I am excerpting on this blog roughly 10% of my next book, The New Technology Elite due out in February (and available for pre-order on Amazon – see badge on left) . Chapters 6 through 17 cover 12 attributes of what I call the elite. Here are excerpts from Chapter 9 which focuses on being Global. Note: the text is going through the publisher’s edits and subject to change.
To become a tech elite, you have to be a Marco Polo and a Gulliver—bravely explore a fast-changing world. Suppliers and captive units in exotic locations can provide unique competitive advantage. But they can also make much more complicated the supply chain and product development cycles.
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Max Henry graduated from France’s ISG business school, but he has spent the last two decades in Asia. He is a publisher of various Asian technology magazines. In a recent issue of ChAina magazine the focus was on two second-tier Chinese cities—Xiamen and Qingdao.3
In many ways, though, Henry is a high-end tour guide to facilities in such cities. Every few weeks his Global Supply Chain Council organizes field trips to plants and ports across China. It could be to Juijang on the southern shores of the Yangtze River with visits to the solar photovoltaic manufacturer Sornid and the helicopter manufacturer Red Eagle. Or to Qingdao (better known to many in West as Tsingtao—as in the beer), host to Haier Group, one of the world’s largest home appliance manufacturers and GERB, which focuses on vibration control in heavy machinery, equipment, structures, and trackbeds. Or it could be Xiamen on the Southeastern Chinese coast where Dell has a factory for the booming local China market as does Philips Lighting Electronics, which is focused on next-gen LED and other lighting. Or Chengdu in Western China, home to Intel assembly and testing facilities, and to Giant, the largest bicycle manufacturer in the world.
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Russia is also pitching its assets: “Boeing, Cisco, Intel, Microsoft and MIT are key partners in Russia’s high-tech Skolkovo Innovation Center (Skolkovo), which opened yesterday its American beachhead in Silicon Valley along with OAO ROSNANO and the Russian Venture Company (RVC). The new Russian Innovation Center will serve as U.S. representative office of the three organizations. It will promote and coordinate high-tech partnerships and scientific cooperation in the IT, biomedicine, energy efficiency, nanotech, nuclear, and aerospace sectors among top Russian and American companies, venture capital firms, and academic and scientific institutions.”11
Then there is Novosibirsk. Already a major Russian high-tech hub, if the northern branch of the China‒Europe train becomes reality, its Siberian remoteness could become much less of an issue. “None of our programmers in Novosibirsk are programmers by education,” says Intel’s Chase. “They are physicists, chemists, biologists, mathematicians. They are first of all scientists. Secondly, they learn how to program, as an afterthought. This combination is extremely powerful.”
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India-centric vendors such as HCL Technologies, QuEST, Symphony Services, Wipro, Persistent Systems, and several others have sizable product engineering practices. HCL says it has been involved in all major commercial aerospace programs around the world in the past decade, including the Boeing 787 program described in the case study in this chapter. It has also created a smart home automation solution—AEGIS, which is a multi-platform gateway that controls multimedia, energy monitoring, HVAC, security and more, all through smart devices, and using multiple wireless standards. QuEST provides companies like Caterpillar 3D modeling and other product engineering services. Symphony Services does product development work for a wide range of technology vendors like Adaptec, Lawson Software, and Motorola. Wipro has a joint venture with GE Healthcare and a large set of patents around wireless local area networks and Bluetooth technologies. Persistent Systems, which develops software for over 300 customers, most of them technology vendors, says it has delivered over 3,000 software product releases in the last five years.
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Over the last few years, Silicon Valley‒based Accelerance has seen U.S. demand for offshore software development shift markedly from traditional markets such as India to nearshore destinations like Costa Rica, Colombia, Mexico, and Argentina. “For small to medium-sized U.S. companies, nearshore is most often the way to go,” says Andy Hilliard, President of Accelerance. “Nearshore software development firms have had time to benchmark best practices from offshore and they provide attributes like proximity, time zone alignment and cultural compatibility that offshore can’t match. Though nearshore rates are 10–20% higher than offshore, on a project basis clients can still save in excess of 50%, while significantly increasing their control and ability to collaborate on projects.”
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The Japanese tsunami in early 2011 showed how many components in high-tech devices still come from Japan. “The IHS iSuppli teardown analysis of the iPad 2 so far has been able to identify five parts sourced from Japanese suppliers: NAND flash from Toshiba Corp., dynamic random access memory (DRAM) made by Elpida Memory Inc., an electronic compass from AKM Semiconductor, the touch screen overlay glass likely from Asahi Glass Co. and the system battery from Apple Japan Inc.”13
Looking ahead, Apple set off all kinds of market speculation when it announced in early 2011 it would spend about $3.9 billion as prepayment for components from three companies, without specifying the suppliers or the parts. The research firm iSuppli speculated it was for displays made by LG, Toshiba’s screen unit, and Sharp—Korean and Japanese companies.
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Ireland has emerged as a major hub as cloud computing grows. It hosts “huge data centers powering the global cloud operations for two of the largest players in the sector, Amazon.com and Microsoft. Dublin also hosts major data centers operated by Digital Realty Trust and facilities for IBM and SunGard, among others.”16
Dell is building a network of data centers around the world, including one in Australia, as it grows its own cloud services.17 Japan, Singapore, and Hong Kong contain most of the data centers in the Asia-Pacific region. “While the facilities in Japan are mainly to support its domestic market, Singapore and Hong Kong are competing to be the preferred location for hosting data centers for service providers that serve MNCs in the region.”18
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Across the world, technology is allowing cities to reinvent themselves. A prominent example is Eindhoven in the Netherlands. It is called the City of Lights because of its much longer association with Philips Lighting than Xiamen described above. More recently, it has earned the title of the world’s “smartest city” as a prototype of a Western city learning to stay relevant in the world of BRIC and Korea and Taiwan.
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