JimPinto.com - Connections for Growth & Success
No. 201 : 26 January 2006
Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.
Click on any item to jump directly to that item
My visit to Bangalore, India
You may have noticed that you haven't received an issue of
JimPinto.com eNews since Dec. 28 2005. That's because I just
got back from a 2 weeks visit to Bangalore, India. I was born
in Bangalore and lived there till I was about 20.
It was a wonderful visit, a reunion with 10 Pintos - 5 brothers
and 5 sisters - and their families. I was overwhelmed with the
love, warmth and hospitality, and it will take a long time for
me to get back to my groove. But let me give you my impressions
of Bangalore, and India.
India, the world's largest democracy, has over a billion people.
There are now 300 TV channels, 1.6 million telephone connections
(land-lines) and 116 million cell phones, with 94,000 being added
every day. At 2c. a minute and free incoming calls, everyone
(and I mean everyone including street vendors) has a cell phone.
There's a tremendous increase of Indian content on the Internet,
with an estimated 50 million Internet users. Small Internet cafes
are on almost every street-corner, where Internet access costs
less than 25c. per hour.
I landed in Bangalore, non-stop from London. India's high-tech HQ
is a vibrant, pulsating, megalopolis - population 12 million,
larger than ANY American city - New York, the largest is 8-9
million, Los Angeles and Chicago are next at about 3 million.
The traffic is everywhere - cars, buses, taxis, motorcycles,
the omni-present auto-rickshaws and the occasional ox-cart,
plus pedestrians all over the place. There aren't any real traffic
rules that I could make out, except: don't hit anything and don't
get hit. Any small opening is quickly closed by the boldest driver,
who often slipping through with a few inches to spare. And yet,
amazingly, I didn't see any accidents (I'm sure there are some).
You know, I've driven in Los Angeles, New York, London, Paris,
Frankfurt, Tokyo, Melbourne - but I wouldn't dare to drive
The software companies Wipro and Infosys have their headquarters
in Bangalore. I visited Wipro, which was an amazing experience.
After traveling about 15 miles (which took more than an hour)
I arrived at Gate-6 of the Wipro complex, which is right next
to the Infosys complex; direct "freeway" access to the new suburb
called "Electronics City" is now being built to ease the 24-hour
We walked past a large outdoor auditorium (occupied by an animated
group chanting a vibrant sales-pith) through a series of buildings
as modern as anything I've ever seen anywhere in the world. My host
asked me to look around from a viewpoint, "Wipro as far as the eye
can see" he boasted. I asked my hosts a million questions - about
security, hierarchy, personnel policies, training, working hours,
promotions, loyalty - all of which were answered with excellent
knowledge and pride. Frankly, I was impressed.
A recent global scenario report by Royal Dutch Shell says that
by 2025 India will emerge as one of the world's best nations,
politically and economically. The report says that India's young
population, vibrant entrepreneurial spirit, and strong state-owned
industries and educational institutions would drive its growth.
Growing at 6-8% a year over the past decade, India is one of
the most important economic stories of the next decade.
It'll take me months to digest what I saw in Bangalore.
As I make sense of it, I'll write more.....
Why What's Good for India Is Good for Us
The Promise of India: The Challenges Ahead
Peter Drucker: India's progress more impressive than China's
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Schneider trumps venture-capital to buy Citect
The October 2005 JimPinto.com eNews announced that Schneider
would be acquiring Citect, the Australia based MES and SCADA
software company. It turns out that my announcement was premature.
The Citect directors had previously recommended that stakeholders
vote in favor of the Schneider buyout. They switched for a price
hike of 10% - in my opinion it was a mistake.
Few could have predicted that a private-equity firm would up the
ante to buy Citect. With about $1.75 billion of capital, US based
Thoma Cressey Equity Partners has invested in about 200 companies
in software, business services and healthcare. The Citect directors
"unanimously resolved" to recommend the Thoma Cressey deal, worth
about 10% more than the offer made by Schneider in Oct. 2005.
This was supposedly good news for Citect customers. The buyout
by Schneider would have resulted in another small, innovative
and dynamic company disappearing by integration into the French
giant. So now, the public company would "go private" with Thoma
Cressey, and make plans for independent growth and success.
But, slow down a minute - Thoma Cressey doesn't really have any
track record of growing software or manufacturing companies over
the long haul. It is a venture-capital firm, interested primarily
in short-term returns - typically 3-5 years. This suggests
(my opinion) that they would hold Citect for a couple of years,
and then look for a big return through a buyout: acquisition
by Schneider, or another of the automation majors. Just a shrewd
Citect has grown well to the magic mid-size ($30-50m) where
more companies get acquired (Wonderware, Intellution, etc.).
I can't think of any similar software companies that have grown
independently beyond that level. It takes capital and global
marketing clout. By remaining independent, Citect will not
benefit from Schneider's global sales and support capabilities,
and it will take much longer to build revenue in today's
competitive global environment.
This was the second offer for Citect in the last three months.
It seemed clear to me that Schneider (after evidently doing a lot
of groundwork to make their original offer) would simply sweeten
the deal. Especially since Citect continues to have good results.
And clearly Citect Directors were simply looking for the highest
So, lo and behold, before I could send my eNews analysis into
cyber-space (January 25 2006) the news arrived that Schneider
did indeed sweeten their offer (original offer $1.50 per share;
Thoma Cressey offered $1.65; Schneider counter offer $ 1.85)
by another 10-12%.
Now the Citect "long-term strategic considerations" are hogwash -
the Directors had already proved that they'd switch for more money.
So there was a new announcement: the Director "unanimously resolved"
to accept Schneider's new offer.
It's doubtful that Thoma Cressey will come back with another bid.
One wonders if they made anything at all through buying Citect's
public stock during the interim. If they didn't, it will have
been a total waste of time for them. Oh well....
So, Schneider will buy Citect after all.
Citect Goes Private to Grow as an MES and SCADA Provider
Thoma Cressey Makes Offer for Citect
Schneider Electric's Higher Offer for Citect
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2006 trends & emerging technologies
The world of 5-10 years from now will be a very different from the
world of today. Predicting short-term (1-2 years) changes is almost
impossible. But forecasting long-term directional change becomes
possible by identifying trends through an analysis of deep history
rather than of the shallow, recent past.
At the turn of the year, several people publish "trends to watch".
Here are some of the things I'd bet on:
These technologies will move from hype to wide deployment:
- Centers of economic activity will shift globally
- New global industry structures will emerge
- The battle for talent will intensify
- Productivity gains will shift "work" to new arenas
- Connectivity will transform the way people live and interact
- Big business will come under increasingly sharp scrutiny
- Emergence of BIG new "startup" companies - new CISCOs and Googles
The McKinsey Quarterly: Ten trends to watch in 2006
- RFID tags
- Machine-to-machine (M2M)
- Cellevision - the small screen
- HDTV - the big screen
- Increased storage and bandwidth
- Wireless connectivity on the plant floor and process plant
- WiFi & WiMax Internet everywhere (airports and cities)
Forbes editors & writers annual look ahead at the coming year
MIT Tech Review - Most Important Infotech Stories of '05
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Achieving growth & success through balanced outsourcing
The cover story of Business Week (January 30, 06) is "The future
of Outsourcing". As companies shift work overseas, outsourcing
is portrayed as a killer of good-paying American jobs.
But businesses are now discovering that outsourcing can not
only cut costs, but also boost quality and even create new
types of jobs and significant new growth for everyone involved.
Up to now, the primary motivation of corporate bean-counters has
been to take advantage of the huge wage gap between industrialized
and developing nations. Big layoffs at home were usually the result.
But now, a more strategic view of global sourcing is starting to
emerge. The new buzzword is "transformational outsourcing". Many
companies are discovering that off shoring is really about growth -
making better use of skilled US staff, and even creating new types
of jobs in the US. The labor savings from global sourcing can still
be substantial. But it's small compared to the enormous gains
in efficiency, productivity, quality, and revenues that can be
achieved by fully leveraging offshore talent.
NOW it's making sense. The shift from short-sighted, narrow-minded
local-job protection, to true business use of global resources,
stimulating innovative talents, partnering of complementary knowledge
resources. Ubiquitous broadband communications makes this possible.
Business Week - Outsourcing
Cheaper, Faster, Better - The Productivity Race
Solutions for the China Challenge
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Song: I am the very model of a Singularitarian
I know that some people think that Ray Kurzweil's "Singularity"
(that a significant event that will occur within 30-40 years)
seems far-fetched. But, as I traveled half-way across the globe
at 40,000 feet, I keep seeing the world continuing to accelerate
through technology. I get a funny feeling that indeed some
significant transition is inevitable. It won't be a smooth shift
- more like an inflection point, a sudden switch.
Some think that the Singularity will be signaled by the emergence
of super-human intelligence. The planet-sized "Web" computer is
already more complex than a human brain and has surpassed the
20-petahertz threshold for potential intelligence as calculated
by Ray Kurzweil. In 10 years, it will be a thousand times more
powerful. So will super intelligence emerge on the Web? And,
if it does, will it be "manageable"? Some people are already
predicting "transhuman" and posthuman" intelligence. Can anyone
say with certainty that this cannot or will not happen?
At this stage, perhaps we can only just muse about the idea.
Before you completely dismiss it, please read Ray Kurweil's book
- or at least read the first couple of chapters on Amazon.com.
In any case, you might enjoy this song. Charlie Kam has written
and recorded a humorous "Singularitarian" version of Gilbert &
Sullivan's "I Am The Very Model of a Modern Major General" from
the Gilbert & Sullivan opera, "The Pirates of Penzance."
Here's a sample:
I am the very model of a Singularitarian
Read the complete "Singularitarion" lyrics, and hear the song (MP3):
I'm combination Transhuman, Immortalist, Extropian,
Aggressively I'm changing all my body's biochemistry
Because my body's heritage is obsolete genetically,
Replacing all the cells each month it's here just temporarily
The pattern of my brain and body's where there's continuity,
I'll try to improve these patterns with optimal biology,
I'll expand my mental faculties by merging with technology
Wired - We Are the Web
Ray Kurzweil's book - "The Singularity is Near"
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Ron Liebis [email@example.com] sent these thoughts
on control of executive pay:
"I think the issue of executive pay is a "red herring".
A more important issue would be providing shareholders with
an effective way to propose, nominate and vote for the board
of directors. This might provide the balance between directors
who are beholden to the company's executives for their position
and those who are capable of representing the shareholders.
"It would be nice if in the proxy statement there were metrics
to show how much of the earnings growth (or cash flow) per share
were the result of corporate activity and how much the result
of share repurchases. Also, the percentage of ownership that
has, through options, been transferred to the management.
"I suggest that you read the book "End of the line" by
Barry C. Lynn. It is possibly the most incisive book on
present day corporate and economic policy that I have read.
The author's analysis of Cisco's management decisions and
its corporate structure is worth the whole book. It supplements
and extends Friedman's thoughts in "The Earth is Flat" and
similar topics dealt with on your website."
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Jim Hetzer [Rezteh@aol.com] discusses the longer term impact
of genetically engineered agricultural products:
"With regard to technology agriculture, if the current trends
continue, we will all be vegetarians within 25 years. With mad
cow disease, avian and swine flu, and vastly depleted quantity
of edible animals in the world's oceans, we are going to find
animal protein sources to be a major health risk.
"The reliance on technology in agriculture is a two-edged sword.
The technology requires major energy consumption for production
and transportation, and the impact on the fields has not been
favorable over long periods.
"With that in mind, someone should get a grip on the people that
are attempting to put animal genes into plant matter to "improve"
upon their resistance to diseases, inability to be shipped, etc.
It is a sad fact that increasing the food supply leads to an
increase in population. We may live to see the opposite effect
if our vegetable protein sources do not remain viable."
Return to the TOP
Paul Fileman [Paul.Fileman@uk.tac.com] corrected my statement that,
with the acquisition of Tridium, Honeywell was the first of the
major automation companies to make a move on M2M:
"TAC, as part of Schnieder have been actively promoting open
integrated systems for several years now. We have reference sites
around the world with integrated systems providing real benefits
to operators and owners.
"It seems to us that Honeywell finally joined in and started to
climb the hill we took some time ago. You can check out news stories
on projects such as Manchester Royal Infirmary and references on
Integration at http://www.tac.com/uk "
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