Will NZ Miss the Pacific Cable Boat?

Apparently Google are engaged in talks over investing in the Unity cable project aimed at spanning the Pacific Ocean with terabits of new bandwidth. It could turn out to be a wise investment on two fronts. Firstly there is obviously a return on the revenue generated by digital traffic. But secondly it ensures that the burgeoning middle classes of Asia-Pacific have ongoing high speed access to applications hosted in America, amongst which Google is aiming to become the provider of choice.

A lot of commentators are talking like Google is setting itself up as a telecoms operator but this is not true. Google may have the cash, but it does not have the expertise to contemplate such a project. The word is that Google are in fact talking to an Australian telco about the new venture.

 Unity is not the only initiative aiming to add capacity across the Pacific. Verizon are working on a project linking to China and North Asia and Southern Cross have just commenced a major upgrade of the cable that links Australasia to North America. All of which is good for consumers because as domestic networks improve, so the demand for international bandwidth increases.

The slow rollout of domestic high speed bandwidth is often upheld as the reason why we will never see a Google or a Bebo spring out of New Zealand. But it looks more and more like a U.S. centric hub and spoke kind of network, everywhere you look now. Naturally providers of innovative global digital content and services then look to the United States as the preferred site to host their offerings. I think that is why we do not yet see anything special built and hosted here in NZ, despite the fact that digital creativity abounds.

In fact there was a visionary project about five years ago called “First Light” that aimed to set up a direct NZ-Singapore cable. The project failed because of difficulty in negotiating “last mile” access at the Singapore terminal. In retrospect it is now clear that New Zealand missed a major opportunity.

Silicon Valley Challenges Auto Makers to Think

A brainstorming conversation held at Google’s headquarters has led to VC investment in a new kind of electric car. Think, a Norwegian based manufacturer of next generation electric cars, is pitching the project as foreshadowing a paradigmatic shift in the logic around personal mobility and connectivity. Not only does their concept vehicle have green credentials, but it is marketed entirely via the Internet and is itself web enabled with communications and self-diagnostic tools. In an article in Business 2.0, Think CEO Jan-Olaf Willums outlines just how the company intends to compete against the huge car manufacturers.

But the technology is not without issues of its own. One glitch is that the kind of battery you need to provide energy for a small car still comprises about half the capital investment of such a vehicle. To solve this problem, Think plan to set up battery leasing and reconditioning franchises to support vehicle owners. There is also the question of the environmentally sound disposal of battery components when they reach life’s end. With input from other tech firms in Silicon Valley, these and other problems with the batteries will no doubt be addressed over time.

The only real question is about what uptake will be like in the world’s largest car market. But given growing unease over climate change and uncertainties around oil supplies, it seems like quite a good time to be revisiting the electric car idea. Traditional car manufacturers have struggled to innovate around finding greener solutions for transport. In fact they have struggled to redefine their industry at all despite huge financial losses.

But liquid fuels (of one sort of another) seem likely to remain a major part of the mix for a long time yet and electric vehicles may still struggle against the prevailing marketplace until there are further stepwise break-throughs in the technology.

[tags] cleantech, sustainability, technology [/tags]

Free Online Apps: What’s the Catch?

Microsoft is currently trialling an initial release of its free online developer toolset PopFly. It provides enough kit to get yourself up and running with your very own Web 2.0 site plus an inbuilt social network for the developer community. The hosted application requires a “Flash-like” plugin called Silverlight.

The only limitation on users is their imaginations and the fact that PopFly version 1.0 still has a few eccentricities yet to be ironed out. In time honoured fashion this has not discouraged MS from releasing it to a willing public in order to carry out free user-lead testing on their behalf.

PopFly is a response to other hosted offerings such as Yahoo’s HotPipes which goes by the rather esoteric descriptor of “interactive feed aggregator and manipulator”. That’s geek-speak for “recombining” the assets of other web 2.0 sites and placing them at your fingertips and for others to use.

Microsoft is competing in this space because it doesn’t want to be outflanked by its arch nemesis Google (and others) who are populating the Web with hosted applications as fast as they can build them. But there is another more subtle reason. You simply cannot run PopFly unless you have IE 6 or 7 and Windows XP or Vista.

Upgrading your O/S seems to be less of a cultural imperative than it used to be in the past. Until quite recently I was happy running my basic home office business functions, such as email and word processing, on a Windows 98 platform. It remained reliable and has only once succumbed to a viral infection, from which there was a full recovery of data. Furthermore, “broadband” connectivity is so slow in the suburbs that my experience of “media rich” applications could hardly justify spending my hard earned cash on a new O/S. Hence MS know that they now need to make a much stronger case for late adopters like me to upgrade by providing free toys to play with online – toys that only work with the most recent version of their ubiquitous O/S.

But I’m still nervous about being tied to a single service provider for life. So why doesn’t someone clever make an easily installable Linux based O/S for laptops, complete with a nifty applications toolset? Then I don’t have to be reliant on Microsoft (or Apple) or Google to get my work done. Well apparently Ubuntu has the answer. Ubuntu is a free open source operating system that has its own user/developer community and is now reportedly installed on over 100,000 private and government owned computers.

The downside is that Ubuntu is still evolving. And whilst it performs adequately in a basic setup, it can be a wee bit buggy to install where there are lots of peripherals, sound cards, drivers and other toys involved. Furthermore Ubuntu has not been embraced (yet) by the likes of Adobe or by games developers for example. However support groups are popping up like mushrooms, as are new applications that do work with the Ubuntu O/S. A company called Canonical facilitates the project and offers to provide software support on a commercial basis whilst releasing upgrades and promising to keep the software free of charge. It’s a great example of how crowd-sourced content and user communities can make a difference in the world of technology. No doubt a lot of people are watching to see if this business model can be made to work on a global basis.

If anyone has tried Ubuntu, please do share your experiences.

[tags] Ubuntu, open source software, crowd sourcing [/tags]

Innovation Report Card Suggests Room for Improvement

A new OECD report on New Zealand’s innovation policy has found that despite a sound macro-economic framework, New Zealand still lags in terms of per capita GDP and only invests in R&D at about one third of the OECD average. Some improvements to the innovation policy framework are proposed in the report such as refocussing business support programmes, promoting rollout of high speed Internet and addressing the research funding process.

The study also criticises the fact that a myriad of public agencies are involved in setting innovation policy and distributing funding for research and business support. Will we eventually see a unified agency involved in innovation policy and funding research, science and technology in concert with economic development initiatives?

The OECD report card does however give good marks for the establishment of the Venture Capital Investment Fund and the Seed Coinvestment Fund which provide public-private partnerships to encourage early stage investment into high technology ventures. But there is little analysis as to the performance of these funds. In the past they have been criticised publicly for a lack of investment activity.

The government invited the OECD to carry out the review and responds that some of the areas highlighted have already been addressed with recent policy changes. In particular there is renewed vigour in promoting business linkages into the publicly funded research sector. The Growth and Innovation Advisory Board is held up as an example of how R&D policy is connected to grass roots business; although little has been heard from this body of late.

Having been involved on the periphery of the technology innovation scene for the last five years I have gained a few impressions of my own which I will share. One of the difficulties with the whole sector has been that central and local government agencies tasked with drawing up and enacting economic development policy are in a constant state of flux. With endless rounds of restructuring and change there has not been consistent leadership on promoting innovation as an economic development tool. In any event, governmental agencies are so risk averse that directly involving them in innovation seems almost oxymoronic.

Secondly, the research, science and technology community is predominantly publicly funded through either universities or  Crown Research Institutes. Government agencies dictate research themes and economic development projects in accordance with political directives. But worthy initiatives sometimes struggle because of underinvestment or a failure to commit to long term funding. There is considerable rhetoric about “economic transformation” but it is not backed up by ongoing resourcing or visionary leadership. Because politicians are looking for deliverables within their term of office, there is little appetite for long term funding for the kinds of projects that can make economic transformation a reality rather than an aspirational goal. One only needs to look to the more substantive per capita investment levels of countries like Singapore, Malaysia and Ireland. 

Finally, new knowledge arises from innovation networks not from individuals. Combining complementary assets and resources leads to the kinds of creative processes that add real value to an economy. In recent years, policy has shifted away from investing in supporting the social networks that underpin innovation, despite past successes both here and abroad. The private sector is also underinvested in R&D, but this could be improved through greater collaboration. But collaborative projects do not come alive without vibrant and active communities of interest. Facilitating such communities should remain a priority for those involved in economic development.

[tags] innovation, networks, research, technology, OECD [/tags]

Some Clear Thinking on the Digital Summit

I enjoyed Tony Clear’s thoughts on what he thinks needs to be on the agenda for the Digital Summit. He floats the idea that we need to be more focussed on “collaboration” – I agree. Whilst government agencies are tending to opt out of directly supporting industry-wide technology networks and collaborative projects; more than ever we need a unified approach to telecommunications and digital content issues. No individual person or organisation appears to have the answer to making a proper economic business case for broadband, so we risk missing the boat if we don’t work together on these issues.

Clear has expertise in the area of virtual team collaboration and related technologies, so he has a lot of credibility when it comes to the topic of collaboration in the tech sector. But I’m sure he is also well aware that the issue cuts a great deal deeper than simply learning how to deploy and utilise e-collaboration applications. It’s also about how the industry gets on and finds partnerships to make things happen.

Interestingly, we are already noticing the beginnings of some far reaching strategic realignment in the telecommunications industry as minority operators realise that a collaborative approach is neccessary to address the opportunities emerging from unbundling. I hope this approach extends beyond simply funding and setting up flash new networks. I really hope somebody is thinking about what kind of creative content and applications will drive consumer uptake in the future.

 I’ve learnt recently that political headwinds and personal agendas can sometimes stop good ideas from seeing the light of day. Let’s hope that the Digital Summit can help break down some of the invisible barriers that stifle innovation in this great little country of ours.

I’d love to get some feedback from readers on this topic.

Is NZ Missing Out on the “Clean Tech” Investment Wave?

There was an excellent interview with Nick Gerritsen on National Radio this morning. Nick is a unique example of a Kiwi innovator and entrepreneur who has leveraged both his technology start-up expertise and some deep connections into the U.S. venture capital community to kickstart Marlborough based biofuels company fuels company Aquaflow Bionomics.

The company is reportedly negotiating with aircraft manufacturer Boeing to run an airborne trial involving aviation fuel derived from algae and using his firm’s technology. The ramifications of such a project are mind-boggling. Incidentally, Nick is also a director of Celsias a blogsite and virtual initiative that looks at issues around global sustainability and renewable energy. Celsias invites people to submit projects aimed at “global cooling”.

It was interesting to hear his comments about how truely disconnected New Zealand remains from global capital, especially in regards to the surge of investment in “clean tech” or technologies aimed (in particular) at transforming energy production and usage. Gerritsen reckons that NZ has a natural advantage in this area and claims to already have investors from Silicon Valley in close contact with his own venture. Yet local investors to have overlooked the project.

Why then is the NZ investor community standing off from participating? He thinks that the economy has become distorted to the point where domestic consumption and investment in property far outweighs interest in  industries that generate real export revenues. Hence our distance from capital markets does make a difference in terms of constraining investment in local technologies. Since there is little capital available locally, only a fortunate few who have the skills and networks to tap into substantial offshore investment can really make it big, says Gerritsen. He argued that government moves to cultivate venture capital investment have yet to deliver in any meaningful way.

I have already alluded to the potential that exists for New Zealand technology in renewable fuels. Is New Zealand at risk of missing out on the next big technology investment wave?

[tags] technology investment, biofuels, cleantech [/tags]

Genomics: The Next Technological Frontier?

When J.C. Venter and his team of genomic researchers completed the sequencing and analysis of the human genome in 2001, the scientific world was turned on its head. Dr Venter went on to found a research institute  to support putting the gene mapping technology to work for the benefit of humankind. The Global Ocean Sampling expedition is a recently completed study by the same organisation, conceived for the purpose of evaluating the microbial diversity in the world’s oceans using the tools and techniques developed to sequence the human and other genomes. In the spirit of Darwin the researchers circumnavigated the oceans of the globe sampling a vast diversity of water-borne microbacteria. The project turned up millions of previously unknown genes and thousands of proteins. That the research was part funded by the U.S. Department of Energy gives some indication as to where this work is heading.

Microbial life forms were largely responsible for the deposition and decomposition of much of the materials that now form the basis of the global supply of oil. So it stands to reason that energy researchers should become more interested in the biogenic pathways that led there. In fact a small New Zealand company has recently received a boost for its gas-to-ethanol technology that employs bacteria to break down carbon monoxide to form ethanol. Influential Silicon Valley investor Khosla Ventures even saw fit to make a substantial investment in the company.

These developments underline the fact that there is a niche market for a range of technologies that arise from research into molecular biology and New Zealand is well placed to contribute because we have a highly regarded research community including the Bioinformatics Research Institute at Auckland University.

Biomatters is another New Zealand company that has identified the potential of this market. The company has recently moved its R&D headquarters inside the Bioinformatics Institute where it collaborates closely at the cutting edge of research. The firm has developed bioinformatics software for molecular biologists and biochemists. Their research software application provides protein and molecular visualisation, literature search help and data storage tools.

The institute is a great example of a public-private partnership that has the potential to spin off some world class research and more projects with commercialisation potential in the future. In fact there has been a shift in the landscape favouring “centres of excellence” as the preferred vehicle for high end innovation. There is a wealth of talent available around the country in applied technologies such as biotech, software, digital media and design. It would be great to see some more of these initiatives spring up outside of Auckland.

Broadband Treading Water

The news that even third world nations are getting on with the job of rolling out broadband comes as no big surprise. If 300 million global users are now accessing the Internet through high speed networks, then that is a market segment New Zealand simply cannot ignore.

Whilst we continue the academic debate over telco restructuring and the benefits of fibre versus wireless, other countries are getting on with connecting their businesses and emancipating their burgeoning middle classes through fast access to digital content.

New Zealand is brimming over with digital creativity, whilst emerging economies are crying out for it. It’s bad enough that our domestic network speeds are intermittently slow and patchy, but there is clearly now a tangible opportunity cost because our connectivity to the rest of the world is not that flash either.

We have a very fast research network with very little traffic, I’m told there is spare capacity on the Southern Cross cable and there are a number of high speed urban networks in operation or being planned. Surely digital content and applications providers would pay a small premium to be hosted within a high speed network environment with global reach?

What I cannot fathom is with all the smart people involved in the ICT industry in New Zealand, why nobody seems capable of making a good business case. If we don’t do this soon, then the most exciting digital offering to come out of NZ will likely be websites flogging insurance or similar.

Dental Software Deal Hard to Swallow

Investors may be spitting blood in the wake of a $77 million takeover bid for Software of Excellence (SOE). American healthcare mammoth Henry Schein cites “cross selling opportunities” as the fundamental attraction for absorbing the newly profitable dental software provider. Are they serious?

Henry Schein is a Fortune 500 company with 12,000 employees across 19 countries and a multi billion dollar turnover. Why are they interested in a tiny software company from the other side of the world? The answer is that the cheapest way for a large U.S. company to innovate is to simply buy in what it needs to dominate a global market whilst simultaneously smothering the competition. That strategy makes a lot of sense – for them.

One doesn’t need to look far afield to find several recent examples of American corporations swooping on New Zealand technology firms, buying up the intellectual property and then shutting down the local side of the business. That’s fine if you are a foundation shareholder looking for a nice fat return, but it doesn’t help the economy much. Jobs are lost and profits head offshore. Sound familiar?

But, I hear you say, haven’t cashed up entrepreneurs reinvested into new ventures? Yes they have, but most of those new companies have not yet made a dollar in profit and some possibly never will. For every headline sale of a tech company abroad, there are a hundred firms that never make it. I guess the question we have to ask ourselves is a simple one. Is it an acceptable model for NZ to be an ideas incubator to the rest of the world and for us to accept that we have neither the organisational heft nor the capital required to fully exploit global markets?

Perhaps incubation and sale is a perfectly acceptable model? But it seems to me that you need to be sequentially churning out lots of quality ventures to make that model work for the broader economy. I don’t think we are quite there yet. Whatever happened to the plan to build and grow 100 by $100 million tech companies?

Considering some of the other recent trade sales, $77 million seems a little on the light side. I hope SOE shareholders don’t sell themselves short.

Generation C and the Co-Production Economy

I predict that one way or another we’ll be hearing more about “Generation C” the Community of talented individuals who Connect to Co-Create Content. What a mouthful! Appropriately, the phrase itself has been popularised by online articles and has begun to take hold with the aid of viral marketing, virtual magazines and blogging. Idealog ran an article on the topic about a year ago.

The concept probably had part of its origins in Richard Florida’s controversial, but widely read book The Rise of the Creative Class, which explores the Post-Industrial shift towards “knowledge work” involving technology and/or creative pursuits and how this is impacting on cities and economies.

Labelling the co-production economy as the next Renaissance is possibly going a little far at this stage and I still believe we do need to question the validity of crowd-written editorial. Contrarians like Andrew Keen go even further, espousing a dystopian view of the future whereby the Internet enables the lowest common denominator to prevail in the world of arts and letters. He describes Web 2.0 as  a “vertiginous media world in which content and advertising become indistinguishable”. However, Keen may have an axe to grind. He founded an Internet startup company that crashed and burned during the first tech boom.

Notwithstanding all the cynicism, I do like Matt Webb’s summation of what Gen C stands for amongst creative and connected people. Community, empowerment and sharing seem like important themes even without referring to the Internet in any way. I’ve seen the phrase “digital socialist” used in the context of freeing up better broadband connectivity and perhaps that moniker applies here too. So is Gen C and the disintermediation of traditional media and consumer channels perceived as a broader threat to capitalism?

Patricia Seybold doesn’t think so. In fact she articulates a somewhat clinical and business centric view. She’s adamant that Web 2.0 is neither a fad nor a phenomenon associated with a particular demographic. Web 2.0 enables not only peer produced digital content, but also opens a whole new channel to engage with customers by allowing them to co-design the products and services they want.  More importantly let’s imagine what might be possible if we networked entire organisations together and let them collaborate on interesting stuff.

But once corporates and government agencies take it onboard, will Web 2.0 then become mainstream and lose its cutting edge? Once everyone is converted to Generation C and is cross-trading the same images, soundbites and information nuggets repeatedly, will this devalue the opportunity? Will we still be able to differentiate between knowledge and folklore?

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The folks at Webstock have organised a panel debate and networking evening in Wellington on June 19th. The topic of the debate is:  “That Web 2.0 is all fizz and no substance”.