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Indian tech innovation: hardware still poor second to software

by Nitin Dahad

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Photo courtesy World Bank

I’ve just spent a week in India talking to several hundred people in the electronics system design, manufacturing and components sector at two annual conferences for India: or put simply, the Indian tech hardware industry. And it seems that they are still struggling to make their mark in the global ecosystem – a stark contrast to the Indian software and digital media sector, which is booming, and seeing considerable innovation to solve real world problems, for the huge Indian market and beyond.

The week saw two big events for the Indian electronics hardware and components sector: the annual IESA Vision Summit in Bangalore, their 10th such one; and the Source India event in Chennai run by electronics components industry association ELCINA.  I have two major observations from these two events.

From the semiconductor industry event, it was clear that the rhetoric was much the same as over the last five years – the association still talks about the need to set up semiconductor fabrication facilities in India for some level of self-sufficiency in electronics supplies (and to avoid the surplus imports from China); and it talks about the $400 billion ESDM (electronics systems design and manufacturing) market opportunity in India – this figure hasn’t been updated for at least three years.

The mantra is the same and a number of chief ministers from different states were inviting the audience to come and set up manufacturing in their state, with lots of incentives offered (such as free space).

[Editor’s note on this: I asked a question from the floor to a panel of state IT ministers at the IESA Vision Summit enquiring which state offered which benefits to overseas investors, and how an overseas investor could differentiate between all these states so they could make the right choice; the moderator immediately dismissed the question, saying foreigners need to look at India as many different countries, since that is the reality, as there is no one ‘India’: in one fell swoop they seem to have dismissed Prime Minister Narendra Modi’s efforts to present India as one to the outside world!]

At the component manufacturing level, the issue from some of the speakers seemed to be that India was good for manufacturing low level discrete components for the Indian market, but sometimes innovation and quality was an issue if they were considering export markets.

Is the issue image?

And this might be a key issue – Indian electronics manufacturing could be having a problem with its image. When I was advising the British trade and investment organization in 2012 to encourage business between India and the UK, there was a complete lack of interest from trade bodies like NMI, who said India was purely a low cost software outsourcing destination and couldn’t be considered seriously in the area of electronics systems design and innovation.

But there must be some kind of disconnect between global perception and what is happening on the ground. Take for example Cosmic Circuits, which was acquired by multinational electronic design tools vendor Cadence in 2013. Cosmic Circuits was founded in Bangalore in 2005 and had developed advanced mixed signal (ie: analog and digital) semiconductor intellectual property for functionality like USB, MIPI, audio and wi-fi in leading edge technologies known in the semiconductor industry as 40nm and 28nm. By the time of its acquisition, top tier customers globally were shipping 50 million chips containing Cosmic Circuits’ intellectual property.

While Cosmic Circuits was successful, India doesn’t have many stories like this to tell in electronics systems design – most of the successes are in software startups. The hardware industry still appears to be focused on manufacturing and setting up expensive fabs, rather than encouraging innovation in system design.

Young ambition for startups – inspired by software startups

Despite this, there does appear to be a drive by younger design engineers who have ambition and are willing to go to startup mode. I met several advanced technology startups in Bangalore which look set to take on global markets well. One for example is Maxerience, which doesn’t yet have a web site, but is doing something innovative and smart (see its LinkedIn page) – it has developed technology that converges advanced machine learning algorithms and high speed computing for real time recognition and detection, with applications in surveillance, defense systems and industrial automation. The demo I saw at the conference itself told me there is something worth watching here with this company.

This inspiration in the electronics industry is obviously coming from the ground up rather than being driven by industry associations. Youngsters are probably inspired by what’s happening in the software industry, and reading about the thousands of startups solving real world problems and able to grow rapidly in a global market – these stories are told daily in magazines like YourStory and VCCircle, and many others.

And even in the mainstream press there is a buzz about the Indian tech sector. For example, NASSCOM, the software industry trade association, said that India saw 800 new technology start-ups setting up in 2014, taking the total number of startups to 3,100, and that the country is poised to house the second biggest ecosystem for tech startups after the USA in the next two years, on account of the ongoing high growth rates.

In the report, NASSCOM said these startup companies have received over USD 2.3 billion in funding since 2010, while over 70 private equity and venture capital funds are active in the segment. In addition, there were over 62 angel investors active in 2014, and there are over 80 incubators and start-up accelerators operating in the country.

Another report suggests that India will have at least five ‘Internet of Things’ (IoT) startups with a billion dollar valuation by 2018. According to Anshul Gupta, principal research analyst at Gartner, the continued affordability of smartphones and growing acceptance of BYOD (bring your own device) means more and more people are accessing corporate data through mobile devices; he says that Indian enterprises are at an early stage of understanding the impact of Internet of Things (IoT) technologies on their core business, suggesting this is only just the beginning.

In summary, I have written on numerous occasions about the Indian electronics and software industry over the last 22 years. One of the common themes throughout has always been that India needs to encourage innovation in electronics design, so that they can compete in global electronics ecosystems and match what is happening currently in Indian software. Last week has shown that while the messaging from trade bodies might not have changed, young Indian electronics engineers could be the ones who actually drive change and create innovative startups in technology hardware that compete with the big global players.

2015 will be the year when mobile begins to impact almost everything

by Nitin Dahad

The ubiquity of mobile communications has the potential to impact almost every part of society and industry sector. Mobile can enable digital inclusion, cut costs in public health services, save lives, feed more starving people, educate more children, enable more efficient delivery of public services, help reduce carbon emissions and improve living environments through smart and connected cities. The list goes on – and the industry has been talking about connected devices and the internet of things for years.

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Photograph courtesy of ARM

So it is no surprise that many of the technology predictions for 2015 feature mobile or mobile apps as the platform for delivery. This week’s 2015 International CES consumer electronics show in Las Vegas is testament to that, with a strong focus on mobile, the internet of things (as well as 3D printing and drones this year, plus the customary latest television tech). In recent years, the show has almost become the default pre-cursor and preview to the big Mobile World Congress event in Barcelona in March.

The 2015 CES event press release issued before the show does in fact focus, yet again, on the ‘Internet of Things’ (IoT) – stating it will feature the largest ever showcase of products, services and technologies that make up the IoT, with more than 900 exhibitors planning to share innovations utilizing networks to connect everyday devices. Karen Chupka, senior vice president, International CES, and corporate business strategy, CEA said, “It’s all about the opportunity to connect everyday items  like cars, home security systems and kitchen appliances to networked devices like PCs and smartphones for greater control and management of our everyday lives.”

At the CES show, this will include the ‘Sensors Marketplace’, a key technology enabling the IoT. In addition, the ‘Smart Home Marketplace’ will showcase a smarter, more efficient home accelerated by smartphones and tablets interacting with a myriad of connected objects and devices, from basic security systems to connected lighting systems.

Mobile predictions for 2015

There are many predictions for 2015. Gartner talks about a merger of the real world with the physical world, with computing everywhere, the IoT and 3D printing. The forecast, published last October, says as mobile devices proliferate, there will be an increased emphasis on serving the needs of the mobile user in diverse contexts and environments, as opposed to focusing on devices alone.

According to Duncan Clark of Netbiscuits, we’ll see a positive trend towards larger and foldable screens; super batteries will be a key focus, and a closer integration of technology into our daily lives through wearables. Video consumption on the mobile will also grow sharply, and the use of gesture control technology will increase. In addition, the proliferation of big data from mobile will mean increased and better analytics, which may also require human intuitive analysis to unlock full value from the data.

The battle for wearable technology is also part of the top 15 mobile predictions for 2015 presented by Mastercard at Mashable.  As with other reports, connected environments – with expansion of the IoT footprint, enabling the connected home, integrated mobile in automotive and into other environments are also featured.  Health and nutrition monitoring will expand in 2015, with mobile and wearable devices generating and tracking real-time data regarding personal health parameters— such as blood glucose levels, sleep quality, and other data points critical to health.

With multi-screen becoming more of a norm, the screen-agnostic experience will grow, with seamless content/context transfer across devices. Sravish Sridhar, founder and CEO of Kinvey, says, “Apps are increasingly becoming experiences that live across multiple endpoints — from wearables to phones, tablets, and web applications.” As a result, products and apps that can seamlessly transfer between these different devices and states as users move from one to another will have a significant advantage.

Given the sponsor of the report, it talks about mobile payments growing both as a local phenomenon as well being part of a global mobile payment ecosystem. Businesses will also deploy mobile-first strategies, to enable staff to keep working whatever devices they might be using.

Looking to the mobile future

Taking this a step further than 2015, the Mobile World Congress will feature 4YFN (Four years from now). This event is an international program presented by Mobile World Capital Barcelona and GSMA that brings together the best mobile start-ups and entrepreneurs with investors, accelerators, incubators and corporations from the mobile ecosystem. 4YFN will host talks, interactive workshops, an exhibition and enable networking opportunities for over 5,000 attendees from 70 countries, featuring strands on ‘disrupted by mobile’, ‘internet of things’, and ‘digital media’.

In summary, we’ve written and talked about the proliferation of mobile for many years. But 2015 is likely to be a year when mobile will truly be a driver of potentially positive change for almost all technology and non-technology industries.

The future of mobile innovation – this is just the beginning

If you talk to anybody who looks at trends and the future of technology, almost everyone talks about three key sectors that will see further innovation and widespread adoption: mobile computing, cloud computing and big data. We saw how all these technologies were effectively utilized in the 2012 US election which took place this month.  And we also saw some of these technologies used to good effect in the London 2012 Olympics and Paralympics.

Even the law firm DLA Piper’s fifth Technology Leaders Forecast survey, which was developed in conjunction with the firm’s 2012 Global Technology Leaders Summit, talks about these three areas as the most promising technologies for investors and entrepreneurs.

So how is mobile, cloud and big data innovation driving today’s and tomorrow’s economy? And how was it used in the US elections? And what is the future?

The mobile innovation drive

Mobile communications and devices are already driving a new era in the business and social world. We’ve already seen the influence and important of digital networks and social media at the recent London 2012 Olympics. And we are seeing the emergence of mobile as being a platform for enabling new business models in all areas around the world – in government services delivery, in healthcare, in education, and of course in the enterprise. We already referenced this in our paper on the future vision of telecoms, internet, media and edutainment in the article here.

In fact Gartner, the market research firm, says that as many as 821 million smart devices (smartphones and tablets) will be purchased worldwide in 2012 and this figure will exceed one billion in 2013. It also predicts that in 2016, over 2.7 billion mobile devices are expected to be purchased globally, and two-thirds of the mobile workforce will own a smartphone, with 40 percent of the workforce being mobile.  Tablet devices will be a key accelerator to mobility – Gartner estimates that in 2012 purchases of tablets by businesses will reach 13 million units and will more than triple by 2016, to reach 53 million units.

The availability of this channel to customers and employees presents a need for organizations to design their business around mobile, to improve application delivery, employee productivity and process work flows.

It is thought that in less than two years, 20 percent of sales organizations will use iPads as the primary mobile platform for their field sales force. By 2018, 70 percent of mobile workers will use a tablet or a hybrid device that has tablet characteristics.

Many in the industry seem to think that much of the innovation in mobile technologies will come from Asia.  According to one investor based in California, countries with large populations such as India and Indonesia, where most people using the Internet do so with their mobile devices, are becoming catalysts for mobile innovation. An example of true innovation (rather than being a rehash of existing technology) is a SIM-based mobile payment system which only requires the phone network and no internet access – this is provided by Malaysian company Tootpay.

Asia might even drive mobile innovation in the USA, if you look at the headline in the Washington Post, about Japanese company Softbank’s recent announcement that it would be acquiring Sprint Nextel for $20 billion. The article argues that Softbank is Japan’s equivalent of Apple, and rather than focus on devices, the Japanese company hopes to innovate at the point of delivery – ie: in the fastest 4G networks and the services offered to customers.

US elections – a good example of social, mobile, cloud and big data usage

The US 2012 election campaign was the ultimate user of current technologies available in all of these areas. This was both for managing the campaign among campaign staff, and to target voters.

According to Greg Chase writing in the SAP business innovation blog, cloud computing was used effectively to link many field offices to state and national offices. Since political campaigns are only temporarily active for just a few months, and also geographically spread widely, renting cloud-based infrastructure seemed to be the ideal way of deploying the applications needed to manage the whole campaign. No hardware purchase was necessary, and voter and volunteer data could easily be transferred to low cost data storage devices or services.

The cloud was used to store searchable campaign intelligence, and tacked and documented all the details about the candidates, their speeches, videos.  ‘Big data’ profiles of voters were created to better target and motivate voters. A number of mobile apps were available from both candidates as well as the news organizations.

And finally social media was used to influence votes and drive donations. In particular, Chase references startup company Votizen , with its web service that allows you to discover how your friends on social networks are registered to vote, and campaign with them (or influence them) to elect candidates that share your values.  It claims to have a 200 million strong voter database which is social media ready. Voters can connect to their own records to see their voting registration and history, as well as use it to prove their power to those that hold and seek office. Voters can then scan their social networks and reveal the voters they can work with to campaign for candidates they believe in, whether it’s nationwide for a presidential election, or in a local city council race.

This is just the beginning

Industry commentators think we are only just at the beginning of a new innovation cycle in mobile. As highlighted by the recent GigaOm Mobilize 2012 event, there are several areas that point to the future of mobile innovation. Examples cited include the ability to have a ‘point of sale’ everywhere, as demonstrated by Square’s comment that 35 million unique Americans who have already made payments using its mobile card reader which enables anyone to accept credit cards anywhere; and the rapid growth of video over mobile – the article cites Google’s YouTube claiming that 25 percent of its content is now delivered to mobile, while in Korea this figure is closer to 50 percent.

The technology team at PriceWaterhousCoopers says that we are at the beginning of the mobile ecosystem disruption. According to Kayvan Shahabi, PwC’s US technology advisory leader, writing in RCR Wireless, “Mobile computing will continue to drive dramatic changes in how we conduct business, communicate with each other, access and share content, pursue knowledge and educate our children. Even with the tremendous breakthroughs to date, in the future, wireless devices and their supporting services will likely run applications faster, store more data, create better pictures and display information in brighter and more compelling images. This path of innovation, combined with the right business models, should ultimately lead to disruptive products that further transform the ecosystem and many industries in ways we never imagined.”

Indeed we are moving into a mobile world which is could be driven in the future by innovation in Asia and parts of Africa, and likely to also emerge in South America.  We have seen some great usage in the US elections and the London Olympics, but this is only just the beginning.

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