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pretzels
Flat sales compared to what? Flat sales compared to December would rock. Flat sales compared to the year-ago quarter might be a harbinger of bad things. Flat sales in a community that's seen no Apple Store might be an indicator that no growth is there at all, for anyone.
I'm guessing there's some regional variability.
The number I'm more interested in for the long term is the Mac share number. If Apple's share of sales appears to grow, one would expect that when computer sales pick up again, Apple should explode.
For the short term, the Mac number will mean everything, in my view. Apple is likely to show little change in units on iPods, and iPhones isn't huge yet and offer mostly an opportunity for embarrassment (if the numbers seem anemic), so the Mac is where Apple's lone hope of salvation would be, IMHO.
Take care,
--Tex.
re selling online training
Apple sells personal training for folks who want 1:1 assistance. I happen to think the tutorials make a great product advertisement. Folks seeing what they can do are more likely to realize they have use for it and pay up. Would restricting streaming training video access to paid subscribers help, or hurt?
I kinda don't think it'd help. I think making dot-Mac suck less would help. Right now I know two people who actively encourage folks to mail their ISP address because dot-Mac isn't as fast and routinely causes significant email delays.
Just a thought
Take care,
--Tex.
PS Maybe I misunderstand you. Maybe you mean the stuff that's there is fine, but an expanded, in-depth, finely-detailed series for all the apps might be a reasonable paid service. Right now, though, I'm miffed enough about iWork performance on my G5 iMac that I would not be willing to pay Apple more for "services" related to it ... my main interface with the app is noting things I'd like to see it do that it can't. Since I create text documents for a living, and not multimedia docs, I have some issues with the surprising limits of what Apple lets me do with text (smallcaps? changing the font on auto-numbering?). I'm not familiar with the latest update, but the v1 of Pages was a real drag.
Curiouser and Curiouser
Apple trademarked for game machines
http://www.trademork.com/apple/
http://arstechnica.com/news.ars/post/20080210-apple-applies-for-trademark-extension-relating-to-gaming.html
Apple solicits game developers
http://www.9to5mac.com/apple-hiring-game-developers-456657756
I wonder whether Apple's sales via iTunes of third-party games have been such a success that Apple wants to get a bigger piece of that business. Alternatively, is Apple gearing up for a high-end game market device?
This will certainly be interesting. Given Apple's predilection for profitable hardware, one wonders whether Apple plans releasing a bunch of low-cost games as a low-TCO game machine argument for a high-dollar game machine.
Incidentally, I played one of the recent Halo games for about thirty seconds until I was murdered by an 11yo. My first impression was that someone built a High-Rez Doom and added multiplayer. Why is this earth-shattering for game consumers? I'm guessing I'm just not their market. I admit to playing Gauntlet, though
Take care,
--Tex.
re China store
Hiring in the China store seems to suggest Apple's store is actually getting off the ground sooner than later; I'd like to see the store open as early as possible this year.
I wonder how Apple gets profit out of China. I'm under the impression Chinese currency controls make expatriation of funds hard to do at will. Reinvesting profit in more stores is nice, and I suppose there's some benefit to holding Renminbi while the currency continues to be substantially undervalued (30%?), but there's some reassurance in knowing funds are really accessible to the company if desired.
Still, it's a big market, a growing economy, and a good place to develop a customer base.
Let's hope Apple gets atop this
Take care,
--Tex.
re ZFS
I didn't know the source release was newish. I was at the site recently looking at the list of items to work on, and noticed Spotlight and iTunes issues. My immediate conclusion was that the project wasn't actually Apple's code but was some parallel project for folks wanting to add ZFS as a drop-in module. The reason I suspected this was that I read an article last year discussing bugfixes entered into Sun's ZFS tree to address Spotlight problems. Maybe Apple had found worse Spotlight problems on ZFS, and the new problems are simply what's left, but I would expect if Apple had intended fixing them there'd be fixes. The alternative is that fixes outside the filesystem (e.g., Spotlight operational changes that would prevent unending indexing and crashing and so on within the userland indexing tools, and iTunes expectation that HFS-specific features be present in the filesystem, or reliance on HFS-specific features as part of its authentication process) have not been implemented, and continue to cause problems even with the fixed code.
The thing I misses was that MacOSForge.com is an Apple-hosted site. Whoops. I'm thinking ZFS, instead of being Steved, was pushed back in the overall engineering crunch to release iPhone and Leopard in the face of significant issues impacting both.
I'd think some of the Spotlight issues might be caused either in the filesystem (indexing changes folders in ways that are more readily apparent under ZFS ... causing re-indexing ad infinitum) or in the application (Spotlight isn't aware it shouldn't try to index old snapshots, which would make the snapshots different than they were when created and thus keep them from being snapshots), so I don't know where the fix needs to be. I'm sure the iTunes issue is an app-side issue, and they've got enough stuff going on in iTunes to plausibly push out features like adjusting security/DRM checks to accommodate filesystems that aren't officially supported.
There's some interesting stuff on MacOS Forge. CalendarServer, for example, has been compiled and run on Linux systems. What I don't see is info on how people liked it. Ahh, well.
Take care,
--Tex.
re ZFS: ty. em.
Security
Software that doesn't behave as expected has a traditional description: buggy. Apple's iPhone software, which is intended to behave as Unix is intended to behave (kernel requiring authorization to monkey with kernel memory, processes restricted from monkeying with memory outside the process' address space, etc.), is buggy:
http://www.macnn.com/articles/08/02/08/new.iphone.112.unlock/
If OS and app exploits allow the kind of unintended behavior illustrated here, where's the limit? Injecting code into assumed-to-be-protected memory space is just awful.
Apple needs to get security religion. Apple's decision to ignore the code contribution made by Niels Provos is an example of Apple's failure to include well-designed, flexible, useful security tools. http://niels.xtdnet.nl/systrace/macosx.html
Take care,
--Tex.
OT re MOT
Looking at MOT's web site, it seems that non-cell-phone 2-way radios are part of their business, and I know from observation that they've got quite a lot of government agency clients (e.g., police departments). There seem to be a variety of solutions (broadband, paging, etc.) that it's not yet divested:
http://www.motorola.com/us/products.jsp
Still ... MOT's profile will definitely suffer if its major exposure to consumers vanishes. MOT was once a real cell quality leader, I thought. But then, IBM once built PCs ....
Take care,
--Tex.
normalized sales
I think the issue here is that the quarter of release gives a skew to sales numbers due to the release of pent-up demand, and doesn't give observers much idea what the "regular" phone sales will look like.
In the US, the immediate buyers included several classes of people:
+ I'm a T customer already, I'm not under contract due to a prior phone deal, and I like the phone
+ I'm not a T customer, but I'm not under contract, so switching is no big deal
+ I'm under contract elsewhere but am wildly rabid and will buy anyway, paying to cancel
After all these (including all the nuts for whom price is no object) have stood in line and bought, who's left that's interested? And how quickly will they turn up to buy? The novelty will degrade, and phone contracts expire slowly, with a new crop of freed customers each month. Assuming most of the market cones from folks with phones and plans, this delay seems to be reliable to bet on. I didn't buy until my contract ended, for example ... it was just that it was a short wait, as my contract ended in August :P
The class of people that's going to wait till the current phone contract is over is pretty big, considering the frequency with which lots of folks switch phones and the connection between phone discounts and service packages in the US. I heard the coupling of phone discounts and plan contract was less tight in other countries, but I don't have any numbers.
When Apple offers hardware that is compatible with the accepted tech in Europe, I would expect another "pop" and another decline to whatever "baseline" is (for a current-tech phone; I expect that baseline might be a bit higher than baseline for EDGE). The fact that Apple has taken a pretty big slice of the smartphone market worldwide despite its limited geographic release is interesting, and seems promising, and suggests at least to me that the regular run rate will be good going forward -- but "good" might be quite a bit lower than some of the predictions I've heard about Apple's phone sales estimates.
Your point is very good, by the way: people may have just not believed the news the first time around, and may just now be coming to it.
I happen to think that while iPhone is likely to create good revenue and good cash flow (more cash than profit, given the amortization of revenues over 24mo), the bigger story would be Macs if Apple can keep its share growth up. The question is: can it keep share growth up, or is the pie shrinking due to macroeconomic factors? I think panic over the financial markets is evident, and not without basis. We're going to see banks get spanked by counterparty failures in subprime hedges, and so forth.
It could get pretty ugly. And with expectations set in the stratosphere for Apple's sales, disappointment could cause some share price pain while this is underway. The good news is that reasonable profit is almost certain in light of Apple's margins advantages. The bad news is that reasonable profit is not the assumption on which people buy AAPL; they want unreasonable profit
On December buying: In Germany, I understand it's common for annual bonuses to be based on monthly salary and to accrue in December, so folks might tend to feel "rich" that time of year and make expensive gadget purchases like iPhones. Anyone care to comment on whether household income typically is higher in December in Europe? I wouldn't discount the possibility that Apple finds its phone sales are just as seasonal as its other sales. Apple's just trying to mask this with its subscription accounting game. Since folks are trying to unroll Apple's financials into information about Apple's margins and Apple's sales, I don't think Apple will really be gaining much with its subscription accounting, other than perhaps deferring some taxes for up to 24 months, which is creative. If Apple had a plan to make a return on the money in the intervening time I'd be more impressed.
Are other phone sellers not seasonal in their sales performance? Just curious. The fact Apple's product appeals as a fashion accessory may exacerbate this seasonality, but I'm not sure what the seasonal variation in gross sales will mean to Apple's share. Anyone know?
Take care,
--Tex.
iPhone tops intent-to-buy list
Those expecting to purchase a cell phone in the US (not just a smart phone, but any cell phone apparently) say the iPhone is the likeliest buy: 17%, compared to 15% for next-place RIM devices. It's a ChangeWave survey, for what that's worth:
http://www.ipodnn.com/articles/08/02/07/iphone.most.wanted.phone/
I want to see how ChangeWave's intent-to-buy translates over time into actually-bought (Macs as well as iPhones), and how ChangeWave respondents compare to the broader population. Who the heck do these folks represent, anyway?
The good news: Apple leads cell phone satisfaction with 72%, compared to second-place RIM with 55%. My old phone's maker is back at 34% -- MOT. But they're getting out of phones? What'll be left? A PPC compiler?
Take care,
--Tex.
re superheroes
I didn't realize I'd won an award in '01 ... now, the trouble is figuring out which X-Man I was supposed to be. Hmm.
I must say, though, to whomever made the list: remembering The Watchmen as an award category is good thinking. The Watchmen was pretty slick. I liked Rorschach -- a kind of crazy I like in fiction.
Take care,
--Tex.
AAPL whalloped second time on same 'news'?
This guy suggests the slowdown report is the same news in a second door:
http://www.cnbc.com/id/23051139/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
Is there a reason to think the materialization of a slowdown wasn't the forecast slowdown?
If the shares get much cheaper I'll start buying again, unless there's good reason to believe much-worse-than-expected factors are at work.
Any thoughts?
Take care,
--Tex.
CAAH presentation contents:
CAAH reports it isn't spending its own money on Sense Holdings products, but is using several government departments' funding to complete technology development.
Big Tree Toys has been restructured following its acquisition last quarter, and though it has numerous customers around the world, CAAH hasn't actually shown any Big Tree revenue on its balance sheet yet.
China Direct is providing assistance to Chinese management, while CAAH management works to increase sales of subsidiaries. CDS has been doing the due diligence that resulted in the selection of the two existing Chinese subsidiaries, and the CDS person charged with CAAH investor relations stated these companies may not be the last Chinese acquisitions CAAH makes. The IR guy was careful to point out that CAAH isn't a Chinese company borrowing a US listing, it was a US company compliant with US regulations and with US accounting standards overseeing operations in China which are required to report and account in a way that makes their numbers usable in US markets by regulatorily-compliant companies.
CAAH operates under GAAP, is compliant with Sarbanes-Oxley, and ensures that its subsidiaries operate in compliance with Sarbanes-Oxley and with the applicable safety standards. In particular, Big Tree Toys has a safety lab to ensure only lead-free safe toys reach the US; management doesn't want toy-related embarrassment.
The slides and voice presentation is available now at
http://www.visualwebcaster.com/event.asp?id=42359
or
http://www.visualwebcaster.com/Wall_Street_Research/42359/event.html
A headline I saw following this was:
WallStreet Research Initiates Coverage of China America Holdings, Inc. Shares with a Speculative Buy Rating and $0.25 Price Target
CAAH seems to be trading at 0.3x forward sales and 10x forward earnings.
The biometric division actually has a (slowly-growing) relationship with FedEx, and there's work underway to market to more Fortune 500 companies.
At current prices, I'm happy to have bought at $0.06
Take care,
--Tex.
unknowns
It's unclear whether any said production cutbacks may have been a precursor to these new models. Similarly, it's unclear whether reductions in MacBook build orders will be offset by demand for company's new MacBook Air.
I had suspected order changes were related to product refreshes, but who knows. Maybe sales tank. Maybe not.
Got your ouija board out?
I will definitely be rolling out some options positions set to expire this spring, though. It'll be interesting to see WWDC this year. iPod Touch and iPhone as new Cocoa dev platforms should interest quite a few folks to try new things. I'm hoping T's expertise selling into enterprise bears fruit. Let's hope Apple doesn't bork it.
Take care,
--Tex.
acquisitions
Given Apple's recent activity to build suites of speciality tools to address needs for high-end niches in which Apple hopes to take share, one might view a medical data management company and ADBE's medical image handling tools as complements and decide to like both ideas. I don't actually know much about how medical images are handled electronically, though, and whether they get much manipulation. I also don't know much about the premium Apple would be forced to shell out to acquire ADBE.
As for Apple being a software company ... it's s sure thing that what separates Apple from other computer manufacturers is software -- but what separates it from most of the software houses is the hardware. And Jobs has been caught more than once talking about how Apple is all about the box. I find it interesting that Apple can claim to be targeting consumers and avoiding enterprise while building a top-notch rack-mounted server and a high-capacity RAID array and deploying SAN software for connecting huge storage to users across fast networks. I think apple must be building enterprise capacity (if only because it is itself an enterprise with internal demand), and has got to be looking down the road to how to market it (surely they intend selling this stuff ...?).
So, what acquisitions will set Apple up to push into this market? Does Apple need to learn something about high-demand storage environments from film business before trying to expand? What will we be able to tell from the outside about its marketing of film the clip database handling software it bought last year?
Speaking of last year, I remember a nasty lull during the spring while folks sat back, newsless, and watched while the shares wilted. This feels like deja vu all over again.
When the big subprime vendors start writing down losses caused by failed hedging counterparties, things will heat up in nastiness. Any bets?
Take care,
--Tex.
QT apparently target-rich environment for crackers
http://www.macworld.com/article/131990/2008/02/quicktime.html
Sure, they gave another patch -- but let's face it, the large number of patches suggests the code is just thick with problems. The last time I saw an interview on it, QT flaws were being uncovered with fuzzers.
Why isn't Apple implementing bounds-checking in classes from which all its code inherits? I realize Apple is still using lots of Carbon in QT, but where Apple has network connections it should be at least wrapping the code in something that will conduct bounds-checking and other sanity insurance. Overflows should be obsolete, but ... they aren't.
Apple apparently hasn't got a security culture yet. You can have security without giving up innovation, you just need to remember where the bad guys are.
Take care,
--Tex.
re ADBE
Were AAPL to boy ADBE, what would Apple expect to get? I don't know enough about ADBE to know what revenues, profits, etc.
Just looking at Yahoo's info, it seems ADBE's got a higher P/E than AAPL at current prices. Assuming AAPL paid some kind of premium to get the shares, would this be a particularly good deal?
Well, better than idle cash maybe :P
I don't sense AAPL wants to be without its idle cash. I think Jobs has had too much experience living with cash burn not to want an absurd, way-too-big pile if he can.
I'm actually more intrigued by the idea of a medical data system provider. Apple could get an installed base with support contracts, an enterprise market into which to sell, and a software product in a rapidly-growing market with high-end storage demands (Medical records and their associated images might be a good lever for XRAID, XServe, etc.). Buying ADBE gets an installed base and a shot at upgrade revenue, sure, but is the synergy as good for Apple's whole line?
Take care,
--Tex.
re Torvalds
Not the first time he's done it. Of course, the first time he was denouncing the whole Darwin system, not just the filesystem. The fact Apple needs a new filesystem isn't news, but it'd be interesting to see what concrete issues he thought he spotted with the filesystem. It's entirely possible he hasn't any, of course -- the last time he went off on Darwin, I think it was over the principle of the microkernel.
Describing MSFT and AAPL as engaged in a race for second place suggests he has some very specific judges in mind :P
Take care,
--Tex.
Kinetically-recharging mobile chips on the horizon?
Interesting stuff, though certainly not just around the corner:
http://www.electronista.com/articles/08/02/06/ultra.efficient.mit.chip/
Take care,
--Tex.
Those of you wanting to read a giddy, bullish take on the last earnings call can pull yourselves up to a tall Kool-Aid here:
http://aaplinvestors.net/
It's not as though the things bolded in this transcript slice-up aren't true, it's just that the market was more impressed in the short term with sandbagged forward guidance and the macroeconomic risks, which Oppenheimer essentially said he was ignoring when he said he'd leave economic forecasting to others. By making clear he was projecting past business forward, he set up Apple to be interpreted to be subject to terrible downside surprises beneath even its existing guidance if economic factors then widely believed to be in store for the year in fact materialized. Apple set itself up, and the share price we see is the result of folks' agreement what the existing news says about the company's present value in light of likely future outcomes. Of course if most people are wrong then it's a great buy op, no? But that's always the case. If folks had been wrogn about Enron as it headed for zero that'd have been a great buy op too, but they weren't wrong: it was a dog, and a dead dog too. Sometimes most people are right about their fears for a company
In other news, interestingly, the fact there's people confused about Apple's length-of-contract issue on phone upgrades highlights an interesting point: some folks are willing to upgrade iPhones just to get more storage. If they offered a 32GB phone, and made the audio jack a little more accessible to regular plugs, they could probably take a big slice of iPod buyers who wanted the high-end iPod.
Anyone got theories why the iPod Touch has more capacity than the iPhone?
Take care,
--Tex.
re following the nose
Yeah, it may be a stinker indeed. I was thinking it really meant "we admit we abandoned our plan and are flying by the seat of our pants." I think MSFT's stated purpose for the huge tables -- expediting orders and viewing photos -- are so lacking in zip compared to what one might do with real touch tech that MSFT is just praying for a "build it and they will come" result.
If MSFT has a coherent UI for the device, and some apps that really draw people in, there may be hope. I haven't seen it yet. The tagging feature I saw seemed woefully crippled. I sure hope for their sake it was a pre-alpha tagging system.
A huge table might be interesting, but ... a table I can't pull my legs under because it's a huge CRT? Tech that requires the screen to be far beneath the touched surface because there need to be a bunch of cameras looking up at your fingers? It is a tool with some challenges.
$5k-$10k is a lot better than $10k, though. In a few years, this might be actually affordable for someone.
Take care,
--Tex.
re geolocation
Apple needs GPS if it wants to make maps do what people will wish of them. In my two real-world tests, I wasn't in the plotted red circle even once, much less at its center.
I think Apple went with Skyhook because Skyhook could be implemented in a software update. I think if Apple wants to do maps for real, Apple will need to go with a genuine location solution, though.
Remember, the iPhone was late and they were fighting for a long time just to get what shipped on it to work properly. This wasn't the product they dreamed of shipping, this was the product they could actually ship. If Apple hears loudly enough that Skyhook is an embarrassment, Apple may have incentive to fix the problem. Given Apple's introduction of Skyhook at all, Apple probably already plans fixing it. "Pretty darned well" isn't the description Jobs usually gives his new features, is it? Jobs kows it's second-rate and a stopgap, I think.
Given that Apple has been able to persuade INTC to build custom packaging for mobile processors (which Intel then went and offered to others, sure, but only because they had production capacity to try to turn into profit, not because that packaging was planned on that chip), I wonder what Apple has in mind down the road. Apple is running real-time Unix on multicore ARM in your hand today. The possibilities for a few years from now are really something else.
Do they have room/power for a GPS later on? I'm sure of it.
The next revision (storage increase doesn't really strike one as a revision, does it?) might be too early to hope for a solution, but who knows. Apple realized folks wanted to know where they were when they looked at the maps, and Apple may have clued in that this is the wave of the future.
If only I could get my in-dash system's screen to mirror my iPhone!
Take care,
--Tex.
about Apple, actually
Apple has good-looking smartphone share
http://www.ipodnn.com/articles/08/02/05/iphone.vs.rivals/
http://www.canalys.com/pr/2008/r2008021.htm
Highlights:
+Smartphone ("converged device") sales rose 72% (comparing Q407 to Q406), so Apple's iPhone is selling into a fast-growing market
+Despite limitations (release timing and geography) in iPhone sales, Apple reached a market penetration of 7% of worldwide market share by the last quarter in 2007
+Although Apple is 4th place in OS share, Apple is third in hardware (some OSses like MSFT's ship from multiple hardware vendors)
+The size of the market in 2007 was 115 million units
+Apple's share in the US, where the phone was on sale longest, was thought to be 28% of smartphones
Apple's effort to increase ASP via storage upgrade may do good things for Apple's gross from phones in calendar 08. If Apple can achieve 20% of share or better in markets where it sells the iPhone, Apple (a) better get rollout moving and (b) will have quite a bit of money to reel in. I suppose there's also (c) Apple will have a lot of work trying to make its product better and cooler to compete in certain Asian markets ....
I realize the shares are in the toilet, but this is exciting news. I fully expect it to be ignored, though, in light of the lackluster prediction for the quarter.
Take care,
--Tex.
OT puff pieces
The "background" they seem to want to feed us, perhaps to draw us in emotionally, really doesn't help those of us who want to see skiiing, ice hockey, etc. I can imagine showing a "good parts" reel for a marathon, but why not show all the gymnasts?
I'll watch more carefully when they add underwater hockey to the event list
Take care,
--Tex.
OT Team Uniforms
I think your team uniform idea is great. I wonder how one would figure out how to label the patch the Tong (er, that was "informal community associations" was it?) gets for "persuading" ~$20k/y non-citizen dishwashers from NY to donate $1-2k to Clinton's campaign. Presumably the Tong isn't really China per se. Have they got a recognizable logo? And why do they favor her, exactly?
[i[Sadly, almost depressingly comical how many people are out there voting for her even as we speak on grounds they desperately want to get rid of corporate ownership of the white house and the corruption of cronyism brought by the current occupant, apparently clueless as to how much more of the same she happens to embody.
I read an article in which Clinton was singled out for being effective in getting line-item pork through for key supporters. Asked about it, her interviewed staffer referred to inserting these kind of line items as -- I kid you not -- a "privilege" she enjoyed as a Senator. Selling her office by throwing away money taxed from me in a faraway state, a privilege. Indeed.
I think the fact reporters can go through donor rolls to find the donors who paid $2k and got their photo taken with Clinton is pretty cool: it's a degree of openness we didn't have a while back. (Of course, there were donors they couldn't find at all, go figure.) Information is wonderful. Knowing some of her donations came from hesitant and unwilling people coerced by non-citizen underworld forces is absolutely fascinating.
http://www.npr.org/templates/story/story.php?storyId=15460506
The NPR interview treats this with kid gloves, but if you know what they are really talking about it's frankly amazing. I honestly never expect to hear the truth in the news any more. I wasn't thrilled with how they danced around what was going on, but ... wow.
Was it Scully who said "The truth is out there" ?
Heh.
Take care,
--Tex.
no Macs bc closing in April?
The project, your team, or what? You going to me OK?
Good luck!
And yes, watching the BBC for election coverage is probably a better idea than trying the local advert vendors.
Take care,
--Tex.
OT Good luck!
Are you by any chance doing any of this work on a Mac? We could remove the OT flag
Take care,
--Tex.
ASP heading up? em.
MSFT: Surface in a hurry, but Win7 maybe not so much
Surface for home use soon:
http://www.electronista.com/articles/08/02/04/ms.surface.home.fast.track/
Windows 7 maybe not a 2009 product after all:
http://www.electronista.com/articles/08/01/28/windows.7.in.2011/
Maybe confusing people about its DRM's requirements will spur Vista adoption:
http://www.electronista.com/articles/07/12/12/ms.rebrands.playsforsure/
What do you reckon the chance is that MSFT's YHOO bid is related to YHOO's apparent interest in launching a DRM-free music store?
http://www.electronista.com/articles/08/01/24/yahoo.drm.free.leak/
I went to Amazon to look at its DRM-free offerings, and the first thing I saw was an ad for iPod covers. Interesting.
Take care,
--Tex.
What's your take on them?
Do you view their investment as a signal for or against the company, or for or against the likelihood it will get further notice going forward? Have they been able to draw attention to holdings successfully to improve their exits or returns in the past? Do you know them as a client, or as a group of colleagues, or ...?
The press release predicting profit this year certainly boosted volume.
Any guesses what the quarterly report shows?
Any guesses how CAAH will raise the rest of the money it needs to pay the folks from whom it acquired its interests in the Chinese portfolio companies? The lack of cash to finish buying these, and the difficulties posed by raising more capital, all seem to suggest this might be a concern going forward. I'm most interested in this one, as it stands to cause the worst problems if it turns out to be the case.
Take care,
--Tex.
Times are a-changin'
This article is interesting, not so much for how it tries to foresee Google's victory online, but that it bases the 'inevitability' of this outcome on the perception that the public loathes Microsoft. The final paragraphs sum it up:
Everybody knows Microsoft's tricks. Everybody knows it wants to make the same mess of the internet that it made of the personal computer, with all money channeling back to it as it puts up barriers to innovation in all directions. Everybody's sick of Microsoft.
Microsoft should well be terrified of the day a free online alternative to Windows hits the internet. Starting on that day, the countdown to Microsoft's irrelevance could be measured in quarters, not years.
You know how long it would take me to switch? Only as long as the download. When the installation prompt asked me if I wanted to save a backup copy of my former operating environment, I'd click "hell no" as fast as my fingers could move.
And -- poof! -- just like that Microsoft would be gone.
http://seekingalpha.com/article/62881-microsoft-finally-convinces-the-future-belongs-to-google?source=side_bar_editors_picks
I've held this view for a while -- anything other than MSFT, please -- but this article suggests a view that this attitude is increasingly becoming mainstream. If this article is right, the switcher pressure toward non-MSFT operating systems could be a real boon for Apple. Didn't an analyst suggest this as a reason to expect growing Mac volumes? Is disgust with Microsoft becoming mainstream? Or is it just that Apple's lowered the bar to migration with compatible hardware?
Interesting times.
Take care,
--Tex.
OT re Guam
Consider for a moment the number of electoral votes Guam has (0; it's not a state, and there's no constitutional amendment giving it electoral votes despite not being a state, which is the only reason the District of Columbia has any electoral college votes). I'm amazed that I can continue to be surprised at the things the two major parties do. Making candidate selection so unrelated to actual voting proportion is just nuts.
The ostensible reason to have this little contest is to ascertain how the candidate will do in the real election, no? Figure out who is the winner when the score is weighted the way the real vote will be weighted?
Ahh, but surely not: this is why party officials, ex-Presidents, and so on get votes all by themselves -- the dance is for the benefit of the party, not the public.
Ugh.
/rant
Take care,
--Tex.
re concern or pretense
I think GOOG understands that there's a great deal of paranoia about MSFT, and that MSFT really does hope to enslave the world to proprietary interfaces that require MSFT products on the Web and everywhere else (even if hope seems fleeting online), and they understand antitrust issues have been a very effective distractor for MSFT and have made Google look better. After all, GOOG hasn't paid hundreds of millions in penalties for injury to the markets in which it vends its products. Bad news on MSFT makes Google look better by comparison.
Google benefits from warm-fuzzy sentiment (who do you pick for search and why?) among consumers, so anything that tarnishes the reputation of competitors (remember when news broke that AltaVista was selling rankings to paid advertisers? That was AltaVista, right? Did you ever use them again?) helps Google in the war for minds, and thus dollars.
Take care,
--Tex.
On YHOO/MSFT
Bearish on the prospects of MicroHoo!, the article hasn't got financial analysis, but a touchy-feely examination that syggests MSFT has the touch that turns gold into lead, or something, in terms of user experience. The funniest quote:
Ask yourself this question: When you first heard that Ford (F) was using Microsoft's Sync for their car audio/navigation/communication, what was your reaction? Gotta get me a Mustang! or Man, are they toast. Which was it?
http://seekingalpha.com/article/62857-micro-hoo-desktop-vs-internet?source=yahoo
Here's a page with some recent data on the share in free webmail, web search, maps, dating sites, and so on:
http://seekingalpha.com/article/62766-microsoft-yahoo-data-on-properties-vs-search-traffic
My question is how much revenue each of these properties generates. I'm sure they're positive, but in some categories I wonder if network effects haven't put them in a bad position for the future.
I was interested to note Google with over 50% of the maps share. I'm not sure how much revenue there is in this, but (a) they started with zero share when they went into this space the first time not too long ago and (b) I just noticed a feature one could use to have a look at the physical property one found on a map, and then turn one's view, and virtually walk down the street. This was on an address in Tarrant County (I need to do some work in the courthouse there soon), but my guess is that Google is quietly upgrading this service to cover more street addresses and will eventually be pretty complete for most of the search target areas (say, major metropolitan areas) in the not-too-distant future.
Anyone know how one makes money on maps, unless folks are looking for a hotel or restaurant near a destination? Even then, the map vendor needs some kind of relationship to bill for the referrals. I don't really understand free online maps as a revenue generator. I do definitely understand them as a brand-builder: Google's maps have improved tons in the last few years internationally, and it's now my go-to site for maps.
Is there really money in free webmail? I noticed Google's maps and mail and so on in the iPhone don't have ad links. Does Apple pay Google for this stuff?
Take care,
--Tex.
Nice. Thanks. em.
RIP Alpha
The highly acclaimed RISC processor Alpha, created at DEC (which was eaten by Compaq which was eaten by HP) and carrying the workload of Los Alamos National Laboratory's ASCI Q, has taken a step toward cultural erasure. HP (eater of Compaq, eater of DEC) has released an x86 gaming-oriented desktop named Alpha:
http://www.electronista.com/articles/08/01/21/hp.blackbird.alpha/
When DEC was bought by Compaq a decade ago, the writing was on the wall, though.
With Apple's platform independence, I wonder what Apple might be able to support in terms of Intel R&D if Apple's shipping volumes get big enough. Lots of the open source programs could adapt to a serious hardware revolution quite a bit faster than MSFT could. Might be interesting. MSFT can't even support 64-bit on its highest-volume OSses.
No, don't let me go off speculating on how rosy the future might be.
Take care,
--Tex.
board is d-e-d
OK, nobody's awake here, so I'm off :P
Take care,
--Tex.
re B2B and Chinese investments
I think MSFT might be picking up YHOO's Chinese investments at a discount. The Chinese have been pretty aggressive about sabotaging foreigners in the Internet space. For a while, search requests sent to google.cn were being redirected to a Chinese search tool, I read.
It's the Wild West, or near it.
Take care,
--Tex.
the right price
I honestly never heard XBox had actually made any money, either in terms of accounting profits or in cash flow. Since I don't own MSFT the fact this is news is not very surprising, but in light of MSFT's $1B warranty writedown last year I'm kinda interested to know whether MSFT has actually had a positive year on XBox, or just looked cash positive for the holiday quarter. If they've pulled it off, bully for them. Next move, lock nitwits into buying points in weird lots that make nice transaction sizes for MSFT. Yeeha!
If MSFT can really turn an underperforming asset in Yahoo into a properly-behaving asset, then MSFT could do well in terms of IRR, especially if they find the hundreds of millions in savings you suggest are likely. I'm of the view that as a ship starts sinking, the first to jump and head for shore are the strong swimmers who know jumping is a good bet because for them it is. I assume that with Yahoo being so seemingly lackluster for as long as it has, and across its recent helm changes, that it's already lost most of its strong swimmers.
As for Ballmer cutting the fat and creating efficiencies ... has he or his management folks figured out who's responsible for the various delays, discards, rewrites, and other myriad issues in Vista? I suspect most of the culprits still receive email @microsoft.com. I know they lost one top manager, but he wasn't really making everyone row in different directions, was he?
Whether Microsoft can execute on that is another question entirely. But what they're buying and what they're paying, are hardly irrational.
If your view is right that MSFT will make good on the assets, then you're right: they are getting a bargain. Having looked at some of Microsoft's behavior over the last ten years, I've grown dubious. I used to look at Microsoft acquisitions and think "oh, no, they're trying to take over the world again, somebody stop them!" Now, having seen MSFT running what appears to be the Keystone Cops of tech project development and being kept alive solely by its old business of creating APIs on which developers lock customers into MSFT license purchases, I see acquisition proposals by MSFT and chuckle at the ways they could go into the toilet.
Since I don't own MSFT, I can't say I make a serious study of it, but what has MSFT really kicked butt on outside delivering APIs too poorly-documented or to quickly-moving to copy so that customers end up locked into MSFT products as a result of developer work on their apps and the badly-documented file formats their apps create? At this game, they are the undisputed world champs, and I have to take my hat off to them: they did what I did not believe possible, and I really missed an investment opportunity on it. I acknowledge they really do master something, and my link to IIS server share increases is intended to show there's a future for this strategy even in the age of the Net. MSFT isn't doomed, and one can't laugh at their capacity to create cash when one really appreciates its scale and its durability. I just think Ballmer & Co. believe they are a lot slicker at a lot more things than they are -- and that they really believe that merely being Microsoft is enough for them to win in all kinds of markets. Hearing Ballmer talk about, for example, WinCE market share and Microsoft's share in music players, suggests he's living in another world inside his head. I don't think this kind of disconnect is good for MSFT's internal discipline. I think inability to pass harsh internal judgments around is something that could lead MSFT to make all kinds of bad overestimations of its likely outcomes.
That's why I'm skeptical of MSFT. Not because it's become popular. Although MSFT's apparent fallibility isn't to be discounted: I think it supports many people's willingness to consider migration to other platforms, which in turn says good things about the chances of standards, well-documented alternative APIs, and so on.
Add in even a modest turnaround or monetization of Yahoo's wasting assets and it's not unreasonable to think the Yahoo properties could generate another 30% to 50% of profitability.
I'm curious where you see Yahoo easily being capable of creating another 30-50% profitability -- or is that just the ejection of "dead weight"? Do you think a combined Yahoo/MSFT will keep the customers of both, rather than cause a re-shopping behavior on the part of advertisers? I'm not trying to be difficult, I'm just trying to understand what Yahoo's current management may be missing that might be clear to outsiders.
Products that don't suck would certainly help both MSFT and its customers, as well as making its developers look better. I've been wondering whether MSFT has the discipline to demand quality in some of its product lines. We'll certainly see, won't we?
For my part, I'm not so excited about MSFT that I want to buy, though I recognize MSFT experienced some abandonment by shareholders until recent concerns caused a flight to quality (MSFT ain't going out of business; it's been profitable for years and swims in cash). MSFT employees don't seem to think that its consulting business is high margin; they think software is high-margin and that consulting is a side-business. I think things like enterprise consulting are important to keep MSFT products a key part to its biggest customers, and that MSFT's consulting business could teach Apple some serious lessons about how to sell to large buyers with steady deployment streams. Since Apple makes its money on hardware, I think Apple derive make even larger benefit from consulting operations that might set up businesses from servers to handhelds, and create purchasing patterns to last years.
Just because I don't invest in MSFT doesn't mean I'm uncurious about its behavior. MSFT is still an 800lb gorilla. It's just not the only silverback in the troupe any more.
Take care,
--Tex.
on platform independence
I recall Wilfredo Sanchez saying that the Darwin-on-Intel project was intended to enable Apple to reap the benefits of platform-independent design, and thinking this was pretty funny given that listeners would mostly miss what he meant. Yet, here it is: MacOS X + Cocoa's platform-agnostic frameworks means Apple can do whatever it wants with the processor, and neither the OS nor the userspace apps will give a care in the world. http://hivelogic.com/articles/iphones-cpu-still-irrelevant/
When Intel starts creating x86 chips with diverse networking capabilities and a power profile that will set them up to compete in telephones, Apple can migrate to them without pain. It gives Intel something to strive for. If Intel builds it, Apple will come, and there will be millions of units to sell. Intel need not fidget with the task of getting folks to move weird codebases of strange and diverse operating systems to a new chip; Apple can do it as soon as Intel supplies a good compiler.
If this is the trajectory, Apple will be a great partner for Intel: Intel will be able to do what it wants in the low-power area and not worry about software being able to run on it. Apple won't have to sorry that it'll be playing catch-up with folks with better processors. Platform-independence is very sweet.
I wonder if platform independence will, down the road, open up the possibility of supporting a new instruction set, without the x86-to-RISC translation and other kludges that are used to make old instruction sets operable on modern processors. As long as MSFT ships the overwhelmingly dominant OS (which is locked into x86), x86 is pretty much here to stay. Heck, x86/32-bit is even here to stay. What Apple's done is pretty awfully cool.
I wonder when Apple's kernel will start running in fully 64-bit. I gather Apple's memory management has some 64-bit addressing hacks, but isn't actually 64-bit through-and-through. I'd like to see 64-bit all the way through, because Intel's 64-bit instructions are backed with better hardware for accelerating the same work one might do in 32-bit, meaning you get a "bonus" for not using legacy x86/32.
Ahh, well. Apple is trying to lead Kext developers more gently into the future, apparently.
Take care,
--Tex.