Follow the Ships in Singapore...
By bobp on Feb 03, 2009
Flying into Singapore, one of the worlds largest ports, I noticed something odd. There seemed to be too many ships anchored in the waters. From the SwissHotel in Singapore you have a beautiful view of the port. From this view you can also see the Singapore Flyer. One rotation on this structure takes 30 minutes. It is B-I-G. Unfortunately it was closed as mechanical problems caused some people to get stuck at the top for several hours. Not a pleasant thought if you don't like heights... This Ferris wheel measures 571 feet (165m) in height! During my attendance of Sun's TechDays 2009 in Singapore I spoke with a lot of developers and customers among the ~1300 that attended (see below). During the event reception, on the 70th floor of the hotel, we had the backdrop of the port amongst several conversations (see below).
I was speaking with folks about Singapore's Port Terminal and why so many ships at port. I was not surprised to find out that many of the ships are short term moored, since imports and exports have slowed. One individual told me that ship movements started to slow in October, then some more in November and plummeted in December. The decrease in port activity is in direct correlation with the economic slow down worldwide. Another person described the port activity as "crawling." While activity may be off in Singapore's port, it still processes 1/5 of the worlds export/import containers and serves as an economic barometer in my view. I noticed a large number of oil tankers in the port as well... Short term mooring of vessels at Singapore is measured in days and it makes sense to stage vessels there-- especially if you consider the amount of throughput at this port. One only needs to watch the ship activity at Singapore's port terminal to gauge if the world economy is getting better or worse. No need to listen to all the analysts, experts, press, news feeds, ect. Simply watch the ships in Singapore.
Moving up North to Tokyo I met with some customers in the mobile provider business. I've been able to visibly see evidence that businesses world wide are interested in cost savings. That does not necessarily mean stop spending, but rather spending to improve efficiencies via consolidation (cloud computing) and commoditized components (storage).
It's rather scary to see more public companies report disappointing earnings and forecasts. Benchmark companies such as Microsoft, Nokia, Toyota, LG, Lockhead, Sony, Hyundai, TSMC, GM, BofA, Barclays and HSBC have all slashed their outlook as well as stating reduction of operating costs. One analyst quoted in the Financial Times has predicted trouble for some British banks who refused help from their government and may be over exposed to emerging market borrowers. Some are speculating that these worldwide economic problems are accelerating computing away from the PC. That means margin pressure for the businesses who center around this particular computing platform. As PC computing moves more toward laptop to netbook to handhelds and thin clients, this will only accelerate the opportunity for those who can differentiate in the computing infrastructure environment. This in my opinion is why the storage market and now the cloud market (virtulization 2.0) has become so visible.
Open sourced efforts will only gain momentum with a bad economy. The computing industry will become a low barrier to enter and exit among suppliers. Look at the auto industry. If you can drive a car your loyalty can move between any supplier. The only way an auto manufacturer can “lock you in” is via your experience. That is not so true in the IT industry today. Apple does a great job today of keeping you as a customer because of the excellent experience with their products. However look at Sony. They had that edge previously, but commodity economics has caused Sony to retreat and regroup. Customers are interested in solving new problems in different ways, especially if there is a savings in cost. For example SATA disks and Solid State Disks (SSDs) combined can give you better performance than buying more expensive Fibre Channel 15K Disk Drives. If I give some quick thought as to what the IT commoditization order looks like I would list it as:
Items 1,2 and 3 are in advanced stages of being a commodity. Items 4, 5, and 6 are early or accelerating stages of being commoditized. In an accelerating economy leaders of new innovation who commoditize technology are usually venture backed private firms. In a deteriorating economy the leaders of new innovation tend to be publicly traded entities who have the expertise to combine technology into new solutions. Also it's important to not be squeamish on changing the business model for these new solutions.
In Tokyo a fellow colleague asked me how the economy was in the U.S. I asked him has he been reading the papers or watching the news to which he said "yes." He then told me he wanted to hear it first hand from someone in the U.S. I asked him why and he stated that he still finds it unbelievable that the downturn is world wide. It's obvious to him in Japan and he's living it, but the other economy woes worldwide are only news to him and difficult to fathom. Having seen the downturn firsthand around the globe I don't need to ask anyone.
Keep innovating, keep commoditizing... the time is ripe for opportunity.