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11New Delhi ●● Monday ●● 8 August 2011
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India can benefit from us downgrade - Kapil Khandelwal, EquNev Capital, www.equnev.com

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Kapil Khandelwal
EquNev Capital
www.equnev.com

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Transcript of "India can benefit from us downgrade - Kapil Khandelwal, EquNev Capital, www.equnev.com"

  1. 1. c m y k c m y k 11New Delhi ●● Monday ●● 8 August 2011 Sony Corp to launch organic electroluminescent monitors later this month. Technomics Old Twitter version is set to be killed this week for a brand new upgrade. TCS to collaborate with the Singapore Management Univer- sity (SMU) for a new R&D facility. SANGEETHA CHENGAPPA BENGALURU Aug 7: The mobile sub- scriber base in India (870 million) that has witnessed a sharp slowdown since April 2011, still continues to attract new handset manu- facturers such as the $28 bil- lion telecom solutions provider Huawei Technolo- gies which is wooing Indi- ans with its range of smart phones and feature phones. The company, which has been selling its unbranded handsets and data card don- gles through telecom opera- tors in India over the last three years, is planning to bombard the market with Huawei branded smart phones and feature phones, beginning with the launch of three Android smart phones in June. Although a late entrant to an already crowd- ed market, Huawei is target- ing to acquire 5-7 per cent of the total handset market in India by 2013 and 15 per cent of the smart phone mar- ket over the next three years. And to make this happen, a dedicated team of 150 R&D engineers who are a part of Huawei’s 2,500-strong R&D team based in Ben- galuru, are innovating for the diverse Indian consumer base from students, first- time job entrants, style- seekers, corporate users, to tech-savvy professionals, semi-rural and rural folk. “We gained valuable insights into the needs of Indian mobile phone users when we soft-launched a select range of feature phones/smart phones last year. Based on those insights, we will be launch- ing 8-10 new smart phone models in the Rs 8,000–Rs 15,000 price band including cloud phone models in the Rs 10,000–Rs 25,000 price band by the year-end”, said Nicolas ZhuHaifeng, head, Huawei Devices India R&D and Product Centre. The cloud phones, which will be unveiled before the festive season begins in October, will give users access to 5GB free storage on the Huawei cloud hosted in Mumbai where users’ photos, videos, music and phone book contacts will be automatically stored and updated on the cloud. Existing Huawei handsets users can upgrade their phones to the cloud for a fee. “The entire cloud phone services spanning phone book, media and IM syn- chronization was developed by our R&D team in Ben- galuru, our second largest team outside China. The cloud phone will be simulta- neously launched in the India, US and China mar- kets this year”, said Nicolas. “Our five-year roadmap for the India market also includes the launch of the MediaPad, a 7-inch Android 3.2 tablet and hi-speed don- gles in October 2011 along with 20 new handset models next year. My team has pro- vided for seamless integra- tion of information and files on phones, dongles and tablets so that users will be able to access information from any of their Huawei devices”, he added. Unlike smartphone users in the US, Europe and other markets who are a fairly homogeneous customer base with similar require- ments, the Indian user base has multiple segments each with different needs. Huawei’s Bengaluru R&D team has incorporated sev- eral innovative features such as automatic internet set- tings incorporated in the phone, with no need for manual intervention. One- touch solution to access content on Bollywood, cricket, stock market updates, Panchang (Hindu calendar), live TV stream- ing, entertainment, gaming, music, videos, etc., with all these applications integrated into the phones. For ease of use, Huawei has a customer care and service app, FAQs and an instruction manual app on the phone to help users access instant customer service and instructions. The phone book contacts are integrated with popular social networking sites and Instant Messaging, which allows users a single view screen interface of their con- tact’s updates on multiple social networking sites, instead of accessing these sites separately. Feature phones and dual- SIM Android phones in the Rs 5,000–Rs 8,000 price range are also in the pipeline. “In a predominantly pre- paid user scenario, dual- SIM phones are in great demand in India where mul- tiple sims from telcos are used to avail of low-cost plans. Feature phones are also in demand for various user needs such as chat, music, FM Radio etc; we will be launching these soon” said Nicolas. Huawei Devices including mobile phones, set top boxes and data card dongles sold through the major tel- cos garnered $490mn in India in 2010 which is 10 per cent of the company’s $4.5 billion global revenue from devices. The India Product Centre in Bengaluru is focused on bringing out products for the domestic market where the entire design, software and testing will be carried out. However, manufacturing of all devices will continue to happen out of China. The company is bullish about the India market and has invested $120 billion on a 20 acre R&D campus in Whitefield, which will accommodate 4,000 R&D engineers over 1 million sq ft of office space and is scheduled to be ready in the first quarter of 2014. At a hacker conference, plenty of friendly FedsLas Vegas, Aug 7: There was a whole lot of hacking going on in Sin City this weekend — and right under the noses of federal agents. But in a sign of a time when cybersecurity is at the forefront of national security concerns, the feds were not lurking in the shadows to keep a watchful eye. They came as invited guests at the Defcon hacker convention in Las Vegas, which drew more than 10,000 attendees in its 19th year. At Defcon, computer wiz- ards test their skills against each other for bragging rights and prizes. No name tags are issued and hackers identify themselves only by one-word handles. High-profile attacks on government and corporate computer systems disclosed this summer have pushed hackers increasingly into the public eye. Meanwhile, gov- ernment agencies are woo- ing hackers to join them in fighting such intrusions. The Defcon crowd made for an interesting mix. It had its fair share of mohawk haircuts that would make a rainbow proud, along with tattoos and piercings but it mostly looked like a campus of geeks let loose in a Las Vegas hotel to do what they consider fun: decipher mind- bending puzzles, starting with the convention badge. Made of titanium — organ- isers say they depleted the country’s stock of the raw material — the badge had a cut-out of the Egyptian mathematical symbol the Eye of Ra, and a letter and number. It offered a clue to a puzzle. Other clues were contained in a large decoder wheel on the floor where a golden pyramid with symbols was encircled by letters coupled with numbers. More clues were salted in the program booklet and strewn through- out the convention center. A hacker who goes by the moniker “LosT” designed the game and offered some helpful hints: 10 people had badges with a Z and a num- ber. “I pulled in so many dif- ferent disciplines that no sin- gle person can really do it by themselves unless they are a weirdo like me,” said LosT, an engaging mathemati- cian/engineer with blue hair and a goatee. The game illustrates the intellect of the attendees, who see hacking as a skill for problem-solving and do not welcome the notoriety generated by some bad apples breaking laws. Hackers are “people who like a challenge. We don’t do crime, we’re not criminals,” said “mournewind” from West Virginia. “People have this opinion that hackers do illegal things and that’s not really a good thing.” Hacking, for example, can help improve commercial products, he said. “We break an iPhone to make Apple make it better.” Hackers pointed out that criminals exist in all profes- sions and they should not all be painted by that broad brush. “I think hackers have always gotten a bad name,” said “pwrcycle,” whose busi- ness card labels him an “Eth- ical Hacker.” “Those are the people who think outside the box. The epitome of free thinkers.” He objected to the term “cyber wars,” saying there was danger in calling what was essentially a crime in which no one died a war, with its suggestion that mili- tary might could be used on basically thugs, bullies and mobsters. “What most people are try- ing to say is we want to stop espionage,” he said. “He’s not trying to kill you, he just wants to pick your pocket.” At the start of a panel of cyber investigators from the Air Force, Navy, Army and NASA, a burly man called “Priest,” who said he entered government service after the Sept. 11 terrorist attacks, advised the audience that if they wanted a government job the key was to stay out of jail, go to college and not do drugs. The panelists said there was a debate in their world about whether it was better to turn a cop into a cyber specialist or turn an information technol- ogy expert into a cop. “I think you just need to be a geek who knows how to talk to people,” said Ahmed Saleh, special agent in NASA’s computer crimes division. “We have a little bit of both. We have a little bit of the geeks who became cops and the cops who became geeks, or nerds or whatever words you want to use,” he said. The panel started with a “spot the Fed” contest in which the audience had to guess which of four women on stage was a federal agent. Most of the audience picked the one who said her favorite president was Ronald Reagan. Wrong. It was the one who said her childhood dream was to be a pilot. One sure way to catch the attention of would-be employers is to win the pres- tigious “Capture The Flag” contest. This year 12 teams huddled with laptops in a low-lit room all day, hacking each other. The competition is all about “attack and defense,” explained “Fac- tor,” who was part of the defending champion team ACME Pharm. The attack- er’s goal is to find vulnera- bilities while the defender tries to to prevent the holes from being exploited. “You are amongst gods,” Factor said. “This is the Olympics.” He shrugged off as “hype” the negative image of hack- ers as criminals and said the public should not believe everything it reads. “There are good hackers, there are bad hackers,” he said. “And some of us have kids.” Other competitions includ- ed “Hacker Jeopardy,” “Crack Me If You Can” and “Hack Fortress.” But one required absolute- ly no computer savvy and got a little hairy — best beard, mustache, partial beard, and fake beard. — Reuters GEEK FEST Your smartphone, a new frontier for cyber punks Las Vegas, Aug 7: Hackers are out to stymie your smart- phone. Last week, security researchers uncovered yet another strain of malicious software aimed at smart- phones that run Google’s popular Android operating system. The application not only logs details about incoming and outgoing phone calls, it also records those calls. That came a month after researchers discovered a security hole in Apple Inc.’s iPhones, which prompted the German government to warn Apple about the urgency of the threat. Security experts say attacks on smartphones are growing fast — and attack- ers are becoming smarter about developing new tech- niques. “We’re in the exper- imental stage of mobile mal- ware where the bad guys are starting to develop their business models,” said Kevin Mahaffey, co-founder of Lookout Inc., a San Fran- cisco-based maker of mobile security software. Wrong-doers have infected PCs with malicious soft- ware, or malware, for decades. Now, they are fast moving to smartphones as the devices become a vital part of everyday life. The smartphone’s useful- ness, allowing people to organize their digital lives with one device, is also its allure to criminals. All at once, smartphones have become wallets, email lock- boxes, photo albums and Rolodexes. And because owners are directly billed for services bought with smartphones, they open up new angles for financial attacks. The worst programs cause a phone to rack up unwanted service charges, record calls, intercept text messages and even dump emails, photos and other pri- vate content directly onto criminals’ servers. Evidence of this hacker invasion is starting to emerge. Lookout says it now detects thousands of attempted infections each day on mobile phones run- ning its security software. In January, there were just a few hundred detections a day. The number of detec- tions is nearly doubling every few months. As many as 1 million people were hit by mobile malware in the first half of 2011. Google Inc. has removed about 100 malicious appli- cations from its Android Market app store. One par- ticularly harmful app was downloaded more than 260,000 times before it was removed. Android is the world’s most popular smart- phone operating software with more than 135 million users worldwide. Symantec Corp., the world’s biggest security software maker, is also see- ing a jump. Last year, the company identified just five examples of malware unique to Android. So far this year, it’s seen 19. Of course, that number pales compared with the hundreds of thousands of new strains targeting PCs every year, but experts say it’s only a matter of time before criminals catch up. “Bad guys go where the money is,” said Charlie Miller, principal research consultant with the Accuvant Inc. security firm, and a prominent hacker of mobile devices. “As more and more people use phones and keep data on phones, and PCs aren’t as relevant, the bad guys are going to follow that. The bad guys are smart. They know when it makes sense to switch.” —AP bITs Haifa, Aug 7: Wikipedia, the online encyclopedia that is written entirely by volunteers and allows any- one to edit its entries, is losing contributors, its founder said. Wikipedia founder Jimmy Wales said the non- profit company that runs the site is scrambling to simplify editing procedures in an attempt to retain vol- unteers. “We are not replenishing our ranks,” said Wales. “It is not a crisis, but I consid- er it to be important.” Administrators of the Internet’s fifth most visited website are working to simplify the way users can contribute and edit materi- al. “A lot of it is convolut- ed,” Wales said. “A lot of editorial guidelines ... are impenetrable to new users.” Wikipedia has more than three million entries but has been marred by subjec- tive entries and pranks. Even so, Wikipedia cites studies that compare the website’s accuracy favor- ably to more conventional encyclopedias, while other studies give it lower marks. Despite Wikipedia’s wide-reaching popularity, Wales said the typical pro- file of a contributor is “a 26-year-old geeky male” who moves on to other ven- tures, gets married and leaves the website. Other contributors leave because, 10 years after the website was launched, there are fewer new entries to add, he said. As of March 2011, Wikipedia had about 90,000 active contributors. The goal is to tack on another 5,000 by June of next year, said Sue Gard- ner, executive director of the nonprofit that runs the website. Among its steps, Gardner said the nonprofit is expanding a program that encourages university pro- fessors to assign the writ- ing of Wikipedia entries to their students, particularly in India, Brazil, Canada, Germany and Britain. The website has also introduced a new feature called WikiLove aimed at keeping users engaged. Visitors to the website select a graphic icon — choices include kittens, stars and the Mediter- ranean dessert baklava - and send it with a message of appreciation to a page contributor as encourage- ment. “It’s like a ‘like’ on Facebook,” Wales said. Even so, Wales said Wikipedia must be used with care. “Particularly be careful if we say ‘the neu- trality of this article is dis- puted,’ or ‘the following section doesn’t cite any sources.’ That’s probably a good warning,” he said. — AP First cloud phone set for October Wikipedia is losing volunteers Defcon hacker convention in Las Vegas drew more than 10,000 attendees. KAPIL KHANDELWAL T he downgrade of United States sover- eign rating by Stan- dard & Poor to AA+ may signal a shift in the exist- ing world order. US has held the gold standard AAA rating since 1917 and dominated the world economy. The impact is going to be felt globally and across industries including health and pharma and the off- shoring and outsourcing services. Back home, our Finance Minister has not ventured out to conclusively give a verdict on its impact to India. If US is unable to man- age its fiscal affairs, there can be another downgrade in the next 12 to 18 months, which may signal a spiral impact globally. One of the contributing factors for US downgrade by S&P is the country’s inability to contain the spiraling healthcare costs and delays in the health- care reforms. Let us calibrate the impact in the short and medium term. From India’s point of view what are the impact to the outsourcing services providers, healthcare serv- ices and pharma compa- nies. Many predict the surge in demand for medical care associated with the aging US population will strain resources because of which future genera- tions in the US will face higher inflation, higher taxes — or both. Some suggest the rising cost of Medicare and Medicaid, the federal insurance plan for those aged 65 and older, will drive the national debt to a point of no return. And still others have suggested that cost pres- sures can ultimately result to reduced health benefits for all. While the aging popula- tion may contribute to the US healthcare crisis, it’s the emergence of costly new drugs, diagnostics and medical technologies that will pose a problem. . American health care industry is already in a state of flux with the downgrade and fiscal con- solidation. For health insurance companies, the general consensus is that the situation will poten- tially bring about price and margin pressures but can also lead to an increase in top line rev- enue as more people will be covered by some form of insurance. This is posi- tive for outsourcing, as one of the levers for cost control can be outsourced to India and other low cost destinations. The second trend is a move toward accountable care organisations (ACO’s) and global capi- tation payments. The general idea is for a health care provider to receive a set amount per patient and take responsi- bility for the patient’s medical care. This serves to transfer most, in some cases all, of the risk to the provider of health care services. The risk is that the patient may need more services than the provider will budget for. However, if the patient, requires fewer services, the provider receives the ben- efit. This spells more medical tourism opportunities for the local healthcare serv- ices providers in India. The third trend will be that of consolidating the industry. While the big players in the US industry appear to be achieving reasonable growth, there are smaller companies within the health care industry that will face challenges and may exit or consolidate. As the post-merger con- solidation occurs, there will be enough opportuni- ties for outsourcing IT, functional and clinical services to low-cost desti- nations like India. Let us now discuss a couple of caveats for India to blow this opportunity away in the shifting of the world order. Firstly, US dollar exchange rates may strengthen the Indian rupee. Secondly, the rate of cost inflation in India is squeezing the margins out and making India uncom- petitive against other glob- al outsourcing destination. The second half year (H2) for this fiscal year for Indian services providers in healthcare and pharma may require re-rating as they gear up for the emerging challenges and opportunities posed by the US sovereign downgrade and a shift to a new world order. A Dose of IT India can benefit from US downgrade Kapil Khandelwal is Director, EquNev Capital, a niche invest- ments banking and advisory services firm and an independent advisory board member with leading healthcare and information communication technology (ICT) companies. Nicolas ZhuHaifeng, head of Huawei Devices India R&D and Product Centre. AGE THE

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