The Global Currency War

The global fight to reducing the value of currencies is peaking up. It might reach to its zenith, with the Fed further printing crispy US dollars, and pumping those dollars in the global economy, either directly or indirectly. The Fed is thinking of buying the US Treasuries, with its new crispy greenbacks, and is going to keep the interest rates near to zero, for a long time. If this happens, the US dollar will get diluted, and US exports will become more competitive on the global markets. Thus, it is a direct, currency-war response to China. But, the challenge for China is to move its currency further down, in tandem with the greenback, against a basket of currencies. Thus, China needs to keep buying US-dollar denominated assets, especially US debt, extending its love-hate relationships with the greenback. For global investors, it is a no-bariner to guess the US treasury yield, and, for the global market, it's a no-brainer to guess the direction of the new money!! :-)

Another challenge for China is to weigh-in the costs and benefits of continuing its currency war, as it holds almost 10% of US debt -- the dollar asset the value of which goes down, every time the dollar is getting devalued. So, the ultimate question for China is to consider whether it is worth keeping its currency devalued so as to export more and more, and then keep buying US-debt with the money earned so to keep exporting even more and more, and, then, somewhere in the cycle, the US brings down the value of the debt down by printing new greenbacks!! Undoubtedly, it is a vicious circle!!! A vicious circle in which China has a huge chance of losing, rather than of winning!! Isn't it illogical to bet on someone else, especially when your entire fortune is at stake? But, it appears, for China it is not!! China has been keeping most of its economic strategies US-centric!! China really needs to come to grips with itself -- that it is a behemoth and it should now be inward looking rather than outward looking!

Although, it all started with the US and China, but, of late, some more countries have hopped on to the bandwagon in the currency markets to manipulate their currency in order to export more and more, such as Japan, South Korea, Indonesia, Brazil, etc., making the currency war global. It's a dangerous-and-quite-pointless fight the world is getting into, as it is purely a beggar-thy-neighbor policy, which is not only mean, but also cheap!! Why? In one way, this unequivocally proves that the world has run out of real innovations, or, at best, it proves that the world has really given up on real innovations, which are the real-and-awesome sources of renewed exports that bring livelihood to all, including the producers and the consumers alike. But, instead of focusing on this aspect, the whole world is getting into a dog fight!! May God save us all. Aamin!

My Blogs: Easier to Read, Simpler to Understand, and Friendlier to Share

I have earnestly tried my level best to make the template of my blog as simple as possible, in order to enhance the ease of readability. Moreover, now, you can share my blogs with others through your very own Gmail, Blogspot, Twitter, Facebook, and Google Buzz accounts.

As usual, please keep enjoying my blogs secretly! :-)

If, in case, you want to share your "secret-enjoyment" with me, there is a comment button down here. Kindly give your invaluable feedback and let me enjoy my blogs too. I will surely try to enhance the level of enjoyment we all derive from the blogs here. I promise. Enjoy. :-)

Is Apple Really In Trouble?

Having successfully failed to woo Apple, Adobe filed complaints against Apple to the US Antitrust Enforcers, saying Apple is stifling competition by shunning all Flash-based content from the iPhone and the iPad.

First things first, is Adobe justified in its allegation? Let me give you some perspective, before you jump to any conclusion.

Flash is Adobe’s proprietary software that currently is being used to run more than 90 percent of online graphics, animations, and videos, especially content for displaying online advertisements. And, Apple doesn’t support Flash on its products, disallowing Adobe a highly-desired, much-awaited entry into the Apple Value Chain.

But, why does Adobe want to enter into Apple’s “territory.” There are two obvious reasons for desiring so:

1) Apple’s customers, in general, are higher-spending smartphones-users. Getting their eyeballs for advertisements are highly desirable, as the chances increase manifold that those customers will buy things, when they are exposed to “relevantly-pitched” advertisements.

2) Apple may break Adobe’s hegemony on online content that generates online advertisement revenues, and may push HTML5 – an open-source standard for web-based graphics, animation and videos – as the industry standard for online advertisements. If that happens, Adobe’s value will tumble, because Adobe makes money from charging advertisers, designers, and developers for using its proprietary tools, such as Photoshop and Illustrator, for creating Flash-based graphics, animation, and videos.

Let me give you some more perspective. Why should Apple bow to Adobe? If the ground has to be leveled for all kinds of stakeholders, then why shouldn’t it be leveled by making an open-source standard, such as HTML5, as the industry standard for online graphics, animations, and videos? Doesn’t it sound more logical? Why should “the power” shift from one company to another? The power to control online revenues should be dissipated to everyone on this earth! And, that is achievable only by making HTML5, or something still better, the industry standard for creating content that generates online revenues.

Apple has vehemently been supporting HTML5!

Now, let’s get back to the original question of whether Adobe is justified in claiming that Apple is killing competition by not allowing Flash-based content on the iPhone and the iPad. What do you think? I think, “Not a tad!”

If you disagree with me, please feel free to rip me apart – there is a button for comments right down here! I look forward to hearing your rationale too!

Adobe’s One-sided Love Affair with Apple

Apple is very clear of how it wants developers to develop applications for its products, such as the iPod, iPhone, and iPad. It wants developers to use its well-documented APIs in the manner it prescribes. Thus, it wants applications to be developed ONLY in C or C++ that could well be executed by the iPhone OS WebKit Engine.

In other words, Apple still wants to shun Adobe’s Creative Suite that includes Flash, which is currently being used for displaying more than 90 percent of online videos.

Apple, since the launch of the iPhone in 2007, has been shutting Adobe out of its value chain, even though Adobe has consistently been trying to woo Apple by sending very clear signals! For example, the new Adobe Creative Suite 5, which is expected to be unleashed soon at Adobe’s annual developers conference, has features that will give developers the ability to produce applications in a format that can work on the iPhone and iPad. But, Apple’s new developer agreement makes it succinctly clear that Apple is not going to accept Adobe’s courtship!

But, the obvious questions are: Why does Apple want to hurt Adobe? Why does Apple want to keep Adobe out of its value chain? Won’t doing so hurt Apple too? Won’t blank-holes be there when Apple customers browse the Internet, using Apple devices? What is going to fill in there, if not Flash-based videos, which already are prevalent all over the Internet?

The answers to these so-called obvious questions could perhaps be like these: No, perhaps, Apple purposely doesn’t want to hurt Adobe, but, definitely, wants to hold on to its highly enthusiastic developers firmly, raising the costs of switching for them. And, yes, doing so is hurting Apple too, but not much, as content-providers are slowly moving from Flash to HTML5, which is an open-source standard, and works fine for Apple. So, hopefully soon, there won’t be many blank-holes for Apple’s customers.

Oh yea, Apple has its own way of saying a big NO! But, it is just playing safe, as it knows what might pop up, if it lets Adobe come close to it – and to its products, services, “hegemony” over its entire spectrum of value chain, revenues, and bottom line, of course! :-)

Emirates, Off Course?

As per the International Air Transport Association, Airlines worldwide, in 2009, which witnessed the worst demand-decline in the airline history, are estimated to have lost USD 9.4 billion. For the same year, Emirates will announce even more profits, including another record for passenger traffic, perhaps above the 23 million mark! How?

Between April 2009 and December 2009, when all other Airlines were getting into a price war to lock-in passengers, in order to fend off the global recession, Emirates increased its fares by 35 percent across its network. The surprising, but strategically-planned outcome of doing so was that the demand for Emirates grew up! Seat factors went up, so did the loads!

The decision for hiking the fares did require a little retrospect for Emirates. It was quite tempting for Emirates to get into the global price-war, but, then, it realized that having spent millions of dollars in building a premium brand, getting into the price war wouldn’t make sense at all.

For example, Emirates had put first-class showers on its A380 super-jumbos; had sponsored horse racing, yachting and football events across the world. All these strategic, brand-building investments would be in a stark-contrast to its decision for getting involved in the global price-war! Thus, to show the world what it was, and, perhaps, what it is, it hiked its fares across the board. Moreover, it also identified a much-untapped goldmine in first-class and in business-class passengers coming out of Europe, Asia, and South America. Awesome! Isn’t it?

But, its competitors are crying foul, as they claim that Emirates has an undue advantage over its competitors, as it has full support of the airport and civil aviation authorities, especially of those of Dubai. But, then, that is Emirates’ strategic, niche business-model for cutting travel-time short for its passengers by creating new “city-pairs” via a single stop at Dubai, and also for realizing Dubai International Airport’s strategic growth-model that seeks to be the world’s busiest aviation hub. Now, this is called aligning your growth strategies with those of your business-partners – a strategy for devising a win-win solution for all the parties involved, even for your customers as you shorten their travel-time while still putting them on a luxurious flight!

Emirates is chalking out a big-potential-for-growth strategy by linking 500 profitable destinations worldwide under its “city-pair” business-model, up from its current network of 101 cities. It says, “It’s just the tip of the iceberg!”

The only constraints that it may face will be the physical constraints of Dubai International Airport, in terms of airspace, runways, and other physical infrastructure that might limit the use of its “city-pairs” concept. Emirates, off course? Of course, not!

The Global Outlook for 2010

2010 is going to be a mixed-kind of year. We are still witnessing major troubles primarily in Greece, Spain, Portugal, Ireland, UK, Dubai, Japan, and the US. But, on the other hand, undoubtedly, they all will fight back, because they ought to. There is no other choice. This is primarily a capitalistic world, which doesn't give in to pessimism. We have seen unprecedented efforts by the Central Banks and Governments worldwide. All those efforts will pay off, albeit slowly but surely. There will again be booms and busts, after all that's the cycle and that is its intrinsic nature. Isn't it? Let's be patient, and hold our grounds firmly. Good luck to all of us, as we see the waning of the modern world's second-worst recession!

There will be some pains and upsets in the globalized world, as economies try to "rein in" their Balance of Payments (BOP), especially with other economies, such as China, which cuts its manufacturing-costs at the expense of its competitors and of its buyers as well! But, that's a different story altogether.

Deflation in Japan is another concern. It has become so hard to make money in Japan. So, obviously, insane amounts of funds will outflow from Japan to economies -- especially emerging economies -- that promise robust growth, creating bubbles and then consequently sudden busts! But, is it something extremely wrong? No! It's not! But, inflow and outflow of funds certainly need to be controlled and be well monitored. EXTREME free-flow of funds is a very dangerous thing, because you just never know what's going to happen next! Economies become susceptible to the idiosyncrasies of few "funds managers!" They take the world economy as "HOSTAGE!" Isn't cartel a reality?

I just hope the policy-makers worldwide would fix the root causes of the problems, instead of beating around the bush -- that is trying to fix the symptoms of the problems. Good luck to most of us !

Walking Without a Plan

Walking without a plan? Yes, that's right -- walking without a plan! :-) It's possible. Trust me; it is. And, you can still work on an unplanned plan to completion. You can still coordinate without coordinating explicitly. You can still communicate without communicating vehemently. You can still promise without promising earnestly. Doesn't silence speak a thousand words? And, doesn't signaling work? All of these work, provided you know how to walk without a plan.

Have you ever driven any kind of vehicle on the Indian roads? In India, hardly anyone follows any traffic rules, but, still, considering how people drive out there, the number of accidents is still very, very low -- I repeat considering the way people drive out there. We are used to of "walking without a plan" -- it's what we have been experiencing since our childhood, isn't it? :-)

That was just an example to hint you at something. :-) Are you game for it -- walking without a plan? :-) Let's see. In the meanwhile, I just hope that you be a sport!

What Comes First: Price or Costs?

For marketing, in general, letting the price, and/or the profit margin, determine the costs of the product, rather than letting the costs of the product determine the price, and/or the profit margin, is the most prudent way to go forward.

First, decide the price of your product, and the subsequent profit margin, that you must make to satiate, or justify, your investments. Doing so gives you a costs window that you may put at stake in producing the product. Thus, the price – and/or the profit margin – of the product drives its viable costs structure. In the worst case, you might not be able to produce the product within the estimated costs. But, your money remains intact, and you can still use it for something better.

If you do the other way round, that is, if you first produce the product, and then aggregate the costs incurred in producing it, in that case, the total costs drive the price of the product, and subsequently drive the profit margin, which may or may not justify the investments made, keeping in mind that there is a certain maximum price the consumer is ready to pay for the product. This second method is prone to the risks of making the entire investments sour! The worst situation has the potential to wreck havoc -- that is that you might lose all your investments!

It is certainly not that the first method always is the best way of deciding on the price, and thus the justified costs, of a product. But, it certainly is the more logical way of going forward.

However, in some situations, the second method is the only possible way of zeroing in on the costs, and subsequently the price of a product, especially when both the producer and the potential consumers are completely new to the concept of the product that is going to be produced.

The call is yours, so take the shot! And, don't forget that you will be held accountable for it too, because if you miss it, the investors will not let you off the hook! You can run; you can hide, but you can't skip, my "love." :-)

A very positive, comprehensive, inclusive budget for 2010

Finance Minister of India has unleashed the Indian Union Budget for 2010. The budget looks quite promising. As per the budget, the masses are going to be taxed lesser for their incomes in 2010. The personal tax breaks are prudently categorized as:

Incomes <= INR 160,000: No tax
INR 160,000 < Incomes < = INR 500,000: 10%
INR 500,000 < Incomes <= INR 800,000: 20%
INR 800,000 < Incomes: 30%

Additionally, investing up to INR 20,000 in infrastructure bonds will be tax-exempt, and this exempt is going to be over and above the exempt of INR 100,000 as per Section 80C.

It is hoped that almost 60 percent of tax-payers would benefit from this tax-relief program, which will definitely increase their purchasing power, which, in turn, will positively impact the businesses operating in the country. This is the strategy of taking the economy even more toward the domestic-consumption-driven growth-path – a very, very good strategy of being self-reliant, and highly proven strategy in this Great Recession.

The budget looks forward to compensate for these relaxations to the common people through marginally increasing excise-duties in certain sectors, such as tobacco products, high-end SUVs, luxury cars, petrol and diesel, just to name a few.

Moreover, the Minimum Alternative Tax (MAT), which was actually introduced to tax companies like Reliance, is raised to 18 percent, from the current 15 percent.

The fiscal deficit for 2010 is budgeted at 6.8 percent of the GDP, but has been guided to 5.5 percent of the GDP for the next fiscal year, to 4.8 percent of the GDP for 2012, and to 4.1 percent of the GDP for 2013. Overall this phased fiscal-deficit-reduction strategy looks pretty good, keeping in mind the current financial situations around the world.

So far, the government has raised USD 7 billion by divesting stakes in the public-sector enterprises, and there will be many more such moves in the coming days to fund the planned fiscal-deficits. Moreover, the government will issue more banking licenses for the private-banking sector, and will also auction telecoms 3G-licenses for raising funds to finance the fiscal-deficits.

Overall, the Indian Union Budget for 2010 appears to be a very positive, comprehensive, inclusive budget. Good job!

Innovative Financing: Changing the Relationship Between the Rich and the Poor

Very soon, people who fly will have a chance to help the world's some of the most unfortunate inhabitants. Flyers, when purchasing airline tickets either on the websites of airlines or through travel agents, will be asked to make a direct contribution to the fight against the world's three deadliest epidemics: HIV/AIDS, malaria, and tuberculosis. This is part of a movement called innovative financing, which is a new kind of aid-tool that could fundamentally change the relationship between the rich and the poor throughout the world, a few dollars at a time.

Each of these diseases – HIV/AIDS, malaria, and tuberculosis – still causes more deaths in developing countries than any other single disease, according to the World Health Organization. In 2004, the last year for which statistics were available, together these three diseases caused one in eight deaths in low-income countries.

So, the whole point is to help such poor people the next time you fly. Trust me; changing the so-called “third world” in this way is cheaper than changing such world by bombing them! The logic is very simple: when people have lots to lose, they think multiple times before losing such things. Let’s help people in getting a real life, and they will think hundreds of times before even planning to give it up! Please raise the costs of “switching” – in a business jargon, for people who understand only business!

Telcos Preparing for the Next Low-cost, Low-end Telecoms War

Vodafone has introduced the `cheapest’ mobile phone ever at the Mobile World Congress (MWC) being held in Barcelona. The handset, aimed for the developing countries, will be initially launched in India, Turkey, and eight African countries including Lesotho, Kenya, and Ghana. The phone is available for less than USD 15 and allows voice calls, SMS as well as mobile payment services. An expensive version of the phone has a color screen and FM radio and is priced at USD 20.

Reliance Communications (RCOM), India’s second biggest mobile communications company, has signed a deal with Huawei to purchase two million CDMA handsets worth INR 3.4 billion (USD 73.27 million). The handsets are priced in a range of INR 1700 (USD 36.63) to INR 1950 (USD 42.02) each unit and are equipped with camera and FM radio. RCOM plans to launch these handsets in Tier-II and Tier-III cities in India. (1 USD = 46.40 INR).

Now, as mobile call-rates in India are already close to free, a new wave of low-cost, low-end war is apparently emerging on the horizon to capture even the remotest of countrymen and countrywomen. Once the telcos are satiated that not even a single Indian is left without having a mobile phone in hand, a new wave of unimaginably massive, extremely painful telecoms market-consolidation will happen. There will then be only two options: buy or get sold! And, such buying and selling will happen based on the market segments the telcos would like to play in and play with. Telcos valuations will be computed almost linearly: X number of customers times $Y per customer – and this will be based on customer segmentation -- plus, the net assets, if any. That’s it. Only the best and biggest will survive the onslaught "massacre." Thus, the survivors will live happily ever after, until the next disruptive technologies emerge on the markets. The end of the saga!

Is Buzz Buzzing?

Buzz has started off with a negative buzz! For end-users, the biggest “buzz” is a concern for privacy.

By default, based on your contacts list, it connects you to people! When you add others to your Buzz – that is, when you start following, or when you start getting followed – you can see who all your “Buzz-mates” are connected to! Now, this is a serious concern for people who experimented with – or better, say, who got victimized of – Buzz!

Well, Google has promised to fix this bug immediately. The “patches” are on their way, in phases, of course. But, I think its strategy has already paid off in getting million of customers on Day 1 of the Buzz release. I call this business strategy “leveraging” and “monetizing” the power of the brand, the faith people have in the brand, and the fickleness of, and the lack of comprehensiveness in, the rules and regulations that govern the industry in which the brand operates. It’s about weighing the costs and the associated benefits. It’s all business! And, businesses do capitalize on loopholes in law. Companies will keep on exploiting such loopholes in order to gain customers and improve their bottom-line.

Wasn’t the privacy issue involved obvious to Google? The answer is as obvious as the question itself! It’s called go-to-market strategy – it is about how to acquire customers in a crowded market. Thus, Buzz was released with a buzz! And, it successfully created the necessary buzz for getting all our attention, especially when we are busy on Facebook, Twitter, MySpace, Orkut, and others. Mission accomplished! :-)

Short to Shorter

For quite a while, I have been noticing something interesting. Day by day, things are getting shorter and shorter. Be they:

• The cycles of boom and bust.

• Interactions amongst human being (twitter, Facebook, MySpace, blogs, the volumes of voice calls are dropping worldwide, etc).

• The sizes of products (vehicles, computers, handheld-devices, etc).

• The life cycles of products and services, as we seek for frequent changes and upgrades.

• Newspapers are getting reduced to, and sometimes even replaced by, blogs, tweets, buzz, et al.

• Peoples’ memories have remarkably been getting shorter and shorter. We just move on so easily and so quickly, shrugging things off as if they never happened, and saying C’est la vie – and it must move on! :-) Well, nothing is wrong with this philosophy! But, shouldn’t we try hard enough to shape it the way we want it to be? Could you vouch for your own answer? Really? :-) Liar!

• Commitments – be they to life, passion, jobs, responsibilities, tenacity, education, logic, humility, empathy, promise, austerity, allegiance, or love.

We are getting bored of things so easily that we continually seek for changes. How is this mindset going to affect our lives? Only time will tell. But, I can surely tell you one thing – there are things that when get shorter become better, but, then, there are other things that when get shorter become worse! So, watch out what you wish for, before you really wish for! :-)

Leaders Vs Managers

Have you ever paused for a while to think of whether you are a leader-material or a manager-material? But, yes, it requires that you understand the subtle difference between the two!

So, how does a leader differ from a manager? Well, I like, and offer, practical definitions/observations, rather than purely theoretical ones that run up to hundreds of pages! Moreover, the difference mentioned below is purely and broadly based on human characteristics, attitudes, and mindsets.

The biggest, and most remarkable, difference is that leaders DON'T lead by concealing data/information/facts/esoteric-concepts from their followers. In fact, they reveal, and subsequently train, their followers on everything they could. Then, they “challenge” their followers to challenge their own preaching/teaching, driving the best out of all concerned, subsequently refining and building on the preaching even further. In other words, they level the playing ground, which could equally be used by all the stakeholders who are allowed to challenge and compete against themselves, albeit in healthy terms – perhaps the theory of genuine excellence prevails here. So, it is not surprising to witness that the best leads the cohort, and is widely highly regarded as a genuine leader, because s/he has the ability to inspire everyone else, including herself/himself!

But, sadly, how many such leaders do we have? Or, even the bigger question is, how many of us do want to be one of that kind?

Whereas, managers inherently are people who like to conceal data/information/facts/esoteric-concepts/know-how from their subordinates, and from the other stakeholders. They manage by hiding things, because doing so is what gives them importance, stability, cushion, fake respect, and eventually job security. If they reveal all the things they know, they might make themselves redundant, or might even make themselves completely useless, as they won’t have any further “value” to add to the teams they manage, or to the organizations they work for. Above all said and done, managers do have some genuine responsibilities, such as collecting work status, filling excel sheets, generalizing everything, firefighting, making things look complex, creating barriers, and, most importantly, "doing" performance appraisals. After all, organizations do have corporate social responsibilities for generating mass employment! Don't they?

Well, I am aware of the fact that I am being very strict in my evaluation here! But, that is the precise reason that I say it is very, very hard to find genuine leaders. And, on the other hand, that is equally the reason why most of us want to be managers – perhaps theory of convenience applies here!

Please note that there could be leaders who might officially be labeled as managers, and vice versa. You will find these two kinds in different skins! So, watch out!!

For further differences, there are millions of books on the topic out there waiting for your grab – so go and waste your time! :-)