Pakistan's internet cafes were immortalized in Bina Shah's cyber fiction. Are they on their way out?

Business Recorder reports that business at internet cafes is petering out. And it makes sense too… with the proliferation of EDGE enabled phones, mobile and wired broadband, WiMAX, and most of all, inexpensive computers, who needs to go to a net cafe now? Yeah, I know the smart aleck response is, “Those who don’t want to surf p04n at home”. But come on! TechLahore is a PG website. We can’t have that sort of nonsense here.

Internet cafes are certainly on the decline, if not completely dead. But they’ve had their place in the evolution of IT in Pakistan. They played a great role in providing access to millions of people when computers were more expensive and not as prevelant as they are today. Heck, an internet cafe even rescued me once in Islamabad! Many years ago, we were driving back from the PC in Bhurban with a foreign customer, heading back to Lahore. My Laptop croaked along the way and we really needed to shoot of a quick email. If it wasn’t for a cafe buried in the basement of one of the plazas at Jinnah Super, I would have been done for!

Internet cafes became such a part of our culture over the years that one of the best pieces of cyber fiction to emerge from Pakistan, The 786 Cyber Cafe, authored by Bina Shah, revolved around the clientele and proprieters of a cyber cafe.

Death for Cybercafes is not an inalterable prophecy by any means. I think these businesses can rescue themselves if they focus more on value added services and less on the plain vanilla internet access. For example, there’s still room for a well equipped cyber cafe with a great multi player gaming setup. Since it’s a logistical pain in the rear to arrange a LAN party, showing up to one of these cafes would be so much more convenient. Or how about a cafe equipped with projectors and sound proof rooms for remote video conferencing? I could see many of the tens of thousands of oDeskers and eLancers spread throughout Pakistan wanting to use these facilities to communicate with their clients in other countries. And finally, how about making the net cafe more of a cafe and less of a cube farm? If the internet cafe evolves into a regular cafe with great connectivity, that could be another viable model… After all, WiFi tastes so much sweeter with a slice of glazed lemon pound cake and a blended coffee frap!

Here’s more from the Biz:

Internet cafes facing crunch, losing popularity

ISLAMABAD (December 25, 2009): The modern and innovative advancement in technology usage in cell phones and laptops has badly affected Internet cafe business and majority of them are either closing down or switching over to other businesses. Few years back people with no access to internet found these cafes handy for browsing internet, to send or receive e-mails or images. But today many internet cafe owners have replaced their business with mobile phone shops.

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The Freescale ARM based $199 Tablet PC - priced right for the masses (You hear that, Apple!)

It’s pretty clear that 2010 is going to be the Year of the Tablet. Here we are in the first week of January and I’ve already seen more tablet products concepts than I can count on all my fingers and toes. There’s the ill-fated Crunchpad since reborn as the ridiculously named JooJoo, the Apple Tablet that’s coming out Any Time Now, various Apple clones, the HP/Microsoft tablet, a variety of eBook readers that are getting close to Tablets, the Asus tablet and more. And now we have yet another entrant to add to the list today: the ARM-based Tablet being peddled by Freescale.

Of course, since Freescale is a silicon vendor, they’re not going to build and sell the Tablet themselves. They’ve created the concept demonstrator and reference design but it’s up to their partners to actually take the product to market. Most estimates put a realistic ship date in the summer 2010 timeframe.

The device is powered by an ARM Cortex A8 processor running at 1Ghz. Presumably, the OS will be Linux. 512MB of RAM and 64GB of internal storage, with a microSD expansion slot. The display will be a somewhat small 7′ touchcscreen, but hey, what do you expect for under $200?!

Devices like this ARM tablet are particularly exciting to me because they’re cheap, have the potential of being even cheaper, provide a richer interaction paradigm than keyboards and mice, and finally, they double up very nicely as e-Readers. I think books represent the next big wave of content that’s going to be rapidly and almost completely digitized in the next few years. It’s like it’s 2000 all over again, but eBooks are the new mp3s. Between Google Books, the Kindle and Nook, eBooks being sold by all the major online book stores and an increasing amount of digitization of library titles, you know this is around the corner. For developing countries like Pakistan, in particular, these tablets can put a world of information and millions of book titles in the hands of children, students and professionals that would otherwise not have access to them. I think that’s pretty cool. It’s the same vision that the OLPC project started out with, but I think the tablet is the right form factor to make it happen and the $100 price isn’t all that far away if Freescale has its way.

More details on the device are available at PC World.

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Word Target is an excellent (and addictive!) word game for the iPhone from Pepper.pk

Pakistani software companies are churning out some exciting gaming titles! I was very pleased to see Mindstorm Studios launch their cricket game for the PC. Undoubtedly, it’s been built with a lot of love and attention to detail and frankly, all of it shows. This is clearly one game designed by cricket enthusiasts for cricket enthusiasts.  The fact that this remarkable game was made in Pakistan by a small startup is true cause for celebration.

Mindstorm’s success with Cricket Revolution made me look around for other gaming startups based out of Pakistan. You may not know it, but there are more than a few! One of these recently caught my attention because it combines two hot areas: gaming, and mobile devices. The Lahore based company is called Pepper.pk and  is a spin-off from FiveRivers, an established software development company also from Lahore. What’s impressive about these guys is that they’ve been quite prolific in releasing productivity and gaming apps for a variety of mobile platforms, including the iPhone, Android and Blackberry.

In talking to the folks at Pepper, I discovered that they’ve been launching small but highly playable and entertaining games at a healthy clip; almost a new one every a week. And they’ve been having a reasonable amount of success too. Their Christmas themed game has been seeing between 2,000-3,000 downloads every single day since they launched it! They’re forecasting more than 100,000 users for their apps before the year ends. For a company that launched its first mobile app just a few weeks ago, that is incredibly impressive. Kudos all around!

In terms of revenue models, Pepper seems to be experimenting with a few different approaches. They have some free apps and then some very inexpensive paid games too. My personal favourites are Snap’n Puzzle and Word Target.

Pepper.pk's Snap'n Puzzle is available for Android, Blackberry and iPhone platforms. It's an addictive puzzle game with a personalized twist!

Snap’n Puzzle is a highly playable puzzle game available for the Blackberry, Android and iPhone platforms. The game starts off by asking you to take a picture with the camera on your mobile device and then converts it into a tile puzzle of varying complexity. Alternatively, you can use an already stored image from your photo folder too. The puzzles can be quite challenging, and the personalized image just adds a touch that makes this game entertaining and interesting.

I’m a sucker for word games, so it’s no surprise that I like Word Target. This is an incredibly addictive word game that is currently available for the iPhone only. The object of Word Target is to assemble a series of Scrabble-like word tiles into words. The longer the word, the higher the score. Once you’re done with five words from a specific set of tiles, you can hit the “ABC” button to have a new set of tiles dealt out to you. If you are unable to conjure up at least five unique words from a set of tiles in the alloted time, you’re done for! At the end of the game, Word Target also shows you all the different word combinations you could have made. So it’s entertaining and educational, fitting squarely in that edutainment genre that’s been all the rage with K-12 kids and their parents.

We’ll certainly keep an eye on Pepper. You can also take a look at their current catalog. From what I hear, this list is going to be growing pretty quickly. Good luck and all power to them!

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Summer Glau as the Terminator. Fiction or reality?

You KNOW it’s going to happen! We can either extend our own biological capabilities by tapping into the science and innovation fuelling robotics and AI, or we’ll essentially become irrelevant.

I’m not the only one saying it. Ray Kurzweil‘s been on this bandwagon for a while, in fact, I think he’s behind the wheel! Hans Moravec, no mental slowpoke, is there too.

Robots being developed today are capable of interacting with a world that was designed by humans, for humans. Stairs make sense for a biped, so robots are taking the form of stair-climbing bipeds. They can now run, with both feet off the ground at the same time. They can self-stabilize when you push them. We are not talking about Robby the Robot. What technology has achieved is far more impressive.

As the video below shows, Honda, is investing tons of money replicating the physical dexterity and implementing the basic instinct that has only been found thus-far in erect bipeds (e.g. you and me).

www.youtube.com/watch?v=2DMDLrsicZ8

Computer vision is improving day-by-day. Improvements in ‘planning’ algorithms, combined with vision and fuzzy controls have yielded cars that drive themselves pretty effectively, at highway speeds:

www.youtube.com/watch?v=qo-Km5FhgXI

And we also have advancements in brain scans, brain-silicon interfaces and mind control of electronic devices. That last piece has become so ludicrously easy to implement in its simplest form that the last Toy Convention held in Mahattan actually featured a mind-controlled toy! Here’s a video of that:

www.youtube.com/watch?v=PwGuOclij6k

We already have voice recognition approaching 99.9% accuracy. Not theoretical, this. I’ve tried it. Pretty darn good. And of course, we have conversational systems that come fairly close to passing the Turing test, whereby during a 5 minute conversation, at least 30% of human participants would not be able to distinguish the computer’s conversation from that of a human. And we’ve made robots with skin actuators and, frankly, that look pretty… well… pretty:

www.youtube.com/watch?v=g1SADcP5g1o

We also have Stephen Wolfram and his Wolfram Alpha, a natural language driven system that uses the Web as it’s brain, ‘understands’ the knowledge that web pages contain and answers questions you might ask it.

www.youtube.com/watch?v=6keS_4TbaWo

Now imagine Asimo, in the body of that Japanese female android… with the car driving program embedded in it’s head, so it can drive… with Wolfram Alpha and an “almost passed the Turing test” conversational system as its interface to a human… with gesture, vision and speech recognition operating at 99.9% levels. Now, add to this the ability to store terabytes upon terabytes of visual, auditory and tactile data gathered via sensors as this being moves around. Add to that a Google-style search engine driven by - once again - speech recognition. Extremely powerful exo-skeletal technology that provides near-human levels of dexterity mated with superhuman strength. Since we are imagining, might as well throw in arts/music capabilities, theorem proving capabilities and some chess skills, for good measure. Sprinkle in some extra-sensory perception (at least as per the human definition), such as radiation sensors, pressure sensors, ultra violet and infrared cameras, wind speed and direction sensors, magnetic field sensors, ultra-sonic hearing, microwave and RF hearing/sensing, “Radar”, “Sonar” and laser-based vibration analysis to recreate sound, essentially, a “spy ear”.

www.youtube.com/watch?v=n0X1vyWU6bw

All of this is available today. It’s just been implemented in pieces, independently. Yeah, the integration would be a bit of a challenge, but not a greater challenge than coming up with the component technologies were to begin with.

If such a “robot” existed, how long would it be before we stopped thinking of it as a “machine”? Would it be more interesting to interact with, than, say a dog? Don’t we anthropomorphize robotic vaccum cleaners already? Would these amazingly powerful creations be any different? Of course not!

I don’t want to make this post an AI discussion about learning, neural nets, support vector machines, fuzzy response systems and all that. I think the point is illustrated well enough with all these pictures and videos… and a little bit of imagination.

If we are willing to use Predators and Reapers, or a variety of UGVs as near-autonomous “soldiers”, what about our imagined Robot? How autonomous will we make these creatures? How smart will they get on their own, by being mobile and observing what we observe - only much better, at higher fidelity and with unlimited, instant-recall memory. What we’ve imagined, is this the Terminator? Science fiction from 20 years ago is becoming science fact, pretty fast. For those of you who are worried about the coming reality, here’s something by Bill Joy, the founder of Sun, that should scare you even more. Suffice to say, no one is going to heed Bill’s advice. Including me. It’s just not the way things work around here.

All Hail, our Robot Overlords!

www.youtube.com/watch?v=VTkPzcTUFIA

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SAP integration being implemented via the Portlet factory

IBM, as you might have noticed, have continued to invest heavily in the Pakistani market and broaden their  software offerings.  Most recently they announced the Pakistan launch of Lotus Workforce and Talent solutions, an extension to IBM’s ERP and HRM offerings. The application is a web based tool implemented in J2EE that will allow companies to more effectively manage their workforce, while also integrating with existing enterprise solutions, such as SAP‘s.

More on Lotus Workforce and Talent solutions can be found on the IBM website. The Daily Times carries a story about the Pakistan launch. Take a look after the fold.

The Daily Times reports:

IBM launches product

KARACHI: IBM announced the first holistic offering in the talent management marketplace, combining world-class human capital software, consulting services and information technology integration. The new offering, IBM Workforce and Talent Solutions, will help companies become smarter and more integrated in all aspects of managing the human capital lifecycle to create measurable improvements in people and business productivity. It is a combination of world-class human capital consulting services, IBM software assets: Cognos, Lotus, IBM Research and market leading human capital software: Saba and SuccessFactors. staff report

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Yay! We made it this far. The previous post on Emirates’ in-flight entertainment system was our 100th published post. To celebrate the occasion we decided to share with you some of our personal favourites from the past few months – hope you enjoy reading them as much we enjoyed writing them:

1. The fools at Mint.com or Mint.com sucks!
   
2. Entrepreneurship vs. Labour Unions
3. Rickshaw Wisdom and HR Politics
4. A Billion Dollar House with a view of Poverty – Shame on you, Mukesh Ambani!
5. TechLahore and Gartner’s Karamouzis are now friends
6. Dot-Bust 2.0: how will it play out this time?
7. Why VCs aren’t investing in Pakistani companies
8. TechLahore’s Predictions for 2008
9. Stock loses 55% of its value in 3 months – Netsol in trouble?
10. The Meteoric Rise of Pakistan’s Economy

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Netsol has lost more than half its market cap since the last week of October this year. The stock has fallen from its high of $4.64 to just $2.00 today. Part of this is because of concerns about the US economy in particular and the global economy in general. The first three trading sessions of 2008 have delivered a huge loss to investors in the NASDAQ. Concerns are now running high as to whether the US is headed for a recession. The other part of the concern is around the political situation in Pakistan; the latter we completely discount. Frankly, there is next to no risk to Netsol’s operations in Lahore and regardless of the noise in the US media, there is no credible long term stability concern vis-a-vis Pakistan. What is MUCH more worrying is the impending economic crisis in the US. The mortgage fiasco, rising oil prices, the rapidly depreciating dollar and the continued expense of war is beginning to weigh on things in a very significant way. The latest job growth data, which is at a 4 year low, provides no comfort.

So what is going to happen to Netsol’s stock? Well, first, what’s going to happen to Netsol’s earnings? I think at this point there are real risks. Netsol’s core product – a lease management application – is very heavily dependent on the increase in lending, consumer finance and similar economic activity. Certainly, 2008 is not going to be a great year for this sort of product in the US. In Asia, perhaps it will be better. But Netsol has some exposure here. While Netsol has been trying to expand its customer base in Asia and diversify out of the US, there is going to be a negative impact in my opinon. Now, has the market already taken the extent of this impact into account in halving Netsol’s valuation? Probably. That said, Netsol may suffer an irrational response if it drops much below its current price. If it goes down another 10-20% I would say it would be a steal at the price. Even now, if you’re looking to accumulate slowly over time averaging out costs, it’s probably not a bad time to get in. If you time your buying over a quarter, you’ll hedge against the uncertainty of the next few months.

Look to start slow accumulation if you like Netsol’s business. While there might be a 10-20% downside still it won’t be because of anything wrong with the business. More so because irrational fear will drive it to those levels. Grit your teeth and get ready for what can be a difficult year for investors.

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Here is a list of our predictions for 2008. While most of these predictions have to do with technology and IT companies in Pakistan, some of them are political. We’ll circle back on Jan 1 2009 to see how accurate our crystal ball was; until then, we’d love to hear your opinions!

1. Macroeconomic Predictions
   1. GDP growth for next year will be around 5%, plus or minus .5%.
   2. The KSE will hit 15,000 in 2008.
   3. The Pak Rs. will exchange between 60 and 63 to US $1 through 2008.
2. Predictions about the Local Industry
   1. There will be a change of leadership at the PITB or the PSEB (at least one of the two) in 2008.
   2. PTCL will continue to lose landline customers in 2008; financial problems will continue especially during Q1 and Q2 ’08.
   3. The Punjab IT STP Tower will not be completed in time; it will be delayed by at least 3 months.
   4. WiMax will not be much of a success for Wateen in 2008; consumers will find it too expensive and corporations will stick mostly to wired broadband. Coverage will not be wide enough to truly benefit remote industry operations that don’t have wired broadband access readily.
   5. NetSol stock will not close at or above $4.50 for 10 consecutive trading sessions in 2008.
   6. 2008 will be an excellent year for Media Companies in Pakistan; they will see increased freedom, a growing viewership and an increased global footprint. As a corollary, Wordcall stock will rise at least 15% in 2008.
   7. 2008 will be the beginning of the end for dialup ISPs. As PTCL loses fixed line subscribers, WLL connections and broadband will become methods of choice for Internet access. Dialup user growth rates will slow in 2008 and the reversal will set in during 2009-2010.
   8. Power companies, professional services companies dealing with power and local power generation equipment manufacturers will see tremendous growth; electricity shortages will persist through 2008, but the situation will begin to remedy itself in early 2009. Shortages will propel the alternative energy and Natural Gas (CNG) based generator industry.
   9. Software licenses will be strongly enforced; it will be virtually impossible for any company with 40+ employees to not comply with licensing – in particular Microsoft licensing. This will drive some increased Linux adoption, but not in any significant measure.
3. Political Predictions
   1. The PPP and allies will form the next government in Pakistan
   2. Pakistan will have a new President in 2008, or at most, by the first quarter of 2009
   3. Hillary Clinton will win the Democratic nomination and will win the 2008 election in the US

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I hope Telenor perishes! Why? Here’s why. I’ll start from the top. As I mentioned on this blog a while back, I was looking at Telenor’s TV service. Despite the cost, I bit the bullet and subscribed. Right after sending the SMS message to initiate the subscription, I received a prompt confirmation message. So far so good. So, as instructed, I then responded with a “y” to confirm my order. Soon after, I received a username for my new account. Exciting! The SMS with the username mentioned that I would “shortly” be getting my TV software download link in yet another text message. So I waited, and waited and then waited some more. No luck. Oh well, I’ll look at it tomorrow, I told myself.So the next day, I called the Telenor service center number. Dialed 0 to connect to a technician… but my call was immediately dropped. Tried again. Same result. I was getting pretty frustrated at this point and couldn’t wait to sort ‘em all out, but fate intervened to save Telenor a toungue lashing. Something important came up and I got distracted.

The third day, I tried calling the service center YET again. Pressed 0 and voila! immediate disconnection. A couple of hours later, imagine the coincidence, it just so happened that I got a call from a lady at Telenor. At first I thought they must have figured the problem out and were proactively trying to resolve it. But instead, this lady asks me if I’ve received my Telenor Persona post-paid bill yet! So I let her have it.. “I’m not paying any bills, lady, until I either get a refund or you get my TV service working. After a completely unhelpful conversation, she says, “Please call the service center”. I let go another salvo, “But I already told you, I repeatedly get disconnected as soon as I hit 0 to connect to the blighters in your tech support group!” Then she says, and please appreciate the irony here, “Sir, why don’t you use a PTCL landline to call our service center!”. What?!! I can’t even get connected to the Telenor service center on a Telenor phone! So, absolutely livid at this turn of events, I curse (well, not really!) her every which way to Monday and back again, but she simply declares, “Thanks for confirming you got the bill, and thanks for using Telenor”!

@#$@#$@#!!!! is what I’m thinking at this point. So then I figure, “I’m on my own on this one”. I’ve already wasted my money, let me see if I can fix it myself. Bravely, I tried to respond to the old confirmation message with a “Y” once more. I deliberately did not send another subscription initiation message so I wouldn’t get double charged. But guess what I get back? A message saying that I’ve been signed up for the service for another month and that I would be getting my download link shortly!!! Swines! Of course, I never got the download link. I concluded that this crappy TV service from Telenor was never going to work, and the best I could do was get my darn money back.

So, since I couldn’t get connected to the Telenor service center, I logged onto the website and sent the following message:

“Re my subscription to the Telenor TV service, I am quite frustrated by this entire experience. I am not getting the download link despite a subscription initiation and a response to the confirmation SMS. Please refund the amount deducted for the TV service as I have not been able to use it and am really no longer interested given the apparent complexity in even initiating the experience. Also, I have been calling the 555 helpline and the moment I hit 0 to connect to your call center, I get disconnected. This has been happening consistently for the last couple of days. Please look into it. I pay an average of XX,000 a month for my postpaid account and should NOT have to deal with poor service on multiple counts. Please respond ASAP!!”

This was 12 days ago. No response so far. I don’t even care about the money anymore. Now I just want to set fire to the closest Telenor office. #$#$#@@! incompetent slobs!

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Netsol is one of Pakistan’s major software outsourcing companies. And if you’ve been following Netsol stock on the NASDAQ (NTWK), you’ll find that over the last couple of months, the stock price has roughly doubled. This is mostly due to a recent earnings call where management disclosed healthy growth and also an increasing percentage of future business expected from license revenues for their LeaseSoft application. What does the future hold for Netsol and what does it’s past warn us about? Read on…

If you do your basic stock research on Netsol, you’ll find extensive and well written pieces like this analysis of why Netsol stock is going to fare well in the months ahead. This particular article was written back in March and many of the positive aspects highlighted in it are the main reason why Netsol stock has performed well over the past few months. However, the question is, is it a good time to buy now? The answer, as these sorts of things normally are, is pretty complex. Netsol’s future is not entangled only with its customers, management team and partners, but also with the political and economic outlook for Pakistan itself. The bulk of NTWK’s market cap is actually dependent on Netsol PK (Pakistan).

It’s not just the operational and HR elements that are tied to how events shake out in Pakistan, it is also revenue growth which is dependent. The juiciest potential deals expected to be closed by Netsol are not international, but rather very local. They are things such as the Punjab Land Records Automation project. While in the west these deals are looked upon as “$300M” opportunities, it remains to be seen, given the climate in Pakistan, whether they end up happening or not. Is there a risk that with a change in the Punjab Government, this project suffers major setbacks or, in the worst case scenario, goes away?

The other issue is, even if Netsol does continue to get good business, how will they scale locally? There just aren’t enough people being produced for them to support an additional 400 hires a year (all mainly in Lahore). Where did I come up with that number from? Well, if you assume even a 25% attrition rate, given their current headcount of 650, they’ve got to hire 160 people every year just to stay at-par. On top of that, when you add 30% headcount growth to serve new business, you’ve got their headcount growing at about 400 heads a year over 2008. In, 2009 just to maintain parity, they’ll need to make 220 new hires. While the new education and University initiatives being invested in by the Government are going to help, the effects are not going to be felt in any great measure prior to 4-6 years. So in this period, Netsol will have to either pay premiums above market to keep people on hand, thus reducing margins, or hire more developers in China or even the US. Which would mean again, margins would be reduced.

I don’t mean to sound negative. I am NOT saying Netsol absolutely can’t hire 400 people in a year. But if you’re familiar with the IT industry, specially in Lahore, it’s going to be a challenge. And these have got to be 400 guys with decent skill levels.

But, there’s positive things here as well. For instance, growing LeaseSoft revenues imply that the headcount doesn’t need to grow at the same rate as revenues. That’s where the advantages of a product kick in big time. So, if Netsol gets some good, high margin LeaseSoft deals closed in their export markets, that would bode really well for the financial scalability of the company. If you hear the recent earnings call where Naeem Ghauri spoke to this issue, management sounds pretty confident.

The other positive factor to consider is that Netsol probably has an edge over other software companies in getting the local government business. Ok, they may not get everything they’re bidding for, but even half would be good. The risk here, and we’ve talked about it previously, is that inordinate delays get inserted into the governmental decision making process. Hopefully, the local Netsol sales team is covering this well.

Overall, Netsol seems like an interesting investment at this time. While their stock is at a 52 week high, it used to be hovering in the mid $70s back in the boom days. Yes, that was an unsupportable valuation based on fundamentals. But that wasn’t the only reason why Netsol suffered. They also had quite a bit of board room drama which affected their perception in the marketplace. That is one of the big question marks hovering over Netsol’s future potential. At the end of the day, it’s pretty clear that they are still a company run by three brothers. And that doesn’t necessarily score high points on the corporate governance index. In fact, if you look at Yahoo! Finance’s rating, this is what they have to say:

“NetSol Technologies Inc.’s Corporate Governance Quotient (CGQ®) as of 1-Oct-07 is better than 6.8% of CGQ Universe companies and 2.8% of Software & Services companies.”

The biggest favour Netsol can probably do to its shareholders and itself, is to really restructure the company to reduce the complexity in its many JVs, holding companies etc. to project a single unified brand and a single entity to the market. And also upgrade to a management team that is not only very competent, but also takes the “family run” criticism off the table.

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