According to a 2009 report by the Boston Consulting Group (BCG), the BRICI countries, Brazil, Russia, India, China, and Indonesia had some 610 million internet users, and that number was expected to double by 2015. The Vancouverite cited the BCG report as saying, with PC penetration still quite low, mobile phones are cheaper and more convenient tools for both communicating and seeking out entertainment.
The BRICI countries have around 1.8 billion mobile-phone SIM card subscriptions, more than four times the combined total of those in the United States and Japan. In fact, as sophisticated handsets become available in the BRICI markets, millions of BRICI digital consumers are leapfrogging over PC usage and going online via their mobile phones, a trend that has significant implications for their internet usage habits.
Samuel Palmisano recently made this comment, "This is what I don't think people get in the United States, is the emergence of the middle class." He stressed, that we lose site of the statistic that 500 hundred million people are going to enter the middle class in the next few years.
"Those 500 hundred million people want cars, houses, cells phones, bank accounts, air conditioners. They expect transportation to work, they expect secure safe cities, and quality health care."
These statements made by Mr. Palmisano were recently aired on CSPAN-2 at an event held at the Center for Strategic & International Studies in Washington, D.C. The topic: US Global Competitiveness & The Deficit. IBM Chairman & CEO Samuel Palmisano, along with Dell Chairman & CEO Michael Dell were the guest speakers. These international businessmen interact on a global scale, and were discussing the state of the US.
Palmisano said, "We are in a financial crisis." Dell commented, "If you stand in the way of collective improvement you do so at your own peril."
John Hamre, President and CEO of the Center for Strategic & International Studies, and moderator for the February 2011 event asked the two international businessmen to describe the "competitive landscape." Hamre continued, "That most Americans don't know how far behind we are falling." "If you leave Bejing airport and fly into LAX it's embarrassing!" It's like going back 30 years in time and yet we have this vision we are ahead.
Hamre asked Dell and Palmisano to share their understanding of competitive landscape in real and tangible terms. The point is how do those countries that are emerging in the world address it?
Palmisano described that the emerging countries skip everything that we have done. They go right to the future. Their is not such thing as land lines, they go right to the future. Everything is wireless. In the highway systems of Shanghai, they built a loop around Shanghai in a year. At one time the largest share of crane capacity was in Shanghai, that is 70% of crane capacity was in Shanghai. One other example Palmisano gave is that China has decided to build the largest high speed rail network in the world.
Palmisano added, take the education statistic in science and math, China is high and we are low. The first thing that needs to be understood is that these are not developing countries. These countries have a huge class of well educated middle class people that are going to drive massive economic transformation, and they don't have a lot of debt. They can write checks for everything. They are the lender.
The question that Palmisano asked, "What are the inherent advantages of the United States?" We have an incredible University system, we have the ability to innovate, create, and research for intellectual property, we have rule of law, the right to be protected, we have had and we will have a transparent capital market system.
Palmisano added, "What is missing?" Somebody saying, just like they do in these other places like Brazil, India, and China; we're going to take this country from here to there. We're going to set up an innovation agenda. We are going to drive innovation. Here is our advantage and then we are going to sell the case!
Dell suggested, "That it has to be a national priority." He described that we have 5 billion people in the world with cell phones. He used the figure that about 1.5 billion are connected on the internet. The fastest growth is in the emerging nations. 1.3 billion cell phone users are in China and India together. Adding 15 million new subscribers a month between the two countries. Enormous industrialization, modernization, and skipping past problems. These countries say, what should this look like in 5 or 10 years, and leap ahead to that.
Hamre asked the two leaders, "What is the problem when industry is sitting on the biggest pile of cash in history?" Palmisano responded by saying the question is, "Why aren't you investing more?" That gets back to competitiveness because we invest where there is opportunity for growth. If you take more from us, there is less to invest. If you compare the US to the rest of the world we take dramatically more than the rest of the world. Work flows anywhere in the world and so does capital. So the question is,"Why would they come here?" "Why would you come and invest in the United States of America when you can go elsewhere and give 10 percent to their government instead of 30 percent?"
Why would business come here, and compete for 100,000 graduates in math and science, when you can compete for 600,000 in another country.
Palmisano said, "When people have ultimate choice, money can flow, people will invest, with a good rate of return." If you are a government today you need to have a value proposition that attracts the smartest people in the world, and have the best flow of capital so you can be competitive. If you don't do that, then there's too much choice today, and it moves too fast, and it doesn't have a happy outcome.
Dell described China as in its twelvelfth, fifth year plan. A plan for each business sector. America needs to get real serious in the systemic issues of productivity, education, and competitiveness. America has 4% of the worlds population and half the wealth and the world is changing very quickly. We have to work in this competitive landscape.
Palmisano described that the way IBM works is to establish the process, to put the metrics in place, and put somebody in charge, and then reward someone for doing well. He stressed, establish the metrics, then that becomes hard wired into the business.
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