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The most accurate predictive letter in computing and telecommunications,
***SNS*** Integrating Forward
The FiRe Box:
“FiRe 2009: Shaping the Rebound: Technology Driving Economics”
“FiRe is my home, the place I come back to every year.” – Larry Brilliant, CEO, Google.org.
You’ve been watching Hewlett-Packard’s gravity-defying performance over the last few months, noticing that Chairman, President, and CEO Mark Hurd not surprisingly spends most of his time at work (and not at conferences), which explains these amazing numbers.
If you want to meet and hear Mark Hurd, perhaps the most successful technology CEO at work today, come to FiRe 2009.
What else will you find?
“The Battle Over Bandwidth Economics,” with Telstra CEO Sol Trujillo.
How “Cloud 2.0” will support corporations and consumers.
“Unleashing the Power of Dynamic Network Infrastructure,” an advanced look at the design and performance of next-generation Net infrastructure.
“Fixing Healthcare: Technology Following the Demographics.”
“Wireless Broadband: LTE, WiMAX, and Other Global 4G Alternatives,” with a separate look at NASA’s most advanced wireless broadband technology AND NASA’s WorldWind software.
“The (Real) Science Behind Today’s Alternative Energy Solutions.”
“The Best-Selling Computer of All Time: Next Design Steps for the CarryAlong/Netbook/Mini.”
On-the-ground application of new green energy technologies in Hawaii and China.
“1:1 Educational Computing” in new Inkwell pilot programs in Mexico, the U.S., and Africa: perhaps the greatest computer sales opportunity of the decade.
“Supervisualization and Global Conferencing, and New Views of Supercomputing,” a series of stunning demonstrations by Larry Smarr and the “FiRe Lab,” Calit2 at UCSD.
“Nuclear Energy Without Nuclear Proliferation: A New Design.”
“Many people concerned about the consequences of future climate change would find abundant reason for optimism, were they to witness the spirit of innovation and commitment to solve this problem that pervades the discussions at FiRe.” – James McCarthy, Leader of the Nobel-Winning Intergovernmental Panel on Climate Change, and Professor of Oceanography, Harvard University.
Elon Musk will describe being the first private party to launch a rocket into orbit, bring us the newest version of the Tesla electric car, and update us on large SolarCity installations.
And much more.
Member Price Alert: Use “firecode 2009” when registering, and save the usual member discount of $300. Catch it now, before it slips away –
Date and Place: May 19-22, 2009, Hotel del Coronado, San Diego. Register here to join us for the best Future in Review yet:
» Integrating Forward
Since most corporations are already into their second or third tier of cost cutting, you can ask someone in product design almost anywhere, and they will tell you that basic research has been put on the endangered species list.
Yes, there are a few companies and places left in the U.S., and the world, that do it: IBM, HP, Microsoft, Xerox PARC, Canon, Fujitsu. Most companies cut basic research long ago, and even those with applied research and development programs have pushed increasingly during this crunch for cost containment and product focus (HP, Microsoft).
This is as predictable as it is unfortunate: everyone with entrepreneurism in their blood knows that basic research drives the global economic engine, whether leaders under the share-price gun like it or even know it. Even so, there is a bright side to this swing of the pendulum, as I noted in my prediction set for this year (see “SNS: The Top Ten Predictions for 2009,” December 15th, 2008; audio is in “Media Links” below). In place of basic research, the integration of a variety of features and technologies into new and better products will be the preferred mode of action (and spending) for most corporate leaders over the next two years.
Knowing this gives us an opportunity to look a bit more closely at what distinguishes integration from innovation, and why Integrating Forward is such an important concept for technology companies of all sizes.
What does this phrase recommend, specifically? It suggests, first, that each firm do a detailed review of what it “owns.” As the Swedes are perhaps best aware, most of this intellectual property is still inside your employees’ brains – which is all the more reason to avoid massive layoffs.
(Here is a great idea: What if, instead of laying off 100 people, you offered them a place on an Integrating Forward team, running for 60 days, to be paid based on their results? The accountant can call it a current liability of zero, the earnings per share goes up, and everyone wins.)
As a leader, you want to review not only the IP you know about, but also the IP you don’t know about; this means “organizing the ask”. What is the most promising idea, project, half-finished product, feature, and even past failures turned promising with changing markets, for your company, going forward? Whether you use all these ideas (you won’t) or not is unimportant: what matters is that you will learn a great deal about your company’s most promising IP (and find out that some shibboleths are really dogs), while recruiting the participation of the whole firm.
Next, you will want to review the markets. Don’t discount this process: it is exactly what Steve Jobs does, all day, every day, without thinking about it. How big was the MP3 player market when Apple jumped in? How big was the phone market?
What is important here is not just the market size, but what you can bring to it. You can pick an uncompetitive niche, for a small company, with a pretty good product, and make money for years. Or you can pick a huge market, for a large company, with a great new Integrated Design, and mint money – e.g., Apple’s moves since Steve’s return.
Finally, you have to make some tough decisions, and get a team focused on the design. (For those lacking design genes, I recommend either calling, or learning from, IDEO, one of our SNS Project Inkwell members and creator of the “Spark” educational computer.)
Does this work? Absolutely. Is it hard? You bet. Worthwhile? Yes; it can save the company or keep your bottom line healthy for the next five years.
Finally, it is worth noting that a successful process will capture the best or most advanced human abilities and enhance their power, use, or pleasure. The discussion in these pages a few issues ago about using machine sounds in a factory to pre-determine assembly line maintenance is a great example of using existing technology to enhance a human ability to achieve an important task with new accuracy and power.
Here are some examples of the importance of taking existing basic research and technology, already developed, and integrating it into a forward-facing design:
Smartphones, and particularly, the Apple iPhone. There is nothing in this device that was not obvious or available elsewhere. The Samsung had already done the look and feel of a shiny black touch-screen phone. Many companies had done touch-screen interfaces. The glass surface needed some research, but that, too, was done elsewhere. The OS came from the Mac. The accelerometer was already done by a third party. GPS was already available. Playing media had already been done.
How many managers would take a feature list like this and scratch their heads? What’s new here?
Steve isn’t brilliant for inventing science: he is the best product creator on the planet because he knows what it will take as a designed combination of interacting features to create a customer experience guaranteed to “Wow.” Just being able to turn the unit and have the picture or Web page turn with you: what a stupid pet trick! What a HUGE “wow” factor!! Finally getting GPS interactively into the phone environment, feeding other applications such as Google Earth, linked to a shop and restaurant guide. Wow!!!!
That’s 10 million units, right there, without inventing a thing. Add the original pinch-gesture for zooming pictures and pages: another 10 million.
As Apple obviously knows, and as Google/Android are betting, the integration of existing features and tech onto the phone platform is perhaps the most important design trend in software today.
Yes, Integrating Forward is worth doing.
I’ve written at length about the CarryAlongPC, now on its way from these pages to being the best-selling computer format ever made. Whether you call it the mini, the netbook, or the CarryAlong, it, too, is an Integrated Forward product: there is nothing in it that is raw science. Rather, it represents the perfect size and shape, price, weight, connectivity, and compute power.
There is nothing coming from basic science into the most compelling models of the CAPC today (although that can change); its power is in the integration of what is “just right” in each of these categories. Alone, they are boring. As a design suite, they are overwhelmingly compelling.
Do most product designers have that knowledge? Nah, that’s why they read SNS.
Are there additional, format-specific applications or features that should be brought to the CAPC? Sure. And the educational market, with all its apps, probes, ports, and requirements would just be a start. Want to make the perfect machine? Go to www.projectinkwell.com, read the minimum requirements list (especially the ruggedization part), and then email me at mark@stratnews.com.
There are other fascinating new products and projects that represent the power of “IF.”
The Amazon Kindle is one of my favorites, actually because it is imperfect (at least in sold-out version 1.0). The shape is so-so, the edges are too sharp, the screen is OK but not great. It’s basic white. There is a great deal of second-rate design involved in the Kindle. But it does the job, integrating what matters into a useful, properly weighted and sized device. The Kindle doesn’t do “Wow,” but it does “Useful” and “Cool” excellently.
The Kindle started out popular, but went through the clouds when Oprah pumped it last fall (see “Upgrades”); the new version should be out in the next week.
In my opinion, the Kindle’s success has the same uber-lesson that the iPod and iPhone brought to us: the product environment is a garden, its success is an ecosystem success, and the customer is buying into more than the product. If the product is surrounded by additional applications, content, websites – the benefits that accrue to the customer accrue to the product, even on launch.
Some products have yet to be made – like the CAPC or Inkwell when I first wrote about them. Because all these require is integration, and because they are so valuable in the market, they are a bit like found gold. Sometimes I imagine someone paying for a year’s subscription to SNS and coming out with the Asus Eee , or the HP Mini. Good investment.
I feel this way about the Wall Computer. I keep thinking that I will see one somewhere, but so far, all I’ve really seen are wall displays. What’s the difference? Use and tools.
Many companies have put up large displays and wowed visitors with beautiful pictures, or even touch- or gesture-driven interfaces. But so far, even the industry leaders seem to get hung up there: art for art’s sake. We’ve seen thousands of photos moved by hand, or videos opened or closed, or maps zoomed in and out. I love this stuff, but, uh ---
What I expect from a Wall Computer, first, is the ability for several people to use it at once. Second, for the ability to run several kinds of applications at once, so that users can stand at the wall and actually compute, and use the results to work interactively.
The example I picture is one of a top management team in the company boardroom. Not for a presentation, but for a work session. Standing in front of the Wall Computer, each calls up his or her own data: sales figures, manufacturing efficiency, inventory, marketing budget. They look at global cuts, shipping times, competitive effort, and make a world plan for a new product rollout. Time flies, and a few hours later they have completed the plan, memorized it for a board presentation the next week, and included links to real company data in support of the proposal.
They have probably done the work of 30 in a month, by three in three hours.
There is no new science or technology in this product; just new IF.
While we are at it, the Global Financial System could use the same kind of effort. We don’t need any new rocket science or technology to fix the problems of today; just a larger integration of the regulatory functions that we figured out in the 1930s and somehow forgot, under lobbyist pressures, over the last decade.
Creating a sound global financial system will be the ultimate test of our ability to do Integrated Forward design just right.
Your comments are always welcome. Sincerely,
» The SNS “Trigger Theory” on Oil Pricing: The First Proof
For those just tuning in, SNS was the first to predict $100/bbl oil pricing last time around, on the way up, back when pricing was in the $40s. Two weeks later, Goldman Sachs came out with the same bet. Then, as the price hit the $140s, Goldman predicted $200 oil. SNS went the other way, suggesting that under Obama, it would be in the $95 range, or with McCain, in the $135 range.
How time flies.
In making those predictions, I also suggested something so breathtakingly evil that I thought I would get hate mail, but nothing happened. I suggested, first, that the high prices were manipulated, the result of speculation; we now know that for a fact. I also suggested that at least some of these speculators were likely the oil companies themselves.
Now, that’s interesting. When I published it last year, I called it the Trigger Theory, because it proposed that those handling physical oil were also in the markets, as speculators, to drive up prices. OPEC could basically even out supply and demand, and then its traders could pull the trigger, at the most sensitive part of the pricing curve, to move prices higher. (To some, in the business, this will sound boring and dull; to U.S. drivers and investors, it will sound outrageous.)
Jump-cut to Houston, Home of Oil. Two weeks ago, Houston trader Andrew Serotta was dismissed from Vitol Group. What does Vitol do? According to the January 7th Wall Street Journal, “the firm primarily brokers sales of physical oil and oil products such as gasoline, but also has an internal hedge fund that trades for the firm’s behalf, not other investors.”
According to the WSJ, Serotta’s recent market moves had come under review by regulators; an outside PR spokesperson representing Vitol said the trader’s strategy in futures and options markets was not a good fit.
No one is talking.
The Commodity Futures Trading Commission, it turns out, is now looking at Vitol and “other significant oil firms,” according to the WSJ, to “examine how physical trading of oil influences pricing of oil futures and vice versa.”
It’s the “vice versa” part we called out, and which all of us will find most interesting.
While no one has been charged yet, the fact that a physical broker is running its own internal hedge fund should indicate that Enron lives on, oil prices are a gamers’ market, and that the Trigger Theory is central to the trading of physical oil.
» Amazon Numbers
Jeff continues to earn our renewed confidence, quarter after quarter. While some short-termers bailed at the sound of wind rattling the shutters (worried about future predictability in times uncertain for all), most folks increasingly recognize Amazin’s place in the online commerce firmament.
Here are the numbers:
The company showed Q4 profits of $225MM, up 8.7% YTY from $207MM; on sales of $6.7B, up 18.2% YTY from $5.67B. Sales would have grown 24% without currency adjustments, or 31% just overseas. Earnings per share were up 8.3% YTY, from $0.48 to $0.52.
Both earnings and sales beat expectations.
For the year, Amazon’s profits were up 36% to $645MM, sales up 29% to $19.17B.
The company had a killer (record) quarter, while everyone else on the retail side of the planet was getting kicked around.
Here is the sentence that matters the most: Amazon customers were willing to shop for convenience’ sake, while customers on the street were shopping for deep discounts.
Now that is interesting.
Those watching will recall the electronic reader the “Kindle” being sold out by an Oprah blessing not long after she ignited the Obama campaign. The Q4 numbers, in my opinion, could have been considerably higher without this problem, as the company got ready to ship the next version.
Rumor is we will see Version 2.0 next week, at a Jeff Bezos rollout, again in NYC.
Amazon is indeed Amazin. Nice work, Jeff. It’s turning out just the way you planned it.
» SNS vs. Putin and Wen
When I first wrote about the root cause of the current global collapse, it never occurred to me that the prime ministers of Russia and China would show up at Davos and turn a global catastrophe into a political football.
But that’s exactly what happened.
Here is Wen Jiabao, attacking:
“unsustainable model of development characterised by prolonged low savings and high consumption” and
“blind pursuit of profit” and “lack of self discipline” (both quoted in the Financial Times);
and Vladimir Putin, mocking last year’s claims of the U.S. economy’s:
“fundamental stability and its cloudless prospects.”
Of course, they are both right.
But the tenor of the slugfest seemed to be: capitalism caused the crash, and its repairs will cause damage for years to come. They aren’t really mad at capitalism, which at least China is copying; rather, they are mad at the administration that, by not regulating, harmed their own near-term prospects.
To be fair, Wen never mentioned the U.S. explicitly, and he did a good job of calling out the lack of regulation as a major cause of the problems. That was just before he called for a “new economic world order that is just, equitable, sound, and stable.” Sounds good to me, but it wasn’t clear what one would call it or who would run it.
“This is Davos under the Russian flag,” Putin spokesman Dmitry Peskov put it, somewhat more bluntly.
If the leaders of the Communist world decide it is really worth their while to try to pin the collapse on the U.S., and on capitalism, then they will have trouble explaining how I made the first public collapse call, based on global liquidity inflation fueled by Japan’s carry trade and manipulated oil pricing.
While all of the details complained of by Wen and Putin are essentially true and correct, the final conclusion appears to be political, particularly from the Russian side.
Suddenly, SNS’s predictions back in February of 2007 stand as proof that the interpretation of capitalism’s failure is incorrect, and incomplete.
What both the U.S. and its trading partners should now be railing against, together, in Davos and at home, is what happens when you put a chimpanzee in the cockpit of an F-16. The intentional abuse and destruction of the regulatory system by the last administration should not be confused with the merits of capitalism, or any other system.
Capitalism needs regulation, as it always has, and we have just seen the best, if not the final, proof.
SNS TakeOut Window
Integrating Forward: Selected Designs
Quotes of the Week
“It was an interesting chance discovery.” Zurich police’s specialist narcotics unit official Norbert Klossner, after the arrest of 16 people and seizure of 1.2 tons (1.1 metric tons) of marijuana as well as cash and valuables worth 900,000 Swiss francs (US$780,000).
The plantation, measuring almost two acres (7,500 square meters), was hidden in a field of corn. But officers using Google Earth to locate the address of two farmers suspected of involvement in the drug operation quickly spotted the illegal crop.
“I am very concerned about the potentially devastating impact to individuals, to families, to businesses. But my principal responsibility at this time is to make sure that California does not go into default.” California State Controller John Chiang, on deferring various payments for 30 days.
SNS Members know that California is going bankrupt. We just don’t know how it is done; obviously, its officials don’t either.
“It’s putting downward pressure on all PC prices across the board.” Leslie Fiering, Research VP, Gartner; in the Wall Street Journal.
“Intel is trying to figure out how to get into the smartphone space, they call them “MIDS” [mobile internet devices], trying to change the name. --- In the computing space, I think there’s going to be a competition between Snapdragon-based netbooks and the [Intel] Atom-based netbooks.” Paul Jacobs, CEO, Qualcomm, in the Financial Times.
I hope SNSer Paul, and our members, will come to FiRe 2009, and we’ll talk about it.
“We’ve again widened the corridor” within which the ruble trades against a basket of dollars and euros. Official at the Central Bank of Russia.
As predicted here, taking the price of oil into the $40s has led to (the first steps in) the political destabilization of Russia, with anti-government protests this week in Moscow and Vladivostok.
“In fact, the estimate to date is that the TARP has actually had a gain of about $8B, while recapitalizing the financial system. With this type of stimulus, there will be little, if any, long-term increase in the debt.” Senator Judd Gregg, R- NH; in the WSJ.
It looks like Mr. Gregg is about to become Secretary of Commerce.
“In the 21st Century, there is no longer only one country that says what we should do and think. We will not accept any return to a single way of thought.” French President Nicolas Sarkozy, in the FT.
Unless it is France?
“The Ukrainian Government is incapable of organizing a normal market economy. We see the collapse at the center of the Ukrainian State.” Russian PM Vladimir Putin, adding that the Kiev government was a “criminalized regime.”
Putin/Stalin is using his own FSB/KGB criminalized regime to destabilize ex-Soviet countries no longer interested in being his vassals. His latest trick: assassinating a Chechen on the streets of Vienna for exposing his Chechen puppet leaders’ history of torture and murder.
“We did not deal directly with the issue of history. President Lee agreed to my view that Asia should be the growth center in the world and play a big role in the global economy recovery.” Japanese PM Taro Aso, cementing a new alliance with South Korea, New York Times.
This fits our prediction that Japan, SK, and China will lead the Asian Rebound. Japan becoming the lead foreign direct investor in China was the first step. This FDI and business development agree.
Re: ***SNS***: Small Computers vs. Big Phones: The Next War
Mark,
Your article “Small Computers vs. Big Phones: The Next War” was right on the money (as usual), right down to the battlegrounds that will be fought over. I don’t want to sound nitpicking but I think you have missed some credible combatants in these battles, particularly around operating systems – I don’t think you can afford to leave out Apple (OS X), RIM (Blackberry) and Palm (WebOS) in the Operating Systems section. I also think that browsers will become the new multi-application operating system for many devices.
There is one other subtle issue. Unlike a PC operating system, on a cellphone, the operating system has to be tailored for each device. This implies that developers cannot write an application once for each OS, but often have to subtly tailor and definitely test for each and every device that the OS runs on. This is a definite disincentive to developers. Apple have successfully overcome this by defining (effectively) a single hardware device form factor. This will be a major test for the new type of devices (what I think you are calling a “CarryAlongPC” but which the industry is calling “MID’s” = Mobile Internet Devices) – will they allow a standard operating system load like a PC or will they need to have the operating system tailored for the device and built into its firmware by the OEM like a phone?
Regards Hugh Bradlow Sydney, Australia
Hugh,
OK, you’re right: I believe I did mention Apple in interface design, but should have called out OSX as a real player. RIM is also there, to my continued amazement, although I still don’t get the religion: a PC running a beeper’s OS? And although Elevation Partners are really cool guys, I can’t quite jump back onto the Palm wagon.
As for the problem of tailoring the OS to different devices: I think this is true as well with computers. Every Windows PC is different – different screens, memory, etc. – and the OS has to modify the calls to fit that machine. So this world is similar, I believe, to phones. In fact, this is a decent description of why we even have OSs today.
It is true that the browser takes up more and more attention in this OS fight, but I would submit that you can’t separate browsers from OSs, at least today, and despite all the work of the European and U.S. courts to do so.
Yes, Windows users can run IE, Chrome, Safari, Firefox, and probably Opera on their machines, but despite Mozilla’s recent gains, the browser still seems to stick to the OS.
Will it always? That is where MS loses its franchise. What kind of bet do you want to make that it will let this happen anytime soon?
Thank you for an excellent letter, Hugh, and I look forward to having both you and Sol Trujillo with us at FiRe 2009, where we can continue this conversation.
Mark Anderson
Mark,
(President Obama is now up-grading to a comprehensive US/China strategic dialogue, under Light-Horse Joe Biden.)
Your analysis in the latest SNS was incisive and hard-hitting -- Kudos!
I especially appreciated your analysis of the folly of knee-jerk down-sizing -- the euphemism for lay-offs.
It may be natural, but it is certainly counter-productive, for business leaders who have irrationally invested to panic and irrationally throw out their staff when they themselves get caught off base.
But this panic reaction only adds to the problem, in the long run, as you so cogently point out. That is quite different from a deliberative reduction of forces when necessary.
For my own two cents -- I do not believe that an anti-US trade block will form, with Japan on the other end, backed by China and the ROK. There are strong economic arguments for such a move -- but long-term strategy, policy, and powerful national feelings militate against it.
China's leaders are focusing on forging closer political and economic ties with the USA. Chinese public opinion strongly favors this orientation. While Sino/Japanese and ROK/Japanese relations have shown marked improvement since the fall of Koizumi, the amount of rapprochement that is achievable in the near future is probably limited.
Traditional strategy from China's ancients calls for allying with distant countries against near ones, rather than the other way around. This may not be a dominant factor in current Chinese strategy, but the emphasis on building the closest possible ties with America is very clear whereas anti-Japanese prejudice is a potent political factor throughout China, which will take a long time to overcome.
I would expect to see US/China trade ties expand, as the financial crisis is resolved. Our imports to China have expanded to an amazing extent during the past few pre-crisis years, and only dropped precipitously after the storm hit Wall Street. The Yuan stopped appreciating for a time, also -- but its value will resume the up-swing before long.
I think it was three years ago, at the (world's best) FiRe Conference, that I predicted a sharp improvement in Sino/Japanese relations, arguing that the big popular Chinese demonstrations against Japan were actually a prelude to negotiations. But that doesn't mean China would link with Japan in forming anti-US economic barriers. I doubt seriously that this will happen.
The USA and China today have 60-odd on-going dialogues between different areas of federal/central government, including regular top-level meetings on security, commercial and economic relations, diplomacy, and other topics. There are more than 30 cooperation agreements between the two governments. Nothing remotely similar has begun between Beijing and Tokyo, unless you count the snail's-pace tri-lateral China-Japan-ROK talks among historians on assessing their various historical issues.
Of course, Barack Obama will have to deal with pressure from Pelosi and Co, and from the AFL/CIO to "get tough with China." He will certainly need to take a firm stand on some of our [U.S.] trade, counterfeiting, and other issues. But from the advisors he has chosen on China, it seems pretty certain that the relationship will gradually improve, as it has with every single Administration, Republican or Democratic, thus far. The national interests of both countries demand it, and their areas of disagreement are narrower than their common interests.
Admittedly, your friend here is an incorrigible optimist. But this is my two cents, for what it's worth.
Best from sunny Arizona.
Sidney Rittenberg [Author, The Man Who Stayed Behind President, Rittenberg Associates Fox Island, WA, and Beijing] Sidney,
I would like to disagree with a single thing that you have written here, but you have made it very difficult by saying intelligent, thoughtful things.
Although I don’t disagree with the points you have made, and while I do agree that there will likely be a resurgence in U.S. and China trade, and while I don’t for a moment doubt that China wants to improve relations with its top trading market –
I have begun looking at all of these relationships from two new perspectives.
First: while most of us in the U.S. have essentially written off the Japanese, and their endlessly moribund economic figures, as either a trading friend in the East or, at minimum, a non-threat, I am seeing things differently. Instead of being lolled into a safe stupor by reading the GDP figures, I am looking at the long-term effects of a strictly mercantilist nation in all of the areas wherein we compete.
It appears to me that we lose every battle. Whether one looks at cars, memory chips, screens, TVs, consumer electronics, steel – the story is the same: without intervention by the U.S. government (the only thing that saved Intel), the Japanese end up owning the market leaders. While we are the ones who often are the inventors of these various and attendant technologies, our somewhat random system of ad hoc trading does not stand up to a government-industry partnership focused on moving target industries from the U.S. to Japan.
In short, we are acting like idiots.
The second change in view is related: I am starting to look at U.S./Asia interactions in terms of the mercantilist model vs. open trading. As you know, in open trading everyone buys and sells. In the mercantilist model, I sell, but I may not buy; I export, but generally restrict imports. How countries manage this is complex, but the results are simple: protected domestic markets where home companies can grow, make mistakes, and often over-charge, through a lack of competition with imports; and wide-open foreign markets that provide all the economic growth of the nation.
No one doubts that this is the Japanese model; it has been well-described in many books.
But one cannot forget that this is the model that both the South Koreans and the Chinese took for their starting points. Americans probably assume that either country took American capitalism as its initial model, but that is untrue. Indeed, the opposite is true: they correctly saw the Japanese winning market after market vs. the U.S., and have taken, and modified, that system to become their own.
This is why the Chinese will now stop buying airplanes from the West: they want to have their own aerospace system, and are ready to grow it. They have appropriated enough technology (another part of this model) through reverse engineering, IP theft, and plain old copying, to start. Once started, they have, I believe, zero interest in having domestic airlines buying foreign planes, as noted by one of our correspondents last week.
This isn’t free trade: it’s mercantilism. What the Chinese have done, in their model, which improves on the Japanese model: they have increased the foreign direct investment in China and vastly accelerated the transfer (legal and illegal) of Intellectual Property by doing so. Many companies are not allowed to build factories without simultaneously relocating science processes, research institutes, and scientists, to China.
So, while I agree with almost everything in your letter, I now am beginning to look at Western economic relations with South Korea, Japan, and China in these two new ways.
Thank you for a terrific letter,
Mark Anderson
» Upcoming SNS Events
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» SNS Media
A new library for a new year: here are your favorite books, including who has proposed them, whether they’re fiction or nonfiction, and ready clicks to Amazon:
http://www.tapsns.com/members/books.php
“SNS iNews is a terrific idea.” – Peter Petre, Author and Past Sr. Editor, FORTUNE magazine
Are you an AORTA (Always On RealTime Access) member of SNS? Use SNS iNews™ to stay in touch, in real time, with what your fellow members and FiRe Thought Leaders are achieving – and then help them get there.
Click here for the current iNews digest: www.snsinews.com
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Mark’s Top Ten Predictions for 2009: http://www.tapsns.com/media/nydinner2008/nydinner2008-predictions.mp3
Executive Postings
SNS members are encouraged to share postings that would be of interest to fellow members. This might include vacation rentals, job postings, jobs sought, business opportunities, funds needed for startups or expansion (no priced solicitations), and other categories. There is currently no charge for posting, and we reserve the right to veto offerings deemed unsuitable. We hope this will afford members yet another way of communicating and benefiting from their membership.
– mra.
For Rent: Old City Barcelona Apartment
I would be delighted to offer our small one-bedroom apartment in the heart of Barcelona’s old city to fellow SNSers, should they come to this great city.
SNS Member Discount Pricing:
» 80 euros/night plus 40 euros final cleaning charge
» See more photos and details here: http://tinyurl.com/7oure2
» Contact Richard Lander at rlander@citywire.co.uk
For Rent: Luxury Home, Winter Wonderland
Enjoy 7,000 ft. altitude “Wow!” views from this Winter Wonderland Luxury Home for rent in Park City, Utah.
» SNS Member Discount Pricing: $600/night
» New Members’ Welcome
I would like to welcome, among others, these new members to the SNS family: Sophie Vandebroek, Chief Technology Officer and President of the Xerox Innovation Group, Xerox, Lincoln, MA; Peter Doherty, Professor, Department of Microbiology and Immunology, University of Melbourne, Melbourne, AU; Chet Dagit, Director of Product Management, Nielsen Mobile, Wayne, PA; Sean C. Barker, Vice President of Worldwide Operations, Ingram Micro, Santa Ana, CA; Tom Smith, Technical Sales, Sales Management Inc., Marysville, WA; and many more.
If you are a Premium SNS Member, you now get:
Direct email privileges enabling you to contact Thought Leaders via SNS iNews™ stories
Automatic inclusion in the SNS iNews Thought Leader Pool: FREE global news distribution to thought leaders worldwide whenever you appear in any press or blog story
Searchable access to the Archives of past SNS issues
Invitation to a complimentary Premium Member Breakfast with Mark at FiRe 2009
Other privileged Premium website content, and
Free posting privileges on the brand-new (about to be announced) SNS Business Board
To upgrade from Standard to Premium membership, go to http://www.tapsns.com/orders/?page=account (login required).
» How to Subscribe (All rates $USD)
If you are not currently an SNS subscriber, the SNS newsletter has been sent to you for a one-month trial. If you would like a one-year subscription to SNS, the current rate is $595, which includes approximately 48 issues per year, plus special industry alerts and related materials; two years are $995. Premium Subscriptions, which include passworded access to additional materials on the SNS website, are $895 per year. Subscriptions can be purchased, upgraded, or renewed at our secure website, at: www.stratnews.com. Conversion of your trial to full subscription will lead to 13 months of SNS, no matter when you convert.
UPGRADE YOUR SUBSCRIPTION TO PREMIUM LEVEL for $300 per year, and enjoy email access to our FiRe Conference speakers through our new service, SNS Interactive News (SNS iNews™), along with other Premium benefits. After logging in to your Account, go to: http://www.tapsns.com/orders/?page=account
VOLUME CORPORATE SUBSCRIPTION RATES: More than half-price savings, for up to 10 members: $2950. Additional members: $295. Contact lynne@stratnews.com.
SMALL COMPANY SITE LICENSE (for companies with fewer than 10 employees): Deep discount (far less than half price), for up to 10 members: $1495. Additional members: $295. Contact lynne@stratnews.com.
TEACHERS’ GROUP RATE (five teachers): $295. Contact lynne@stratnews.com.
STUDENT and INDEPENDENT JOURNALIST RATE: $295 per year. Contact lynne@stratnews.com.
RENEWALS: Your one-year Standard subscription to SNS continues at the current rate of $595, which includes approximately 48 issues per year, plus special industry alerts and related materials. Two years: $995. Premium subscriptions, which include passworded access to additional materials on the SNS website, enhanced access to SNS iNews features, and other benefits: $895 per year. Subscriptions can be purchased, upgraded, or renewed at our secure website, at: www.stratnews.com. Or you can call Lynne Mercer at 360-378-1023 for personal assistance with your subscription. Conversion of your trial to full subscription will lead to 13 months of SNS, no matter when you convert.
This service is intended for strategic thinkers who depend upon business technology planning. The SNS charter is to provide information about critical computer and telecommunications issues, trends, and events not available to managers through the press. Re-purposing of this material is encouraged, with proper attribution.
» May I Share This Newsletter?
If you are aware of others who would like to receive this service, please forward this message to them, with a cc: to Mark Anderson at sns@stratnews.com; they will automatically receive a free one-month pilot subscription.
ANY OTHER UNAUTHORIZED REDISTRIBUTION IS A VIOLATION OF COPYRIGHT LAW.
» About the Strategic News Service
SNS is the most accurate predictive letter covering the computer and telecom industries. It is personally read by the top managers at companies such as Intel, Microsoft, Dell, HP, Cisco, Sun, Google, Yahoo!, Ericsson, Telstra, and China Mobile, as well as by leading financial analysts at the world’s top investment banks and venture capital funds, including Goldman Sachs, Merrill Lynch, Kleiner Perkins, Venrock, Warburg Pincus, and 3i. It is regularly quoted in top industry publications such as BusinessWeek, WIRED, Barron’s, Fortune, PC Magazine, ZDNet, Business 2.0, the Financial Times, the New York Times, the Wall Street Journal, and elsewhere.
Email sent to SNS may be reprinted, unless you indicate that it is not to be.
» About the Publisher
Mark Anderson is CEO of the Strategic News Service™. He is the founder of two software companies and of the Washington Software Alliance Investors’ Forum, Washington’s premier software investment conference; and has participated in the launch of many software startups. He regularly appears on the CNN World News, CNBC and CNBC Europe, Reuters TV, the BBC, “Wall Street Review”/KSDO, and National Public Radio programs. He is a member of the Merrill Lynch Technology Advisory Board, and is an advisor and/or investor in OVP, Ignition Partners, Mohr Davidow Ventures, Voyager Capital, and others.
» SNS Website Links
For additional predictions and information, please visit:
SNS Blog, “A Bright Fire”: www.abrightfire.com
SNS Media Page: www.tapsns.com/media.php
SNS Future in Review (FiRe) Conference website: www.futureinreview.com
SNS FiRe 2008 Photo Gallery: http://futureinreview.smugmug.com/FiRe%202008
FiRe TV on YouTube: http://www.youtube.com/futureinreview
SNS Project Inkwell: www.projectinkwell.com __
» Where’s Mark?
On February 13th-16th, Mark will be participating in the Aspen Institute Socrates Society series on “Whither Innovation: Can we be this shortsighted and succeed?” led by Judith Estrin. On March 26th-27th, he will be keynoting a special guest CEO meeting hosted by Orange Wireless in London. On March 31st, he will keynote the 2009 CRIM (Centre de recherche informatique de Montral) Crystal Ball Conference, at the Palais de Congres de Montral, on the subject “Combining Economic Landscape with Technology Trends: Shaping the Rebound.” On April 27th, he will be the opening keynote speaker for the 2009 Accenture International Utilities and Energy Conference, talking on “A Future View of Energy: Technology Driving Economics,” at the Hotel Regency Vancouver, in Vancouver, B.C. And on April 29th, he will be speaking at the Family Office Circle 2009 conference, at the Hotel “Europischer Hof,” in Heidelberg, Germany, on the subject “Root Causes of the Economic Collapse, and How the Obama Program Will Affect U.S. and Global Economics.” On May 19th-22nd, he will be hosting Future in Review 2009, at the Hotel del Coronado, San Diego.
In between times, he will be driving, top down, through fields of snow geese gathering in the thousands on the black-earth Skagit flats, so thick they seem a collective mirage, until, suddenly, they lift, and become a white, fractured cloud.
Copyright 2009, Strategic News Service LLC.
“Strategic News Service,” “SNS,” “Future in Review,” “FiRe,” “SNS Ahead of the Curve,” and “SNS Project Inkwell” are all registered service marks of Strategic News Service LLC.
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