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Sunday, February 24, 2008

Comments

Alex Tolley

"What the Chinese have done in manufacturing, he is showing that the Indians can do in software: undercut U.S. and European software makers dramatically."

Not necessarily. With the current trends in currencies and Indian software engineer rates, the is no reason to believe that India offers an inherently cheaper place to develop and sell software compared to domestic producers. Far more likely Salesforce.com is just bloated. OSS competitor Sugar, substantially undercuts Salesforce in its core market.

Even the core product is not that cheap. $10/seat/month = $120/year. Microsoft already sells the "student" version of office for ~ $120 and that is for 3 machines/users.

Vembu is probably more like a conventional naturalized Indian CEO who just happens to have his business located in India rather than the US.

The trend to watch is the idea of "free". See Chris Anderson's article in this month's Wired.

http://www.wired.com/techbiz/it/magazine/16-03/ff_free

Software can be developed quite cheaply and viral marketing can generate a good business supported by ad rates and low annual subscriptions. Software entrepreneur Paul Graham (YCombinator) has made the case that the best place to develop software is in existing high tech havens, where hungry young talent will be able to be tap the creative zeitgeist to create novel ideas that can be exploited.

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