Sunday, September 30, 2007

A bridge and its heritage

Talking just about environmental protection or culture, and not economic realities, will not launch local communities into development. Environmentalists are often accused of being “immoral”—hearing only the desperate cries of heritage activists and ecosystems and not recognizing people’s daily struggles against poverty. But then things get a little quirky if NASA takes a few satellite pictures and publish it.

Opinion is highly divided over the Sethusamudram (Ram-Setu) issue, a chain of limestone shoals between Mannar in northwestern Sri Lanka and Rameswaram off the southeastern coast of India. The Hindus believe it’s part of their mythical folklore that goes the bridge was built for Lord Rama to cross over and rescue his wife abducted by Ravana, a Lankan demon king, as recounted in the epic Ramayana.

The 48-km-long feature connects the Gulf of Mannar to Palk Strait. The Encyclopedia Britannica says it was once the world's largest tombolo – a sandbar connecting an island to another island or the mainland – but it was destroyed several thousand years ago by a slight rise in sea level. Today, all that remains is a chain of sandbanks that severely hinders navigation.

Right now, ships trying to move between India's west and east coasts have to go around Sri Lanka. To save time, India decided to build a shipping canal between the countries. The decision to build the Sethusamudram Shipping Canal itself is fraught with controversy – with several geologists and environmentalists from India and Sri Lanka raising objections on scientific grounds.

So, what stand to take? Let’s first decide how the emissions from the longer round-about trip and their contribution to global warming compares to the damage from the construction project. A canal MAY save some fuel and time for the ships to get across. But building it in itself would burn up a million gallons of fossil fuel - for the dredgers, pavers, concrete pourers, not to mention the steel required, plus the shipping involved to get the raw materials there! Even after the canal gets built, imagine ships lining up to pass through it with engines humming, burning more oil in the process. Also I wonder what the environmental cost savings would be with fewer miles traveled. They aren't talking about solar or wind powered ships.

Precisely why I am tempted to lean towards heritage, as it saves a beautiful bit of nature. Let the ships go round.

Wednesday, September 26, 2007

The bug in Excel

In all likelihood, Bill Gates must be using Excel spreadsheet to compute the value of his shares in Microsoft. In that case, he’d better recheck the math using- gee, the simple calculator.

Spreadsheet math has been one of those things most of us have taken for granted, but a bug newly uncovered in Microsoft's 2007 Excel program may bring some to reconsider.

According to the spreadsheet program: 77.1 x 850 = 100,000, way off from the correct answer of 65,535. Microsoft, in the final phases of testing a fix to the spreadsheet bug, says the problem occurs in only 12 very specific cases.

So how did a powerful program like Excel end up choking on a calculation that your everyday calculator can do? Says AppScout: "It all boils down to the fact that you can't represent an infinite group of non-integer numbers using a finite number of bits. In fact, Excel can store "only" about 9 quintillion distinct values. The numbers going into your calculations may be infinitesimally different from the number displayed, and for two calculations that nominally have the same answer the result may be infinitesimally different. Excel generally manages just fine in dealing with these tiny differences, but in exactly 12 instances out of the 9 quintillion possibilities it goes completely bonkers."

Wolfram offers a good, in-depth explanation of this issue, and why it's hard to get arithmetic right.

Especially in the age of energy efficiency and global warming, perhaps it's time for us to reconsider the abacus -- at least for the easy stuff.

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Are you sure, Ms.Young ?

This one had me in splits.

The Indian IT vendors or SWITCH companies [TCS, Infosys, Wipro, Cognizant, Satyam and HCL Technologies] has accounted for 1.9% of the total $672 billion IT services market in 2006. (Oh, what a dent!) This is an increase from 0.5% of the $554 billion IT services market in 2001, according to a study by global research and analyst firm Gartner.

“India-centric providers have perfected their respective value propositions through global delivery models (GDMs), providing high-quality yet lower-cost labour to buyers globally. These companies are making inroads in key clients, often beginning with smaller, project-based or staff augmentation work,” Allie Young, VP and analyst, Gartner said.

Are you sure, Ms.Young…?


Friday, September 21, 2007

From risk takers to risk shapers

“Customer risk is the most subtle and perhaps the most widespread strategic risk that any company faces. It’s also the most unnecessary”, argues Lisa Haneberg from an article by Adrian Slywotzky, the author of the bestselling The Profit Zone (selected by BusinessWeek as one of the ten best books of 1998), Value Migration, and How to Grow When Markets Don’t..

How can you take action to prevent customer risk? You can’t force people to buy from you. As Yogi Berra once said, "If the people don’t want to come to the ballpark, you can’t stop them."

No, you can’t, but you can reduce the risk of losing customers by reducing the uncertainty that creates the risk in the first place. After all, that’s what risk is about—not knowing what’s going to happen, what your customers are thinking, what they want, what they will do, what will they respond to. If you could know those things, you could react appropriately with the kinds of pricing, marketing, and service offerings that would motivate them to stay.

This is why the first countermeasure for defeating customer risk is creating and applying continuous proprietary information about your customers. It’s about answering the question: What do we know about customers that others don’t? And then using that knowledge to make and keep profitable customers for life.

Very intuitive article. I found it a bit late though, as usual.

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Thursday, September 20, 2007

Grave dancer knew when to step back

If you revisit the Blackstone – EOP deal today after the Housing market collapse, Sam Zell wouldn’t have timed his exit better.

In February, Zell sold his flagship Equity Office Properties (EOP) and its portfolio of 540 prime office buildings to the Blackstone Group for $39 billion. Large PE firms that benefited from absurd leverages, were offering premium prices to publicly held Real Estate firms. Later the subprime crisis followed and the resultant credit squeeze and risk aversion would never have allowed that kind of a deal to go ahead. In Zell’s own words “today, you would never be able to replicate the Blackstone deal”.

Interesting feature on the great mogul here.

Wharton Real Estate professor Peter Linneman notes that Zell is known by the nickname "the grave dancer." According to Zell, the term grew out of the headline of an article he wrote describing his strategy of profiting off distressed real estate following the inevitable bubbles of investment enthusiasm. Zell said the article shows how "I was dancing on the skeletons of other people's mistakes."

Zell, however, also pointed out that the last sentence of the article reads: "He who dances closest to the graves, always has to be careful he doesn't fall in."

Zell clearly knew when to step back. Does that leave Blackstone in the grave then? Stephen Schwarzman knew how to look for greater fools. He did the unthinkable – of taking a PE firm public - Blackstone went public in June…!

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Tuesday, September 18, 2007

What drives the US dollar down ?

If not as stressed as India’s IT vendors and exporters, I am a little hassled. What drives the US dollar down so much?
Ok. There you have a steep oil price, a weak economy and an anxious credit market - all helped dump the dollar. But America's growth prospects are not so poor and the subprime-mortgage market not so woeful—at least, not yet—that they can fully explain the dollar's recent sickliness. My basic understanding of economics tells me a currency of a country that has an adverse balance of trade will be weak.

But a closer look suggests that currency markets, rightly or wrongly, are blithe about trade imbalances. Some of the countries whose currencies have gained most at the dollar's expense, like Britain, Australia and New Zealand, have large external deficits and debts too. Australia's current-account shortfall has been more persistent than America's and, as a result, its net overseas debt last year was 60% of its GDP, compared with 19% for America. New Zealand's debt ratio is larger still at 90% of GDP. Meanwhile the currency of the world's largest creditor nation, Japan, continues to languish—even against the dollar.

If anxiety about global imbalances is not driving currency markets, perhaps the dollar might rally once America's economy is back on its feet. It has, after all, fallen a long way already: on the Fed's broad trade-weighted index, the greenback is down 22% since its peak in 2002. According to the purchasing-power parities calculated by the OECD, the dollar is undervalued by 15% against the euro, 18% against the Australian dollar and 21% against the pound. Such divergences from fair value might not prove sustainable, particularly for the countries that have external financing gaps of their own to fill.


Wednesday, September 12, 2007

It's a Free world, yeah...

All those carriers outside US waiting to lock down iPhone users (a la AT&T in US) to their own network when Apple decides to launch it in their territory, might as well recognize that it would be a big mistake. First it just took a 17 year old to unlock the iPhone, followed by iphoneSimFree that sold its unlock software licence in bulk to resellers.

Now it turns out that the folks at iPhoneSimFree may have just set a land speed record for product launch to obsolescence. It has been reported that a software unlock has been released for FREE download for all.

It started with a rebate of $100 on iPhone. Now the hack is set free too. Apple, clearly a winner here, will certainly sell more iPhones with the unlock freely available. And everyone who waited to buy the unlock (and the iPhone) will save anywhere from $50 to $200, depending on when they bought their iPhone and at what price they bought the unlock.

There’s this lesson – Don’t hurry to buy a gadget; never try to lock it down either… It’s a Free world, yeah…

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Monday, September 10, 2007

Should we grudge the central banks?

I hear a lot more arguments against the central bank policies that inflate money supplies and its support to artificially-cheap credit that provides the fuel for speculative fever and instability.

On one hand, a liquidity crunch inspired sharp declines on many of the largest stock exchanges around the world. On the other hand, the Fed, the European Central Bank and the Bank of Japan pumped in liquidity worth hundreds of billions of dollars. Their idea was to restore calm by providing the means for borrowers to meet short-term credit needs. I have discussed it here earlier.

It may seem counter-intuitive but the good news was that the credit crunch was a signal that air was being released from stock market bubbles. It was a welcome event that excess liquidity behind most imbalances in the global economy was finally retreating. Interest rates are the single-most important conveyor of information — with these artificially low, investors felt their wealth had risen and got reckless.

Hey, but wait a minute… Central Banks intervention has as much to do with politics as it has to do with economics. When large number of people reel under debt mountains, someone has to help them ease the load. When Central Banks quietly ignore a subprime lending that overlooks all norms of credit assessments and individual’s capacity to repay debt, they’ve already precipitated a crisis – first sin. Now when it recoils, you grudge the central banks for infusing liquidity – the second. We're talking about lives here in millions - not just what makes good economics. Either you don’t commit the first sin or go cool with the second... can’t have it both ways. What do you think?

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Friday, September 07, 2007

A whiff of freedom ?

I cringe each time I have to feed in a User ID and Password as I log in and out of applications. When technology is enabling so many things, why is it that a simple authentication protocol that is acceptable across applications be designed? Can it not be planted in the cloud and make it universally accessible? A choice of word processor or contact manager shouldn’t prevent you from seamlessly communicating and sharing with other applications, but today you can’t easily cut-and-paste or share among Web 2.0 applications, user interfaces are all over the map and each requires a unique log in.

I don’t think it should be a big deal. Finally, there’s some whiff of freedom as I read that the application as we have known it is being redefined. During the Office 2.0 Conference, a panel of software vendors discussed the future of application and rise of Web-based applications with collaboration at the core. Seems there's someone out there that cringes like I do.


Monday, September 03, 2007

It happened one night at Harvard…

So….Facebook, the social networking site valued close to a billion $$, is not all about Mark Zuckerberg. The list of claimants to Facebook concept is getting longer. After two earlier founders of ConnectU filing a lawsuit, a new face Aaron Greenspan has come up with a chronology of events and even a series of email exchanges which Zuckerberg does not apparently dispute.

Ironically, Mr.Greenspan had expressed his concern at the potential privacy nightmare it will entail. [Why do people with that famous second name end up being in warning business?]
Foolish of him not to realize what one of those nightmares will be worth….

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