In a recent editorial published in Economic Times, a leading business news daily in India, I likened the economic reforms initiated by Dr. Manmohan Singh in 1992 compared to the "Hare and Tortoise" story -- where China was the Hare and India the Tortoise. Long before Experts predicted that India will eventually catch up with China and overtake it.
The latest growth rate figures for the second quarter growth in the fiscal year 2006-07, released by the Central Statistical Organization, come close to vindicating those forecast; the Indian economy is already growing at the rate of 9.2% not far from the 9.5 reported for China recently.
The stock market in India, in retrospect, responded rationally to the prospects of Indian economic growth. Between 2001 and 2006, the stock indices in India have risen by four times while growth rates increased from about 4.5% to twice as much. In contrast to China, institutional development and deregulation have progressed in tandem in India. Chinese stock market indices move much more erratically reflecting the lack of depth in that country's capital markets. This also implies that capital allocations in India are driven much more by economic considerations compared to China.
In its last issue, the Economist commented that the potential growth of India is only 6.5% and that the current growth rates are not sustainable. The argument is based on the premise that India's savings rate at 30% trails China's at 45%. This is a flawed argument since it does not take into account the efficiency of capital use in India.
The current rate of growth is not only sustainable but it has also very likely exceeded 10% according to Surjit Bhalla, an Indian economist and investment banker. There is also as yet untapped potential for growth in infrastructure and the farm sector and the Government is working to implement reforms to get this underway.
I will not be surprised if growth rates eventually touch 15%
On Nov 16th Economic times
Reacting to some global experts who likened China and India to the tortoise and the hare in Aesop's famous fable, Jinzhen said "To use the analogy of the race between the tortoise and the hare for the competition between China and India is fantastic." "Only when the hare (China) naps does the tortoise (India) overtake the hare. China will never 'nap' in the process of its economic development," he told 'People's Daily,' the official mouthpiece of the ruling Communist Party of China (CPC) in a recent interview ahead of Chinese President Hu Jintao's visit to India
Saturday, December 02, 2006
Thursday, November 23, 2006
The Word Is SONY...and Its World Is Tumbling
SONY...The most comprehensive entertainment companies in the world...Historically noted for creating its own in-house standards... Name synonyms to Reliability with Passion for Innovative Technology is reeling under sever pressure. A company with Annual sales of $69 Billion and employing over 160,000 people is looking for a break thru. Can its flag ship launch of PS3 with Blue Ray technology save "Sony World".
Play Station Launch Story:
Sony's trouble story began earlier this year, when the wheels were falling off the train when Sony started delaying the release of the new PlayStation 3. The first excuse Sony made was that licensing issues were causing the delay from Spring 2006 to November 2006, but that was not the real reason. At Long last when Sony Play station 3 (PS3) was released, on Nov 17th, Sony had horrendous shortage of game consoles to sell. Sony made the best of the bad situation or at least made sure that the launch got plenty of hype.
Technical details:
Technically PS3 is a very impressive creation. Sony took two radically new technologies and successfully incorporated them into a consumer product. The heart of the PS3 is a new Cell broadband engine processor, a joint development Of Sony, Toshiba and IBM.Games are delivered on Blue Ray Disc’s, a high definition DVD that can handle up to 50GB of data. The combination of a super fast processor optimized for Graphics and almost unlimited data storage allows game designers to achieve realism unprecedented in the console of games. The PS3 can play high definition Blue ray movies as well as normal DVD's... but will that be good enough?
The bottom-line Question becomes...Will the consumers find the PS3 worth $200 more than Microsoft Xbox 360?
Sony could have made this equation easier, if it used a month that the PS3 was delayed, mainly by problems in making the blue ray drive, to get the online component of the Play station experience (Play station Store) into shape. Its failure to do so is a major mystery. The most important component of the online experience will be multi player gaming and this is becoming major strength of the Xbox. Sony made a good move by making the Play station network free, while Microsoft charges $50 per year for Xbox Live...but will take a while as the sale of lot more PS3's before we could tell how good there online gaming is.
Sony clearly blew it with other network features as well. The Play Station Store is mainly a way to download games and high definition movie trailers, but the browser interface is very awkward to use. Strangest of all, the PS3 is devoid of the software required for connecting to other devices in the home like computers of other devices. For example if u want to play music on PS3 u have to connect a memory card and a external hard drive or a player such as an I-pod directly to the console and transfer the songs from the device to the consoles hard drive. The same is true for movies or other video and forget about playing any copy protected media such as songs purchased from I-tunes. Even if Ur the one of handful of people who bought the music from Sony connect store. They won’t play in PS3 and this is very odd.
Financial Details:
The future of Sony CEO Howard Stringer rest on the success of this shinny black PS3.
Sony is far behind its competitors in the fast growing LCD flat-screen TV market and has lost its decades-long edge in portable music devices to Apple Computer's I-Pod players. With the failure of its TV, Music electronics businesses and its up-and-down Movie business, it has relied more and more on the video game business to keep profits up. But now even its video game business can't save the company. In fact, it's the video game business that could put the whole company right down the toilet. Here is it why
Play Station Launch Story:
Sony's trouble story began earlier this year, when the wheels were falling off the train when Sony started delaying the release of the new PlayStation 3. The first excuse Sony made was that licensing issues were causing the delay from Spring 2006 to November 2006, but that was not the real reason. At Long last when Sony Play station 3 (PS3) was released, on Nov 17th, Sony had horrendous shortage of game consoles to sell. Sony made the best of the bad situation or at least made sure that the launch got plenty of hype.
Technical details:
Technically PS3 is a very impressive creation. Sony took two radically new technologies and successfully incorporated them into a consumer product. The heart of the PS3 is a new Cell broadband engine processor, a joint development Of Sony, Toshiba and IBM.Games are delivered on Blue Ray Disc’s, a high definition DVD that can handle up to 50GB of data. The combination of a super fast processor optimized for Graphics and almost unlimited data storage allows game designers to achieve realism unprecedented in the console of games. The PS3 can play high definition Blue ray movies as well as normal DVD's... but will that be good enough?
The bottom-line Question becomes...Will the consumers find the PS3 worth $200 more than Microsoft Xbox 360?
Sony could have made this equation easier, if it used a month that the PS3 was delayed, mainly by problems in making the blue ray drive, to get the online component of the Play station experience (Play station Store) into shape. Its failure to do so is a major mystery. The most important component of the online experience will be multi player gaming and this is becoming major strength of the Xbox. Sony made a good move by making the Play station network free, while Microsoft charges $50 per year for Xbox Live...but will take a while as the sale of lot more PS3's before we could tell how good there online gaming is.
Sony clearly blew it with other network features as well. The Play Station Store is mainly a way to download games and high definition movie trailers, but the browser interface is very awkward to use. Strangest of all, the PS3 is devoid of the software required for connecting to other devices in the home like computers of other devices. For example if u want to play music on PS3 u have to connect a memory card and a external hard drive or a player such as an I-pod directly to the console and transfer the songs from the device to the consoles hard drive. The same is true for movies or other video and forget about playing any copy protected media such as songs purchased from I-tunes. Even if Ur the one of handful of people who bought the music from Sony connect store. They won’t play in PS3 and this is very odd.
Financial Details:
The future of Sony CEO Howard Stringer rest on the success of this shinny black PS3.
Sony is far behind its competitors in the fast growing LCD flat-screen TV market and has lost its decades-long edge in portable music devices to Apple Computer's I-Pod players. With the failure of its TV, Music electronics businesses and its up-and-down Movie business, it has relied more and more on the video game business to keep profits up. But now even its video game business can't save the company. In fact, it's the video game business that could put the whole company right down the toilet. Here is it why
Research firm iSuppli has reverse engineered the PS3 and has estimated that it will cost Sony $805.85-$840.35 for each unit sold. The materials price estimates do not include marketing, software development, or other costs, which will push Sony's total cost per console even, be higher. With Sony pricing the console at $499 and $599 depending on the model, it means that they will be eating a loss of between $241 - $306 every time someone buys a new console. In contrast, the materials cost for the Xbox 360 is estimated at only $501, and should continue to drop as the console ages. While Sony pays $200 to $300 for each raw Blue-ray drive, Microsoft pays only $20 for the simpler DVD drives. Of course, the single most costly item in the PS3 is the Blue-ray drive. Blue-ray would add at least another $200 or so to the price of the machine. And this cost is intended keeping in view promoting Blue Ray disc's which is a long term objective is for Sony.
Although the PS2 captured more than a 70 percent share of the previous generation of console sales, with Microsoft already predicted to sell 10 million Xbox 360 consoles and Nintendo selling 4 million of its new Wii consoles, Sony plans on making 6 million PS3 units before April. Let's say that they sell every one of them at full retail price. With what we know about the materials price -- particularly the price of Blue-Ray players -- let's say that they will lose only $270 for every PS3 they sell, The loss would be to an amount of $1.6 billion.
The bad news for Sony this year isn't restricted to video game competition. The company is also liable for a large share in the laptop battery recalls being conducted by Dell and Apple. Nearly 6 million batteries have been recalled in the past two months -- all of them manufactured by Sony. The battery fiasco alone could cost Sony as much as $500 million.
Devoting its cash reserves to losses in the video game and computing sectors, with no guarantee of future profits for another two years, could send the company's stock into a tailspin, once its investors realize the full measure of the grave situation for the company.
Although the PS2 captured more than a 70 percent share of the previous generation of console sales, with Microsoft already predicted to sell 10 million Xbox 360 consoles and Nintendo selling 4 million of its new Wii consoles, Sony plans on making 6 million PS3 units before April. Let's say that they sell every one of them at full retail price. With what we know about the materials price -- particularly the price of Blue-Ray players -- let's say that they will lose only $270 for every PS3 they sell, The loss would be to an amount of $1.6 billion.
The bad news for Sony this year isn't restricted to video game competition. The company is also liable for a large share in the laptop battery recalls being conducted by Dell and Apple. Nearly 6 million batteries have been recalled in the past two months -- all of them manufactured by Sony. The battery fiasco alone could cost Sony as much as $500 million.
Devoting its cash reserves to losses in the video game and computing sectors, with no guarantee of future profits for another two years, could send the company's stock into a tailspin, once its investors realize the full measure of the grave situation for the company.
Here is how u can save Sony:
If u are also a great fan of Akio Morita after reading the book Made In Japan like me..
Stop complaining that the PS3 costs $600. In order to cut down on its losses,-- it'll require that you buy two games in order to get a machine. That'll boost the price for you to around $725 or so.
But there's more! Want an HDMI cable? That'll be another $100 to $125. Now we're at $850 or so.
If u are also a great fan of Akio Morita after reading the book Made In Japan like me..
Stop complaining that the PS3 costs $600. In order to cut down on its losses,-- it'll require that you buy two games in order to get a machine. That'll boost the price for you to around $725 or so.
But there's more! Want an HDMI cable? That'll be another $100 to $125. Now we're at $850 or so.
You've got a Blue-ray player, so you'll want a few Blue-ray movies -- Sony titles only, of course. Buy six of them while you're at it! At an average list price of $25 each, we're talking another $150. That pushes our total price to an even $1,000.That'll go a long way to saving Sony.
Now who's going to save you?
Now who's going to save you?
Wednesday, November 22, 2006
ERP : Battle Space : SAP Dominates While Oracle Consolidates
Alright...this will be a Soap-Opera-Class Entertaining and Interesting Story to track all my life, as most of us do, As the dust never seems to settles in the battle of ERP dominance between Oracle and SAP. This would be long story made short with Quotes to hear from heads of both companies...and don't make any judgments from them since the twist in the story is still to unfold and will be long time before we can conclude...Check and Mate.
Larry Ellison, 62, CEO of Oracle, those who know him, say, He is a Master of Applying and Executing My all time most favourite Book -The Art of War-Sun Tzu’s precepts to the modern-day warfare of business competition.
One of basic tenet from the book notes,"A smaller force can beat a larger one by causing its rival to respond before thinking." exactly so..
Larry Ellison, 62, CEO of Oracle, those who know him, say, He is a Master of Applying and Executing My all time most favourite Book -The Art of War-Sun Tzu’s precepts to the modern-day warfare of business competition.
One of basic tenet from the book notes,"A smaller force can beat a larger one by causing its rival to respond before thinking." exactly so..
Ellison Recent Key Remarks of SAP and its CEO:
"SAP appears to be rethinking their strategy as they lose application market share to Oracle and confront the difficulties of moving their application software to a modern Service Oriented Architecture [SOA],” said Ellison in the release. “They’ve just announced that they are delaying the next version of SAP applications until 2010. That’s a full two years behind Oracle’s scheduled delivery of our SOA Fusion applications.
And now [SAP CEO Henning] Kagermann is talking about an acquisition strategy to augment SAP’s slowing organic growth.These are major changes in direction for SAP."
Ellison's comments were "a complete misrepresentation'' of SAP's products and strategy, Walldorf, Germany-based SAP said the same day. Only once before, in 2000 when Oracle said it was first in sales of business-management software, had SAP issued a statement responding to Oracle claims. "Both times the distortion of facts about SAP were so significant we had to clear the record,'' SAP spokesman William Wohl said in an interview.
Now.. Why did Ellison do this ?
Ellison's tactics are meant to validate Oracle's place next to SAP.Ellison's efforts were aided by SAP in July, when SAP CEO Henning Kagermann said his company lost market share in the $25 billion industry for business-management software to Oracle and Microsoft Corp.
SAP never should have reacted to Oracle's statements because it makes customers and investors view Oracle as a peer to SAP, when they aren't.
"They are trying to set the boundaries of the discussion,'' Daniel Sholler, lead SAP analyst at Gartner Inc., a Stamford, Connecticut-based research firm, said in an interview.
"It has no effect on customers except to make it clear that Oracle should be compared to SAP.''
SAP and Oracle are in the middle of overhauling their software toward a so-called Service-Oriented Architecture, or SOA, which allows customers to upgrade and change management software more easily. SAP said all of its products will be able to run on the new platform by next year, and will only offer enhancements to that platform until 2010.
Actual Market Share:
According to Boston-based AMR Research, SAP had 20.6 percent of the applications software market in 2005, up from 19.5 percent in 2004. Thanks to $20 billion of acquisitions in two years, Oracle's market share almost doubled in 2005 to 10.1 percent from 5.2 percent.
The $10.6 billion PeopleSoft acquisition in January 2005 and the $5.85 billion purchase of Siebel a year later made Oracle the second-biggest maker of business-management software, behind SAP. In September, Ellison said the purchases allowed Oracle to "leapfrog'' over SAP in several industries, including retail, banking and telecommunications.
Ellison has also employed Sun Tzu's statement,"All warfare is based on deception'' in asserting that Zale, which SAP announced as a new customer about a year ago, will switch to Oracle because, the CEO said, the German rival "made some promises we knew they couldn't deliver.''
Oracle reported application license sales grew 80 percent in the first quarter. Stripping out sales from Siebel and other recent acquisitions, application license sales gained 47 percent.
Software license revenue, is a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting.
“We’re rapidly taking applications market share from SAP,” Oracle President Charles Phillips said in the release. “Q1 was the second consecutive quarter that Oracle’s applications new license sales growth was 80% or more. That’s ten times SAP’s 8% new license sales growth rate in their most recently completed quarter.” taking absolute joy in poking its finger in the eye of rival SAP.
Charles Di Bona, an analyst with Sanford C. Bernstein, disagrees with Oracle's math. Factoring in Siebel Systems' third quarter sales, before its acquisition, Di Bona estimates Oracle's organic growth for the quarter at 2.2 percent.
Q Results For Oracle :
For the fiscal first quarter ended August 31 which blew away expectations across the board. Revenue totalled $3.6 bilion, nicely ahead of the Street consensus of $3.47 billion. The company reported 13 cents a share in GAAP profits, or 18 cents on a non-GAAP basis; both were several pennies ahead of Street projections. Database and license revenue grew 15%; application revenue grew 80%; services revenue was up 33%.
In its press release announcing the numbers, Oracle President and CFO Safra Catz said that the company “exceeded our guidance on every metric…we are now in year three of our five-year plan targeting EPS growth at 20% per year.”
Important Statments from Oracle :
"We think Oracle’s current strategy is helping us overtake SAP and win market share. Let me start with the first key success factors for SOA applications, and that is middleware... SAP is sticking with a proprietary approach to middleware while Oracle has adopted a completely standards-based approach from middleware and our next generation of fusion applications.
As the market more deeply embraces service oriented architecture, SAP’s non-standard ABAP approach to middleware is hurting their sales and helping us win share...
SAP has good industry knowledge and products in some industries, like oil and gas, but they lack industry-specific knowledge and products in most other industries.... Oracle’s acquisition strategy has moved us ahead of SAP in several industries -- banking, telecommunications, retail, and so on. Oracle will continue to acquire industry knowledge and products. We believe that SAP must do the same, or SAP will become progressively less competitive in several industries and continue to experience slowing organic growth." explians Larry Ellison.
"Well, I think it’s hard for our share gains to accelerate. I mean, SAP’s growth in their most recent quarter was 8% and our growth in our last two quarters was over 80%, so I cannot imagine that our rate of gain will accelerate, but I think our rate of gain against SAP will stay very, very high. I think it includes gains in ERP, gains in CRN, and gains in industry-specific applications" Ellison remarks.
The Other Side of Story: 85% win Rate for SAP
Oracle claimed 88 head-to-head wins against SAP.
Leo Apotheker an independent analyst team gave the detail of the analysis of head-to-head between SAP and Oracle.
"We chose not to compete on one of these deals. Six were not competitive situations, and all occurred before Q107 of August quarter, first quarter. Twelve of them we have no record on, so I cannot comment because we did not compete. We were not in the game. Seven were not a win against us. They must have counted some other wins. Four were indeed losses for us, so they did win four against us.
Just to put things into perspective, in this quarter, we had 247 competitive head-to-head against Oracle, of which we won 209. That is an 85% win rate."
"What we do is we take our sales figures. We compare it to the Oracle Siebel entity last year, compared to the combined entities this year, then you know that SAP has really gained market share again." explained Henning Kagermann, CEO, SAP.
Q Results for SAP:
SAP said net income rose to 388 million euros ($486 million), or 1.27 euros a share, with revenue up 11% to 2.2 billion euros.Software license revenue, a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting, grew 17% to 691 million euros in the third quarter. Analysts had expected SAP to generate 14% growth.
License revenue had grown just 8% in the second quarter. “We reported a strong third quarter with an impressive win rate and double-digit software revenue growth in all regions,” said Henning Kagermann, chief executive, in a statement.
Oracle, SAP’s leading rival, reported a 19% profit rise in the quarter ended Aug. 31. SAP fared well in Oracle’s home market, with U.S. license revenue up 1 5%.
“This long track record of outstanding performance can be largely attributed to our successful strategy of growing SAP organically. This disproves our major competitor’s claim,” Kagermann said in a clear reference to Oracle.
Conclusion :
Oracle's enthusiasm for bad-mouthing the competition doesn't help the industry.
Oracle's made full-page advertisement that mimicked SAP's ad campaign.
The Oracle ad said: "Computer Associates (CA) Runs SAP.''
The implication was that CA's well-publicized troubles, including a $2.2 billion accounting fraud, were connected to the SAP software it uses. CA has applications from both rivals. These kinds of guerrilla marketing tactics, combined with puffed up rhetoric and carpet bombings are tedious distractions.
But ultimately, knowing how the enterprise software sales cycle works, experts guess, the playing field is far more balance than what either side contends.
For a while, SAP is just dominating Oracle (particularly in the U.S.).
Ellison has also employed Sun Tzu's statement,"All warfare is based on deception'' in asserting that Zale, which SAP announced as a new customer about a year ago, will switch to Oracle because, the CEO said, the German rival "made some promises we knew they couldn't deliver.''
Oracle reported application license sales grew 80 percent in the first quarter. Stripping out sales from Siebel and other recent acquisitions, application license sales gained 47 percent.
Software license revenue, is a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting.
“We’re rapidly taking applications market share from SAP,” Oracle President Charles Phillips said in the release. “Q1 was the second consecutive quarter that Oracle’s applications new license sales growth was 80% or more. That’s ten times SAP’s 8% new license sales growth rate in their most recently completed quarter.” taking absolute joy in poking its finger in the eye of rival SAP.
Charles Di Bona, an analyst with Sanford C. Bernstein, disagrees with Oracle's math. Factoring in Siebel Systems' third quarter sales, before its acquisition, Di Bona estimates Oracle's organic growth for the quarter at 2.2 percent.
Q Results For Oracle :
For the fiscal first quarter ended August 31 which blew away expectations across the board. Revenue totalled $3.6 bilion, nicely ahead of the Street consensus of $3.47 billion. The company reported 13 cents a share in GAAP profits, or 18 cents on a non-GAAP basis; both were several pennies ahead of Street projections. Database and license revenue grew 15%; application revenue grew 80%; services revenue was up 33%.
In its press release announcing the numbers, Oracle President and CFO Safra Catz said that the company “exceeded our guidance on every metric…we are now in year three of our five-year plan targeting EPS growth at 20% per year.”
Important Statments from Oracle :
"We think Oracle’s current strategy is helping us overtake SAP and win market share. Let me start with the first key success factors for SOA applications, and that is middleware... SAP is sticking with a proprietary approach to middleware while Oracle has adopted a completely standards-based approach from middleware and our next generation of fusion applications.
As the market more deeply embraces service oriented architecture, SAP’s non-standard ABAP approach to middleware is hurting their sales and helping us win share...
SAP has good industry knowledge and products in some industries, like oil and gas, but they lack industry-specific knowledge and products in most other industries.... Oracle’s acquisition strategy has moved us ahead of SAP in several industries -- banking, telecommunications, retail, and so on. Oracle will continue to acquire industry knowledge and products. We believe that SAP must do the same, or SAP will become progressively less competitive in several industries and continue to experience slowing organic growth." explians Larry Ellison.
"Well, I think it’s hard for our share gains to accelerate. I mean, SAP’s growth in their most recent quarter was 8% and our growth in our last two quarters was over 80%, so I cannot imagine that our rate of gain will accelerate, but I think our rate of gain against SAP will stay very, very high. I think it includes gains in ERP, gains in CRN, and gains in industry-specific applications" Ellison remarks.
The Other Side of Story: 85% win Rate for SAP
Oracle claimed 88 head-to-head wins against SAP.
Leo Apotheker an independent analyst team gave the detail of the analysis of head-to-head between SAP and Oracle.
"We chose not to compete on one of these deals. Six were not competitive situations, and all occurred before Q107 of August quarter, first quarter. Twelve of them we have no record on, so I cannot comment because we did not compete. We were not in the game. Seven were not a win against us. They must have counted some other wins. Four were indeed losses for us, so they did win four against us.
Just to put things into perspective, in this quarter, we had 247 competitive head-to-head against Oracle, of which we won 209. That is an 85% win rate."
"What we do is we take our sales figures. We compare it to the Oracle Siebel entity last year, compared to the combined entities this year, then you know that SAP has really gained market share again." explained Henning Kagermann, CEO, SAP.
Q Results for SAP:
SAP said net income rose to 388 million euros ($486 million), or 1.27 euros a share, with revenue up 11% to 2.2 billion euros.Software license revenue, a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting, grew 17% to 691 million euros in the third quarter. Analysts had expected SAP to generate 14% growth.
License revenue had grown just 8% in the second quarter. “We reported a strong third quarter with an impressive win rate and double-digit software revenue growth in all regions,” said Henning Kagermann, chief executive, in a statement.
Oracle, SAP’s leading rival, reported a 19% profit rise in the quarter ended Aug. 31. SAP fared well in Oracle’s home market, with U.S. license revenue up 1 5%.
“This long track record of outstanding performance can be largely attributed to our successful strategy of growing SAP organically. This disproves our major competitor’s claim,” Kagermann said in a clear reference to Oracle.
Conclusion :
Oracle's enthusiasm for bad-mouthing the competition doesn't help the industry.
Oracle's made full-page advertisement that mimicked SAP's ad campaign.
The Oracle ad said: "Computer Associates (CA) Runs SAP.''
The implication was that CA's well-publicized troubles, including a $2.2 billion accounting fraud, were connected to the SAP software it uses. CA has applications from both rivals. These kinds of guerrilla marketing tactics, combined with puffed up rhetoric and carpet bombings are tedious distractions.
But ultimately, knowing how the enterprise software sales cycle works, experts guess, the playing field is far more balance than what either side contends.
For a while, SAP is just dominating Oracle (particularly in the U.S.).
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