Saturday, March 21, 2009

My Contribution to Current Economic Mess

I'm facing the heat of the current economic crisis. My clients are doing bad and our business is hit. Same is the story with many companies that deal with consumer products. Though I'm a victim of the crisis but to some extent I'm also responsible for the same crisis which is hitting me hard. It's like shooting on my own feet. 

The present crisis is mainly caused by excess consumerism driven by the urge of consumers (I'd say dumb consumers) to buy things, which they don't need, with the money that they don't have. These dumb consumers world-wide (not that much in India, but mostly in US & EU) kept on chasing their aspirations of possessing the latest mobile phone that should take a 5 mega pixel photo or video and upload that immediately to the web for sharing with their near and dear ones; should have the space to contain 1000 mp3 songs so that they can keep on listening to the songs in office, buses, trains and every other place where they go; should have a screen of good resolution so that they can see youtube videos; should have all the facilities of checking mails, creating power point documents, editing excel files and everything else that they generally do in office; should have a well enough speaker so that the phone can be used as a boom-box if required; should have bluetooth, GPS, WiFi and many more.  I know that people are getting busy now-a-days and they should be always connected to the world of their office. Hence checking mails is something very essential. But I really don't know how efficient and ergonomic it is to check mails in such a small screen of a mobile phone. And believe me, even if Obama doesn't accept it openly, he will surely do so in private that typing a mail in a laptop is much easier than using even the QWERT compliant keyboard of a BlackBerry phone. Even if I accept the real need of checking mails while on the move (as if businesses used to collapse even a few years back when BlackBerry or similar services were not available), I really can't understand why people are so obsessed with clicking low quality photographs with their mobile. These photos are never usable even if it's 5mega pixel. A cheaper CyberShot camera worth some $50-60 has any day better picture quality than even the most sophisticated camera on a phone. A very ridiculous thing is watching a video on a small screen of the mobile. When the TV sizes are getting larger and larger to give a better feeling of watching a movie, does anyone really enjoy seeing the jerking videos on their phones? 3G is being promoted with the main intention of doing video calls and watching videos - as if the technology came into being just to facilitate a few jerks to view jerking video clips on their mobiles. I can tell some thousand more such useless innovations which have caught the fancy of the dumb consumers and the manufacturers have spent millions in R&D to come up with much more dumber features in gadgets. 

Long time back I got a mail about useless Japanese inventions. I remember of one gadget that was a fork fitted with a small motor that makes the fork rotate slowly. This is meant for eating chowmein. The rotating fork pulls up the threads of chowmein and if you place the fork near your mouth you get a continuous flow of chowmein. Wow, that is exactly what Charlie Chaplin had shown in 'Modern Times' - a world full of useless innovations which are consumed by dumb consumers. Now suddenly when the consumers not only spent all their money and also the money they had borrowed from banks and have nothing to pay off their debt, the sale of all the dumb gadgets have come to a halt. And that's how we're having a tough time - no sale means less work - cost cutting - layoffs - and the full mess that we all are in!!

Now let's come to the point. I've been abusing the consumers for spending money on dumb things. But the question is who made them dumb? Why have exploited the innocent consumers to be obsessed with silly things for watching jerking pictures of Lord of The Rings on a 8x10 cm screen? It's me!! I've been working on niche electronics technologies that are meant for niche people with a penchant for technology. I've created this hoopla that the business will stop if you don't check mails or edit a document on your phone. It's me and my friends in the semiconductor industry who have been putting extra hours to create really dumb things for which the innocent consumers have spent everything they had. We've created a hype about all these junk products. A perception was created that without these the life would be just dull and dumb. And the innocent consumers fell prey to our gimmicks. 

Well, it's not only me and my industry, it's also the housing industry which did the same thing that we did. They created this scenario where a couple started feeling suffocated in a house of 3500sq. ft, with a 4000 sq. ft backyard and 2000 sq. ft front yard and went on to buy another house situated on a hill top in Saratoga with a magnificent view of the south western Bay (well, what's that??) overlooking a beautiful lagoon and complete with a swimming pool, garage for four cars (two for the couple and two for the would be children to be born after 5 years), 4 bed rooms, 2 study and multiple levels of living rooms. Unless they bought this house their dream of being engineers in Bay Area won't have fulfilled!! Again things that they never needed but still they spent money (borrowed) for that. Where ever you go you see the same thing - people running after useless things. Now suddenly every thing has come to a point of no return. People don't have money to buy even useful things. And people who really need things can't afford to buy those useless gizmos.

Had the semiconductor industry not spent so much to innovate all silly things (like ridiculously large TVs, phones packed with dumb features which if used extensively would create serious ergonomic problems, smaller and smaller sized products on hugely costly latest and greatest of semiconductor technologies like 45 and 32nm -just to name a few) and thought of really useful things like unconventional energy products, more cost effective bio-medical products and general value-for-money simple gadgets then things would have been totally different now.

Just think about this. I've mentioned this in a previous blog:
India now has 350 million mobile phone connections. Considering the fact that there are still about 180 million households (~900 million people) in India thriving on less than $2/day per head- out of which 90 million households thriving on less than $1/day per head and only 40 million households earning more than $2/day per head, it's indeed a very interesting statistic. Even if we assume that the 40 million middle and upper class households, who earn more than $2/day, have one phone each for their members, still that accounts for only 160 million connections. This means that the remaining 190 million connections are coming from the households that earn less than $2/day.  So mobile phones are no longer items of luxury or aristocracy.  Even the poorest households can afford to have a mobile phone.

The handset market in India is about $5 billion. The 180 million households, who earn less than $2/day and who have already bought 190 million handsets, can still buy, on this date, 270 million more handsets (assuming 90 million households with income between $1-2/day buying 2 handsets per household and the 90 million households with income < $1/day buying 1 more per household), provided the price of the handsets comes down considerably. Even a price of $10 would mean a $2.5 billion more revenue, which is a straight 50% increase. Also at the same time the phones could have been made even more useful for the vast majority of people by providing usable Internet (say on on 3G technology) at a low price, say $15. There are 650K villages in India and it's not possible to lay the cables for broadband for all the villages immediately. But 3G has the potential to reach all such places. Exactly the way mobile went to places where landlines couldn't, 3G should go places where conventional broadband can't go. A centralized database keeping track of farming in each of the 650K villages, assessing the demands of each vegetable and grain across the country and accordingly regulating the supplies to maintain a steady price for all farm products can be a reality only if each farmer has access to Internet and that's possible through technologies like 3G. The impact of such an achievement is immense. As per reports about 72% of India's fruit and vegetable produce goes waste. The main reason for this waste is lack of proper storage and retailing facilities. With centralized database the retailing can be made much more efficient. Also government can make recommendations to farmers on various aspects of farming based on the projected demand and supply of any crop or fruit and vegetable. Lesser wastage and more efficient retailing would translate to higher incomes and facilities for the farmers - who constitute almost 70% of India's population. Just imagine how much impact can it have on India's economy!! I'm sure some one can make a gross calculation and prove that even without a single sale of niche products like an N-series Nokia phone or the biggest plasma TV, the manufacturers could have earned more had they catered to only the rural value-for-money market.

Does anyone know why a CT scan is so costly when a digital camera just costs a few dollars? The reason behind is that we've  never put our brains behind all these technologies. It's high time that people put their thoughts and energy in areas like biomedical, unconventional energy, power saving gadgets etc which are not only useful but also have immense social and environmental impact.

I feel it's good that we're having this crisis. Selfish people like us would arise and awake and do the right things that we should have done in the past decades. At the end of the crisis we'll all emerge with much better things that will remain for long and not end in a bubble!!

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