31
Mar

On the brighter prospects of a world with more tasks handled by machines

2-Color-Design-Hi-Res-100px-widthSince the advent of the world wide web in the early 1990s it has been possible to craft viable business models from highly specific — and limited — market niches. Now, in 2015, with the promise of an expansion in the capabilities of computing machines to handle more tasks of, perhaps, a mundane nature, this opportunity horizon has widened even further. (If you would like more information about why I have specifically connected the enormous popularity of web pages exposed over Ethernet networks for the general public as an important milestone leading to an enormous expansion in the range of viable tech business notions, please contact me as I offer consulting services in this area).

I think it makes sense for readers to keep this factor in mind as they witness public debate about the notion of just whether or not the proliferation of robots, hardware computing machines powered by algorithms, and even what are colloquially referred to as “smart” applications (and apps) will, in sum, result in a net positive, or negative, result for the sheer number of people employed.

An OPED piece published on the CNN web site on March 18, 2015 communicates the seriousness of this debate and adds a raw edge to it: Silicon Valley to millennials: Drop dead. The piece is written by David R. Wheeler. I could not find any information about him, beyond his picture on the CNN web site. So I can provide no background on why CNN decided to post his article.

The raw and right-to-the-point flavor of Wheeler’s chosen title for his piece certainly captures one’s attention. When this factor is combined with CNN’s decision to go to press, and prominently, with this piece, I would hope my readers will agree the topic has a lot of interest behind it, as it should given what I take to be Wheeler’s core point: “The commonly held belief is that with hard work and a good education, a young person in America can get a good job”.

Given the statistics Wheeler provides in his piece, he is probably correct in his conclusion the employment horizon has darkened. But if I replace “can get a good job” in the above quote with “can achieve financial security and even wealth”, then the horizon opens up for another phenomenon we are all witnessing today: an explosion in the number of small businesses and, particular, technology startups.

As recently as Sunday, March 29, 2015, an article appeared on the Financial Times web site about an entrepreneur by the name of Bart Van der Roost. Mr. Van der Roost has started a business by the name of neoScores. I hope readers can share my appreciation for Van der Roost to craft what may become a very promising business from an especially narrow niche market — musicians requiring scores on digital devices. Perhaps we can extrapolate from his notion an opportunity for literally millions of these niches just waiting for entrepreneurs to expose.

Sure code is required. But isn’t code one of the skills people can go to college to learn? I hope we can all take a more sunny view of a new world of computing with hardware devices (powered by algorithms) capable of executing a widened vista of tasks.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

11
Feb

Logistics Software for Transporting Hazardous Wastes is an Example of a Niche Market based upon an Industry Component

The market for logistic software for transporting hazardous wastes is an example of a niche market arising from a heavily regulated industry. In fact, this niche market is actually the result of a number of heavily regulated industries; for example:

  • Oil and Gas Exploration
  • Energy Production (Nuclear Power)
  • Health Care
  • Environmental Management
  • Transportation

Each of these industries produces waste that is hazardous to human health; therefore, a unique set of policies and procedures — specific to heavily regulated industries — accompanies the normal set of required operations for a typical business in this category. When we Googled the keywords “logistic management software hazardous waste” when came on the web page of a business that is, by no means, a smaller ISV, but, nevertheless, one that certainly started out that way: Information Handling Systems (IHS). IHS, which is now a public company with fiscal 2012 sales of $1.53B and EBITDA of $363.32M.

IHS was founded in 1959 by Richard O’Brien to address a highly specialized, niche market: “as a provider of product catalog databases on
microfim for aerospace engineers” (quoted from the IHS web site) Note how the original business plan included a very tight focus on a highly specific (in other words limited, clearly defined) set of requirements for a heavily regulated industry — aerospace.

In 1967 IHS, itself, was acquired by another firm, Indian Head Company, ” . . . founded in 1953, a broadly diversified company in metal and automotive products, producing glass containers, information technology systems and a wide variety of specialty textiles.” (quoted from the IHS web site). From 1967 forward IHS has grown through a series of acquisition of other businesses, all of which were dedicated on specific niche markets that contributed to the enormous success that this company has achieved.

We are not presuming that every small ISV that successfully build a solution for a niche market will enjoy the success that IHS has enjoyed, but, nevertheless, we do think it makes sense in 2013 for smaller ISVs to consider adopting a contrarian marketing plan, meaning one that eschews the commodity markets that characterize most software development requirements, as well as the push to deliver all sorts of software via a SaaS business model, in lieu of a realistic focus on identifying very promising, albeit limited opportunities — in other words, niche markets.

In all likelihood, most competitors are looking other ways, towards SaaS delivery models, or towards simply provisioning development talent to an enterprise market. Therefore, a smaller ISV may have a glimmer of opportunity to succeed following a model that worked for IHS back in 1959.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved