, where I found water, but not the hot variety.  Jolted awake but clean, I went down to the lobby for lunch with my host.

Over a very nice Indian buffet lunch, I learned that most of the area surrounding hotel (a very extensive piece of property) was owned by an individual who had struck a deal with the Indian government, in the interests of preservation, not to develop more than ten percent of his holding and not to sell any of the land.  So he is building high-rises on the ten percent and offering 999-year leases on other parcels.  I noted that beating the system seems to be a global pastime.

We then proceeded to my hosts’ offices, and I found myself traveling back toward the airport, through the lightly populated area from the previous evening. This turned out to the Aarey Milk Colony, formerly the primary source of diary products for Mumbai, now less so.  Some limited cattle farming remains, but recently an IT industrial zone has been added into the mix.  So one can add “programmers” to the list of cows, dogs, pigs and goats roaming the area, along with villagers living in conditions that were quite poor but by no means the worst I encountered.

The offices are housed in a four-story building close to the airport, in an area that can be generously described as “developing”.  The building is one of the nicest in the adjacent few blocks, originally built for a bank, and slightly renovated so as to qualify for the same favorable treatment as those in the IT zone mentioned previously.  The building and offices are quite modern, and redundancy has been addressed.  There is a diesel generator for backup electricity, and multiple backups for Internet and phone connectivity.

A major bus station is very close, and a light rail station is rumored to be in the works.  Busses are the favored mode of public transport in Mumbai.  Fares are low, even by Indian standards (fare for a 2 kilometer trip might be $0.25 or less), and busses are frequent.  The two major commuter train lines in the city are stressed to their limit, always overcrowded and are to be avoided if at all possible.    Many of my host’s employees commute by bus, although a significant number ride motorbikes, and a few have private cars.  Road traffic in Mumbai rates further discussion later.

I spent the afternoon with software engineering management.  This included project and quality managers.  I heard a detailed presentation about the organization, and about the processes currently in place.  As noted prior to my visit, I was impressed by the company’s process maturity relative to its size and age.  The employees I met with were attentive, engaged in conversation, and appeared willing to take feedback.  They responded to my questions without becoming defensive, and we ended our meeting with a wide-ranging discussion of global IT issues.

At 5:45, I left the office to make a quick stop at my hotel and then continue to a dinner meeting in southern Mumbai.  This was to be a treat for me – thirteen years ago I attended a Harvard program where an Indian gentleman was in my “living group”.  Though we had shared many experiences during our time together, and communicated infrequently by e-mail in the time hence, we had never been able to reconnect in person.  So it was with pleasurable anticipation that we arranged to meet at the Bombay Gymkhana Club, where he was a member.

At about 6:15 we left the hotel for a thirty-kilometer drive in Mumbai’s rush hour, which I would describe as the worst traffic I have ever encountered, except that it got even worse later in my trip.  Indian roads are generally unsigned, unlined and Indian driving is best described as a freestyle event.  The good news is that the vehicles are generally small.  Three-wheeled “rickshaws” and commercial vehicles abound, and the typical American driving view of a large metal SUV backside is mostly absent.  It is replaced by painted invitations on trunk lids and rear doors for drivers to use their horn, and use them they do.   This is a far cry from cities like New York, where a misplaced honk can result in a $350 fine.

Given the road capacity, and the incredible number of vehicles, and the Brownian motion of those vehicles, I was amazed that a) we made reasonably good time, and b) I did not see a single accident along the way.  Later I was told that drivers in Mumbai are the best in India and that “if you can drive in Mumbai, you can drive anywhere”.  The person saying this was referring to India, but I would extend her comment to the entire planet.

We arrived at the Gymkhana about 7:50, well in time for my 8PM meeting.  Suffice to say it was a very pleasant reunion, which included a wonderful story I had not heard of my dinner host’s trip to Harvard, including an unspecified illness, admittance to a Massachusetts hospital, and favorable treatment by a Pakistani doctor there who offered to help him escape the implausible (to them) financial tentacles of the US health system.  Though this happened 13 years ago, the story is amazingly topical, pinning both the social and political irony meters.  I made a note to send my friend a DVD of Michael Moore’s “Sicko”. 

My return from the Gymkhana (which sports a cricket pitch that must be among the most valuable undeveloped pieces of land in the world) was uneventful, even by new-to-Mumbai tourist standards, and quick.  I hit bed at about midnight and was immediately asleep.

Thursday

I did not want to seem the ugly American, so had not made a fuss over the hot water situation in my room.  But I did discreetly ask my host if this was a cultural or a plumbing issue, and he had someone call the hotel.  They said they would take care of it.  I guess the plumber didn’t get the memo. Once again shocked into consciousness and cleanliness, I met my driver and we made our way to the office. 

The morning’s meeting was with the marketing staff, which included people working on web search-engine optimization, direct mail and other lead generation, and marketing collateral.  This group represented more diversity of background than the software engineering group, which was not surprising given the relative youth of the software industry in Mumbai.  However, I found the same openness and willingness to learn that I had encountered with the previous group.  The search engine optimization activity is mostly manual but extremely effective, resulting in #1 results for many relevant keywords with no direct payments to Google, MSN or Yahoo.  This expertise should be translatable to my sponsor’s products.  On the other hand, a wider gap exists between the Indian marketing activity and the American market.  This is mostly due to limited experience with American cultural and language issues.  I suggested several ways for improvement in these areas, and am confident that others ideas can be developed and adopted.  We also spent time discussing the lead process, and the need to change the group’s current definition of “qualified lead” to be more in line with standard practice. This process change is underway.

For lunch, a larger group of us ventured to a Gujarati restaurant (Gujurat is the Indian state north of  Maharasthra.  Mumbai is the capital of Maharasthra).  Several of my hosts are of Gujarati decent, and were eager to show off their version of “grandma’s cooking”.   The restaurant was in a large shopping mall in Goregaon, whose development has exploded in recent years due to the rapid growth of the Indian IT outsourcing industry. Construction cranes were everywhere, and the multitude of English road signs suggests the high number of direction-hungry American drivers on the road.
 
After lunch we did a complete mall crawl, which proved once again that the US still leads in brand marketing.  Any American would feel completely at home here, which isn’t necessarily a good thing.

We returned to the office where I met with the administration group, and learned of the ways that my hosts use to recruit and hire in Mumbai.  As one might expect, these are substantially different than in the US.  One useful differentiator is that my hosts run a
product company.  Most Indian IT employees are in service businesses, and many desire work in product companies.  As one of the few software product companies in Mumbai, my hosts are able to use this attribute to offset negative perceptions, such as their small size or unknown brand.  Another issue is that my hosts must run their US support and sales in US real time, which means that a majority of their employees work the Indian night shift.  Several methods are used to make this attractive and palatable, including salary differentials, commuting differentials and office benefits.  For employees who are deemed “keepers”, my host will sponsor and pay for a US green card.  This is a five-year process, which helps minimize turnover. My hosts have developed a close relationship with the US consulate in Mumbai, and can smoothly navigate this process.

Last I met with the sales group.  In many ways, this was the most “American” group, which is not surprising.  An effective salesman must become like his or her customers, and an Indian salesperson targeting the US market is no exception.  Furthermore, some of the sales culture is universal, including the thirst for, and grousing about, leads and quotas.  This group was much more concerned with performance than grousing, and excited about the prospects for growth in both the US market and internationally.  We spent the latter part of the meeting exploring possible scenarios for international expansion, and the challenges and benefits that could result.  For our hosts, a benefit includes the possibility of work beyond the Indian third shift, which they see as both an aid for recruiting and lateral movement.

Dinner was with another large group at a local Chinese restaurant.  We had a wide-ranging discussion about business and culture, as befits a gathering of this type.  I was presented with gifts of Indian dress, and a large carving of the Hindu god Gamesh.  Gamesh is the god of prosperity, and is typically acknowledged by Indians at the start of new ventures.  Since I had accomplished my sponsor’s mission, my host suggested that I spend Friday touring Mumbai, and suggested an itinerary that was busy but seemed doable. 

Friday

I awoke to clouds.  Since another call to the hotel had been made, I was eager to check on the hot water situation.  There was some progress – I had hot water in my sink.  I wondered if there was a Hindu god of hot water I could appeal to as I took yet another chilly shower. 

I went to the office and spent some time with my host discussing business development issues, and then left for downtown escorted by two of my host’s female Indian employees and our driver.  The plan was to grab a snack, see the Gateway of India, the Taj Mahal Hotel, take a boat across the bay to the Elephanta Caves, return for a drink at the Taj, and meet for dinner before my flight. 

Like many plans, this one was disrupted by the weather.  As we were heading south, the sky opened up on us, providing a typical tropical downpour.  I’d seen this weather before, but not in an urban area of  13 million.  The combination is dramatic – road flooding begins quickly and what was slow traffic becomes glacial.  But the rain let up and I had a good tour of the older, wealthiest part of Mumbai, some of which is spectacular, and the part most Americans see in the tourist guides.  Since we had lost some time, I suggested we try to go directly to the caves, which featured carvings dating back to the 5th century.

We got tickets and boarded the small passenger ferry to Elephanta Island.  I noted that there were maximum loads posted for “fair” and “foul” weather, and that the safety equipment consisted entirely of old tires draped around the hull for use as life preservers.  But we weren’t the only passengers, and everyone else seemed game, so off we went into the bay.  We passed a large Indian naval installation, and were reminded not to take any photos only after all of the passengers had snapped everything in sight.  As an American, I was interested to see a large collection of Russian-built warships in one place.  We also got a good view of the oil tankers and supertankers offloading – one really doesn’t get a good sense of the size of a supertanker until passing it at about 5 knots – it takes a long time.

We reached Elephanta Island after about an hour of peaceful cruising.  The weather was gray, with a slight drizzle, and there were not a lot of tourists about.  This was a problem for both the vendors lining the walk to the caves, and for the dogs and monkeys who beg or steal from unsuspecting visitors.  I watched a monkey relieve a tourist of a just-purchased ear of roasted corn and was impressed by its well-practiced finesse.  The walk to the caves is uphill for about half a kilometer.  The caves are impressive, especially considering their age – they were carved by hand and essentially on-the-fly – no CAD systems or power tools to make the job easy.  The quality of the sculptures is also very high.  By the way, the island and caves were “discovered” around 1400 by the Portuguese, who ended any chance of completing the project by using it for target practice.  Yet another example of progressive foreign relations.

As we were admiring this antiquity, the sky opened up again, and this time, the rain wasn’t stopping.  We were thoroughly drenched, which wasn’t horrible since the air was warm, but I was getting a bit concerned about our boat ride back.  We boarded the last boat off the island, close to or exceeding the “foul” passenger limit, and began chugging back to Gateway of India.  The rain got harder; the wind started getting stronger, from the southwest.  This meant we would be beating our way back – not so bad in two foot seas, but potentially very, um, interesting in 3 foot seas or better.  More rain.  Wind picking up.  Lightning visible ahead.  One or two waves broke over the deck, but it didn’t feel like we were shipping any considerable water.  The pilot was doing a great job, keeping our bobbing motion to a minimum.  Should I now mention that a group of young Indian males started teasing my female companions, and that our driver began a heated defense, and had to be calmed down by the ladies?  I had visions of the Gilligan’s Island opening crossed with a western bar brawl and me ending up in the soup – but calmer heads prevailed.  

We climbed out of the boat at the Gateway of India and went across to the Taj Mahal Hotel – not to have a drink and pretend we were VIPs, but to find the rest rooms and use all their towels to try to get dry.  We squished our way across the very nice lobby, shivering from the air conditioning.  Outside, the rain persisted, and our driver brought the car around to take us back north.  Heat on full blast, rain on full blast, traffic at a dead stop or close to it, we made the return trip to the office in about three hours. 

After bidding my guides a fond farewell, my host and I had a quick dinner before he dropped me at the airport for my return trip.  My clothes were mostly dry by then, although my shoes were still pretty soggy.  I figured they could dry out in my pod.
This had been a worthy travel experience – my business and social missions had been accomplished, and I got in a side order of travel adventure.

Mumbai is a confluence of contrasts – it is at once modern and ancient, luxurious and squalid, thought provoking and mind numbing.  It is a driving force in India’s future, and I look forward to getting to know it better.

That said, I was very happy to arrive in London and have my first hot shower in four days at the British Airways arrival lounge.  I grabbed a cab to my hotel in the West End, changed into truly dry clothes, and promptly walked over to the Savoy, where I sat contemplating the incredible range of contrasts I’d experienced in my journey, including the current moment, over a drink at the American Bar.