Notebook to Netbook

My present HP notebook bought 14 months back costed me 45,000 Rs, weighs 3 kgs, runs Windows Vista(TM), boots in 4 minutes, shutsdown in 90 seconds, uses 65% of 1GB RAM without me running a singe application.

For my usage that is mainly entertainment, I surely don't have to incur so much of cost. The cost is not just the price I pay but also the weight I carry, the speed (or lack of it) that I put up with. I think I can reduce the costs in the following ways.

1. Replace Windows Vista with Ubuntu Linux - Vista Home Premium costs around 7000 Rs, uses atleast 12 GB Hard disk space, uses atleast 500 MB of RAM, wants to confirm every time if I am sure I want to run an application program. Opening a folder with 40 files takes a noticeable amount of time not to mention the boot and shutdown time. Solution is to customize the free and open source Linux to include only those modules that I need. I tried doing that but couldn't get the Display driver and Wireless Network driver.
2. Use Online Productivity suite instead of Desktop Office Softwares - Whole MS Office Professional bundle costs 25,000 Rs, though minimal student ones are available for 8000 Rs. It takes around 1 GB disk space, each program like word or excel uses 50-100 MB RAM space depending on file size. Significant amount of time too is required to open a file. Free alternatives like OpenOffice and StarOffice don't give much respite either. Online office suites like Google Docs, Zoho move the computing from the PC to their servers freeing up the resources at the PC end. Inherently online office is the best way to share and collaborate. The documents can be accessed from anywhere and edited on any OS and Browser. Any updates in Desktop softwares have to be done by applying a patch or reinstalling, while in online it can be done continuously and without intervention of the user.
   
3. Install Basic Softwares - Have basic softwares to only read pdf, xls, doc, ppt files. Simple mp3 player, video player and photo viewer. This is to do something when I am not connected to internet.
4. Remove Anti Virus - It is one of the most annoying softwares. It will add 30 seconds to the boot time, runs in the background, pops every now and then and ask you to register, update, scan and restart. Thanks to the security provided by Internet Explorer and Windows, Anti Virus has become a necessity. I will not need it anymore.
5. Change from Hard Disk to Flash - NAND Flash is almost as fast a RAM in read, so I can imagine opening a file from it. It has no moving or rotating parts like Hard Disk that's why it is called Solid State Disk. Power Consumption is one tenth of Hard Disk. Weight and space is vastly reduced. With bloated OS and softwares gone, the space requirement is also reduced and a 32 GB Flash Drive should be good to keep even photos, music and videos. If one likes to keep lot of data like movies then an external Hard Drive should be good.
   
6. Have an external CD/DVD - This again has moving parts and removing it reduces lot of space and sheds weight. I don't use CDs and DVDs that often and if I do require I can use an external one.
   
7. Reduce the screen size from 15.4" to 12" - This will make it more portable without compromising on the display effectiveness. Power will also be saved.
   
8. Remove some of the connection slots - Slots for Memory Card Readers, PCMCIA, Serial Ports, Parallel Ports, 1394-firewire, PS2 ports etc are not required. If required, one can always buy those converters for 150 odd rupees. This does away with having the necessary controllers, drivers and hence cost. I only need 4 USB slots, 1 network slot, audio output, voice input and Wireless Network capability.

Having simplified so much, the RAM of 512 MB and 1 GHz processor should suffice. And yet I can get desired performance of 30 seconds boot time, 15 seconds shutdown, fast enough run time performance and increased battery life. The price can be brought down to 10,000 Rs and weight down to 1 kg. The basic requirement is a decent broadband connection.

What I have actually done is to reduce a notebook to something more simpler but optimized for internet usage which is called Netbook. ASUS Eee PC is the pioneer and leader in this market. Nova netPC is the brainchild of Rajesh Jain for Indian market.

Personal computer market growth started with Desktops. Now the baton is passed to Laptops or notebooks. Following the trend of more compact, simpler and affordable PCs, I believe the next growth will come from Netbooks.

India regains Border Gavaskar Trophy

India regains Border Gavaskar Trophy at Nagpur where they lost it exactly 4 years back. With this we have shown that we are not only equals to Australia but even better than them.

Statistical Highlights

• India has held the trophy 5 times while Australia held it 3 times.
  
• Out of 26 matches, 15 in India and 11 in Australia, India has won 10, lost 10 and drew 6 times. Only Rahul Dravid has played in all 26 of those matches from either side.
  
• Sachin has now played in 49 of the matches which India has won. He has a chance to win his 50th match at his home ground in Mumbai when India plays England in 2nd test.
  
• Australia is losing a series for the first time since Ashes 2005. India is winning more than 1 test in a series for the first time since home series against Sri Lanka in 2005.
• After nadir at Sydney and things looking only worse, India has not lost any of the last 6 encounters against them. Till Sydney, Ricky Ponting as captain had a 31-3 win-loss record including 16 successive wins. Since then they won 2 against West Indies and lost 3 to India.

My predictions

My prediction of a 2-1 defeat has gone horribly wrong. I had predicted a 2-0 loss to England too last year. I am glad that they were wrong. I generally make a pessimistic guess, so that I will have something to cheer about even when India loses. I realise that this approach will not take me long and I need to be lot more realistic and accountable with my predictions.

This proves my strength in accounting about the past through statistics and weakness about predicting the future. Statistics requires just good memory power and regular following. Prediction involves a lot more skill and understanding of the game. Even in Business, Managers are paid to plan and control the future while accountants are paid a pittance to document the past.

My emotions during the series

Indians were dominant throughout the series and I am witnessing this for the first time since 1998 series in India. The matches were quite high scoring and didn't make it as interesting as earlier series. 2003-04 series in Australia was also high scoring but still it was lot more interesting owing to the see-saw contests. Overall, there weren't so many thrilling rides over the series. One moment which did provide some thrills was the 4th day afternoon of the 4th test.

Anil Kumble and Saurav Ganguly have retired. Both of them have done their jobs and have taken Indian cricket to a higher level. It was time for them to go. It is time for even Rahul Dravid to go. His last great contribution came 2.5 years ago with twin fifties in the Jamica Test. India are now at a stage where those legends will not be missed so badly.

Future

After the series Australia has come down from 138 points to 129 points and India has gone up from 109 to 116 to reach second spot in the Test Rankings. There is a lot of cricket coming up over the next one year for Australia, India and South Africa. With the difference of only 13 points there is a good 3 ways battle for the ultimate number one spot. Australian domination will be questioned for the first time since they won in West Indies in 1995. Over the last few years we have only seen fight for No 2 spot between India, England and South Africa and all of them held the position for a brief period of time.

In the present situation, India is favourites to become No. 1.

Border Gavaskar Trophy 2008 in India

This is easily the most competitive series in Cricket ever since it started in 1996. That is all the more fascinating considering that one is undisputedly the best team and other is unpredictable and plays its best agaisnt the best. In the table below I compare a few of the most important series in cricket.

(Only matches since 1996 are considered)

Clearly, Border Gavaskar Trophy is right up there interms of results percentage and competitiveness i.e. Win/Loss Ratio. Ashes but for 2005 has been extremely one-sided. Last 2 India-Pakistan Series was very boring.

Fabulous Five

The hype for the Series starting today is not just about the recent rivalry between the Teams. It is also about the Individual players. From India it is the aging Fabulous Five of Sachin, Kumble, Dravid, Ganguly and Laxman. Their cricket playing career very much conincided with my viewing career. And it will be very hard for me to see an Indian Team taking field in a Test Match without any of them. They are the best not just because of their envious career records but also because of their contribution in India's fight against the World Champions.

The table shows a very surprising statistic. One would normally expect a Team to win most of its matches against weaker teams and lose against stronger teams. But with Indian Team it is different. All the members of the Fab 5 have defeated Australia the most, next being the weakest teams like SriLanka and Zimbabwe. Kumble is an exception because he missed the 2001 series.

Advantage India

Coming into this series Indian team looks to have advantage on paper.

1. Home advantage. But if we look at the things media is focussing on at the moment, it actually is a disadvantage
2. Best players with loads of experience and talent are playing. They are all fit, haven't retired yet, haven't gone fishing either!
3. Balanced Batting and Bowling. Sehwag opening and Big 4 in the middle order. Dhoni Keeping. Good variety in bowling with a leg spinner, off spinner, left arm medium and tall right arm fast bowler.
4. Only 4 Australians have played a Test in India earlier and none of the bowlers have bowled a ball in India. Ponting's glittering career has a huge dark spot in India especially against Harbhajan

To win series

There are more important factors that decide the winners than the ones mentioned above.

1. Having a detailed plan for each of the players and situations. Assigning and assuming the roles according to the plan and executing them.
2. Being desperate and focussed only on winning the series. Showing fight and intensity in the field for all the 5 days of the Test.
3. Patience, Playing positively, taking the chances (catches) offered, taking singles and not letting slip a winning situation.
4. Again focussing on the big picture i.e. the series without getting distracted with Individual miles stones. Ganguly is playing is last series, Sachin is closing on Lara's world record and 12,000 runs, Laxman closing in on 100 Tests, Kumble and possibly Dravid playing his last test at their Home ground Bengaluru.

All matches will have results unless more than 2 days are lost due to rain. A couple of matches will also be very close. I would say Australia will retain the Border Gavaskar Trophy by winning the series 2-1.

Sony Cybershot DSC-H50 - How I went about buying it?

What is my need for a new camera?

The Nikon Coolpix S1 camera at home is not working. So, I will give my big LCD Sanyo Xacti E6 to them. While I will go for an upgrade. The ideal upgrade would be an SLR. But considering the cost (40K+), amount of manual operation and maintenance required, I thought I should go for something lower than that. So, I thought I should go for one in the prosumer category.

My requirements are

1. Good Optical Zoom 10x+. When I shot the moon at night using 3x zoom, it appeared just like a white dot.. It also helps to take some good people's photo from a distance without their notice ;-)

2. Large LCD screen. I am used to 3 inch screen in my earlier camera. It indeed was a useful luxury. And it will be difficult to go below it.

3. 4 Mega Pixel is more than enough for me. And even the most basic models and Mobile Phones have more than 4MP.

4. Video is necessary but an average quality 640x480 would do.

5. Brand should be within the top 3 brands in India. Japanese makers seem to be leaders in this market with marquee names like Sony, Canon, Nikon, Panasonic, Olympus, Kodak and Fuji.

Recruitment and Selection

Checked at a few sites and Multi Brand Outlets (MBO) to get a hang of a few cameras in prosumer category. Only Sony and Canon seemed to be well distributed. So had to decide between the 4 models.

1. Canon Powershot S5IS

2. Canon Powershot SX100IS

3. Sony Cybershot H50

4. Sony Cybershot H10

The Sony versions were superior to Canon's w.r.t LCD (3 vs 2.5 inch) and Lens (Sony has Carl Zeiss lens). Sony was priced slightly lower and their models were released later (April 2008) than Canon's(2007). But Canon did well w.r.t the screen, it could be rotated.

Between H50 and H10, H50 looked much better (15x vs 10x zoom) at not much difference in price (20K vs 16K). So, I finally decided on Sony Cybershot DSC-H50 model.

Where to buy?

Two options here too.

1. SonyWorld and Sony India authorized outlets.

2. Online shopping portals like ebay, indiaplaza and rediff.

 - Online had only 1 year warranty while Sony India has for 3 years.

 - Online companies source it from other countries like China, Taiwan, Malaysia at a cheaper price and sell it here.

 - When I contacted Sony (call centre), they said - Only ones from Sony India and sold by Sony Authorised dealers are approved. Sony India does not have or approve online channels.

 - 1GB Memory Stick free when bought offline. Non-Sony memory sticks are available in eBay at half or third the price of that of Sony Memory Sticks. But Sony India doesn't recommend using them. Obviously ;-)

 - Online portals were selling at about 15% discount i.e. 3000 Rs lesser price.

Still, I am not too sure about buying such high value items online in India. They may say, I can send it back if I am not satisfied but who has time to go through the procedures of sending back and getting a new one. so, I decided to buy from Sony India recommended channel!

Buying Experience

I visited one of the nearby Sony Authorised Dealer and this is what he had to say about Sony

 - Sony has been there in India for last 25 years and it is still the same customer centric company as it was.

 - I asked if there will be any promotion offers for Diwali. He showed me a case of 75,000 Rs LCD TV that gave just Casino Royale film CD free as a Diwali Offer. Such a small offer. Now that talks about Sony's Brand Equity. The Brand that is adored by its consumers need not come up with discounts to appeal to them. They appeal through their product, service and brand image throughout the year for so many years, so why anything special for Diwali alone?

 - No shop is allowed to give away any discounts below the MRP. Meaning all customers are same and the product is really worth the price. Even Apple doesn't give discounts on its products.

 - After I buy, within 2 days a company person will come to my residence and give me a demonstration of usage. How many companies care for their customers after the sale is made? Similarly in case of any problems later, just call them and within 24 hours they will be at my doorstep. Dell does this though.

Well, I haven't said anything about the Camera itself. I don't yet have the camera yet. I will get it tomorrow. There are enough professional reviews available in tech2, mouthshut, steve-digicamsetc. Looking forward to get the camera tomorrow, get the demonstration day after tomorrow and click some great photographs with it later.

Google Chrome - A New Web Browser

This morning I got the news of launch of a new web browser "Chrome" from Google in its official blog. Since then I have been frantically trying to download the software. I could finally do it at 12 at midnight. I am a huge fan of Google. It is one company that seems to do everything right in this Internet era. Being a leader in Web applications, it was only time before it moved into the platform where they are run i.e. the web browser.

User experience

What I like about all Google products is their simplicity. They have done away with Menu Bar, Tab Bar, Search Bar and a bar at bottom that exists in Firefox. This gives them additional vertical space equivalent to 3 bars to display webpage. Chrome has also done well in being a very fast software. It responds to events faster than other browsers I have used. Perform actions like page scroll, opening and closing tabs, typing text and so on, one will realise how fast it is. Javascripts are made to run the fastest. Sridhar Vembu of Zoho.com lauds this fact in his blog. All this doesnot come free, it uses more resources to do it. Opening each tab spawns a new process. Creating separate process has a advantage. Suppose opening a webpage fails and hangs the software, only the tab that opened the webpage is affected. Not others as in Firefox because it opens all tabs under same process. It is not common to find a webpage hanging the browser, open any unproffesionally written Indian website.

Browser's Growing Importance

After booting the OS, the browser is the first software that I run on my computer. Cloud Computing has enabled all computations and storage online i.e. at server end. Be it Office Application, Email, Music, Video, Photos, Games, etc. No hassles of maintaining files on local computer, updating and maitaining large resource intensive softwares. Anything can be accessed from anywhere. All they need is a web browser and internet connection. A thin client or dumb terminal can replace our sophisticated PC. With this web browser has become the most important software. That's why we are seeing a major browser war today.

Competetive Landscape

Source - Net Applications

Internet Explorer - Microsoft just launched IE 8. IE will continue to exist and be a leader for another 5 years atleast. The users of IE are Windows users who are not aware of Firefox and use it because it came by default with their PC. They don't realise that there are faster alternatives, don't understand that a poor browser can be a security loop hole, are not interested in trying something different.

Mozilla Firefox - Mozilla is adding almost 1% to its market share every month. The firefox 3 launch was spectacular with 8 million downloads spending hardly any advertising money. It earns money from Google itself by placing google as default search engine in its search bar. But remember Mozilla is a Free Software Foundation and is not dependent on Google's money for its survival. Mozilla has its strength in its developer network, the vast reach it already has, 3000+ free addons.

Google Chrome - Google has made it open source, in the same lines of Firefox, used the modules from firefox itself. Google's contract with Mozilla extends for another 3 years. I hope they work together to create 2 complementary browsers to give a good choice to the users. Any internet user in this world uses google.com or yahoo.com. Given its reach and brand image it is easy for Google to promote Chrome to its users. Simple value proposition could be "Use Chrome to work with our applications better".

With the launch of Chrome, I think Chrome will grow at the cost of Firefox. Because to use Firefox or Chrome, the user needs to take extra effort to download and use them. Both of them are similar. Here the user now has a choice between Firefox and Chrome while earlier it was only Firefox. But together they will fight IE.

Top Search Engines

I will be researching on the top 5 web service brands.on categories like Search Engines, Web Browsers, Web servers, email, social networking, blogging tools, rss reader, e-commerce and so on. It will only be a secondary research and the purposes are

1. Being an avid internet user, who spends more than 8 hours everyday on internet, I better know what I am using and what to use.
2. Learn the internet analysis tools like alexa.com, comscore.com, hitwise.com and itfacts.biz.
3. When I become an online marketer, I need to know where my target audience are and how to target them.
4. Internet is an industry that has low entry barrier and a behemoth can be toppled overnight. So, it will be interesting to look back upon this research report 5 years later and laugh at it when things have changed completely. Remember netscape and altavista?
   

Starting off with Search Engines. Guessing the leader and follower is a no-brainer. It is Google and Yahoo respectively. I like Yahoo! over Google because of one particular point. That is, my blog comes 5th in Yahoo but only 33rd in Google in the search list for word "keshavaram". For academic purpose, the table below shows the Search Engines and its usage

Ref - Most popular search engines worldwide, Dec. 2007, comScore

The above results have tremendous implications to both internet marketers users. The users know where to get relevant search results from. The marketers know where to concentrate their SEO and SEM efforts. The focus of top search engines have always been on satisfying the user. If the user likes a website the site will come up first irrespective of how much another site pays. The search engine there by pleases the user at the cost of increased short term revenues.

A comprehensive analysis and comparison of Search Engines in in this link.

Affect of Rupee appreciation on Indian IT Companies

Yesterday we had a guest lecture by Kaushal, Senior BDM at Satyam on the "Effects of Rupee appreciation on Indian IT companies". It was optional to attend that lecture, still I attended it because the topic interested me. I have been tracking this Industry since my B-School preparation days late 2006. So, I felt I knew everything he had to say. Still it is worth documenting them.

Firstly he clarified that it was not just Rupee appreciating but more of dollar depreciating. Indian companies need to worry about this because for top companies like TCS, Infosys, Wipro, Satyam and HCL, 60% of the revenues are from US that are earned in dollars. Remaining are from Europe and Asia Pacific with different mix for different companies.

He analyzed the effects in 4 perspectives
Profits
It has been observed that every 1% appreciation of Rupee against the Dollar resulted in 0.5% drop in Net profits of IT companies. I asked the speaker, "Why is the drop not 1% but only 0.5%?", he said that companies are going to just watch the dollar sliding, they will do something about it to minimize its effects.

Income statements in US GAAP and Indian GAAP don't tell the shareholders in US and India the same story. When Rupee appreciates, same business from US will show lesser value in Indian accounts. On the other hand, same non-US business done will show higher value in US accounts.
E.g When $10 million of sales in US will show Rs. 48 crore in the 1st year when $1 is Rs48, the same $10 million business will show Rs. 40 crore when $1 is only Rs. 40 next year. Indian investors see the drop when the US investors don't see it.
Similarly, domestic business of Rs. 48 crore raises from $10 million to $12 million when dollar drops from Rs 48 to Rs 40. Now American Investors cheer on 20% growth in $ terms while Indian investors have nothing to cheer.

Costs
80% of costs of Indian IT companies are the direct salary cost. This is understandable in a knowledge based industry where people are the assets and there are not much of fixed assets as such. So any raise in salaries will hit the company's bottom line seriously. Salaries have been increasing at 15-20% YoY.
Higher Attrition rate increases the cost of Hiring and Training the new employees.

Business Model
The Business model so far had been offshoring and outsourcing or simply arbitrage of labour. Low value back office work like coding, testing and maintenance are outsourced to third world countries where labour is cheap, while the US keeps with them the high end work like products, consulting, design, strategy, Research and development. This model creates value to both the parties, one gets work done at a lesser cost and other party gets a lucrative Business opportunity. He said the fathers of Indian IT Industries were not risk takers or innovators, they plainly worked on the basis of cost difference between US and Indian labour.

Competition
Effect of competition should be compared between the Local peers like Infy, TCS, Wipro and HCL and Global Peers like IBM, Accenture, Cap Gemini and HP. It is obviously affecting the local peers in the same way as all of them have same Business Model and similar revenue mix in terms of geographies. But even the global peers have large operations in India with the same Business Model and hence their Indian Business will suffer the same fate. Suddenly their home Business becomes 10% more attractive compared to that it was earlier to Rupee appreciation.

The big Tier 1 companies have the financial muscle to bear the rupee appreciation, but the smaller companies have to really suffer.

The solutions that are taken by the IT companies to counter the threats are
Profits
1) Negotiate with clients on higher billing. This is not easy though. It depends on host of factors. If the job being carried out is a low end one, then it can easily be transferred to another company by the customer. If it is high end job, lot of dependency has been created and customer has made enough investment in the offshore center then switching to another vendor becomes costly and difficult. He will then as well pay the existing vendor 10% more than looking at new vendor
2) Add Escalation clauses into the contract saying if the salary increases or the rupee depreciates the billing rate will be adjusted. That is the billing rate will depend on the movement of a certain index.
3) Quote higher rates for new Businesses if the existing contracts cannot be changed. If the vendor is strong enough this can be done and it need not worry about the competitors

Costs
1) Hire locals - If the client is located in China, instead of hiring people from India to do the work in India, have a development centre in China itself hiring local talent. He would be better able to communicate and understand the customers. Also he has become 10% cheaper than he was earlier.
2) Improve Utilization - Freshers were hired in masses to fulfill the requirements for whole year and they were trained only to bench them later. This is a colossal loss to the company. They can instead ask them to join in batches. Since the lead time for recruitment of a candidate is long, companies are forced to hire early and keep them on bench. The transfer of people across project taking longer time reduces the utilization rate. This needs to be seriously worked out and improved to save costs.
3) Reduce operating costs - Lots of money is wasted on stationary items, print-outs, parties and other luxuries. When the times are not as good as it was, these operational expenses needs to be controlled.
4) Reduce Salaries and Hikes - How long can the industry sustain with 20% rise in salaries? Act of luring employees from other companies and industries by simply paying higher pay packages needs to be reconsidered. Reduce the salaries, others in the industry will follow you in these difficult times.
5) Expand operations to Tier II and Tier III cities where lots of hidden talents are available. They come cheaper but need to be trained. They will stick longer with the company. Company in the process will add lot of value to lives of those people and the economy of the city.
6) Most of the jobs done in the IT companies don't need Engineers to do them, why not hire B.Scs and B.Coms. They could very well do the job without cribbing at a lower cost.
7) Reduce Training costs by tying up with Educational institutes to pass out industry ready employable products. This shifts the costs from the Company to the educational institution. such programs are called Campus2Corporate.

Competition
1) Move up the value chain into consulting, product development, Research and innovation. This is easier said than done. It involves much more risks. Israel being such a small country generates more revenues than Indian in IT through their products.
2) Get into Newer Segments with Latest offerings
3) Focus on non-US markets like EU and APAC. I would say more importantly domestic markets especially SMEs. They are the fastest growing markets which are fed by MNCs operating in India while Indian companies are busy serving overseas markets.

Business Model
1) Forward cover for dollar - Hedge for dollar against Rupee so that any fluctuations does not have adverse impact on Profits. Infosys tried doing this and lost to the tune of 100 crore rupees when Dollar appreciates.
2) Relocate Development centres - This may save cost for the time being but strategically we are actually developing talent in competitor countries and help them fight us.
3) Pressurize government to give export incentives. IT companies have been pushing NASSCOM to continue Tax holidays beyond 2009 when it ends. But there has been no extension as per this Budget.

Free News Papers - Any takers?

Being in a B-School has a few (but not many) advantages. One of them is that you get pretty cheap Newspaper and Magazine subscription offers. One such offer that we got yesterday was for The Hindu Business Line. Rs.180 for 6 months which works out to 1 Re per day. When I used to subscribe before MBA it used to be at an average of 4 Rs per day. So when they can give 4 Rs paper for 1 Re, I thought why can't they distribute it for Free?

It isn't that bad an idea as it looks like though.
1) Anyway the Newspaper publishers earn majority of their revenue from the advertisers and not through sale of News papers.
2) Other Media Businesses like TV, Internet and Radio distribute content to users for free.
3) They can attract a large number of readers or at least buyers or takers by giving it for free.

Still it is a pretty bad idea. Otherwise it would have been already implemented.
1) In TV, Internet and Radio the distribution cost to each user is almost zero. Charging the users will only drive them away. In Newspapers and Magazines it is different. Printing each Newspaper and distributing it is costly and there is cost involved for each user.
2) If it is given for free. Everybody will start subscribing, whether they read it or not. So how many copies to print? far too many.
3) On what basis will advertisers know to how many audience are their advertisements reaching? Not straight forward. A separate survey needs to be conducted to find out how many people actually read them. So this will not be a favorite channel for advertisers. You don't collect money from readers and now you have driven the advertisers away. With both the revenue channels being closed, giving News papers for free makes sense only for charity purpose.
4) To make a print that many number of copies a large number of trees need to be cut. So much of paper waste is generated. Distribution becomes a massive exercise. So it doesn't make sense even for charity purposes.
5) When you charge a price that is higher you are conveying the advertisers that users don't mind paying that price to read the content. Or the users are savvy.

I tried to find numbers on the share of advertising revenues and sales revenue of the total revenue generated and expenditure details on printing, distribution, staff and so on. But there are hardly any listed News Paper company to give those details. Now the next question is why aren't News Paper companies not Public?

I don't understand Real Estate Business

Sample this - I buy a flat near say ITPB, Bengaluru for 50 lakhs. I rent it out for 20 thousand per month to a family. Then my cash inflow per year is 2.4 lakhs after taking trouble to find the right area, house, broker, lender and tenant. Whereas if I keep the same 50 lakhs in a bank that pays 10% interest. My cash inflow per year is 5 lakhs without any problem. Ignoring the taxes in both the cases for the time being. Then why should anyone buy a house to rent it out?

One possible explanation could be that the value of the house appreciates. If I find the right house, it could probably appreciate by 20% per annum and double its value in 4 years. Then its fine if I have a job, the house is just an investment and I am not dependent on its cash flows. With this there are also risks involved such as 1) Fraud during buying or selling 2) Natural Calamities like Earth quake, flood, cyclone etc 3) Fire accident, destruction 4) Government acquiring it and 5) Property not appreciating its value.

But I don't think a Businessman who makes a living out of this would be happy with this model of getting (2.4 lakhs on 50 lakhs investment) 5% RoI. Also if he doesn't have 50 lakhs cash with him, he will have to borrow that amount at about 15% interest or 7.5 lakhs per annum. Making an annual loss of 5 lakhs.

I would rather have 1 Re now than 2 Rs 4 years from now. "Bird in hand is worth two in bush". Either people don't understand the concept of opportunity cost and time value of money or I am missing something very basic here.

Why are Air Deccan Tickets so cheap?

Yesterday while having dinner outside with my friend Praveen living next room, I just posed him a question. "What would your mission be as a Businessman?". He said "To make a difference in the lives of the people". I can safely assume that the difference would be positive ;-). He immediately also said, he doesn't believe in Wall Mart's "everyday low prices" concept. Because it only favors the customers by squeezing suppliers of all his margins. I argued saying they reduce prices by increasing the scale and supply chain efficiencies. The argument went on to the example of Indian low cost airlines Air Deccan.

One should really admire G.R. Gopinath and his Company Air Deccan for clearly understanding the middle class Indian Consumer. Their dramatic reduction of its ticket price to match train fares and connecting 64 destinations all across India has made an average Indian dream of flying in an airplane possible. When I myself traveled from Mumbai to Bangalore by this flight, I found the following reasons mentioned in their magazine on board.
1) No frills - No food provided on board. Though one can pay for it and get it. This directly reduces the cost of food per-say. The cost of carrying it to the air-craft, unloading, cleaning and so on. After who needs it when one travels for one to two hours in flight.
2) Fewer cabin-crew members - There are only 4 members other than passengers in the aircraft. Pilot, co-pilot and 2 air-hostesses. The salary costs are minimum now.
3) Simple seating arrangement - Nobody is assigned any seat numbers at all. Like in a city bus, whoever comes first can occupy a seat of his choice, could be window, aisle, front or back. There is no distinct Economy an Business Class seats. This simplifies the ticket booking system, no seat verification required.
4) Less time at airport - After landing, the Aircraft carriers will have to pay an amount proportional to the time parked at airport. Air Deccan minimizes this time by improved efficiencies.
5) Online Ticket Booking - By enabling booking all tickets only through their internet portal www.airdeccan.net, they have avoided the costs of setting up Point of Sale offices at various locations, ticket printing costs, staff costs, rent, power and so on. Money flows electronically from customer's credit card and cash management is that much more easy.
6) Advertisements - Additional revenues are generated by having advertising spaces inside the air-craft.

As a customer, anybody would accept the above mentioned ideas when the costs are half of those of other carriers. But there are other unmentioned means by which they reduce costs
1) Over booking - Having said that, they have a simple uniform seating arrangement and nobody is assigned any particular seat numbers, this gives ample scope for over booking as well. They have survived many times with these tactics that somebody or the other don't turn up or come late and miss boarding. This way they have collected extra revenues. After all the ticket persey doesn't have a legal validity until the passenger gets his boarding pass. The passenger can be denied entry in spite of him having bought the ticket.
2) Poor Customer Service - When one calls the customer care call center, he may have to wait indefinitely before an executive attends his call. Man power is also hired cheap, so one can expect what quality of output to expect from them.
3) Delay and sudden flight cancellation - Flights don't always take-off on time. Worse still is that they even get canceled all of a sudden. I booked a flight from Bangalore to Trivandrum for my uncle 5 months in advance and it got canceled 3 days before the scheduled departure. He couldn't get seats on any day that whole week. Trains were also fully booked. So he had to take an expensive flight to Cochin and then go by road to Trivandrum.
4) Pilots are being stretched - Pilots need adequate rest after each flight and they are denied of this. Without rest he cannot guarantee 100% performance which is absolutely necessary. It is a question of passenger's life and safety. Short sighted managers oversee this for saving on cost.
The company in question and its idea has definitely not survived. It registered 219 crore loss for 3rd quarter. They doubled the prices from 1200 to 2500 for a Mumbai Mangalore flight. It has been taken over by Kingfischer. Some of its noble ideas are taken by other low cost carriers like Spice Jet.

Safe Travel, Convenience and Service are the 3 main ingredients of product called Air Travel and all 3 of them are compromised just for the sake of price. So, the message that we could derive is that "One needs to pay for quality". You can't expect best quality at cheapest cost. This point is obvious but the above mentioned 4 points weren't. So, Praveen as a Businessman would give his customers good product at right price.