At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, including investment analysis, psychology, science, technology, philosophy, etc. We have been sharing our favourite reads with clients under our weekly ‘Ten Interesting Things’ product. Some of the most interesting topics covered in this week’s iteration are related to ‘China’s prison secret’, ‘Boom for Indian online gaming’ and ‘Time and happiness’.Here are the ten most interesting pieces that we read this week, ended August 31, 2018.1) Supply chains: The dirty secret of China’s prisons
[Source: Financial Times
Prison labour is common in China, where the law states that prisoners able to work must do so — a system known as “reform through labour”. China is home to around 2.3mn prisoners and pre-trial detainees, according to the Institute for Criminal Policy Research, giving it the world’s second-largest prison population after the US. Exporting prison-produced goods is illegal under domestic and international trade laws. Yet evidence of prison labour is present in many of China’s supply chains, from handbags to washing machines, according to experts and ex-prisoners. Forced labour is not a new phenomenon in the country, but it is becoming more prevalent as a result of higher wages in China and the decline in the working-age population. Manufacturers are under increasing pressure to stay competitive with Bangladesh and Vietnam. “We have seen companies exploiting prison labour as a way of keeping costs low,” says Kenneth Kennedy, senior policy adviser on forced labour at US Immigration and Customs Enforcement.
Companies who use forced labour reduce their wage costs to the level of paying off the prison or detention centre which keeps most, if not all, of the payment for the work, leaving workers very little. Inside a detention centre in Peixian town, 90km south of Jinxiang, detainees work on a fresh shipment of garlic bulbs for export. Thousands of kilometres from Jinxiang, prisoners in the south-western city of Guilin made handbags once sold in Arizona, while those in the north-eastern city of Tonghua made wreaths to be exported to South Korea.
Jinxiang produces 80% of the world’s garlic exports. The US, sources 80% of all its fresh garlic imports from China. But it is illegal to import goods produced in part or whole by forced labour into the US. If a complaint is raised against a foreign production site, US Customs and Border Protection (CBP) will issue a “withhold release order” — meaning that shipments from that source must be held at the border — and may also launch a criminal investigation into the importer. The use of forced labour is not restricted just to the garlic industry. It also occurs in other Chinese supply chains. Of the 29 active withhold release orders that have been issued by the US, 23 are against Chinese sites.
Customers have found notes, hidden by prisoners, in goods sold in the UK and US — from Christmas ornaments to socks. One note was found by an Arizonan woman after buying a Walmart own-brand handbag last year. “Prisoners in the Yingshan Prison in Guangxi, China are working 14 hours every day,” the handwritten note read in Chinese. “Whoever doesn’t finish his work will be beaten. . . Being a prisoner in China is worse than being. . . a dog in the US.” The letter was signed with the name of a man who was sentenced to serve 15 years in Yingshan Prison in 2012, according to local court records. Calls to Yingshan Prison confirmed that it has a department in charge of production and sales. Walmart confirmed to the FT that it has dropped a supplier who had been sub-contracting from Yingshan Prison after investigating the issue.
“We often needed to work from 5 in the morning to 9 at night so the prison is able to make more money,” says one ex-convict who served five years in jail in Tonghua, Jilin province, where he made wreaths for export to South Korea. Another inmate, released from Yantai Prison in Shandong province last year after serving four-years, also described a 5am-8pm working day with at most one rest day each month. He did unskilled electronics work, bundling wires together for electronics company Weihai Ruicao, which supplies the South Korean multinational LG. Multinationals often rely on a series of local intermediaries and suppliers, who have an incentive to keep their use of prison labour secret. Detecting its use can be extremely difficult. Prisons do not print receipts or sign formal contracts, according to ex-prisoners.2) Jio GigaFiber and Indian gamers: Peanut butter and jelly
The announcement of Jio GigaFiber by Mukesh Ambani at Reliance Industries’ annual general meeting has become a major talking point. With registrations commencing on Independence Day, Reliance Jio is looking to disrupt the fixed broadband scenario of India. While the service is aimed at raising broadband speeds in India to global levels, it also raises a question: who is going to use all that speed? 4G top speeds can get you through most of your day’s work and entertainment, but it’s a real game changer for the power users, ranging between enterprises that rely on fast internet speeds for data transfer and communication all the way to ultra-high quality entertainment, like 4K video streaming. But one underrated application of this service is online gaming, and its use in it stretches beyond just raw speed. The Indian online gaming industry is projected to grow from $290 million now to a $1 billion dollar industry in 2021. This can be attributed to many factors, including affordable new technologies, localised games, growing local developer ecosystem, and in-game purchases.
The addition of smartphones as a gaming platform is also adding to the popularity of gaming in India. Added mobility and improvement in gaming experience have made mobiles a convenient gaming platform. Further, the popularity of games available on multiple platforms like Fortnite, PUBG and Asphalt have proved that switching from a dedicated gaming machine to a mobile phone doesn’t spoil the experience. The only thing missing in the Indian gaming equation then is a good internet connection. A faster connection means your computer can download data faster, which improves gameplay. But more than raw speed, latency is the key here. Latency or ‘ping’ is the total time taken by data for completing a round trip from its source to your computer. This means if your ISP has low latency, you’ll observe less lag during gameplay, which means everything for a serious gamer. Anything below a ping of 50ms is considered to be great, while anything over 150ms could result in noticeable lag.
At Reliance’s AGM, it was mentioned that the Jio GigaFiber will have a latency of 30ms, which is decent for online gaming. While smartphones and portable consoles are bringing convenience to the gaming experience, they’re not the only game changers. What if you had a service, similar to Netflix or Amazon Prime, which lets you stream and play games on any device that comes with a screen and a controller? Cloud gaming or gaming on demand is an upcoming technology that is still in its trial phase which has a potential to revolutionise the gaming scene. It uses a remote operator to store, execute and render a game on its server and stream the video results directly to a consumer’s computer. This eliminates the need for a gaming console or expensive hardware to play a game. All you need is a screen and a controller to play games. That means you can stream a game on your mobile phone with high-end graphics that only a PC or a gaming console can provide.
Cloud Gaming services like Nvidia’s GeForce Now and Vortex have made their way to India, giving you access to games like Assassin’s Creed, Arma 3, Borderlands 2, Call of Duty, Counter Strike, Dota, F1 2017, PUBG and Fortnite, to name a few. GeForce Now is in beta stage, so it works on an invite basis, while Vortex charges you ₹690 per month. The reason why cloud gaming hasn’t taken off in India yet is because it requires a reliable, high-speed internet with low latency for best results. Jio GigaFiber has promised to provide quick, reliable internet, which can be a relief for gamers.3) Worshiping the false idols of wellness
[Source: NY Times
Wellness has increasingly become a false antidote to the fear of modern life and death. The wellness industry takes medical terminology, such as “inflammation” or “free radicals,” and levitates it to the point of incomprehension. The resulting product is a D.I.Y. medicine for longevity that comes with a confidence that science can only aspire to achieve. The piece discusses the trend of adding a pinch of activated charcoal to your food or drink. While the black colour is strikingly unexpected and alluring, it’s sold as a supposed “detox.” “Toxins,” as defined by the peddlers of these dubious cures, are the harmful effluvia of modern life that supposedly roam our bodies, causing belly bloat and brain fog. It’s clear that without these toxins there can be no search for purity — “clean” tampons, “clean” food, “clean” makeup.
Medicine and religion have long been deeply intertwined, and it’s only relatively recently that they have separated. The wellness-industrial complex seeks to resurrect that connection. Ancient cleansing rituals with a modern twist — supplements, useless products and scientifically unsupported tests. The dietary supplements that are the backbone of wellness make up a $30-billion-a-year business despite studies showing they have no value for longevity. Modern medicine wants you to get your micronutrients from your diet, which is inarguably the most natural source. Yet the wellness-industrial complex has managed to pervert that narrative and make supplements a necessary tool for nonsensical practices, such as boosting the immune system or fighting the war on inflammation. The resulting fluorescent yellow urine from multivitamins may provide a false sense of efficacy, but it’s a fool’s gold.
So what’s the harm of spending money on charcoal for non-existent toxins or vitamins for expensive urine or grounding bedsheets to better connect you with the earth’s electrons? The placebo effect or “trying something natural” can lead people with serious illnesses to postpone effective medical care. Data is emerging that cancer patients who opt for alternative medical practices, many promoted by companies that sell products of questionable value, are more likely to die. Moving the kind of product that churns the wheels of the wellness-industrial complex requires a constant stream of fear and misinformation. Look closer at most wellness sites and at many of their physician partners, and you’ll find a plethora of medical conspiracy theories: Vaccines and autism. The dangers of water fluoridation. Bras and breast cancer. Cellphones and brain cancer. Most people think they will be immune to these fringe ideas, but science says otherwise. We all mistake repetition for accuracy, a phenomenon called the illusory truth effect, and knowledge about the subject matter doesn’t necessarily protect you. Even a single exposure to information that sounds like it could be quasi-plausible can increase the perception of accuracy.
Also, belief in medical conspiracy theories, such as the idea that the pharmaceutical industry is suppressing “natural” cures, increases the likelihood that a person will take dietary supplements. So to keep selling supplements and earthing mats and coffee enema kits and the other revenue-generating merchandise, you can’t just spark fear. You must constantly stoke its flames. Also, as a doctor, the author of this piece takes it to heart when he hears about the latest measles outbreak or when a friend spends money on a therapy that can’t possibly help. When patients ask for an unsupported test, such as urine chelation or salivary hormone levels, often promoted on wellness sites, he explains that he can’t in good faith order a useless test. So why do people turn to wellness? There are symptoms that he believes have been with us since the beginning of time, so common that they are likely part of the human experience: fatigue, bloat, low libido, episodic pain, loss of vigour. When medicine can only offer a therapy, not a cure, or when doctors give undesired answers — suggesting attention to sleep hygiene, for instance — it isn’t hard to see how the intoxicating confidence and theater of wellness could beckon.
Medical illness is also scary. Who wouldn’t want to take IV vitamins instead of chemotherapy? The author admits that doctors can learn something from wellness. It’s clear that some people are looking for healers, so we must find ways to serve that need that are medically ethical. Doctors can do more to provide factual information about hazardous substances, such as carcinogens and endocrine disrupting chemicals, in products and the environment from medically vetted sites with no products to sell, such as the National Cancer Institute and the Endocrine Society. Many people, women especially, have long been marginalized and dismissed by medicine, but the answer does not lie in predatory conspiracy theories, a faux religion or expensive magic. In its current form, wellness isn’t filling in the gaps left by medicine. It’s exploiting them.4) Alibaba vs. Tencent: The Battle for Supremacy in China
The two sharply distinct companies, Alibaba and Tencent, are trying to dominate the Chinese Internet industry. Both have market capitalizations that hover around half a trillion U.S. dollars. Both command sectors of the rapidly growing Chinese digital landscape: Tencent owns the leading gaming and messaging platform, while Alibaba rules e-commerce. Both are aggressive investors inside and outside China. Each is the pride of their not-quite-first-tier hometowns: Alibaba of the ancient city of Hangzhou near Shanghai and Tencent of shiny-new Shenzhen across the border from Hong Kong. Finally, both touch an astounding percentage of the world’s most populous country: Alibaba’s various online marketplaces count 552 million active customers; Tencent’s WeChat messaging service recently surpassed 1 billion accounts. The two men, Jack Ma (Alibaba) and Pony Ma (Tencent), who’ve known each other for years, are quick to profess mutual respect. But as their rivalry heats up, those assertions are increasingly a prelude to damning the other with faint praise—or worse.
Alibaba and Tencent attack the market differently, in ways that have often allowed them to grow without butting heads. Alibaba’s is largely a strategy of buying controlling stakes in businesses that are a fit with its commerce platform; Tencent takes hundreds of minority stakes in an array of businesses to win over partners and gain access to their technology. What’s more, the competition is hardly a zerosum game, thanks to the rapidly expanding Chinese middle class. In an economy in which e-commerce is dominant in ways unthinkable in the U.S., each company stymies the other’s payment service on their main platforms. And when Tencent and Alibaba sign on investment bankers, they reportedly make it a condition that the bankers work exclusively for them. Even if the world is big enough for both of them, Tencent and Alibaba increasingly are in conflict. “Until recently, everyone played in their own sandbox,” says Deborah Weinswig, New York–based CEO of the China-focused retail consultancy Coresight Research. “Now the sand is starting to spill over.”
For years Alibaba and Tencent were rivals only in the sense that both were successful and prominent examples of the Chinese Internet phenomenon. At first they weren’t even that successful. “We were little brothers in the Internet industry playground,” Pony Ma reflects, compared with the leading “portals” of the late 1990s. “We were second- or even third-tier companies.” Over time, the two probed the other’s perimeter, to relatively little effect. Alibaba, for instance, launched a gaming division and a social network, neither of which caught fire. Tencent built an e-commerce site, called Paipai, but eventually sold it to JD.com. The rapid rise of WeChat, however, made Tencent a societal phenomenon, and in 2013, Jack Ma publicly urged employees to band together to “kill penguins,” an unmistakable swipe at Tencent’s flightless mascot. But, on rare occasions, the two invest together, as they did in 2013 by starting an online insurance company, called ZhongAn, with insurer Ping An (whose CEO also is named Ma). Indeed, if history repeats, it’s possible that many of the companies’ jabs and feints at each other’s properties will amount to just that. “Internally, Tencent people hold Alibaba in high regard,” says one former Tencent insider.
The years of entrepreneurial battles are catching up with Pony Ma as well. At the Fortune conference in Guangzhou, he addressed criticism about the addictive and omnipresent nature of products like Tencent’s games by acknowledging society’s overattachment to their phones. “Even I get a bit anxious sitting here while my phone is offstage,” he said. He allows that just recently his eyesight has gotten worse, which he attributes not so much to the onset of middle age as to too many hours spent staring at his phone. “I wish the next-gen instant-messaging platform would not be such a burden on your eyes,” he said. “If there’s a brain wave that can transmit the message to my consciousness, that would be perfect.” Give him time, and it just might happen. Wait a little longer, and Alibaba just might launch a brain-wave platform, too—with a cuddly critter for a mascot. 5) If money doesn’t make you happy, consider time
Jennifer Aaker and Melanie Rudd at Stanford University, and Cassie Mogilner at the University of Pennsylvania, published "If Money Doesn't Make You Happy, Consider Time," in the Journal of Consumer Psychology, 2011. They discuss how happiness is indeed a consequence of the choices people make. So what can people do to increase their happiness? Their answer is surprisingly simple: spend your time wisely. Although happiness is clearly relevant for individuals, businesses should also pay attention. Building a workforce of highly qualified, hard-working, and loyal employees is an essential aspect of staying competitive in today’s global markets. Therefore, being concerned about employee happiness is not just a moral thing to do, but it makes smart business sense as well. “People often make career choices based on how much money they envision they can make now or in the future. Surprisingly little thought goes into how they will be using their time - whether they can control their time, who they will spend their time with, and what activities they will spend their time on,” said Aaker, General Atlantic Professor of Marketing at Stanford GSB.
Over the years, there has been relatively little research on the relationship between the resource of time and happiness. Perhaps money has been investigated much more thoroughly as a potential key to happiness. Yet, very little research corroborates the idea that more money leads to more happiness. Some research suggests that perhaps people just aren’t spending it right. In fact, even the mere mention of money can result in individuals being less likely to engage in behaviors linked to personal happiness, such as helping others, donating to charity, or socializing with friends and family. After being prompted to think about wealth, individuals work more, and their ability to enjoy small moments becomes significantly compromised. “We know that people with meaningful social connections are happier than those without them,” said Mogilner. “The more time that individuals spend with their partners, best friends, and close friends, the happier they are. When they spend time with people who they dislike or when they spend time alone, their happiness levels drop. Loneliness is a relatively good predictor of unhappiness.”
Further, Mogilner has found that encouraging people to think about time (vs. money, for example) tends to foster those social connections. So thinking about time has a fundamental impact on how people behave. Why might concentrating on time get us closer to our centuries-long search for happiness? One reason is because time spent doing something, especially when compared to owning something or spending money, is associated with personal meaning and evokes emotionally laden memories. You might not recall how much money you had in your bank account when you were 20 years old, but most people remember their first kiss. Time also fosters interpersonal connections: the camaraderie that people get from attending a baseball game with friends, for example, would be more conducive to happiness than watching it alone in front of the television.
Drawing from their research and that of others, Aaker, Rudd, and Mogilner extracted five time-spending happiness principles. 1) Spend time with the right people: The greatest happiness levels are associated with spending time with people we like. 2) Spend time on the right activities: Certain activities are energizing, and others make us feel drained and defeated. Choose the former whenever possible. 3) Enjoy experiences without spending time actually doing them: Research in the field of neuroscience has shown that the part of the brain responsible for feeling pleasure - the mesolimbic dopamine system - can be activated when merely thinking about something pleasurable 4) Expand your time: Unlike money, time is inherently scarce. To increase happiness, it can make sense to focus on the here and now -because thinking about the present moment (vs. the future) has been found to slow down the perceived passage of time. 5) Be aware that happiness changes over time: As we age, we experience different levels of happiness and how we experience happiness changes. Recent research found that younger people are more likely to experience happiness as excitement, whereas older individuals are more likely to experience happiness as feeling peaceful.6) Superstar chief executives can self-destruct
[Source: Financial Times
Silicon Valley entrepreneurs and venture capitalists decamp to the Nevada desert this week for Burning Man, the annual jolly to celebrate “radical self-reliance”, gift-giving and co-operation. It culminates on Saturday with the torching of the effigy. Burning Man is a playful experiment in how community can flourish away from private finance and rival companies. Its art theme this year is “I, Robot”. The irony is that technology titans such as Elon Musk, founder of Tesla and a regular “Burner” (event participant), are giants of the real economy. The way the latter works was the topic of another gathering in a western state last week — that of central bankers at Jackson Hole in Wyoming. They fretted about the power and profitability of “superstar companies” such as Apple, Facebook, Microsoft and Google. Wages, prices and monetary policy are all heavily affected by these oligopolies.
Jackson Hole is a better guide to economic reality than Burning Man but the Burners are right in one respect. The symbolic giant — the superstar founder of the superstar company — is a figure of the time. Willful, charismatic, unruly entrepreneurs such as Mr. Musk embody its economic spirit. A Jackson Hole paper by John Van Reenen, professor at MIT, holds some clues as to why. Professor Van Reenen analyses the phenomenon of concentration in industries, such as technology and media, and how they have become “winner-takes-all” markets. Rather than oligopolies and all-powerful platforms emerging from mergers and lax antitrust rules, Prof Van Reenen argues that they are mainly produced by structural factors. Globalisation and new technology foster superstar companies with high sales margins and returns on capital because “network effects mean that small quality differences can tip a market to one or two players”.
This influences the personalities of leaders at many superstar companies — impatient, relentless and crazily ambitious. It seems bizarre that Tesla’s board and shareholders have allowed Mr. Musk to act so unpredictably. One reason why financiers have permitted technology entrepreneurs to secure managerial control over public companies through dual class shares is that they have limited choice — that is what founders such as Mark Zuckerberg at Facebook demand. But they have also made calculated bets that such figures work best for the company in a winner-takes-all economy. This is in sharp contrast to 40 years ago, when Harvard professor Michael Jensen articulated concerns about the “agency costs” imposed on shareholders by the entrenched class of managers who ran big US companies. It encouraged the rise of leveraged buyouts and private equity ownership of companies, with share incentives to make executives follow investors’ interests.
The managerial risk in the superstar economy is that the founder and leader pushes so aggressively for global control that the company unravels. This happened at Uber, where Travis Kalanick had to be pushed out of the chief executive’s seat by investors despite his voting stake because he had upset too many people, including regulators. That said, superstars can be decent managers. Neither Larry Page at Alphabet nor Jeff Bezos at Amazon have the same problem, although both are hugely ambitious. The value of a founder who personifies the company and has an insatiable desire to grab territory is reinforced by the economy that Prof Van Reenen describes. The author however argues that reliance on willful genius also makes them vulnerable to instability. It is hard for others to compete with them head on, but wait for a while and they may self-destruct.7) Why getting back to the moon is so damn hard
[Source: MIT Technology Review
Over 10 years ago, Google and X Prize offered a $20 million prize for the first non-governmental organisation to complete a lunar mission as it defined one. After multiple extensions of the deadline from the original date in 2012, the competition was officially killed in January when it became clear no private company would make it to the moon by the final deadline: March 31, 2018. The prize required a private team to successfully perform three tasks to claim the cash and glory: 1) Successfully place a spacecraft on the surface of the moon; 2) Travel 500 meters on the moon’s surface; and 3) Transmit high-definition videos and images back to Earth. Since the contest was launched on September 13, 2007, only three vehicles have successfully hit the moon. They were all government funded, and only one, Chang’e 3, launched by China in 2013, even had the ability to rove on the moon’s surface. People landed on the moon in 1969, so we have proof that it’s an attainable goal. Why can’t we easily repeat our success from 49 years ago with today’s advanced technology? The reason being - resources.
Also, when the US made its first moon landing, NASA had taken the fastest route possible to get there. The priority was beating Russia, not building a clear path for future trips. “Instead of logical steps to build a sustainable model for continual access and operations on the moon, it was more of a leap to the surface of the moon,” says Blair DeWitt, CEO of Lunar Station Corporation (LSC), a moon data startup in Cambridge, Massachusetts. “This abnormal market structure removed the means to build the supply chain needed to support continual transportation of equipment, materials, and people to the moon.” Even though the costs of accessing space are decreasing, getting to the moon is not cheap. In today’s dollars, the Saturn V rocket used in the Apollo program would cost about $1.16 billion. It’s difficult to convince a government to quickly put that much—or more—into a rocket of equivalent or greater power. Right now, we just don’t have rockets with the firepower to match the Saturn V, making cargo-heavy moon trips a challenge. SpaceX’s powerful Falcon Heavy rocket—which recently had a successful test flight—shows promise for future moon trips at a comparative bargain of $90 million, but it still packs only two-thirds the 7.5-million-pound thrust of the Saturn V.
“The reality was it’s a lot of money to go to the moon,” says Chanda Gonzales-Mowrer, senior director of the Google Lunar X Prize. “When we launched in 2007, we were under the assumption launch contracts would be lower than what they were.” So teams had to get creative. Some, like Moon Express and Team Indus, established contracts and ties with national space programs in the US and India, respectively. SpaceIL and others turned to VC funding. Many of the competitors—including Astrobotic, SpaceIL, and Moon Express—do have planned launches, even if they are still a few years out. Their business goals range from Moon Express’s mission of harvesting lunar resources to Astrobotic’s aim of becoming a cargo delivery service. The fact that the teams have so many different reasons for going “shows why [private] lunar exploration is going to succeed,” says Gonzales-Mowrer. Astrobotic, the only team to win all of an interim series of prizes offered for reaching certain milestones, already has 11 confirmed customers for its first planned launch in 2020, with over a hundred in the pipeline.
Also, President Donald Trump announced his support at the end of 2017 for sending astronauts to the moon and eventually Mars. His 2019 budget proposal included support for that as well. Not far behind, Vladimir Putin voiced his intention for Russians to travel to the moon and Mars. China, India, Russia, Japan, and the European Space Agency are all working on moon projects, some of them well under way. India and China will be launching rover missions this year, and China will be launching a sample return mission in 2019. Ultimately, the stage has been set for a future of government and private collaboration on space travel. Thanks to a combination of private and public business motivations, scientific curiosity, and the desire to explore, the moon that we touched so briefly may be in reach once again. But this time, we will be making a permanent bond. 8) Populism was not sparked by the financial crisis
[Source: Financial Times
The financial crisis of 2007-08 has become a convenient Year Zero: the supposed beginning of the political distemper that carried Donald Trump to the White House in 2016. It “lit a match”, Steve Bannon, his former adviser, and usually a taker of the long view, said last month. “And the explosion was Trump.” According to the author, this neat account exaggerates the centrist idyll before the crash and the centrist rout afterwards. Rightwing populists had enjoyed breakthroughs as long ago as the Republican seizure of Congress in 1994. Democrat Barack Obama sauntered to re-election as president a full four years after Lehman.
He says that we are living through the hasty promotion of an important historical event to a totally seminal one. Modern populism was not born in 2008. Like the raising of a vein, the crash just brought to the surface what was already extant and pumping. Mr. Trump weaponised a popular suspicion of political elites that long predates Lehman. The root of that suspicion is not all that mysterious. The most telling chart in American opinion data tracks public trust in national government since the middle of the previous century. Compiled by the Pew Research Center, it shows the people and their rulers united in almost gooey rapport well into the 1960s. Some 77 per cent of Americans trusted the government in 1964, the year before President Lyndon Johnson sent ground forces to Vietnam. The level of trust was down to less than half that a decade later. After Watergate, it fell still lower at the turn of the 1980s and sagged to 18% last year. Through booms and busts, peacetime and war, sleaze and probity, state expansion and shrinkage, rule by Republican and by Democrat, public trust in government has never recovered to anywhere near the level of the early 1960s.
If there has been a rupture or inflection point in the postwar history of the republic, it was the Vietnam war, with its compound traumas of bloodshed abroad and rancour at home. Next to this, the crash, at least in its impact on public trust, hardly registers. The secular decline has even survived the patriotic spike after 9/11. As the regulator of Wall Street and the setter of interest rates, the US government was complicit in the financial bubble and its ruinous puncture. But as the backstop for banks and the provider of stimulus, it also softened the recession. The government’s record in Vietnam, which spanned technical incompetence and lies about the prospects of victory, was not so nuanced. Nor does economic pain equal the loss of lives. Thus did a far-off war so poison the domestic space. The streets were aflame with clashes between counter-culture and counter-counter-culture. The 1970s, the decade of Badlands and The Deer Hunter, was Hollywood’s darkest. These trends came and went but the underlying disillusion with a once-trusted government has remained and intensified.9) Here’s Apple’s plan to keep from losing the World’s fastest-growing smartphone market
Lost in the hoopla around Apple’s $1 trillion capitalization has been its serious trouble in the world’s second-largest smartphone market, where it ranks 11th. The company accounts for 1% of India’s phone sales and sold fewer than 1 million phones there during the first half of 2018, according to Counterpoint Research, while Xiaomi sold more than 19 million. During a weeklong trip to India two years ago, Apple Chief Executive Officer Tim Cook told just about every employee, politician, and Bollywood star he saw that the country was central to his plans. During a July 31 earnings call, he barely mentioned it. Behind the scenes, though, he’s been working to remold Apple’s failing India strategy, according to current and former Apple employees.
Michel Coulomb, a well-regarded veteran Apple executive, parachuted in from Singapore to oversee its India operation at the end of last year. In June, having forced out three top sales executives, Coulomb spent three days with senior employees from throughout India at Apple’s sales and marketing headquarters in Gurugram, a tech hub south of New Delhi. He and other executives laid out a strategy to rekindle iPhone sales that focused on better retail deals with higher sales targets, the establishment of Apple stores in India, an overhaul of the company’s relationships with independent retailers, and improved apps and other services aimed more closely at Indians, including a revamped version of Apple Maps by 2020.
At $1,500, including a 20% import tax, the iPhone X is a tough sell in a country where many people still can’t afford a smartphone of any kind. Fewer than 5% of phones purchased in India sell for more than $450, according to Counterpoint. Even the lesser iPhone 8 costs about $900, so Apple has fallen back on selling older models—the iPhone 6, 6s, and SE. That worked well over 2014-17, but sales slowed sharply this year. In part, that’s because the cheaper hardware is now more than 2 years old, ancient by smartphone standards. Because the government has made it tough for Apple to open its own retail stores in India, iPhone prices are less reliable than the company’s reputation for strict price controls would suggest. Indian wholesalers and online retailers often raise or lower their prices daily without giving a reason, leading shoppers to haggle or wait in hopes of a better deal, says Subhash Chandra, who runs a 510-store chain of gadget shops called Sangeetha Mobiles. Two leading retail chains say iPhone sales have fallen to one-third of their January level.
Instead of officially lowering its prices, Apple is in talks with retailers and banks to offer holiday deals all-year round, according to people familiar with the plans. Those people say Apple is also asking some individual stores to more than quadruple sales targets, to 40 or 50 iPhones a week, and plans to cut off retailers that consistently fail to hit the mark. Retail sales staff will be trained to teach customers how to use their devices, and Apple intends to overhaul in-store branding and product displays. Executives would conduct daily conference calls with stores to gauge progress. Apple hopes to start opening stores in India next year and eventually set up three in New Delhi, Bengaluru (formerly known as Bangalore), and Mumbai. The government has long required foreign companies opening shops to manufacture 30% of their products locally, but it said in January that businesses can reduce that requirement by sourcing more Indian goods for their global operations. Apple now builds some of its India-aimed iPhone SE and 6s models in Bengaluru; it’s unclear whether the company plans to take advantage of the revised policy or try to hit the 30% mark.
None of this will make much difference if Apple doesn’t understand its customers. For years, Indian consumers have complained that Siri can’t process their requests in local languages, they have no access to Apple Pay, and Apple Maps can’t give them turn-by-turn directions or identify points of interest. The 2020 revamp is supposed to fix Maps’ failings, say the people familiar with Apple’s plans, but so far, the Maps development office the company set up in Hyderabad in 2016 has mostly been used for editing map data in other parts of the world. For now, Google dominates the maps market, and along with Facebook controls much of the developer community. Google’s and Amazon.com’s voice assistants are far ahead of Siri when it comes to understanding Indian languages and accents. Vijay Shekhar Sharma, CEO of Indian digital payments company Paytm, says he hasn’t bothered to integrate his services with the iPhone because iOS users represent such a tiny slice of the market. Like the BlackBerrys of old, the iPhone’s biggest selling point, says Sharma, is relatively high data security for the privacy-conscious. Otherwise, unless you really love Apple, he says, “there aren’t many reasons to buy this expensive phone.”10) Silicon Valley’s dystopian vision
[Source: Financial Times
The author of this piece talks about the risk of “divergent humanity” in the Silicon Valley. Referencing ‘Factfulness’ by Hans Rosling (so enthusiastically endorsed by Bill Gates) he says that humanity has been converging over the past few decades. The developing world has been catching up with the developed world so fast that it is senseless to keep using such binary terms, according to Rosling. On most measures, humanity is converging towards longer, healthier, safer and more prosperous lives. Alongside better governance, technology has played a starring role in this “secret silent miracle of human progress”. Inventions as varied as electricity, antibiotic drugs, washing machines, the shipping container and the internet have all contributed to this great convergence.
But the gnawing concern in Silicon Valley is that the latest advances in technology, such as synthetic biology, artificial intelligence and pervasive computing, may reverse that happy story, resulting in global divergence. It appears to be taken as read by many of this tech crowd that it is only a question of time before AI-enabled automation kills most jobs. Having automated muscle during the Industrial Revolution, we are automating brain during the present Cognitive Revolution, with potentially enormous economic and social fallout. Such thinking helps explains the appeal of the “silver bullet” solution of universal basic income to prepare us for the day when most citizens are economically worthless. Fears of possible societal breakdown also seem to lie behind some tech titans’ desires to buy lavish bolt-holes in New Zealand or build escape pods for Mars.
However, he warns against techno-determinism, which is often shaped by science fiction as much as scientific reality. Societies adopt and use technology in starkly contrasting ways. Just compare the differences between North Korea and South Korea. One is arguably the least wired country on the planet, the other among the most wired, even though they both speak the same language and share the same peninsula. The author’s conversations with Tony Blair (whose think-tank takes an interest in such matters) about the risks of divergent humanity revealed that many governments had not yet understood the full impact of technology because they were often the least affected by it.
Mr. Blair’s favoured solution is for a structured dialogue between tech companies and policymakers to figure out how best to interact. And that dialogue must include the developing world, which is at the greatest risk of losing out. “If the tech people are not in a proper dialogue with policymakers then that scenario [of divergent humanity] might come about,” Mr. Blair said. One organisation that is trying to structure such a dialogue is Pathways to Prosperity, a commission on technology and inclusive development, co-chaired by Melinda Gates, the philanthropist, Sri Mulyani Indrawati, Indonesia’s finance minister, and Strive Masiyiwa, founder of the pan-African Econet Group. The commission is pooling the expertise of technologists and policymakers to “turn the potential risks of technological change into opportunities for inclusive development”.
-Prashant Mittal is Strategist, at Ambit Capital. Views expressed are personal
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