Debunking myths about Asia's IT

comment Despite the outsourcing hype, Asia is not the promised land for Western companies looking to expand their horizons, argues Martin Brampton.

comment Nokia and Microsoft look to have strong positions in their sectors, as I noted in last week's column (This article first appeared in Silicon.com).

But one of the great imponderables of our time is how Asia will affect our familiar IT scene. Opinion is forever shifting, with the present consensus in favour of taking Asian influence very seriously.

There is a feeling that many technology markets have stagnated. To some extent this is related to a common attitude to competitive positioning held by many companies. A market strategy that is often advocated is to find a sector that is presently unoccupied, enter it and seek to dominate it before anyone else can get a foothold.

The received wisdom of management thinking is quite influential, so this strategy has broad appeal. It is quite the opposite for the contrary strategy of attacking a market that has an established and apparently dominant incumbent. Mobile phones and, even more, PC operating systems seem to be such markets.

One caveat, though, is that if a market is growing fast enough, it may still be worthwhile looking for a share of it. Then a major question is how easily one product can substitute for another. Clearly, that is an issue where Microsoft has an advantage over Nokia, at least while mobile phones have not yet fully achieved their IT potential.

Two older Asian themes have run into difficulties. It is a while now since all the talk was of the Asian Tiger economies. They turned out to be rather fragile and in the face of crisis, and people realised they were also quite small in global terms. Another theme was that Western companies could open up huge new markets in Asia, and especially China. The result has mostly been losses and no sign of compensatory long-term gains.

Those factors might suggest we can forget about Asia - but that would be a mistake. Just because the market is not conforming to our preconceptions does not mean it does not matter. It is interesting to note that the Nokia rivals making most progress are South Korean companies. And, of course, the best known IT brand is now going to be attached to Chinese PCs.

In fact, Asian companies are making progress not only in global markets that are apparently dominated by a Western incumbent, but also in emerging market areas such as India. At this point perhaps we should start to take into account questions of culture.

Maybe the world is not quite so homogeneous as Francis Fukuyama claimed in his book The End of History. We in the West are inclined to be very insular - as when we claim movable printing type was invented by Gutenberg, despite its earlier invention by the Chinese. Applying reason to human affairs may not lead inexorably to a single conclusion after all. Cultural differences do affect markets, globalisation notwithstanding.

It is difficult for Asian companies to adopt the strategy of finding and dominating a new sector. Locating such sectors usually requires intimate knowledge of the society in which they occur. Spotting them from a considerable distance is much harder. But by the same token, Asian markets may not be as simple as many in the West suppose.

In fact, even simple things are different. A common assumption, correct in the West, is that the cost of software products is of little relative consequence because IT expenses are dominated by the cost of skilled labour. However, in societies where hard currency is extremely scarce this is patently untrue and priorities will be changed.

We must set aside some of our earlier conceptions of Asia rapidly coming to dominate the world of technology, or of Asia as a huge virgin market ripe for exploitation. But we need also to be prepared for many of our other preconceptions to be shaken, as apparently stable markets turn out to have new and unexpected possibilities.

Martin Brampton is founder of Black Sheep Research (www.black-sheep-research.com), an independent consultancy providing research, writing and speaking services on a wide range of business and technology issues. Martin was previously a director at Bloor Research, and has worked with IT as a user and analyst for over 20 years. He is a long-term contributor to silicon.com through videoed debates and his weekly column, which tackles a wide range of issues. He can be contacted through his website.

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