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January 09, 2007
Outsourcing Innovation at CES
I arrived at the Consumer Electronics Show in Las Vegas today. It was interesting to see how IBM has come on strong at CES. The company hadn't been here for a decade, but this year it took a good sized space (though still small compared to Microsoft) IBM actually has a pretty interesting consumer strategy. Sure, it's not making PCs any more, or any other products that are sold directly to consumers. But it's now selling a lot of technology and services that are incredients in other company's consumer products. (I wrote a story about this for BusinessWeek Online, which is supposed to be published on Thursday.) One of my thoughts about this is that, with a strategy like this, IBM might be making better profit margins than the companies it supplies with technologies. The CE world is notoriously low margin. But if IBM picks its spots well, and provides essential technologies that differentiate it and its clients, it could build a very healthy and profitable business here.
I noticed that Wipro has a couple of points of presence at CES. It has its own small booth at the Sands and a small spot within a wireless cluster at the Las Vegas Convention Center. I'm told that Ramesh Emani, head of the R&D business, has been meeting with potential customers. In my view this is one of Wipro's best businesses. It has a strong lead on the other Indian tech services outfits--not to mention other global players. In fact, I'd bet that Wipro's R&D outsourcing business is even bigger than IBM's.
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