Facebook Is Becoming A Virtual Phone Company

Facebook Messenger now makes up 10% of global mobile Voice Over IP calls. Because the audio quality of mobile VOIP calls are higher than the quality of the standard phone calls, the use of Facebook Messanger will continue to go up. Facebook will also add free mobile VOIP feature to WhatsApp.

Two years ago I anticipated Facebook will become a communications medium in which your Facebook ID could become your de facto phone number. I admit that while Facebook Home didn’t succeed at all, with 600 million Messenger users and 800 million WhatsApp users the mobile VOIP call feature could have a global impact on the telecommunication services.

The phone companies will have to rely increasingly on charging for data usage rather than for the traditional voice calls.  Even that avenue of profits may become problematic with Google, Facebook, Elon Musk and Richard Branson (through their new satelite ventures) aiming to become global ISPs for over 50% of world population. Telecommunications companies will have to adapt and figure out new ways of generating income.

Eclipse: Solar Energy’s Achilles Heel

Europe power grid system was put to the test by the recent solar eclipse that swept the continent. The solar power installed base generates over 89GW, of which more than half is sourced by Germany with a capacity of 39GW. The German grid operators managed the rapid transition from full power to a low level caused by the eclipse and back to normal levels by rebalancing the power system using traditional power sources and reserves. Overall the European grid was back to normal without any issues. This event though reminds us of a major weakness of the solar power system in the long run.  If an event causes a significant reduction in solar exposure the power grid relying on this type of source will be affected. For instance, a volcanic eruption could cloud vast areas of land for long periods of time.  Solar power is an excellent source of energy, but it needs a good backup plan. Europe’s Power Grid Passes Eclipse Test; No problem meeting electricity demand, despite large amount of solar capacity.

The Clash of Two Shanghai Secrets

Thomas Friedman wrote an op-ed article in the New York Times he probably wished it never happened. “The Shanghai Secret“, as the op-ed is titled, received a blistering response from Ann Qiu. It’s not like Thomas Friedman said anything outrageous. By contrary, the article is as inoffensive as it can be, similar to many other written on the subject of China’s extraordinary focus on achieving international reputation in education. Anyone following the PISA rankings knows that the Shanghai region is included in this list as a country. Everyone was surprised when it topped the PISA score ranking in 2009.

After visiting Shanghai’s Qiangwei Primary School, Thomas Friedman declares he found the secret of Shanghai’s schooling performance: ” a deep commitment to teacher training, peer-to-peer learning and constant professional development, a deep involvement of parents in their children’s learning, an insistence by the school’s leadership on the highest standards and a culture that prizes education and respects teachers”. One could think he may have stirred the ire of some American or European teachers who work very hard doing exactly that, but surprisingly it was a Chines educator who took offense of the comments made in this article. Ann Qiu decided to write a replay when she read “what Mr Friedman said to the American people through this very influential newspaper, I couldn’t help feeling upset”. She goes on to say “an American who has interests in China at least should have some basic understanding of Chinese contemporary history. To me, Mr Friedman is not such a person”. That’s harsh. The game is on!

The anger stems from a personal experience shared by many parents in China. There are two frustrations that are brewing in this reply: the students are homework force-fed, they rote learn and they have to pass standardised test as an absolute measure of success in education, and fact that the parents are responsible for the homework working long hours as if they have a second job, unpaid mind you.

While Thomas Friedman quotes a Chinese teacher who said with pride that his job also includes “parent training”, Ann Qiu almost explodes at that thought: “Mr Friedman was applauding a deep involvement of parents in their children’s learning, Chines parents, in fact feel kidnapped by it. […]. Every afternoon, after school time, before dinner time, on a mother or father’s mobile phone, a homework list is sent by the teachers who often are in charge of three major subjects: Chinese, math and English. […]. Through these tools, teachers pass their duties to parents because it then becomes the parents’ job to make sure that their children complete the homework.”

This reminded me of a video I watched in the early nineties about education system in Japan where students and parents were under relentless pressure to perform and produce good results during tests. Young students from primary to secondary school levels would go to coaching colleges after school and then continue to study until late night with just a few hours to sleep before going to school next day. Japan invested in education with a clear goal of creating a skilled and disciplined workforce to establish itself as a global economic leader. It seems China is following the same steps Japan took a few decades ago.

Six Californias

Bubbling Tech Power Wants California Split

Could there be a state of Silicon Valley, a dream political unit in which innovation can be represented unhindered by the problems typical of the old industrial era? This is what Tim Draper is proposing in his plan to split California into six states.  The proposal cites the reasons of oversized California compared with other states in terms of population, geography and economic power, the lack of proper political representation and poor administrative services.  The movement behind this proposal already has a website for marketing and support gathering.

I assume a lot of effort went into the design of the territorial make up of the new states.  The logic behind this blueprint must consider the history of California, the demographical distribution and its group interests. It is clear though that beneath this general dry presentation that the high-tech are the key influencers. What they really want is to have one state for themselves, the state of Silicon Valley.

This is fascinating. What an idea! On one hand one could think that this is madness, an exaggeration, one of those crazy ideas that are doomed to failure from the beginning.  It could be interpreted as a sign of out-of-touch grandeur of companies that have achieved colossal success at a global scale: the Twitters, the Facebooks, the Apples and the Googles.  It almost sounds like a prank. On the other hand maybe the people behind this proposal are onto something. Tech companies are moving much faster than Washington, they have caused a revolution that is changing the economic landscape not only in terms of novel technological products, but in terms of structure of workforce, education, social relationships.

Regulations are slow to adapt. Maybe this is a good thing and a bad thing in the same time. You don’t want to make mistakes that affect future generations because you made a quick bad decision or because you procrastinated for too long.  This plan goes for speed.  The California six-way split is wanting to accelerate the pace of regulatory change and create a power base for the tech class that can rival those held by the finance, energy, manufacturing and agricultural groups. The Twitters, the Facebooks, the Apples and the Googles are the new dynasties as the Morgans used to be (they still are to some degree).  Or perhaps the likes of Kleiner Perkins Caulfield & Byers (Tom Draper is representing one of them) are the real dynasties pushing for this change.  If somehow through a miracle this happens, other states will follow. The consequences are incalculable.

Update 3 Jan 2014:  I found this map created by professor Andrew Shears who created a fantasy version of US based on past partition proposals.

USNeverWas

 

 

Fed Stimulus Blunted as Software Replaces Hardware: Economy

See on Scoop.itDisruptive Technologies

Mike Nobis saw how the financial crisis led his customers to postpone orders until the last minute, forcing his 100-year-old family printing business to work faster to deliver on time.

ThoughtKast‘s insight:

Business invests more in software to increase efficiency and reduce the headcount

See on www.bloomberg.com

Australian Banks Worried about Competition from Silicon Valley

In a rapid succession in the space of two weeks, two major Australian banks raised a red warning flag signalling their deep concern of what could be their biggest existential threat. The threat comes from not from the  Bank of America, or Citibank, HSBC or Bank of China, but from unexpected sources, in form of nimble technology companies from Silicon Valley.

Commonwealth Bank CEO Ian Narev expressed this view at the G100 Congress in Sydney in May this year.

The new competitors are “the Apples, the Googles, the Samsungs, the PayPals, the credit card companies, who can pick particular slivers as a result of the application of technology into financial services and compete. We need to be prepared for that.” he said.

Ian Narev alluded that regulations have to be adapted to reign in a new type of competition. The trouble with this competition is that there is no precedent. Disruptive innovators create solutions that address needs outside the boundaries of traditional models before invading the established markets threatening to displace the incumbents. What to do?

Take for instance the case of Dwolla. Founded by a 28yo young entrepreneur from Des Moines, Iowa, USA, Ben Milne, Dwolla is a 12-person startup that invented an online payment system that bypasses credit cards completely. This startup is onto something because large financial institutions are very interested in this idea. Venture capitalists are backing the company with money. Just last month Dwolla received $16.5m in funding, its biggest investment yet. It is hard to predict the impact of Dwolla and other similar innovators on the banking system in the near future if the momentum continues.

A couple of weeks ago, the ANZ chief executive Mike Smith described the technological innovation wave that is about to hit the financial industry as “terrifying”. Smith made this statement to the board based on information received following a study undertaken by the bank during a tour in California. “Much of it is being driven by small companies that are very active in payments but very well-funded, and they are moving very quickly.” It is interesting how quickly ANZ followed Commonwealth to look at what is happening in the Silicon Valley.  Something must make them nervous.

Reputable banks have some of the deepest moats protecting their business from new competition, something that Warren Buffet always liked about banks. But rapid changes can ruin that assumption. The transformation will go beyond improvement of operations. It’s about service, it’s about having a different presence in the peoples’ lives, with new perceptions. If a “normal” bank is still something that brings to mind images of prestigious physical old buildings (you-come-to-us), the new banks need to become virtual, quick, creative and very social (we-come-to-you).

Will the disruptive innovation brought by super-smart technology companies become a systemic threat to the traditional banking system? Maybe not, not entirely that is. It is more likely that a wave of restructurings, consolidations, and small bankruptcies will re-shape this business. Banks that “read” the market signals will either buy some of the successful fresh innovators, or innovate themselves, or establish alliances to surf this new wave of opportunities and reap the benefits. Others that refuse to see the threat may well as disappear.

Who Is Funding MOOCS?

Forces disrupting education are gaining momentum. This is made visible by the increased investment in innovations outside the mainstream educational institutions. This will feed the demand for more education services supplied by businesses that although they did not exist only a few years ago they have a huge impact on the way education is delivered around the world.

In an interesting diagram published by The Chronicle of Higher Education four players are placed at the centre of the MOOC universe: Coursera, Udacity, edX and Khan Academy. The latter is a little bit of an odd addition to the group, but nevertheless it is an innovator with huge impact.

Image


Source: The Chronicles of Higher Education (2013)

What seems to be contributing to the fast ascendance to power and influence of these organisations is the network effect supported by the participation of three types of investors: venture capitalists, large non-profit educational institutions and elite American universities such as Harvard, MIT, Stanford and University of Pennsylvania.

It is important to note that MOOCs are not pure technology companies. There are no IBMs or Microsoft or Google in the mix, and this is a good thing, because this allows enterprising educators to create something that has design elements organically crafted with educational DNA.