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Era of the Mobile WebPosted by ahc99 on October 18th, 2008

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The Economist recently published an article on how the mobile web has sort of taken on a life of it’s own. They believe that in the future, most new internet users will be in developing countries and will use mobile phones.

I believe that future has already arrived. Last year when I went to Shanghai, China on a scholarship I saw almost everyone carry a mobile phone, from corporate executives that make $200 USD a day to farmers that make $100 USD per month. This is a country in which the poor accounts for nearly 80% of the population yet almost everyone I met could afford a cell phone.

Part of the reason could be attributed to globalization, which has drastically undercut the cost of most electronic toys. But another big reason is that the infrastructure for mobile anything is already in place. As long as a signal from a tower or satellite can travel to the far reaches of the globe, you can probably find a person there using a cell phone and surfing the web. Phones are not like most PCs that need an actual cable in order to hooked up with the rest of the world, instead all you need is a signal. Mobile phones have made communication and data transfers both cheap and easy.

Startling statistics from the article support this growing trend of mobile web users:

The simple answer is that the number of mobile phones that can access the internet is growing at a phenomenal rate, especially in the developing world. In China, for example, over 73m people, or 29% of all internet users in the country, use mobile phones to get online. And the number of people doing so grew by 45% in the six months to June—far higher than the rate of access growth using laptops, according to the China Internet Network Information Centre.

This year China overtook America as the country with the largest number of internet users—currently over 250m. And China also has some 600m mobile-phone subscribers, more than any other country, so the potential for the mobile internet is enormous.

It is not just China. Opera Software, a firm that makes web-browser software for mobile phones, reports rapid growth in mobile-web browsing in developing countries. The number of web pages viewed in June by the 14m users of its software was over 3 billion, a 300% increase on a year earlier. The fastest growth was in developing countries including Russia, Indonesia, India and South Africa.

Furthermore, for many people around the globe, a mobile web is just a cheaper solution of getting access to the Internet:

Xuehui Zhao, a recent graduate of the Anyang Institute of Technology in Henan province, explains that a typical monthly package for five yuan ($0.73) includes 10 megabytes of data transfer—more than enough to allow her to spend a couple of hours each day surfing the web and instant-messaging with friends. It is also much cheaper than paying 200 yuan per month for a fixed-broadband connection.

Just a few years ago, cell phones were only used to conveniently place calls where ever you were located. But now there are increasingly elaborate data services available for consumers to buy. For example, just with my T-Mobile plan I can add text-messaging, instant messaging, limited web services, unlimited web services, email services, ringtone customization services, and GPS services. And I don’t even have a smartphone, the data services available on those are much more intricate.

Besides services you can buy, the uses of the mobile phone has multiplied exponentially over the years. I can use my phone to place calls, take photos, share photos, stream videos, triangulate my location, get web updates through RSS, write/check emails, send text messages, send instant messages (though AIM, ICQ, Yahoo!, Google, MSN), surf the web, check bank accounts, etc… The choices are unlimited. If someone has thought of a way to use the mobile phone, it probably has already been implemented. And if it hasn’t been, it will likely be done within the next few months. Like the article says, a “wave of innovation” should arrive soon with this growth in mobile phone users.

Now, I am happy about all of this happening, but I am just curious, as a side effect of this growth, how many more e-mails from Nigeria should I be expecting asking for my bank account number so they can wire me hundreds of millions of dollars. I can’t wait, how about you?

Free Trade: Is Globalization Hurting the U.S?Posted by ahc99 on September 4th, 2008

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This is an interesting article from Newsweek about the affect that Globalization has been having on the U.S. and whether Free Trade is a good thing for U.S. businesses and consumers. It is definitely a question on many people’s minds recently due to the various crisises (is that even a word?) that we are going through. Some of the more notable parts of the article include:

In this decade, rampant growth in emerging markets has mercilessly boosted prices for energy and commodities; competition from foreign workers has tamped down wage growth, and the weak dollar has made U.S. companies vulnerable to foreign buyers. “In the 1990s, we got all the upside of globalization,” said David Smick, a consultant and author of the new book “The World Is Curved: Hidden Dangers in the Global Economy.” “Now we’re getting some of the downside.”

That sums up the current U.S. situation quite well. Because China, India, and other emerging countries such as Brazil are developing so rapidly, they need a ton of natural resources such as oil, corn, rice, nickel, etc… I can’t blame them though because how is what they are doing any different than what any other developing country is doing? America went through the same type of rapid energy and commodity usage during it’s own Industrial Revolution. The fact that China and India are so huge and have such massive populations just makes the effects more pronounced to the rest of the world.

The second part of the sentence regarding competition from foreign workers is also very true, much of the jobs in America’s manufacturing industry (and even tech industry) have been outsourced to both developing and third-world countries. That can’t be helped though, we live in a global economy right now and people are able to easily work and communicate with other people half way around the globe. And why wouldn’t you want to hire people that require lower wages? Corporations aren’t in the business to be nice or protect their country’s economy, they are in it to make their shareholders rich. If this corporation doesn’t undercut the competition by lower wages, another corporation will. It’s just survival of the fittest. Walmart probably best exemplifies this statement.

As a result, Americans are now more inclined to see themselves as victims of globalization—rather than as beneficiaries of it. A Los Angeles Times/Bloomberg poll this spring found that 50 percent of respondents said free trade hurt the economy, while only 26 percent said it helped.

I don’t think there’s any use to think we’re victims of globalization, it is just the natural course of things. As technology improves and the distance between countries become non-existent, it is up to the country and its citizens to get better and invest in more high tech solutions that other countries have not yet been able to do. Only then can you stay ahead of the pack and be a world power. U.S. needs to buckle down and spend more money on education and advance technologies instead of military defense. Even if we have the best military defense in the world, it would be useless if our economy is stagnant behind all other countries. There is no way we can compete with other countries in manufacturing millions of goods when our wages are so much higher than theirs, but if we can specialize in higher technology, we will still be able to compete in the global market because there is a need for it.

A good analogy for this would be monopoly in a niche market versus full open competition. We cannot do full open competition because the U.S. would be undercut by all other developing countries. Besides there isn’t much profit to be made in such a market. However, if we become a country of specialists in various technologies that is generally unavailable or untrained in developing countries then we can maintain a monopoly in that market. As a result, the U.S. would then still be relevant in the global economy.

Americans returning from jaunts abroad can’t help but notice that the distinguishing features of modern capitalism, many of them developed in the United States, are being put to greater effect overseas. I’ve had better cell-phone service in Cambodia than in Connecticut. South Korea, and many other countries, has a higher rate of broadband penetration than the United States. An Ernst & Young report found that about 24 percent of America’s major roads are in “poor to mediocre condition,” while China builds ever-faster trains.

As capital and financial know-how spreads throughout the world, America’s status as the global leader in risk management has taken a beating, thanks to Wall Street’s credit immolation. The evaporation of savings has forced American bankers to beg sovereign wealth funds in Asia and the Persian Gulf for new capital. The Big Three automakers are lobbying for federal loan guarantees. The “ownership society”? More like “bailout nation.”

Now this is a scary fact. Like I said before, we need to be able to excel other countries in the technologies that we create and specialize in. However, from the article, it clearly shows that not only are we not excelling or keeping up, we are actually falling behind them. In this global economy, information spreads like wildfire and other countries are also trying to one up the U.S. In addition, our current situation in the housing, credit, job markets are just worsening over the coming months. I predict that we will be having a period of stagflation before things get any better.

Globalization doesn’t have to be a winner-take-all, zero-sum game. Mark Zandi, chief economist of Moody’s Economy.com, notes that exports—up 13.2 percent in the second quarter—have created hundreds of thousands of jobs this year. And there are still plenty of economic events in which the United States sweeps the medals: farming, high tech, higher education, branded goods.

I agree with the conclusion of this article. It isn’t a zero-sum game. It is a global economy and the effects of one economy ripples through many others. Although we are not in a good situation right now and many other countries are catching up to us, we can still use globalization to our advantage. Because everything is global now, we can have access to technologies developed all over the world and then optimize it or create synergy with our own technology. There is no point in arguing about whether globalization is good for the U.S. or whining about how it is hurting us. A global economy is here and it isn’t going away any time soon. It’s time we start taking action to make the best of it.