Drake's formula: How many of them are out there?

Having gone through years of Math, Physics and Engineering, I’ve had my share of formulas. Many of them represent the most towering and spectacular achievements of the human brain; Newton’s F=ma, Einstein’s e=mc2, Boltzman’s S=k log W and Pythagoras’ a2 + b2 = c2.

But my favorite is the Drake’s formula. In fact, strictly speaking, it may not qualify as a formula at all; it’s speculative in nature. But its implications are profound.

Drake tried to estimate the number of civilizations in the universe (N).

Drake combines the following factors in his equation/formula:

a)What’s the average rate of star formation in the galaxy? (R’)

b)What fraction of stars have planets? (fp)

c)How many planets per star are capable of supporting life? (ne)

d)What’s the likelihood of intelligent life developing on these? (fl)

e)What fraction of these would be willing to communicate with other civilizations? (fc)

f)How long will such civilizations last, on an average? (L)

N = R’ * fp * ne * fl *fc * L

As you will notice, except the first factor, which is more or less well known (R’ = 10), putting a value to all others is guesswork. Worse, we have only ourselves to go by, and that can create biases.

However, the amazing thing is that for N to be greater than 1, L has to take the burden. Put simply, if there is any chance of more than 1 intelligent civilization capable of communicating across inter-stellar distances, it’s vitally important that they last a long, long time. Else, at any given point in time, there will be only one civilization and it’ll self destruct. A new one will emerge somewhere else later.

An interesting point that comes out of this is that if another specie does contact us, it’ll be so far down the road in existence that it’d have found a way to co-exist with differences. It’ll have the technology to inflict violence, but it’ll also have the wisdom to be non-violent, unlike in the movies.

India vs China: The billionaires' numbers

This is a table from Forbes.com. (The comments on it are mine)

The interesting numbers are in the average age of billionaires and the number of billionaires below 40. China scores on both front.

Does it mean that China is ahead of India in terms of young entrepreuners? Most likely.

How will China impact the global auto market?

Take a mobile phone and make it bigger. Make it still bigger. Now you have got a screen size that makes it a viable competitor to the TV for your entertainment needs. Make it big enough to put enough processing power for your information needs. Make it voice activated. But it is too unwieldy to carry around with you. No problem; if you can’t carry your communication-entertainment-information unit, let it carry you. Make it even bigger and add some wheels to it. Soon, a GPS enabled car, with all its in-cabin communication/information/entertainment implications will be a regular feature on the roads of Japan and Korea. And what begins in any of these places will naturally find expression of scale in China.

Let's look at some numbers. The US consumes about 10 million cars annually. China consumes, currently, about 3 million annually. Given the low level of current penetration, the rapidly increasing infrastructure of global quality, the large population and the increasing wealth of the Chinese consumers, this number is going to increase constantly (the "emerging markets" flattener). How much will it increase to?

If we take a 50 year view, and assume a conservative CAGR of about 4% over that period for the Chinese auto market, it'll reach a level of 20 million cars annually in 2056. Cumulatively, between now and then, China will consume about 450 million cars. What about the US? Given the high level of penetration, the relatively static population, and lower economic growth rates, let us assume a static consumption of 10 million cars annually over the next 50 years. That's a cumulative consumption of 500 million cars; roughly speaking, the same as China. The US market is fragmented and mature; the Chinese market is the new frontier, with no clear long-term leaders established yet.

What does this mean for the global auto majors? How will it impact the balance of power?

The Japanese and the Koreans are strong in the latest generation communication technology. Will it give their automobiles an unbeatable edge?

Energy efficiency, either through hybrids or through alternative fuels, will be a key driver. Whichever energy source emerges as the winner, the end of the big-big car and the rise of the small/medium car looks likely. This trend will be further enhanced in China as millions of people who buy a car for the first time will go for a smaller car that's more affordable. Will this be Hyundai's window of opportunity? Does GM"s acquisition of Daewoo give it an entry here? Will the Japanese, the past masters of the small, fuel efficient car, further increase their dominance?

Will there be a Chinese company that will combine the potent force of local knowledge, made - in - China pride and fierce ambition to emerge as a dark horse?

And what would be the strategy of the US car majors? Can they fight on two fronts? Given that there is more money to be made per car in China, should they resign themselves to a gradual erosion of their market share in their domestic market, swallow their pride and focus on the China market?

If the center of gravity of the supply chain of all auto majors shifts to China completely, how will it impact the market in the US? And will the US players be able to crack the communication code in China, or will they struggle long enough for the Asian players to establish a lead?

We haven't even discussed the impact of the Indian market and the European auto industry, but it'll be interesting to watch the flat world phenomena play out on the roads in China.