Popular Programming Languages In India

A selection of programming language t...

Google Keyword Tool can provide good insights sometimes. While I was playing with it, I just compared the ratio of keyword searches for some programming languages in India vs Worldwide –

Keyword Global Monthly Searches Local Monthly Searches (India) Percentage of Local Searches
.net 506000000 20400000 4
c 226000000 9140000 4
php 101000000 4090000 4
java 83100000 6120000 7.4
html 55600000 2740000 4.9
javascript 24900000 1830000 7.3
asp 20400000 2740000 13.4
programming 13600000 1500000 11
python 13600000 368000 2.7
ruby 11100000 246000 2.2
perl 7480000 368000 4.9
coding 4090000 550000 13.4
actionscript 2740000 135000 4.9
software programming 2240000 60500 2.7
objective-c 1000000 74000 7.4
lisp 1000000 27100 2.7
groovy 823000 22200 2.7
Total 1074681100 50411800 4.7

Python and Ruby are not very popular in India compared worldwide, while Java, Javascript and .Net are relatively more popular.

Also interesting to note that local search is only 4.7 %age of total search for these specific keywords.

Education In India – Is It Just About Getting A Degree Or Cracking Entrance Exams?

Needless to say, Indian Education needs a lot of work. There are problems aplenty and these are clearly visible. On the other hand, there is already lot of work undergoing – new schools, engineering colleges, MBA colleges, eLearning companies coming up every day… hard to believe that it is not a bubble. In addition, it appears there is a terrible mismatch between the excitement in this sector and the problems that plague currently.

If we list down some of the problems –
– Lack of schools offering quality education at less than Rs 100/month
– Lack of teachers in schools
– Students passing out of engineering schools/ MBA schools are not employable
– Divide between urban and rural India

While, most of the investments we are seeing today, for instance, are in –

– Test prep, coaching classes, JEE and other entrance exams: more than $billion market catering to just around a million students
– eLearning companies making sub-standard content to crack K-12 exams (sometimes, in the name of animated content, it is just set of Powerpoint slides with a voiceover)
– Opening of schools in cities (charging more than Rs 1000/month)
– Opening of b-schools in India (now there are around 3000 B-schools in India)

And the reason for the above pattern is simple – making money is easy for these businesses. Parents are shit-scared to lose out not sending their kids to IIT coaching classes. Schools need to tick-mark if they support Audio-Visuals in their premises. People need B-school tag to get a job. What appears is that these businesses are built around opportunities that take advantage of the problems. However, in no way, they are solving the real problems.  To be fair, making money in solving the education problems in India holistically is very difficult. How many people in India will pay in the name of learning? It has to be some entrance exam or some degree or certification when people pay. Why does someone have to consider opening a school providing low-cost education when there’s already huge demand in upmarket? And probably I would do the same thing – exploit the system unless you find a sustainable model. You need to survive and only then you can make a difference.  Again to be fair, some people/companies are actually trying to solve real problems and have come with successful business models.

So what is the way forward? In the long-term, market is a weighing machine. Supply and demand keep swinging but converge in long-term. And if the current investment is not solving the real problem, the bubble will burst. But it can also become bigger than what it is now. It is also possible that I am terrible wrong here. Only time will tell.

15 Resources For Intelligent Investing

I remember the amount of time it took to discover resources on investing when I started investing. The problem was further amplified by the analysts’ noise on TV and stock market exuberance in the surrounding. Since I would be taking break from active investing for some time, I thought of putting down some resources for budding value investors. Feedback is always welcome. Here is a list of resources that might give a head-start to young investors –


Books are investor’s best friends if one does not have enough people to talk around about investing.  Spending more time with books would also help you cut your time watching CNBC and stock market levels. There are many interesting books on investing and the more books you read, the more you would want to read. Here are few good books to get started –

1. The Intelligent Investor

The book is written by Benjamin Graham, the teacher of the investing God Warren Buffet. Although Buffet himself does not follow the quantitative framework provided in the book, it is a good book to start primarily to get into value investing school of thought – paying cents for a dollar and understanding Mr. Market.

2. Annual Letters to Shareholder from Mr. Warren Buffet – Berkshire Hathaway

Investing is best done when it is done like business. And nobody understands business better than Mr. Warren Buffet. Every year Mr. Buffet writes letters to Berkshire’s shareholders and each one of these imparts immense wisdom. Must read for anyone who wants to learn investing or learn business. There is also a book covering the lessons from these letters – The Essays of Warren Buffett: Lessons for Corporate America – a quicker read if you don’t want to download each letter and go through details of Berkshire’s businesses.

3. Buffet: The Making of an American Capitalist / The Snowball

Now since we are learning from the writings of the great man, we can also read more about his life from either of these two books – Buffett: The Making of an American Capitalist by Roger Lowenstein or The Snowball: Warren Buffett and the Business of Life by Alice Schroeder. I would recommend both. Continue reading “15 Resources For Intelligent Investing”

Dolby Labs – A Real IP Company

Dolby has similar clout as a brand in Audio technologies as Intel has in PC market. For namesake, there are multiple technology licensing companies (perhaps numbering in thousands), but there are only few who have brand recall like that of Dolby. Other than creating breakthrough technologies, Dolby also makes money and enough of it. For starters, it made more than $700 million dollars for year ending Sept, 2009 with around $250 million profits. That is more than what ARM makes being the number one IP company.

Dolby Labs develops and markets products and technologies related to audio entertainment and are standard in a wide range of entertainment platforms. Dolby’s compression technologies, noise reduction technologies and surround sound are used in DVD players, PC DVD playback software, DTVs, STBs, PMPs, gaming systems, a/v receivers etc. Primarily, it makes money by licensing its technologies to consumer electronics manufacturers and media software vendors. This makes up more than 80% of the total revenue. The remaining part comes from selling products and services to entertainment content producers and distributors.

Licensing revenue can be split into following major chunks – PC market, broadcast market and consumer electronic market and other nascent markets like mobile, gaming and automotive market.

– PC market makes up around 35% mainly driven by the inclusion of Dolby’s technologies in media applications and operation systems. Microsoft is a major customer with almost 10% revenues coming from it. It is also a competitor to Dolby in one way. Dolby Digital and Dolby Digital Plus are the key technologies employed in this segment.

– Consumer electronic market is around 25% [mobile market is treated different from consumer electronics]. Dolby Digital and Dolby Digital Plus are mandatory audio standards for Blue-ray format, so Dolby’s technologies become part of every Blue-ray players. Earlier, it enjoyed the same privilege in DVD players.

– Broadcast market which is mainly about STBs and TVs constitutes around 25%. This segment has shown an exceptional growth benefiting from increased global shipments of set top boxes and digital televisions. Here again Dolby Digital, Dolby Digital Plus and HE-AAC are the major technologies minting money for Dolby.

– Mobile, Gaming, Automotive and Licensing services cover up the remaining pie of the total Licensing revenues. Mobile markets are primarily driven by AAC and HE-AAC technologies, whereas Gaming and Automotive are driven by Dolby Digital, ATRAC and Dolby TrueHD.

Besides licensing revenues, product sales consist of revenue from sales of equipment to cinema operators and broadcasters representing around 15% of total revenue.

Dolby’s current position in these markets offer a decent growth for next few years. The real upside can come from mobile market where it is trying to increase the scope of its technologies. With the increasing processing capabilities of Smartphones and Internet Tablets, there are lot more things that Dolby can do to improve consumer experience. So in short Dolby is well positioned to ride on the success of mobile devices.

Dolby has also introduces many new technologies like Dolby Volume, Dolby Mobile, Dolby Axon and dynamic range image technologies. These technologies will start adding to topline in coming years. In addition, increasing penetration of CE device is developing nations like India and China will increase Dolby’s prospects [Dolby’s licensing deals are based on number of devices sold by the system licensee].

Geographically, Dolby is well diversified as it enjoys more than 65% revenue outside US. The major competitors include companies like DTS, DivX, Fraunhofer Institute, RealNetworks, Sony, SRS Labs and Thomson. The major competitive advantages of Dolby are 1) its brand, 2) its technologies, 3) its close relationships with content producers and distributors and 4) its clout with the standard licensing bodies. Dolby has almost 1600 patents issued and 2000 are pending in multiple countries.

Here come the numbers. Dolby has grown 80% in last three years and maintained profit margins of more than 30% last year. It employs around 1000 employees and with around $720 million dollars revenue and $250 million profit, the productivity is quite high. By Sept, 2009, it had cash and cash equivalent of $450 million dollars. Return on equity is around 20%. The market cap of Dolby is around $7billion.

A company worth keeping a close watch.

Tata Elxsi – Is it just another software services company?

Tata Elxsi is software products and sevices company promoted by much renowned Tata group. It was created as a joint venture between Tata and Elxsi, a maker of mainframe computers and incorporated in 1989 as a hardware manufacturer of computer servers. Elxsi went bust in early 90’s as mainframes went out of fashion. Only the name remained after so many years.

Tata Elxsi has four product divisions – Product Design Services, Industrial Design Division, Visual Computing Labs and System Integration Services. However, it reports revenues as two segments – Software Development Services and System Integration Support & Services. It is not very clear as to which product division fall under what segment but seems that the first two product divisions are reported combined in Software Development Services while System Integration Services and Visual Computing Labs are reported with System Integration Support & Services. Software Development Services form major chunk of the total revenues. [already confused with so many similar sounding divisions/segments?]

Product Design Services division appears to be usual service company operation in software, hardware, systems, vlsi, basically whatever comes in the way. It claims to have domain and technology expertise in VLSI design, embedded software, networking, telecom, multimedia, storage, wireless and high-performance computing. This perhaps cover almost all the domains in electronics Industry. This division completes with lot of Indian companies operating in embedded and VLSI space vying for outsourcing pie from companies operating in electronics space. This division might be constituting more than 80% of the revenues.

Industrial Design Services is somewhat more interesting as it is different from other IT companies. This division provides complete product solutions to clients across multiple industries like FMCG, consumer electronics, transportation etc. This division has worked on many successful product designs including the Pureit water filter and Pond’s for Hindustan Unilever, Horlicks Junior and Women’s Horlicks for GlaxoSmithKline and styling intent and Class A surface development for car makers such as Jaguar, Land Rover and Nissan. As interesting it may sound, but we do not know how much money it really makes and contributes out of the total pie.

Nothing much to take note for System Integration Services where it competes with number of System Integrators (SIs) across the globe. Visual Communication Labs division is interesting with its hand behind special effects and animation in many Indian Movies.

With major chunk of revenues coming from Product Design Services division, the growth is tied to overall growth of embedded and IT industry. The strength lies in the brand name associated with Tata group. This can also bring in work from Tata group companies and companies enjoying close relations with Tata. There is also a possibility that it get merged with TCS, another Tata company and leading IT Services company. However, there has been no signal from any of the companies for this. There is no significant competitive advantage apart from being a Tata group company. Recently company has been showing very bullish signs and have taken the fancy of analysts. Appointing Mr. S Ramadorai, ex-TCS CEO as Chairman has added more fuel to the fire.

It needs to be seen how the company can diversify the business from Product Design Services to other three divisions. Company has already been investing heavily in VCL division. Results are yet to be seen. It would also be interesting if the company gets in product development or IP development in a big way. The space is very crowded and it will be difficult to make a mark but the upside is very high if it gets successful.

Coming to numbers, for year ending March 2010, Tata Elxsi reported revenue of Rs 3.88 billion down from the previous year (Rs 4.19 billion). Net profit was Rs 488 million versus Rs 581 million. Total capital employed was Rs 2.14 billion. That comes to 12.6% Net Profit Margin and 22.8% ROE. The dividend yield has been always good. The market cap had started seeing action 6 months back after being subdued for a long time. Perhaps the time of making obscene money on the stock is gone.

Disclaimer: I hold the stock. I bought it at very low price when it was grossly undervalued. I can sell it anytime I need money or find another opportunity or just feel like doing so.

Apple – Is it the peak?

Apple has touched the market cap of $250 billion. At this stock price, it is only second to Exxon Mobil Corporation across all Industries and first in technology even leaving behind Microsoft. Take any two companies of the following set – HP, Intel, Cisco and Oracle – and the sum of market cap is less than that on Apple. In last one year, the stock price has risen by almost 100%. Investors are upbeat about the future prospects.

There are reasons for being bullish. The phenomenal success of multiple products one after another, a cult-like customer following, multi-million worth of free marketing, iconic status in commoditized consumer electronics Industry and charisma of Steve Jobs – multiple set of conditions existing all together! iPod broke all the records and killed all other alternatives. iPhone broke iPod’s record by selling 1 million devices in just 74 days. iPod took two years to achieve this. Then comes iPad and it takes only half the time what iPhone took. And not to forget the phenomenal success of iTunes and App Store. Macs and Macbooks are also doing fine.

However, it is always difficult to maintain this position. Lot of things can go wrong. What if iPad sales do not keep up this momentum? Android phones are closing in [NPD already claims more Android phones being sold than iPhones in the last quarter]. Steve Jobs is going to retire some day. People will get bored of talking about Apple some day and hence goes free publicity. Competitors, are making products which are almost as good as Apple’s and in some instances at half the prices. In addition, technology Industry is always fraught with sudden changes which can shake the entire ecosystem.

Let us visit some numbers.
Sales ending year 2009 – ~$43 billion.
PAT year ending 2009 – ~$8.2 billion
Total equity year ending 2009 – $31.6 billion
Total market cap (as of today) – ~$250 billion

Rewind back by ten years to year 2000 and check the numbers from Cisco and Microsoft
(source: Wikipedia)

Microsoft’s market cap – ~$586 billion
Cisco’s market cap – ~$350 billion

Let us first discuss Microsoft. Microsoft reported revenue of $22.96 billion for the fiscal ending June 30,2000 with net income of $9.42 billion. Windows 2000 was a hot cake. Microsoft had had line of successful releases and enjoyed monopoly in operating systems (it still does). PC growth rate was terrific which was benefiting both Microsoft and Intel. Microsoft also unveiled .NET platform eying the applications market. MSN network of Internet services was the Internet’s largest network. Analysts were bullish about Microsoft. Nothing could have gone wrong (with Microsoft and the whole Technology Industry).

Coming to Cisco, the darling of Wall Street, was in an even faster lane with a sparkling decade behind it. It acquired numerous companies. One startup company was valued at $7billion in 1999. It recorded revenue of ~$19 billion in year 2000 with an income of #2.67 billion. According to letters to shareholders for year 2000, It held leadership position in 16 of the 17 key markets. An equity analyst noted – “But they [Intel and Microsoft] are in a much more moderate growth phase. The more rapid growth is to interconnect all those computers, and Cisco is the standard bearer for all that interconnection.” People were expecting [dreaming] that Cisco will achieve market cap of $1 trillion.

Coming back to 2010. Both Microsoft and Cisco are alive and leaders, albeit at lower market cap even after 10 years. Relatively Microsoft did better than Cisco perhaps because Cisco’s case was more optimistic in 2000.

Today we see the similar optimism for Apple. What would be the market cap of Apple in year 2020?

Disclaimer: I am a fan of Apple. I own an iPod, an iPhone and a Macbook. But I really dont care if Apple’s share fall 90% from the current level. I do not own the stock.

Free IP Model

Is “Free” going to work in hardware the way it has worked in software? We have been so accustomed to use free software but will hardware be ever free. The distribution costs are almost nil for software products while hardware involves both the distribution and manufacturing costs. But here we are just looking at the final product in the value chain. What about the intermediate stages?

To answer this question, we will have to consider the various levels in the hardware value chain and analyze the scope of “Free” model. We have already started to see some open source movement gaining up in the hardware side. There are some free EDA tools like Spice and GTKwave. There are some open source IPs for Microcontrollers and many other designs on opencores. There are also some open source board designs, schematics etc. Considering the “software” nature of these components in the value chain, we can explore the viability of “free” here.

There is decent amount of stuff free or in open source domain with various licenses. However, there is nothing of equivalent caliber as Apache or Linux from the software world! In software, there is MySQL against Oracle, but there is no free silicon IP equivalent to ARM. To my knowledge, there is no open source silicon IP being deployed in mass production (Are there any? Would be interested to know if any).

Reasons? One of them is that it is very hard to ascertain the quality of a “Free” IP. Another important thing is the much needed support in the integration of the IP. Then there is customizations based on various project requirements like frequency, interfaces, technology etc. With all these problems and considering the fact that the cost of IP is marginal compared to the overall chip cost, it is a risky proposition for a chip vendor to consider a free IP.

So it there anyway of establishing a successful IP model based on open source or “Free”? One of the options is to go the “software way”. The delivery is open source or free but you charge for the support and services. Some IP companies, at a smaller scale, may be already working on this model.

The other “software way” of making things available free by means of advertisement is difficult to replicate in IP model. However, it is worth considering the Freemium model, where a basic version is provided free with additional costs for enhanced features. One thing to note here is that the “Free” need not always be open source. It can be proprietary IPs with no rights for free distribution.

The Freemium can have various flavors. For instance, the use of IP can be free for SoC integration and final implementation, but can involve licensing fees when the production starts. Customers will be happy with this model as they don’t have to pay unless the IP has been proven. On the other hand an IP vendor gets the credibility and a foot in the door of customer more easily. One practical problem can be in terms of cash flow of the IP vendor as it is effectively procrastinating the scheduled cash receivables. However, once the IP cost has been amortized with first few customers, this model can be tried with lesser risk. One de-risking strategy for an IP vendor can be that IP development be started and done along with the free customer so that the IP requirements are based on the true customer feedback.

Freemium model can also be based on feature limitations. Lets say, an IP vendor provides two variations of an IP. One version is a non-optimized version with limited set of features and without support. Another version is full fledged production version IP. Customer can use the free version for bring up and limited production, however, it needs to buy the later version for mass production. The model fails if somehow customer can workaround with the free version for its mass production.

I am sure there are many more options which can be viable for “free” IP business model. Only time will tell if some IP company will get any success with this model.

Industry analysis

People keep talking about great Indian (and China) juggernaut, that is taking these economies into new sphere. This is one camp. Another camp feel that great “India-shining” story is a hype. People comprising these camps are mostly Economists, Stock analysts, Businessmen and Politicians. I bet my two cents for the case somewhere in between these two camps. Perhaps little more biased towards the former. This is what I think about some of the industries:

1. IT industry: Most of the success has come because of outsourcing from the western world. If the “India/China” story is true, Rupee factor is going to haunt the Industry. Companies catering to developing economies can foster since the market size will be big but “20% salary hikes” may not work out. Companies in higher value chain and with competitive advantage will have pricing power and hence may do well. Economy of the industry can change drastically. The effects will be seen much later. And as theory of evolution says, only the fittest will survive. IMO, the inflexion point is going to come very soon in this Industry or we may be already in it.

2. Logistics: India spends more proportion of GDP in transporting and supply chain than most of the countries. This is leading to a very systematic Logistics Industry with most of the companies outsourcing their logistics need to logistics companies. This will help companies in saving some cost by outsourcing to more efficient companies specialized in doing this stuff.

3. Cement/Steel/Pharma/FMCG/Consumer Durables – I dont see big change in these industries. With more consumers and more purchasing power, all these may do ok.

4. Premium Segments: There is new market coming up for luxury products. And contrary to what we may feel, it is not limited to Metro cities. I heard Merc sells more cars in Ludhiana than any other city in India. Be it slim TVs, ACs, Cars, Clothes, beauty products, companies capturing the nerves of consumer can strike it big.

5. Agriculture: There are lots of problems in Indian agriculture. Companies with right business model can solve these problems and generate lot of profits too. Check out my previous post

6. Education: After being neglected for so many years, recently education sector has become very hot. And when something becomes hot, imitators follow innovators and then come the incompetents. And the best example of this would be the following industries.

7. Real Estate/Infrastructure/Power/Telecom: Lot of people trying to solve the same problem. Result: lower profit margins. Only the companies with Moat will do well.

8. Entertainment: If we go by the numbers of IPL, there is lot to come in this sector.

I might have left out lot of other industries. Will add to this if I remember something later.

Opportunities in Agriculture sector

I dont know the exact number but more than 50% of population of out country depend on agriculture for livelihood. The growth rate in Indian agriculture has been abysmally low. May be around 2% of less that that. So although the average earning/purchasing power of Indian people is increasing, its mostly because of other less that 50% of population. This fact can be looked from two angles:

1. Divide between rich and poor will increase leading to social unrest and instability
2. There is immense opportunity in agriculture industry. If, somehow, this “more that 50%” people can be made to earn more and hence spend more, economy can catapult in a healthy way.

So what are the problems to be solved.

Firstly, farmers have very little knowledge. They dont know what crops are suitable for the land they have, how to time the whether, which seeds, fertilizers, pesticides to use, how to sell the yields profitability and how to add value to the crops. Empowering farmers by providing them more information will not only boost farmers income but also improve our crop productivity and hence GDP.

Secondly, there is lack of trading systems for farmers. I agree, mandis exist in local towns and villages but they are largely manipulated by traders. And farmers dont know about commodity exchanges.

Thirdly, rural infrastructure is next to nothing. There are no roads connecting them to cities. Thanks to mobiles, some communication gap is being filled up. Electricity, water supply, hygiene are all missing.

The third problem is largely the responsibility of government but in absence of one (not government but a good one), it is left over to enterprises and NGOs. The problem with enterprises is that they need to see the profitability in avenues. I thing first and second problem do have such avenues. And if some smart people can come up with ideas to resolve the third problem too, it can make the backbone of rural India. “More that 50%” people will get rich and so will people resolving their problem. Remember the market size comprises 500M people. And that is just India.