Monday, January 30, 2006

Gates, Zennström: Storage, Processing Power, Adding Users now Free

Turns out the WEF actually has some podcasts of their panels. I found the "Digital 2.0: Powering a Creative Economy" panel to be quite interesting.

Here's some food for thought from Bill Gates and Niklas Zennström (co-founder of Skype). First, Bill Gates about the remaining challenges in technology:

"I think the easiest way to understand the new developments is to think of computing power and storage as almost free.

What are the limiting factors that are left? [They are] the ease of management, ease of development, [and the] ease of a user working with multiple devices. Then, take this idea of digitization and map it against all the activities that we would like to change. [...]

Broadly, it's taking all those activities – digital workstyle and digital lifestyle – and thinking through how infinite hardware ability with a little bit of software do those things. Then, you need to apply the test of whether it's simple enough and packaged in an [easily understandable] way."

Zennström started out by stating that Skype now has 75 million registered users – quite a feat for a company that was founded a bit over 3 years ago.

"You have to think about the incremental cost for a new user […] as virtually free. So it doesn't matter if you have a lot of users that don't pay because that doesn't cost you any money. But it creates a great ecosystem, a network of people who are then spreading your service to others.

We don't think about the average revenue per user. We think about how many active customers we have and how we can convert those to paying customers."

Friday, January 27, 2006

Does Global Tax Competition Increase Poverty?

Every year, the world's leaders meet in Davos, Switzerland, for the World Economic Forum. This convention is a highly exclusive– you have to be head of a major international corporation to participate. However, there is a parallel event taking place, the Open Forum, which is open to the public. I figured I might as well go.

There have been accusations in the past that Davos is turned into a fortress during the WEF. They are only partially true: Sure, the conference center is blocked off, and the police and security guard density is the highest I've even seen in Europe. But it all still looks very peaceful. As a side note, Davos had the highest concentration of black Audi sedans I've ever seen – Quattro for snow?

We all like lower taxes and corporations do too. But do countries that drop tax rates to spur the economy and attract foreign investment do this at the expense of the poor in other countries? Are nations that do not get foreign investments deprived of income needed to run their social system? This was the topic of Thursday evening's panel at the Open Forum.

The two sides of the issue were best played out by Youssuf Boutros-Ghali, Minister of Finance in Egypt, and Leonor Briones, former Treasurer of the Philippines.

Boutros-Ghali pulled off quite a coup when he dropped tax rates in Egypt from 42% to 20% last year and eliminated all tax loopholes and fiscal incentives for foreign investors. Even though this move was much, it actually increased tax income in his country!

One reason for this is that foreign investors prefer low, but predictable tax rates over having a 5-10 year "tax holiday" after first settling in, but later being taxed at 42%. Some even prefer investing in Egypt over places like Dubai and Kuwait, which basically have no taxes at all, but also don't have a cheap labor force and a only small home market.

For a country on the other side of the world, in the Philippines, Leonor Briones painted a different picture: High rates of poverty and the highest infant mortality rates in Asia are plaguing a country desperate to get foreign investment. Nearby neighbors - Hong Kong and Taiwan - are engaged in intense tax competition, in her view at the expense of the Philippines, which needs every penny it can get to solve its internal problems. Sheila Killian, a lecturer in economics at the University of Limerick seemed to share this view.

Overall, I found the Egyptian argument to be more persuasive: Drop taxes and clean up your system to encourage growth seems like the right way to go. As harsh as this sounds, competition is not an opt-in system. While many may sympathize with loud whining about the unfairness of your neighbors, that does not help solve your problem. Ireland, Egypt and almost all of Eastern Europe have profited greatly from becoming competitive. There is no reason why you can't follow their example.

For me, the answer to the question "Does global tax competition increase poverty?" is "Yes, unless you participate in it, which you should."

On the other side of the panel, a different fight was taking place: Brian Henderson of Merril Lynch and Peter Athanas, CEO of Ernst & Young Switzerland had to defend the perceived tax-evasive behavior of multinational corporations. They both denied that it still exists. In fact, according to Athanas, 'tax planning' in corporations is now much less aggressive than in the 1990s, and almost all companies pay their dues.

Much of the following Q&A was very disappointing: Instead of asking relevant questions, most audience members' contribution consisted of accusing multinational corporations of misbehavior: It ranged from a four-minute rant about Ernst & Young's role in the Enron scandal to basically asking the Merril Lynch guy about how much laundered money they have in their bank. I, too, believe that corporate responsibility is important. But I also think that it's very simple to equate big with bad.

One point that was lost completely in the panel is that the world is not made of huge corporations. It is made of small and medium-size enterprises. By lowering tax rates in your country, you're mainly supporting these companies and encouraging them to grow. The growth they deliver is much more sustainable than that of corporations who might leave the country in a moment's notice. But maybe thinking small is too much to ask of the WEF.

Thursday, January 12, 2006

Track Your Life with Google Search History

You may already have noticed it: If you have a Google Account and keep yourself logged in, a "Search History" link appears on the top right side of every search results page.

This feature has been extremely useful for me many times. If you search for a lot of technology-related documentation like me, you usually rephrase your question many, many times before you get results that really address what you searched for.

Recently, I was looking for a way to flush the linux disk buffer, so that some measurements I performed could start with a completely cache. In my search history, you can see how my queries started with the naive "how do you flush disk cache in linux?", morphed to "generate huge file linux bytes", before my searching ended with "dd /dev/zero/ of count". A couple of days later, I may have forgotten the last query, or the URL of the site that led me to, but will be able to reconstruct it from the search history record.

In addition, Google has recently added a Trends feature that compiles your search behavior into nice charts. Using these, you can easily track your own life. For example, the "hourly search activity" graph will seem like a chart of your waking hours.

Clearly, this is not a product for people worried about privacy. Myself, I will really start worrying once the ads next to the search results start to unexplainably be tailored my interests. Until then, I should go to bed earlier - as the chart suggests.

Is Video Conferencing Finally Catching on?

Today's Financial Times reports that Tony Blair has asked George Bush to overturn a decision that cancelled a $2.4 billion contract for Rolls-Royce:

"According to US and UK officials, the request was made in a video conference call between the two leaders, which came just days after Mr Blair sent a letter to Mr Bush outlining his case."

The fascinating thing here is not the jet fighter engine deal, but that two of the world's world leaders are using video conferencing for chatting about such topics. The days of the red telephone may be numbered.

There have been lots of video-conferencing products coming out lately. Probably the most interesting system is Hewlett Packard's Halo, which costs half a million dollars to install per room, but apparently delivers quality that is out of this world. An Economist article hints at the profile of the the average target customer:

"Steve Reinemund, boss of PepsiCo, says that every chief executive to whom he has shown the system has decided to buy it, too."

Meanwhile, in consumerland, Skype now supports video calling, while Apple is putting an iSight video camera into every new Mac model.

Are we all going to be using video conferencing soon? Will you, dear reader, be using this soon? Leave a comment and let me know.