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new accounts and volume
Rationally, one would expect volume to pick up as interest would pick up as the business prospects improved. My concern is that rational behavior isn't something one can count on in the short-run, a lesson Buffett was pretty good at underscoring for us by regularly producing outsized returns by buying good businesses at competitive prices (and not necessarily selling them). Sure, he eventually made money on what he bought, but mispricing is opportunity. Mispricing is also short-term liquidity risk, though.
I think the new accounts and the growing business will result in favorable quarterly numbers and will improve the price and volume -- eventually. Looking at the recent activity in ACAS and AGNC, though, it's clear that even companies with good regular reporting and articulate earnings Q&A sessions are horribly misunderstood and mispriced.
http://jadedconsumer.blogspot.com/search/label/Ticker%3AACAS
Looking at pinks, I conclude one might have to be extremely patient to get pricing that matches actual business performance.
Take care,
--Tex.
re o2 demand
The idea that demand not only ate the supply but caused server overload is pretty harsh, given what servers can handle -- unless this thing is being run out of someone's basement, that shouldn't be easy.
Between this quarter (low iPhone sales) and next (back to school plus new phone launch) it's sure to be a wild ride.
Take care,
--Tex.
re trading range
The recent arguments I've seen for a fair value of Apple puts it in the low 200s. Given the tendency of Apple to acquire boom-bust investors highly reactive to news and fears, I'd think the price should fluctuate from below the rational price to above it in wild swings, but what do I know? I've just been on the roller coaster for the last ten years ....
While Apple's sure to miss eventually, is there a reason to suspect it'll be before rather than after several upside surprises?
I'm just asking for the sake of argument, not predicting some kind of wild upside surprise in the immediate future. While I expect the reports on Mac sales growth to support solid earnings for the near future, I think this isn't a "surprise".
Incidentally, I do see a "miss" potential in analysts' failure to notice Apple ran out of iPhones and intentionally didn't refill its channels this quarter. They'll rag on the iPhone number and on any report showing anyone "gaining" on iPhone share, despite that Apple basically threw this quarter away. Due to the magic of Apple's subscription accounting, Apple will show revenue from every iPhone ever sold (24 months hasn't passed on any iPhone sale), but folks watching the sales numbers for the quarter can easily have a conniption that their number wasn't made. As for the overall profit number, Apple's Mac and software businesses (the connect rate on AppleCare and other non-hardware extras has been nonzero for some time, and Macs are apparently exploding) stand a realistic possibility of carrying Apple to a respectable finish.
The victories I expect are the back-to-school quarter (with new iPhones) and the holiday quarter, both of which have good potential to create overbuying before the post-Macworld slump.
Second verse, same as the first?
Take care,
--Tex.
Not Earning Green Points
Apple sells online services in a box:
http://www.macrumors.com/2008/07/03/mobileme-retail-boxes-shipping-to-customers/
You get a cardboard box and pay for its shipping, when the whole product is delivered electronically! What a deal!
Take care,
--Tex.
re mid-Oct
That gives us maybe two quarters in which to prove the thesis the company makes money as a Chinese holding company. I sure don't want to be stuck in much longer without an exit opportunity.
The real killer is this: if volume doesn't improve, how will we exit at any price? Commissions would swamp sale price in multiple day-after-day partial fills!
Take care,
--Tex.
Adobe speeds code on code ... but will Apple?
Adobe's performance optimization in Flash may be designed to protect Flash from competition ...
http://jadedconsumer.blogspot.com/2008/07/adobe-to-apple-we-can-write-quick-code.html
... but it makes me wonder why Apple's iWork suite performs so poorly just displaying text (Pages) and real-world-size spreadsheets (Numbers). One would think Apple would spend some effort optimizing its own software so it didn't look like the slowest source of code on the box. It doesn't do much for confidence in Apple's frameworks to have applications that purport to showcase them move so slothfully.
Take care,
--Tex.
never coming back
Let's hope that's not the case -- there are some good companies with profits and assets that I'd sure like to see valued higher than they now are!
One example, not a pink, is ACAS -- it's got profits and consistent dividend growth but the folks following this company don't seem to have the first clue how it makes its money or how one should think about whether to buy it. The analysis is so trivial as to be inconsequential -- which is why I think it's continued to be undervalued. Some thoughts on ACAS here:
http://jadedconsumer.blogspot.com/search/label/Ticker%3AACAS
There's less detail known on the pinks I have (ETLT and CAAH) but the information one can get on ACAS makes a strong case it's got consistently-performing management who refuse to dilute shareholders, and that's golden.
Any ideas how long you think you have the patience to wait for folks to become impressed with CAAH? In ACAS, I console myself with dividends. What's your intended target on CAAH? I'm really new to pinks.
Take care,
--Tex.
re Intel credit
I think there may be a solution in there: Pixar has previously credited Sun (by my recollection) and Dell (by a report here). The conclusion I draw is that Pixar arranges what amounts to an advertising payment in exchange for a credit with its supplier. This allows the supplier to claim the film as a demonstration of the product's power, so there's some benefit aside from the branding message reaching geeks watching the credits.
If some boxmaker doesn't want to part with money for the credit, but Intel is willing to pay for the recognition, that would explain why Intel but not the box manufacturer was credited. And what box maker would decline? Not the likes of Sun or Dell (which have done it), one imagines. I wonder if the answer is either rented processing power (but IBM or Sun would love a credit for renting that kind of horsepower to a high-profile client) or a vendor that isn't interested in marketing itself as an enterprise big-iron vendor. And there, I begin to wonder: who would build big iron but not want to advertise itself to the kind of enterprises that actually buy big iron by showing them a big, high-profile success story?
And there, I find I've already asked this question about Apple: why does Apple, which obviously can build systems that are top-500-supercomputer systems, seem to take no interest at all in marketing itself as a big-iron provider to enterprise?
While the fact the two questions seem to be played in the same key doesn't prove anything, but it does make me wonder whether Apple is the vendor that won't pay for its name to be in the new Pixar movie, even though, e.g., its startup chime is in the movie (every time WALL•E finishes recharging) and EVE looks like an iMac reimagined as a robot. Maybe Apple thinks it's already got enough advertising out of the movie, either because of the Jobs/Pixar association or the content of the film (which may be a bit subtle for folks not already familiar with Apple's products).
At any rate, it was a good flick and I will see it again, though perhaps not in the theater. On second viewing I'll work out whether adding it to the collection is in the cards. Toy Story I and II and Monsters, Inc. and Finding Nemo all made it.
The absence of a manufacturer credit may also mean Pixar used a budget-built nobody-box and Intel was the only firm with an advertising budget left in sight. That might be consistent with Pixar's previously-revealed preference on interviews toward commodity hardware. Back when they were talking about their storage needs for Cars, they said el-cheapo disks connected to a gaggle of Linux boxes was better than a high-dollar enterprise storage solution one might find.
I found pix of Pixar rendering systems, but I could not verify that the pics were particularly recent or which film they were used on, etc. If Verari is a high-value blade vendor competing mainly on price, maybe it's the mystery vendor, and Pixar picked up advert bucks from Intel. Do we know the vintage of the Verari pix?
Take care,
--Tex.
re Chinese companies
I was attracted to both ETLT and CAAH due to an investment theses about China, and in theory I'd be happy to hold long-term. On the other hand, as the market goes to hell I'm more and more interested in liquidating things that aren't marginable.
I like CDS but it's in the toilet, too. CDS has the advantage that it makes money setting up China deals, and takes a stake in the deals it brokers, so it ends up acting like a fund of Chinese companies that is paid to give advice rather than taking payments from shareholders to cover the cost of the due diligence. I think CDS is a great story.
I'll look into AAGH. The symbol sounds like a choking man, though ... is that kinda inauspicious? Are you attracted by technical data or by fundamentals or ...?
Take care,
--Tex.
re pinks
The only pinks I've got are Chinese deals: ETLT and CAAH.
Both have been hammered, and I expect eventual news to wake people to their merits. ETLT has occasionally traded below cash per share, and the company is profitable. Go figure! CAAH has a good story building, but until the quarterly reports show the profit and the revenue growth and so on, folks will remain skittish. The company only just changed its business from security products and the hope of eventual revenues to a holding company with things like Chinese industrial lubricant dealers. This change will take a while to digest.
One problem facing both companies is the difficulty turning Chinese profits into a currency US shareholders can taste and smell. The currency controls are a problem in that regard.
Assuming China's business environment gets better -- and capital stuck in China becomes less a problem -- I think these companies' prospects for price rationalization is a bit better.
Take care,
--Tex.
Take care,
--Tex.
breakeven
We'll see break-even, I'm confident. The question is whether, in the absence of another Chinese acquisition target, the shares will have tremendous profit is another question. The due diligence on AoHong was done by a firm that knows Chinese companies, and management picked the best deals it saw. AoHong will do great work. The question is whether CAAH could do better with more.
Take care,
--Tex.
Image upgrade in Japan
After the ho-hum reception of the original iPhone (and why not? it didn't run on any Japanese networks) in Japan, the 3G iPhone seems to have made up for lost time and become the most asked-after smartphone:
http://www.electronista.com/articles/08/07/02/iphone.sought.in.japan/
I am beginning to wonder whether Apple's wild expectations of sales are wind enough.
Take care,
--Tex.
too good to be true?
Cramer's "too good to be true" comment seems to have been made without any reference to ACAS' businesses or business model. The arguments I like on ACAS have been summed up here:
http://jadedconsumer.blogspot.com/search/label/Ticker%3AACAS
Basically, financials are all hammered. If the current pricing were a result of financials being genuinely surprised by subprime or other "shockers" and being punished with justification, ACAS' newly-launched fund AGNC, which got off the ground in May and paid a 31¢/sh dividend for its first 27 days invested, would not be affected. After all, AGNC bought its assets after current pricing environment was known. Thus, everything in the portfolio is fully discounted at purchase.
Yet? AGNC, which launched at $20, was for sale earlier today under $16. Assuming the full quarter has a dividend better than three times its 27-day dividend, its dividend is as high as ACAS' even after paying ACAS its management fee.
Of course, since ACAS owns half of AGNC, the fat dividend is a great benefit to ACAS' operating earnings, and will help ACAS keep its dividend growing. Folks worried about ACAS' ability to make profitable exits haven't been paying attention: ACAS exits pretty big volume every quarter, and has been rolling profit forward undistributed to shareholders. ACAS' dividend isn't evidence the management is eating the seed corn, it's evidence ACAS' management is farming the banks of the Nile (before it was dammed) and gets two crops a year to most folks' one.
I'm in ACAS big-time and not looking to exit. In fact, I'm looking for places to raise more money to invest in ACAS. The businesses are just too diverse, and the management too good, to let a deal like this pass.
Sure, the price can get crazier -- but that's part of what we learn from the likes of Buffett is a superior profit opportunity, right? Be greedy when others are fearful ....
Take care,
--Tex.
on-topic
If iPhone is really nabbing 15% of the US market next calendar year
http://www.electronista.com/articles/08/07/01/bernstein.on.iphone.share/
and Apple's ASP is closer to $500 apiece than originally estimated, raising per-unit profits,
http://www.macnn.com/articles/08/07/01/piper.on.att.iphone.costs/
then we should start seeing some nice returns as the facts come in. The competition among OEMs for component prices is good to see when the company is finally mainstream instead on the fringe of hardware demand. Remember when news about some mainstream technological improvement always threatened relative performance, rather than promised better margins?
You've come a long way, bay-bee.
Take care,
--Tex.
re results or operations
The folks doing operations are in China. The guys who do the PR are all in the US.
I think the real issues are that (a) they need the numbers before they're safe to say anything official about them -- reckless reporting on hunches won't help anyone; (b) CAAH still has some payments to make for the AoHong subsidiary, and these will weigh on cash flow even if they're already accounted for, though I haven't tried to watch when the payments were taken as charges or would be, but since the payments were to be made over time and weren't due before then, I am going to assume CAAH is taking its payments as charges as they are due and paid, which may weigh on CAAH profits until the payments are done; and (c) I think the company has operational profits now, and they've announced they expect this to be the first profitable year, but with US-side overhead, plus possible expenses related to a Take II acquisition (with Big Tree down), and marketing overhead as CAAH goes to conferences talking up the stock, it's quite possible that we don't see serious profit until CAAH has finished making its delayed payments to the original AoHong owners.
AoHong growth might be good, but what would *really* rock is growth from two operating companies instead of just one. I expect that to be a future focus of US-side management. Since the US management isn't, to my knowledge, part of the Chinese operations, I'd think this should have little impact on AoHong business development.
Still long, but weary.
Take care,
--Tex.
re bottom
If it goes down much more it'll be paying in forward dividend twice my margin rate and I'll have to go shopping on credit. I'm not interested in the stock as a trade, I'm interested in it as a dividend-reinvestment opportunity for the long term. Ironically, the longer the stock stays irrationally underpriced, the better I make out.
I notice that AGNC's 27-day quarter seems to have rocked. It's heading toward nearly a buck per full-length quarter. That's nearly 20% dividend based on its IPO rice of $20. With ACAS the 50% owner and the ability to take management fees atop its dividends, it looks like ACAS' new venture will be pretty lucrative.
I'm not buying AGNC, mind you -- I'm interested in ACAS' whole business. I think the deals ACAS will see as this goes on will be quite good.
My only concern is how ACAS will raise funds to invest in the good deals. Stuff like AGNC, that allows ACAS to raise funds at NAV when ACAS' own shares are trading below NAV, are the kind of imaginative solution I'm glad to see materializing.
I've been buying ACAS on the way down, and I'm getting pretty overloaded on it, frankly. I'm still in the DRIP though and plan to own more. ACAS is one of my best ideas at the moment. The fact the financial sector is hated at the moment is frankly just one more reason to persuade me the stock really is mispriced.
I'm toying with selling losers (MKL, MIG) that I actually like out of conviction that ACAS is a better place for the money.
My biggest winners at the moment are MA and AAPL. The prospects for these seem interesting enough I'm not particularly interested in bailing out of either.
Clearly, I need to go make some more money so I can feed my investing habit!
Take care,
--Tex.
re realtime
My current computer -- an iMac G5 -- can't even play without skipping the second video, which you suggested as a good demo. I don't know how many pixels those guys were doing in realtime, but ... da-yum. I still imagine cinematic definitions are likely a bit beyond anyone's realtime capability if the detail gets good enough. Also, they're using all kinds of sophisticated textures and behaviors -- making shirts wrinkle under gravity, making hair bounce with character movement, and making water behave realistically.
I think the Cars render farm was Linux on Dell, but who knows what hardware these guys decided to use down the road? Apparently they push the envelope with their hardware demands every time they make a new flick, so they won't still be using a several-years-old farm unmodified. I'm interested in where the price/performance equation leads new farm buyers, and that has me more attuned to hardware issues than to software issues (the render farms are going to be subject to application-specific tweaking by expert operators, so I don't see factory-default performance issues really playing much role in performance for these customers).
I assume that these back-end systems' purchasing decisions are made based on decisions led by price to buy, price to run (energy and reliability), and top-end performance.
Do you think rendering cinema-sized frames is something retail GPUs are much help in doing? I kinda picture the render farms as doing all this on general processing units. Will the future hold multiple-GPU systems for high-end graphics computations? In the old days, big racks of SGIs would crunch oilfield data to give 3D output, and I assumed they'd found a way to leverage the graphics-specific processors on the SGIs. Whether coprocessors are a significant part of the current equation is something I've gotten kind of obsolete on -- but I note that the cluster nodes I've seen described were lacking in graphics-specific hardware. Is this the kind of machine that fills rendering clusters?
Take care,
--Tex.
re Intel credit
Do you think Intel might have leased Pixar time on a processing farm? The issue with an Intel credit is that it's not clear whose box the Intel processor would be in. Presumably, to get a price break or credit of some kind, Pixar could have made an arrangement for an Intel credit in connection with an Intel Inside machine from virtually anyone.
It'd be interesting to know. Disney apparently has quite a few Macs these days. I wonder whether Pixar's tools will be catching on in other parts of Disney ....
Take care,
--Tex.
If Electronista is right ...
... it's gonna be one heck of a product (re)launch:
http://www.electronista.com/articles/08/06/30/rbc.high.iphone.demand/
That won't help this quarter, but ... wow. Here's hoping they're right!
Take care,
--Tex.
iPhone & Garmin
Fool.com has an article that says iPhone's nav software is better. Are they onto something, or just on something?
http://www.fool.com/investing/general/2008/06/30/fool-blog-is-garmin-lost.aspx
I'm guessing the iPhone will offer mapping that meets quite a few people's needs -- but I'm not sure what the real quality comparison is likely to be between Garmin's product and what Apple will be able to deliver. For that matter, will Garmin's content be deployable on iPhones on terms that benefit both?
I know Garmin would hate to lose unit sales volume, but gaining a software business might be worthwhile if the pie got large enough. I'm not about to bet against either company.
I would like to call BS on an unresearched Fool.com article, though, if someone would tell me what Garmin had over Google (the likely source of iPhone 2.0's built-in map tech).
Take care,
--Tex.
Infrastructure costs
Ensuring coverage in HongKong has got to be simpler than in Canada, for example. Population density means that any given tower's investment can be amortized across a high use volume. By contrast, questions about cell support in St. Helena get the result "never". Heck, just normal phone land lines are outlandishly expensive in St. Helena, whose switching hardware, and the backup hardware, must be sustained by at most a few thousand users.
I'm unsurprised telecom is relatively cheap in HK.
Take care,
--Tex.
On WALL•E
(1) At the end, I did look for credits that might inform me about the hardware used to render the film, but I don't think I paid enough attention to definitively state there was no such credit, though I did look. I had a 4yo with me and that can be distracting. However, I didn't see a credit to Sun (or to Dell). This point is why I don't mark the post OT; I wanted to make sure I reported on the thread from which this post came:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=30331552
(2) I didn't think the political or environmental angles were really the dominant features of the film. For my take on the film itself, I offer this:
http://jadedconsumer.blogspot.com/2008/06/walle-is-about-caring.html
(3) My daughter is 4, and more concrete, and her synopsis was a bit more oriented toward the people leaving and returning to the Earth, and the plants coming back when people took care of them. So the story's top level, most-obvious tale (but the one most lacking in any kind of specifics or data or support, and most undermined by loony things like people expecting to grow pizza plants) does seem to be about saving the Earth, but I believe the real message is about saving ourselves from apathy by finding things to live for.
Enjoy!
Take care,
--Tex.
Anyone alive here?
At this price, I think the share buyback may start looking competitive next to alternative capital uses like proposed business deals. The question is whether the price dislocations are making deals other than share buybacks even more attractive.
Some of what I see in ACAS selling seems driven by reports that don't seem particularly grounded in reason. Consider some of the arguments at Jaded Consumer:
http://jadedconsumer.blogspot.com/2008/06/professional-stock-analyst-opinions.html
There's another (related) post on AGNC, which ACAS seems to be doing well with -- it's an ACAS-managed fund that's publicly traded and has entered the Russell 3000. Assuming its dividend keeps performing, it could have its own success raising funds (for greater ACAS managed-funds fees). Even if it doesn't, ACAS' growth in its fee business has been nice, and offers increased consistency in ordinary income. I wouldn't mind seeing ordinary income grow, though it could have the impact of pushing ACAS dividend up (as ACAS needs to pay 90%+ to maintain BDC status) and a higher dividend will make the "this dividend is unsustainable!" crowd absolutely nuts.
Funny how terrific success making money turns into a reason to hate the stock!
Take care,
--Tex.
re lockdown
I don't think the question is whether Apple will take steps to make installation on Non-Apple hardware inconvenient, but whether (a) the steps will be bulletproof (ah, no) or (b) will be enough to make non-Apple installations a curiosity rather than a mainstream event (which is the current state of affairs, and is plausible).
I don't think Apple relies on EFI as its litmus test of whether hardware is from Apple. I suspect Apple has code specifically to query for firmware information, etc. to give support to the idea it might be booting on an Apple machine. Further complicating hacking is the movement toward code signing, which will make it harder to substitute Apple's .kext files for modified ones that might enable booting on unapproved machines.
However, as iPhone unlockers have demonstrated, encrypted boot images and so on are just a speedbump. The fact that every update would threaten to kill a machine depending on cracked MacOS X is probably a bigger reason folks would avoid it except as a curiosity: Apple's shown that it can and will tweak updates to kill doctored installations.
Microsoft has a pretty big problem with cracked operating systems despite draconian efforts (Product Activation?) to control unauthorized copies. However, my understanding of most of the cracks is that they derive from enterprise versions specially crafted not to call home -- that is, versions that don't use Product Activation to ascertain their own legitimacy. Assuming Apple implements a consistent policy, and that its relationship to the hardware makes this a better bet than Microsoft had before it resorted to calling home, Apple may be able to do a little bit better than Microsoft was able before Activation arrived, without becoming as reviled for doing things like Activation.
One problem I've had is that every time Apple replaces the motherboard on my iMac G5, I seem to need to re-authorize my machine to play the maybe 3 iTunes tracks on it. Since Apple takes the old broken one away when it swaps them out, I can't log in and deactivate really .... This kind of thing would really suck if (a) it applied to my whole system or (b) I had lots of Apple-acquired music.
Take care,
--Tex.
cash
If I had 35% cash, I'd be asking myself when the mispricing in the public markets had gotten bad enough to buy companies that are buying underpriced untraded companies (for a "double discount"). My best idea at the moment is ACAS:
http://jadedconsumer.blogspot.com/2008/06/professional-stock-analyst-opinions.html
... and ACAS is a major investor in a newly-launched publicly-traded fund it manages, AGNC, which is joining the Russell 3000:
http://jadedconsumer.blogspot.com/2008/06/american-capital-agencys-first-27-days.html
I'd think buying ACAS would get ACAS' underpriced contents, plus the benefit of its management fees on the billions it doesn't own. And the dividend goes up each quarter, and they keep rolling more profit forward unpaid. (As a BDC, they can deduct from income and avoid tax on profits paid to shareholders as dividends, so it avoids double-taxation in a way BRK.B would not; so it doesn't have BRK.B's incentive against dividends.)
But that's just me.
Having a bunch of cash could make a lot of sense for some folks.
All the best!
Take care,
--Tex.
re nightmare
Maybe Apple's delay in getting folks set up with certificates for signing apps is that Apple is verifying the developers and not their apps. In that case, once folks are set up in the system, they can post and withdraw and update apps all they please. This is actually a pretty good strategy for avoiding malware posing as real applications, but it creates up-front delays. Someone at Apple has to make decisions about whether a developer is "real" or not.
There are antispam solutions I've seen that don't inspect mail content, but the trustworthiness of the server delivering the message. If Apple is in effect building a whitelist of developers, it might take a while for Apple to roll this out. I hadn't thought about this aspect of the store, but they have to be trying to trust developers (the signature) rather than the applications, which of course can have bugs and which may be far too complex to seriously evaluate for "suitability".
Apple will probably let enterprises sign apps for use within their enterprises very quickly, as it doesn't impact Apple's work on the App Store and will enable third parties to work up demand for iPhones. What I'm interested in is whether Apple's setup poses a barrier to genuine developers. I think the $99 probably weeds out not-serious folks, while funding some human intervention to check out applications.
I hope Apple doesn't screw the pooch on this one. I'd love to see it become a major business. I'm just too skeptical of Apple's dedication to developments thrust upon Apple, after seeing MS-Active Directory compatibility sit incomplete for so long. If Apple wanted integration it'd not have left the solution in a state that required supportive intervention by MS-Windows administrators.
Take care,
--Tex.
re nightmare
Well, Apple is the one that specified an architecture that will require Apple to ride herd over all the push messaging, application installation, and so on. I'm not sure that this is necessarily a problem, if Apple provides an API and then does the lifting needed to support it for paying customers. What does concern me is that Apple may appear to be or end up providing a warranty of all sold apps' compliance with Apple's announced app requirements, to folks who use Apple's download/install system -- and that Apple may end up bottlenecking third party apps as it engages in QA. And then recall lots of these are free downloads ....
I never heard of a platform where the OS vendor had to do QA on third-party code, unless maybe it was vendors paying Microsoft to sign kernel drivers in recent OSses.
Incidentally, I saw a call for Apple to begin loading only signed .kexts. For some reason, I thought Leopard was already starting on this path.
Who knows what secrets lie in the hearts of Cupertino?
Take care,
--Tex.
re credentials and plans
While I don't have any idea what the internal corporate ladder political dynamics are, this does beg the question of whether Jobs values loyalty more than competence
This is exactly what I meant when I said I didn't know his credentials. I was trying to politely avoid accusing him in public of being a bozo yes-man brown-noser when all I had to go on was a record of public failure. I can imagine in theory other explanations, and I don't know Forstall, so I wanted to steer clear of the ad hominem explanation without that kind of evidence.
It's possible he's good at the things he's entrusted with, but that this list is short -- or that he's really incompetent but talks the right game. But since I really don't know I didn't want ... you know ... to just drop this kind of accusation, though this turn of conversation has led me to voice the very speculation I was keeping to myself.
But hey, maybe it stings less if you cast it as Jobs valuing loyalty above competence than if you cast it as Forstall getting ahead by sucking up!
if Apple was living in a fantasyland of delusion that it could control all access to the next major computing platform prior to introduction, it's undeniable that they knew in the immediate aftermath that that wasn't going to happen
I think they may not have really "gotten it" until the one-click unlocking apps and the swarm of software for unlockers had appeared. Then, the issue became: how do we manage this unstoppable trespass in our lovely garden? I think Apple has known less than a year that it's plan to be the sole vendor on the platform was a bust (not because you and I didn't see the writing on the wall, but because Apple wasn't looking for it and didn't want to see). And, Apple isn't committed to expanding this new vision into a piece of corporate art, as it was never Apple's vision. They may not see the App Store as anything but damage control.
I hope I'm wrong, but I don't think the folks at Apple really have a lot of commitment to the outside developer idea. Jobs said the SDK on iPhone was the APIs exposed to web developers in Safari, and I think that's what he meant. He was hissed, and Apple just edited this out of the webcast of the WWDC.
I'm optimistic that most of this gets sorted out and taken care of eventually. But when you see strategic or managerial blunders being repeated, what fan of Apple and the iPhone platform wouldn't be at least a little concerned?
Well, maybe yes and no. I don't think the leopard will necessarily change its spots. I think Apple might get dragged unwilling into developer support on iPhone and leave it unfinished like it was dragged unwilling into providing integration with Microsoft's Kerberized directory services several versions ago (by an Apple employee in sales who knew what the customers wanted, not by an engineer following engineering orders) and hasn't yet delivered something that's a complete drop-in replacement. I suspect Apple's capacity to do half-assed things in which it doesn't really believe exceeds the expectation of ordinary people. (Enterprise? This company has machines in the fricking Supercomputer 500, which Microsoft does not, and can't make a case to back-offices for data mining and mass storage?)
But I fully appreciate that fans should be concerned: I am concerned myself.
Let's hope there's a paradigm change.
On that I think there's little question.
Take care,
--Tex.
re Pixar
Pixar has supported MacOS X with things like Rendereman, and I'm betting they have a cluster node client for doing networked cluster crunching, and maybe it's even built on Apple's XGrid. The only reason I was talking loudly about Pixar going to Macs in the future was that I saw credits to Sun in an early Pixar flick, and heard Jobs gritching about signing a PO for a Dell purchase.
I never saw the evidence Pixar had gone Mac, or evidence against it, and by now that's Disney's problem. Whether folks with cluster computation issues go with Macs will depend in the future on things like energy-efficiency issues (which may not have a lot of variation if folks all use Intel parts, but who knows what clever use of heat sinks or coprocessors or load-sharing with GPUs might yield), price issues (a place Apple might have an edge on a MSFT solution, but maybe not a Linux solution, if everyone is building machines from similar parts), and sheer performance. It's this last place that tech like Grand Central may be able to help Apple saturate cores better than MSFT solutions. Serious users will probably be able to build implementations that can saturate cores on Linux, though making it easy to ensure it's done version after version may give some weight toward a systematic approach offered by Apple.
I think that looking at the credits of the movies is likely the best idea I have short of breaking into Pixar with a camera. I know it'd Disney now but the acquisition promised Pixar its own campus, name, etc.
It's gonna get very interesting if this multi-core advantage is substantial - can Microsoft come up with something similar, or are they just too bloated to turn fast enough? With rising energy costs, this *could* be big (if we are talking *big* improvements in performance/watt).
Microsoft may be trying to retool the guts of the kernel to solve performance problems in Windows 7. My concern for them is that the APIs -- on which the installed app base depend and on which upgrade traction will depend -- were designed in an era in which Microsoft was trying to build a high-performance UI in the age before big GPUs, and has a bunch of UI stuff in the kernel (for example). Thus the kernel is involved many places where it'd not be involved in a Unix/Linux system, and bottlenecks get exposed. There's a tradeoff between granularity (the number of different kind of things you can safely try at once in the kernel) and performance (all the stuff you do to make the locking and resource-sharing happen between parts of the kernel eat processor cycles), and Microsoft may have a hard time getting the balance "right".
When Apple wanted to move forward, Apple basically told folks the old MacOS 8 API was going to be replaced with a subset, and retooled in a way that would enable future growth. Microsoft has given folks dotNet, but it hasn't warned folks off the old API that I know. And Microsoft hasn't seemed to give people a clear migration to 64-bit, either -- there's 32-bit, there's 64-bit, and there's 64-bit OS that gives 32-bit code an emulation experience (that I read works pretty well regardless its theoretical drawbacks). Migrating people to 64-bit, and the future, might be a trick from where Microsoft now stands. Microsoft may have to do what it's long fought doing: tell people their code is going to be broken by an upgrade in the name of future development.
When Apple dished out this bad news, it softened the blow with Carbon, but there was still griping if you recall -- and it took Quark and Adobe a long time to deliver Carbon apps (MacOS X versions).
Honestly, we could be making a mountain out of a molehill. There may be such power and performance in future hardware that Microsoft can offer a huge array of compatibility modes, ancient APIs for needy applications, and pretend-kernel-calls for applications that still expect 1995 behaviors -- and yet still make it look just fine to Joe User. Microsoft does have a lot of smart folks. I've wanted to count the days the firm had to survive on its nasssty evil plans for some time, but the near term doesn't show evidence of it.
And MSFT can keep dotNet a moving target just like it kept Win32 a moving target, and prevent things like dotGNU from accomplishing today what IBM tried and failed to accomplish in 1995 (easy migration from Redmond to the Blue Team). Just like Microsoft hasn't yet released a file format specification that will let third parties do with MS-Word documents what Microsoft's applications can do.
Take care,
--Tex.
re remote control
It's not hard to imagine a "super-smart Universal remote" setup that would put Apple in control of the living room, though it could be one of those incremental things that takes a while.
Very interesting ...
Take care,
--Tex.
Apple and outside developers
from a management standpoint, Apple's relationship with developers is being handled fairly poorly. Abysmal to non-existent communication, destruction of goodwill for no apparent reason, and an apparently increasingly insular approach where foresight/insight on potential challenges, issues, problems (and associated solutions) are only generated internally. Given the similar issues plaguing Leopard, one has to wonder whether putting Forstall in charge of the iPhone platform was a good move.
No question Apple's making a mess of it. But recall, Apple didn't want to be here at all: Apple wanted to be the sole provider of apps, excluding maybe web "apps". Apple's been dragged to this place and never had any intention of being here. No wonder its management isn't thinking how to do a better job here: it was never on their radar and was never part of the vision they were trying to bring to life.
I have no idea what Forstall's credentials are, and though it's easy to make biting speculation from my safe distance, I'll withhold on the basis that I really don't know. It's possible Apple needs an iTS/Apple Store team to make the whole online download licensing experience work for the whole panoply of users, and give them the task of figuring out how to grow it into a valuable property. Apple could really leverage it if it cared to. Apple could use the possibility of worldwide music, software, eBooks, school lectures, etc. as a tool to change lots of lives, and to really put content creators in a better position both to connect with audiences and to negotiate with various kinds of business managers and organizers.
Apple has got its hand on something, but the question is whether Apple will strike while the iron is hot, or let it get cold while it's still but a modest tool.
Take care,
--Tex.
re Macs
Nice to hear real stories in the wild. I have a friend, a full professor at a major cancer center, who is convinced he can't get a Mac because it's not supported by his institution. Macs are formally supported at the institution, but he apparently didn't get the memo; I play underwater hockey with a guy who works in IT there as a Unix guru, and I verified it.
The momentum is in the right direction, but there's still mindset to reprogram. Still -- the momentum is building.
Of course, I've rhapsodized about Macs in business enough for folks to know my tune already. I should make a shorthand for it so those in the know can just nod and move on
Take care,
--Tex.
Report: Macs in 80% of Business
I don't know who these guys are talking to, but here's the link:
http://www.macnn.com/articles/08/06/26/macs.in.us.business/
My personal observation has involved an erosion in the hostility of tech folks to Macs, though there's no shortage of folks who think that despite that there are no Microsoft systems in the Top 500 Supercomputers, the presence of Macs in the list still doesn't mean they are not toys worthy only of being scoffed at. The last time I really explored this with someone was before the x86 transition, so who knows where it stands now.
To the extent Apple can get businesses to deploy their apps on iPhone, they are a mere hop, skip, and jump from getting support for the enterprise apps on Macs, including as back-end support. I think that efforts like Grand Central, intended to get the most juice out of multi-multi-processor systems, may help Apple to look competitive in that regard. Apple's seemingly liberal view on virtualization (as many as you like, without additional fee, provided the physical hardware is a Mac?) should be a plus, too. Then, we get into language and localization ... where I think Macs have an edge.
Assuming India and China are going to continue their movement into the 20th century (heh, heh), and will industrialize and become bigger users of technology, support for oddball character sets and innovative UI demands would seemingly be a big competitive advantage. Linux is the price leader on the licensing side, but what's Linux done in the UI space other than fight to catch up with Microsoft? As personnel costs depart from their current near-zero status in India and China, the TCO equation will look better and better for environments like Cocoa that save programmer (and user) time, and reduce upgrade burdens (if you get runtime linking, developers need not issue an update every time Apple improves a library in Cocoa, because it's re-linked the next launch and need not be recompiled and re-shipped and updated for users to get the benefit of the update).
I'm not suggesting Apple (yet) try selling machines at the very-low-end of the hardware range (which MSFT can't do either, with its newest OS), where Linux might run tolerably on it with one application running (but little else; I mean, OpenBSD is slick on constrained systems, but who outside a firewall maintainer actually uses it?) but few others. But then I look at Snow Leopard's suggestions on performance and size, and I wonder if Apple isn't positioning itself to compete in future desktop environments where system constraints prevent MSFT from competing at all. Or deliberately competing in more-constrained environments, for energy and cost purposes, so that the TCO view on MSFT-based solutions will just suck for any large deployment.
And then Apple is building its own processors (and maybe coprocessors), while shipping volumes of computers (not counting handhelds, >1m/q?) that make this kind of thing commercially feasible.
It's a very interesting time to own Apple!
Take care,
--Tex.
re conf call
Won't Apple be without 3G data in Q3, given that the launch only occurs Jul 11?
As for the loss of subscription revenues, I think device revenue increases coupled with decreased unlocking percentage will actually work out a bit better for Apple, particularly if App Store contributes as I hope.
Interestingly (and unfortunately for Apple) lots of applications look like they may be set up with a no-fee client, but some costs on things like data subscriptions, or else a revenue model based on referrals and adverts or the like -- fee streams Apple's unlikely to be able to tap. The real advantage in the App Store to Apple may turn out to be not the retail markup, but the creation of a simple place for folks to find apps to do whatever it is they want to do.
Given the impact of badly-running apps on the Palm Vx (including the various patches to the OS), I think that Apple's protected memory plus its enforcement of "no background processes" will be a boon for Apple's platform (performance, stability, consistency). I wonder if things like games and ringtones, that are actually likely to have fees associated with them, are actually going to be common enough in use to result in significant revenue.
Questions ... always questions!
Take care,
--Tex.
OT re Exxon
This is not the forum to give you my perspective, but as a small businessman I was put out of business by the spill, as well as losing about a half million dollars' worth of equity in my business over a one year period.
This, in my view, is part of the hard-to-quantify damage that makes it difficult to imagine that capping punitive damages at some low multiple of demonstrated-and-documented economic damages will adequately transfer to tortfeasors the consequences of their misdeeds. Rolling one's eyes at the money spent on certain individual animals' treatment or the questionable benefit of giving the beach rocks a hot water blast miss the point that folks with real, tangible injury that may mount for years may be unable to get adequate compensation due to longstanding inquiries into "proximate cause" and "foreseeability" ... and are a good reason that when the tortfeasor does step far enough outside the bounds of reasonable behavior that courts be given the flexibility to both compensate and punish. Legislative damage caps are basically a windfall for wrongdoers. The new game in Texas is damages caps with long-gone retroactive dates, so tortfeasors can buy effective immunity for wrongdoing that's already occurred.
Nice, eh?
Tom's got my email address, and if you don't happen to get it from him, I'll send it to you via private msg during Happy Hour
The evisceration of punitive damages has been a major coup for the public relations efforts of the civil defense bar and their lobbying colleagues, but it's done little to make business -- especially responsible business -- any better or more competitive.
Take care,
--Tex.
OT re Valdez
What purpose does steam cleaning rocks accomplish?
You can write a book on money being pissed away by do-gooders working on 'remediation'.
Punitive damages were set up to discourage out right fraud. I remember the triple damage case against General Electric and Westinghouse for price fixing. ... Let's deal with disasters and get on with life. 43,000 people making claims in one parish for Katrina aid who never lived there isn't right.
I don't claim the Valdez was the right place to impose punitive damages, but solving the problem by capping punitive damages as a low multiple of economic damages cripples their purpose when they really are needed. And there are places they are needed.
Let's hear it for the Supremes! I'm going to take my new Springfield Compact .45 cal out and shoot up the first box of shells in their honor.
Even a stopped clock is right twice a day.
http://jadedconsumer.blogspot.com/2008/06/hunter-finds-right-to-bear-arms.html
I'm glad the Supremes got the Second Amendment right, or I'd have to take an eraser to my copy of the Bill of Rights again, and that always sucks. Just remember: celebratory shooting into the air could still violate local ordinances!
Take care,
--Tex.
OT punitive damages
I think the entrance of the Supreme Court to the punitive damages dance with a trumped-up claim there's a 14th Amendment issue in it in the BMW case was a mistake. If folks think Alabama has crazy law, nobody will make them open dealerships there.
The real problem with associating punitive damages with economic damages is that it undermines the purpose of punitive damages and enables folks to budget for wrongdoing even when the wrongdoing results in loss of life.
The basic argument is laid out here:
http://jadedconsumer.blogspot.com/2008/06/united-states-to-exxon-just-kidding.html
There's a reason courts created punitive damages, and it's not because they were fond of plaintiffs or their attorneys. It's because some conduct is so reprehensible there must be a way to ensure it cannot become part of a business plan, and the economic consequence must thus stand unrelated to predictable factors like the expected incomes of likely victims.
This movement away from punitive damages has been a great public relations coup for industry, but it only protects the worst elements of industry. The folks we want doing business in our communities are taking reasonable care to prevent misdeeds, and don't face damages beyond the actual harm they inadvertently cause (car wrecks, etc.).
Crazy.
Incidentally, there's no constitutional limitation in maritime damages; the federal courts were given maritime jurisdiction with the expectation they would carry on applying maritime law. The innovation of punitive damages is something that might or might not become part of some segment of the law, as the law is formed by courts or stated by legislatures. (Maritime law traditionally was, like the common law of contracts and torts, decided judicially and not generally formed from statutes.)
Take care,
--Tex.
re assisted GPS
I don't think assisted GPS means listening to cell towers, I think it means using a different, higher-bandwidth channel to get the low-bandwidth, slowly-repeating data about the state of the satellite network. It's receipt of that low-bandwidth data about the satellites that creates the slow start-up time.
Take care,
--Tex.
re the next Q's number
Had the BigTree project worked -- that is, had Big Tree not failed to deliver auditable accountings of its financials -- CAAH would be enjoying a profit. With only part of CAAH's cylinders firing (or, missing the backup motor, or whatever you want to call it) I think CAAH will be working pretty hard to do better than merely neutral this Q.
I think wild growth will require another attempted acquisition. The share issuance was calculated around two Chinese operating units, and it's only got one to push profit into all those shares.
CAAH might pull off a thin profit, but I'm betting a first loss-free quarter.
The next thing to keep in mind is that CAAH's share count (based on the issuance last year) was expected to be boosted by the income of two China operations. With just the one operation, we're going to see CAAH shares that are instead "boosted" by CDS holdings, which though for sure an excellent long-term bet, haven't been understood or appreciated on Wall Street as a high-quality asset.
Take care,
--Tex.
Assisted GPS
The answer to the question in the article seems to cast one's attention to bundled data plans and the 3G network speeds: the phone won't often be without a network, and so won't often be without help getting the low-bandwidth data from the satellite network. Thus, the phone should be pretty snappy on location.
My question is whether the phone will have a hard time getting many location satellites, and whether there's some advantage to a separate GPS unit. I don't see external antennae on a lot of dedicated GPS units. Anyone got some input on how/why Apple's product's GPS performance should suck/rock?
Take care,
--Tex.