GREAT DELL OF CHINA

One year after entering the Chinese market, Dell Computer is making money there — according to an announcement by founder Michael Dell. In an interview last week with the Financial Times, Dell indicated company sales of several hundred million dollars. He added that sales growth in China had set a record for Dell Computer.
     About 60 percent of the company’s sales are to the government or to government-related enterprises, which, considering that some of Dell’s mainland competitors have government and/or military pedigrees, makes the achievement all the more impressive. Dell’s success also goes a long way toward proving that the direct sales model works in China. Indeed, I’ve noted for the past few years that the direct model may be the only way to avoid artificial market barriers put up by leaders in Asian economies.
     Given the dismal performance of many other companies investing in the PRC, I expect the push toward the direct model will be greater, to the degree that they are interested in the Chinese, and ASEAN, market.

THE BIRD BATTLE

It’s getting pretty rough out there in space, no matter how you measure it. In the general world of satellites, we have Iridium in tatters, without any clear helping hand held out by parent Motorola. ICO is predictably bankrupt in Europe, in the wake of the Iridium debacle. Globalstar is now holding off its light-up by a month or more. And most recently, we have Teledesic pushing its launch date out again, to 2004.
     Teledesic co-founder Craig McCaw inadvertently underlined these delays in a press release indicating the company is in talks with a number of these early launch constellations and future competitors, such as Iridium, ICO and Spaceway, with an eye toward entering the implementation phase earlier than previously announced. McCaw also suggested that Teledesic might want to get into the voice business as well during an early launch — something the company has previously forgone in public statements.
     Confused?
     Here’s one way to read it: Since the company is going to need to go to the markets for execution money, and since one of the prime reasons given for an early entry is the early creation of revenue streams, it may be that this is seen by management as the best way to reopen market funding after Iridium and ICO slammed it shut.
     Certainly the movement of top military officers in the United States and Europe into top positions at Teledesic sends a message about who the big early customers are supposed to be. And as the launch date for the constellation continues to recede, it is understandable that McCaw would like to get near-term capacity in orbit ever sooner. And while always being the last company on the launch ticket has the advantage of probably sending up the best technology, this is not a game one can play forever once one takes on public shareholders.
     And then there is the more modern version, much like stitching together all those cellular companies during the 1980s: Perhaps Teledesic is a brand and not a technology or a constellation at all.

DEBT FORGIVENESS, JUST IN TIME

It’s not technology exactly, but astute reader Mika Salmi, founder and CEO of Seattle’s AtomFilms, asked me about it, and the time for it is fast approaching, so I thought I’d mention it here.
     I’m talking about Jubilee 2000, the movement to forgive all developing nation debt in time for the new millennium.
     President Clinton came out last week in favor of 100 percent debt forgiveness — not just for subsidized debt for the poorest countries but for other debt as well. I think he is basically on the mark.
     Keep in mind that he is requiring that monies thus saved are to be spent on local projects to increase local well-being, such as water, health, etc. Unfortunately, this will be a morass of nonmeasurement that often will lead to a further lining of the pockets of those in power in these countries.
     How do you fix this? It’s intrusive, and many folks on the left and the right agree that such intrusiveness is not a good thing, but I don’t think you can be a benefactor without also accepting responsibility for the gifts you give. If we forgive debt only to find out that a few creeps stashed the money in their Swiss accounts, well, screw ‘em. We have seen enough of this behavior to believe it is likely.
     So if we forgive these debts, we must first do so in a way that benefits the people and institutions in these countries and not just a small group of bad actors.
     Understandably, if one forgives debts today, there is a huge laundry list of countries, including every single country on the “forgiveness list,” that will assume we will do it again. Unless you want to redefine what debt is all about, this is not good. That’s why Ecuador is being hung out to dry after the Quito government missed payments on its Brady Bond debt.
     In summary, we must be generous and find structured ways to help these countries through debt forgiveness without giving any sense that all future loans are essentially gifts. If we can do this, we will all benefit.

Mark Anderson is the president of Technology Alliance Partners, which provides consulting to telecommunications and computing firms. The Next Files, excerpted from Anderson’s Strategic News Service newsletter, appears every Monday.

Copyright 1999 Strategic News Service™. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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While always being the last company on the launch ticket has the advantage of probably sending up the best technology, this is not a game one can play forever once one takes on public shareholders.

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If we forgive these debts, we must first do so in a way that benefits the people and institutions in these countries and not just a small group of bad actors.

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Dell Computers

Teledesic Press Release

GO Satellite Technology Directory

AtomFilms

Jubilee 2000 Coalition