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Went back and read the press release...
product isn't due 'til early April.
Just another case of premature anticipation.
milplease: I went to CompUSA today...
...a very busy store in central NJ. There were no units on the display shelf or in their inventory. The store mananger had not heard of any of the e.Digital products. He suggested I go to their ( CompUSA's) web site to see if the products were available on-line. Besides, he claimed, you often can buy the items cheaper there than in the store and, the money you save usually will pay for next day shipping.
Oh well....
Sentinel: Re: Bollinger Bands
I also note that, with the exception of the 9/11 sell-off, each BB tightening corresponded with an uptrending MACD. In all 4 occurrences in the past 12 months MACD triggered a buy signal as the stock spiked to the upside.
One would think/hope that this breakout would not correct afterwards since it probably dovetails with so much positive news.
Concerned About Your Digital Rights...?
You may wish to check this out.
www.digitalconsumer.org
gearjammer36: Save Your Breath...
While I can appreciate your good intentions, your battle just adds to the clutter that renders RB virtually unusable. If we can't contribute anything constructive to the conversation, we should just step back and listen. This does not rule out legitimate criticism which, when addressed by a more informed participant, benefits us all.
Short of that, though, anything else is just of waste of everyone's time.
USB2 at Gateway...
External ports: (6) USB (2 in front and 2 in back are version 2.0, 2 more in back are version 1.1) Parallel, Serial, IEEE 1394 and (2) PS/2
JBocca9801: Understand your point but...
the day a retailer's phone goes dead for lack of interest or they become upset over unsolicited inquiries marks the beginning of their demise. I'm sure this will eventually die down.
Yeah, we can be a pain in the ass sometimes. It does, though, keep everybody on their toes which, in the long run, will contribute to to our mutual success.
Kinda like doting parents..
Salesman at Good Guys...
indicated that they expect inventory of EDIG products in approximately two weeks.
Re #1037: At Good Guys Stores eom
"Temp. Out of Stock"
All EDIG products?
Is EDIG still working with Fleishman-Hillard?
I don't recall hearing them mentioned lately and they aren't working on the conference call. Since they were hired as the leading domestic and international media and industry relations firm, their absence seems odd.
Maybe we only had a one year deal.
Also, I've noted lately that all my e-mail responses from RP comeback from American Tech. Seems he's spending a lot of time over there.
Observations...nothing more.
Where's the Treos?
Thank you for your e-mail, xx. While orders have temporarily exceeded
production capacity, more Treos (TM) are expected to be available within a
few weeks.
Best regards,
Robert Putnam
Senior Vice President
OT: Do "WINNER" banners cause migraines?eom
"The company indicated further that it intends to offer and sell the shares of common stock for its own account"
Is the company clarifying how the proceeds of the 20 million shelf offering shares will be spent or is it indicating that insiders will be selling additional shares for their own account?
"for possible acquisitions of synergistic
companies and/or technologies..."
I often wonder, as the dawn of DataPlay's public introduction rapidly approaches, whether e.Digital would acquire an equity stake in the company. Their intimate knowledge of and close working relatioship with the DP would make for a great investment opportunity.
Perhaps......
Tech Makers...
Interesting article in this month's newletter from Louis Rukeyser discussing the growth prospects for EMS (electronics manufacturing services) companies.
Analysts expect EMS firms to prosper in the long-term as their customers, the OEMs, increasingly outsource production in order to focus on design and markting, cut manufacturing costs and reduce the time to get new products to market. Just 15% of all electronics manufacturing is now farmed out to EMS providers, a percentage that is expected to double in the next 3 years.
The largest EMS providers are just starting to attract contracts to provide support services (customer service, help-desk support, and maintenance, repair and warranty services) as OEMs realize they can save even more money by outsourcing these tasks. Overseas, while Japan accounts for 25% to 30% of worldwide electronics manufacturing, the EMS penetration is less than 5%.
All About Lan Plus...
The Company
Established in 1991 by providing Local Area Network solutions and distributing brand name hardware and software to corporate, educational and government accounts. By 1992, Lan Plus grew into a profitable company realizing its need for increase revenue through alternative channels. For this, we went after the demanding markets of Cable Television Shopping Networks, Mail Order Catalog Companies and large Electronic Chain Stores. Meeting the challenges and responsibilities of these distribution networks has earned Lan Plus the reputation for quality products and excellent customer services. By 1997, Lan Plus has become one of the leading Personal Computer manufacturers in the States. We design our systems around "quality first" concept, ensuring best stability with lowest post-sale expenses. Lan Plus also market under brand names like Protek, Northgate and ePCdirect.
Manufacturing
We invested in several joint ventureships with offshore manufacturers in the development and production of mainboards, graphics adapters and chassis. The result of our involvement in the design and production of our system components enable us to further reduce defective and incompatible parts. Our purchasing department has total control over all key components in our systems. In case of any shortages or price fluctuations, we are able to better project future material allocation over our competitors which further insures that all savings are passed on to our customers.
Customers
Approximately forty percent (40%) of our sales volume is constituted by Cable Television and Mail Order Catalogers. This is an extremely demanding field because we constantly have to battle with competitors who's only trick is the lower price. We strongly promote the concept of Overall Customer Value. The lowest initial cost usually results in higher final cost because PC is such a service hungry beast. By selling a "reverse integrated" PC built with less quality parts and service, the retailers may end up with high returns and unhappy customers, risking far greater than the initial saving. Lan Plus will not win business with lowest cost, but we will always give our customers the most profit after all the expenses.
Corporate, Schools and Government account for approximately thirty-five percent (35%) of our business. We service "Fortune 500" companies such as Chrysler Corp. and Georgia Pacific. Concurrently, our superior quality systems are installed within the computer laboratories of Oregon State University, Duke University, University of Michigan, University of Kentucky and University of Utah. We are also maintaining accounts with such prolific institutions as National Aeronautical and Space Administration (NASA), Jet Propulsion Laboratories (JPL), Trident Refit Facility of the United States Navy, Fleet & Industrial Supply of the United States Navy, and Food and Drug Administration (FDA). Most of the requests made by these predominant clients are for high-end "application specific" systems. In order to help our clients make the correct system choice based on their needs, we extensively research and test various state-of-the-art equipment, software and operating systems. In meeting the demands made by our customers, we gain the greatest amount of knowledge allowing us to remain up-to-date in this forever changing and expanding market.
Distributors make up about twenty-five (25%) percent of our total sales force. For high volume distribution, we offer models with fixed configurations. However, requests for custom systems are always welcome and encouraged. Many of our distributors are retail houses servicing local school districts, businesses and families.
MTV Joins with Lan Plus to Give Users MTV Computers
Audio/Video
NEW YORK (Reuters) - MTV Networks said Wednesday it will answer calls for ``I want my MTV computer'' through a pact with computer maker Lan Plus that marks MTV's first major foray into the world of convergence through devices.
Through the exclusive pact, MTV, a unit of Viacom Inc. (NYSE:VIA - news), plans to introduce a new line of personal computers and PC-based products this spring that meld different entertainment mediums with the Internet in one device.
Convergence is a hot issue that many large media and entertainment companies are moving into -- mixing movies, music, and television with the Internet.
``We are seeing a lot of majors get into this particular category and combining all these media,'' said Tony Calandra, interactive director at MTV in an interview. ``We feel our audience will be looking for such a product.''
The new products will let college students, for example, convert dorm rooms into entertainment centers where they can burn CDs, watch movies on DVD, catch cable shows, surf the Web, and get exclusive MTV programming in one device.
The line of products fits MTV's audience well -- most of whom have grown up with computers in their home and are tech savvy, Calandra said.
Terms of the deal were not disclosed.
A price has not yet been finalized but the computer line will likely retail at about $1,800, Calandra said. MTV plans to launch the line of computers online.
The computers will be powered by Athlon XP chips from Advanced Micro Devices Inc. (NYSE:AMD - news) and are expected to be equipped with a DVD/CD-RW drive, cable-ready television tuner, as well as a radio tuner with remote.
The pact with Lan Plus, which agreed to merge with McGlen Internet Group Inc. in October, marks the latest bid by PC makers to differentiate their products by teaming up with name-brand marketers to reach new audiences.
To wit, PC-makers have teamed up with major employers in the United States to offer employees computer deals. In Latin America, they have joined with banks, retailers, and online service providers to offer low-cost PCs to customers in a bid to boost PC usage
MTV Joins with Lan Plus to Give Users MTV Computers
Audio/Video
NEW YORK (Reuters) - MTV Networks said Wednesday it will answer calls for ``I want my MTV computer'' through a pact with computer maker Lan Plus that marks MTV's first major foray into the world of convergence through devices.
Through the exclusive pact, MTV, a unit of Viacom Inc. (NYSE:VIA - news), plans to introduce a new line of personal computers and PC-based products this spring that meld different entertainment mediums with the Internet in one device.
Convergence is a hot issue that many large media and entertainment companies are moving into -- mixing movies, music, and television with the Internet.
``We are seeing a lot of majors get into this particular category and combining all these media,'' said Tony Calandra, interactive director at MTV in an interview. ``We feel our audience will be looking for such a product.''
The new products will let college students, for example, convert dorm rooms into entertainment centers where they can burn CDs, watch movies on DVD, catch cable shows, surf the Web, and get exclusive MTV programming in one device.
The line of products fits MTV's audience well -- most of whom have grown up with computers in their home and are tech savvy, Calandra said.
Terms of the deal were not disclosed.
A price has not yet been finalized but the computer line will likely retail at about $1,800, Calandra said. MTV plans to launch the line of computers online.
The computers will be powered by Athlon XP chips from Advanced Micro Devices Inc. (NYSE:AMD - news) and are expected to be equipped with a DVD/CD-RW drive, cable-ready television tuner, as well as a radio tuner with remote.
The pact with Lan Plus, which agreed to merge with McGlen Internet Group Inc. in October, marks the latest bid by PC makers to differentiate their products by teaming up with name-brand marketers to reach new audiences.
To wit, PC-makers have teamed up with major employers in the United States to offer employees computer deals. In Latin America, they have joined with banks, retailers, and online service providers to offer low-cost PCs to customers in a bid to boost PC usage
Power hogs are handheld woes
By Stephen Ohr
EE Times
(12/27/01, 11:56 a.m. EST)
Authorities on analog and mixed-signal technology believe that handheld electronics will soon incorporate an unprecedented number of features. Cellular telephones will likely have a color screen, a wireless Internet browser, the address book and calendar functions of a PDA, even an FM radio and MP3 music player. The big issue, technologists say, is how to pack all these features together without using a battery the size of a brick, or reducing battery life to 30 seconds.
At the same time, the digital guts of a pocket computer, personal digital assistant or cell phone are being built in increasingly fine-geometry, low-voltage CMOS, which allows very high levels of functionality with relatively small hits on battery life.
As a result, the analog interfaces to "the real world" — the radio modules of cell phones and wireless PDAs, the color video displays, the voice codecs and audio playback systems — become the focus of power conservation and sophisticated battery-management techniques. In 2002 and the years that follow, a lot of attention will be devoted to power-management architectures and the technologies required to most efficiently implement radio transceivers, miniature displays and audio interfaces. Also likely is an increasing reliance on bipolar circuitry and bipolar implants on CMOS substrates — particularly silicon germanium — for high-frequency circuits like radio transceivers.
If only the industry could agree on what the integrated handheld should actually include. "It's getting so that you could pick up any box and find it does most anything you want," said Jim Williams, staff scientist at Linear Technology Corp. (Milpitas, Calif.). Linear designed the power-management circuits for the Apple iPod, a device the size of a deck of cards that holds 1,000 MP3 songs and runs for 10 to 13 hours on a single battery charge.
But technology managers worry that many of the features bolted onto cell phones or PDAs will do little more than consume space and battery power (as well as add costs) — unless consumers want and use them. A cell phone built into a portable CD player can seem like "an awful kluge," said Alun Roberts, strategic marketing manager for Texas Instruments Inc. (Dallas). "Who wants it?"
Peter Henry, director for portable power at National Semiconductor Corp. (Santa Clara, Calif.), cited a number of examples of interesting combo devices, including Kyocera's Palm Phone and Nokia's 7560 color PDA-and-Bluetooth handset. National's own Origami experiment, a feature-laden Web pad shown at Comdex last November, is something of a "Swiss army knife," Henry acknowledged.
But though cell phones outsell PCs four to one, Henry wonders whether the cell phone is being asked to do too much. "People want to browse the Internet and collect e-mail," he said. "The cell phone is still an atrocious Internet device — companies are now starting to figure that out."
Implementing third-generation communications — encouraging people to cruise the Internet or conduct videoconferences through their wireless telephone modems — would be extraordinarily taxing on bandwidth and battery life. Other forms of wireless connectivity, such as the short-range Bluetooth spec or IEEE-802.11b wireless LANs, may offer more efficient means of Internet connectivity in the same portable package.
Decisions, decisions
The issue is whether to tax packaging and battery life for a handheld by including both cell phone and wireless LAN interface; to strip the cellular telephone function from the handheld; or to find some sort of radio architecture, such as the software-defined radio, that does both.
In addition to modularity, the latter option would require some type of universal radio architecture and an extremely versatile baseband processor. "If we look at the handset as a modem, not necessarily a 'voice transmitter,' it is possible to add consumer features without sucking down your battery," said National's Henry. This change in thinking, he suggested, would open a "golden age of Internet devices." Getting there, Henry said, will involve creating new battery technologies (though rechargeable lithium ion will be more widespread).
In addition to more sophisticated baseband processing, wireless e-mail and Internet access will create larger opportunities for digital signal processing, said TI's Roberts. Also, security issues — especially encryption, character recognition and pattern recognition — will require more resolution from both the processor and the front-end data converter. Dc-accurate converters, capable of resolving 16 bits (that is, one part in 65,535) can now sample at 100-kHz rates. Accurate devices that sample even faster are coming soon, Roberts said.
While CMOS paves the way for higher levels of digital circuit integration, its lower voltage requirements are a nightmare for designers of power-management devices (such as voltage regulators) and for RF circuit designers.
Portable cell phones and PDAs typically require multiple power supply rails, said David Bell, general manager of Linear Technology's power products group: 1.5 volts for the processor core, 1.8 to 2.5 V for the I/O, 3.3 V for glue logic, 15 V for LCD contrast lighting and 4.5 V for the white LED backlights. MP3 players and other audio amplifiers, in addition, typically require a 5-V supply rail.
This creates a trend toward the use of multiphase switching regulators, which increase the efficiency of multiple voltage generators by switching them somewhat out of phase with one another. Bell also foresees increasing use of synchronous rectification.
In most power supply circuits, even switching regulators, a diode is used to hold the source of the switching MOSFET at a certain level above ground, Bell explained. The diode, in effect, is always "on." But as power supplies follow the CMOS trend toward lower and lower voltages, the diode looks "really tall," Bell said. An additional switching MOSFET, one with low RDSON, allows the voltage to sink to a lower level and ensures higher efficiency.
"Denser CMOS processes mean we can do a much better FET," said Len Sherman, staff scientist at Maxim Integrated Circuits (Sunnyvale, Calif.). The process makes it possible to integrate the power MOSFET switches for a regulator circuit on the same die as the pulse-width modulator controller.
"Formerly, if you tried to do more than an amp with an integrated device, you were really pushing it," Sherman said. "It was more economical to use separate FETs in a battery-powered device — and in terms of heat dissipation, you don't want the thing to cook. But the scale is sliding," he added. "Low-voltage CMOS means there are more cases for integration."
Lew Counts, vice president of the linear products group at Analog Devices Inc. (Norwood, Mass.), envisions a credit card-size PDA, but worries that line-geometry CMOS will offer little help for radio-frequency circuitry. Complementary bipolar devices are more power efficient than CMOS at high frequencies, he said.
The huge interest in RF — and in signal processing in the microwave and gigahertz domain — has fueled a move toward building high-frequency devices in BiCMOS with silicon germanium implants on bipolar substrates, Counts said. BiCMOS is readily available from foundries like IBM and Taiwan Semiconductor Manufacturing, he said. Such a process is not useful for commodity products, like Bluetooth transceivers, but will certainly be mainstream in cell phones with GSM and CDMA modulation schemes.
OT: Print and read when time permits...
Gary North's REALITY CHECK
Issue 102 December 24, 2001
MOORE'S LAW, PARETO'S LAW, AND GREENSPAN'S DILEMMA
Gordon Moore was one of the three founders of Intel,
the world's major producer of microcomputer chips. When
you hear the word "pentium," think Intel. It is one of the
most successful manufacturing companies on earth. Year
after year, it dominates a highly competitive, highly
innovative market.
Back in 1965, Moore made a prediction: the capacity of
integrated circuits (computer chips) over the next decade
would double every 18 to 24 months. He did not say that
this will continue indefinitely.
One implication of this observation that he failed to
spell out is this: that portion of a computer's purchase
price that is attributed to the cost of chips will fall in
value by approximately 50% every two years. Another
implication: within three chip-generations -- six years --
this computer will become obsolete as far as most users are
concerned. They will decide to buy a replacement computer.
As it has turned out, to the amazement of everyone, is
that computer chips are still doubling in capacity --
transistors per unit of space -- but every 12 months. This
means that the half life of the value of a computer chip is
one year.
This doesn't mean that computer speed doubles every 12
months. There is more to computer speed than chip speed.
There is also access-to-memory speed. This isn't
increasing every 12 months because the size of memories
continues to grow rapidly.
There is another inhibiting factor: the ever-
increasing complexity of software code. There is a proverb
in the microcomputer industry:
"Intel giveth, and Microsoft taketh away."
But new computers do get faster, year after year. This
means that used computers get cheaper, year after year.
This means that previous capital investments made in
computers become less valuable, year after year. This
means that in order to stay competitive, companies that use
computers extensively must make heavy capital investments
in new computers every few years. Their capital in effect
wears out very fast. It doesn't stop working, but it
ceases to work profitably. It's as good as worn out.
This means that high tech industry is very expensive
compared to mid-tech and low tech industry. The capital
costs and the learning costs remain high. This means that
the new technology must produce very high rates of return
in very short periods of time in order to justify the
expense of capital, for the half life of computer-driven
technology is very short.
It has become obvious since March 10, 2000, when the
NASDAQ peaked at 5040, that the hope of high profitability
was mostly hype. The bubble burst because the rate of
profit was so low -- and getting lower -- that the price of
NASDAQ shares was economically insane. In December, 1999,
the P/E ratio -- price to earnings (profits) -- was 207.
You had to spend $207 to get one dollar in earnings. In my
subscription newsletter, REMNANT REVIEW (February and
March, 2000), I announced this couldn't last much longer,
and it didn't. The NASDAQ crashed. It hasn't come back.
It won't come back. Investors now know the truth:
compteition and high depreciation undermine the long-term
profitability of the vast majority of companies.
Microsoft isn't profitable because of its innovative
technology. It is profitable because of its enormous
market share, its installed base of existing consumers, and
the enormous cost to anyone of replacing Windows, learning
the new operating system (e.g., Linux), and finding
programs to run on it.
Then there is Moore's second law: the cost of building
computer chip factories doubles every 12 months. This is
exaggerated, but Moore himself thinks that this will be an
inhibiting factor in the extension of his first law.
Nobody will be able to afford to build such plants. By
1997, Intel was spending $5 billion on two plants. In a
1997 Interview, More said:
That's where you get into numbers that sound
impossible again. If we double it for a couple of
generations, we're looking at $10 billion plants.
I don't think there's any industry in the world
that builds $10 billion plants, although oil
refineries probably come close.
Obviously, our first reaction is to see what we
can do to keep the technology moving but the
costs down. For example, we used to build a
completely new set of equipment each generation.
Now our development people try to reutilize as
much of the previous generation's equipment as
possible. And they've been pretty successful. We
may bring a $10 billion plant down to the $5
billion range. But these are still huge numbers.
Then there is the question of what we can do with
these ever more powerful chips.
Even with the level of technology that we can
extrapolate fairly easily -- a few more
generations -- we can imagine putting a billion
transistors on a chip. A billion transistors is
mind-boggling. Exploiting that level of
technology, even if we get hung up at a mere
billion transistors, could keep us busy for a
century. . . .
Our most advanced chips in design today will have
less than 10 million transistors. So, we're
talking about a hundred times the complexity of
today's chips. We wouldn't have the foggiest idea
what to do with a billion transistors right now,
except to put more memory in a chip and speed it
up. But as far as adding functionality, we don't
know what can be done.
http://www.wired.com/wired/archive/5.05/ff_moore.2_pr.html
Moore doesn't think that this doubling of chip
capacity can go on indefinitely. But, year after year, it
has. So far, so good.
In the history of man, nothing has doubled every two
years. Anything that does absorbs too many resources. It
runs out of resources and stops doubling. Moore's law is
unique, or so we thought until last year. But then Raymond
Kurzweil, the inventor of voice-recognition software,
discovered that Moore's law las been going on since the
late 1800's. Information-processing capacity per dollar of
cost doubled every three years from 1910 to 1950. From
1950 to 1966, it doubled every two years. Now it is
doubling every year. He thinks the process is
accelerating.
If this rate of increase continues -- and Moore
himself is highly skeptical about this -- then by 2023, the
computer chip's capacity per $1,000 will equal the human
brain. By 2036, one penny will buy this much capacity. In
2049, we will be able to buy a chip with the capacity of
the entire human race's brains for $1,000. In 2059, this
will cost one penny.
www.kurzweilai.net/articles/art0134.html?printable=1
(My guess is that SAT scores of public high school
graduates will nevertheless be lower in 2023 than today,
and lower in 2059 than in 2023.)
Kurzweil calls this the law of accelerating returns.
To prove its existence, however, he has to show that the
law of diminishing returns will also be abolished in the
construction of chip manufacturing factories. So far, the
law of diminishing returns still applies to the capital
costs of plant construction.
THE CRISIS IN CAPITAL DEPRECIATION
I have argued, following the lead of Dr. Kurt
Richesbacher, that the present recession is a corporate
profits recession, not a falling consumer demand recession.
He and I agree that one of the important factors in the
reduction of profits is the rising cost of computer
capital. The depreciation rate of computer-related
production processes is high. Moore's law indicates that
this rate of depreciation will get higher over time because
the half life of these investments keeps getting shorter.
This implies that older, larger firms will suffer
continuing attrition because of tough competition from
newer firms that have newer capital and less overhead
investment in depreciating capital. This is what we have
been seeing for a generation: the shrinking of employment
of the S&P 500 manufacturing firms. Layoffs are continual
even in boom phases of the business cycle. Computers
replace workers. Then newer computers replace older
computers. High-tech businesses cannot get off the ever-
accelerating treadmill of depreciating capital.
As output increases in the computer-driven high tech
sector, prices of consumer goods fall. We are seeing price
deflation in many industries, especially the computer
industry. Think of the hand-held calculator's power in
1975. I paid $50 for a four-function hand-held calculator.
For $20, I can get a complete business function calculator
that runs on solar power. Think of the cost of computer
power per dollar.
We consumers love falling prices. The greater the
output of some industry, the lower the price of its output
should be. The great economic benefit of free market
capitalism is that it increases output. This is another
way of saying that it decreases consumer prices. The lower
these prices go, the richer we consumers become. If
consumers can maintain the same monetary income because of
increases in their own productivity -- greater output per
hour -- then falling prices make them richer. This is the
best way to get a raise: your money income doesn't
increase, so you don't get kicked into a higher income tax
bracket. Falling consumer prices are the economic
equivalent of a tax-free raise. Keep those prices falling!
Today, we hear cries of alarm about falling prices.
Why? Because of the existing levels of debt. The problem
with capitalism isn't falling prices due to rising output.
The problem is that people have loaded up on debt on the
assumption that prices will rise (money will depreciate),
so they can stiff their creditors by paying off with less
valuable money. This stiff-the-creditor strategy blows up
when the central bank (the Federal Reserve System)
stabilizes the money supply and allows the free market's
output to lower prices.
Here is the problem with falling prices due to
increased output and a stable money supply: there is
larceny in the hearts of millions of people -- the desire
to steal from creditors by using newly created counterfeit
money. They want the central bank to increase its output
of fiat money, so that they can pay off their debts with
money of reduced value.
This is why the hue and cry to inflate, inflate,
inflate occurs every time the FED's prior policy of rapid
monetary inflation to stimulate the economy is changed, and
the growth of the money supply slows down. This slowdown
of the digital printing presses creates an economic bust:
recession. Millions of debtors -- from the average Joe to
the largest corporation -- who counted on the
counterfeiting skills of Alan Greenspan to bail them out
when it comes time to pay off their debts start screaming
bloody murder when the money machine slows.
The Federal Reserve System controls the money machine.
When it buys government debt, it creates new money to make
the purchase. The government dspends this newly
counterfeited money into circulation. This is what
millions of larcenous debtors want.
You may think the money isn't counterfeited. Well, if
you or I diod this, we woulkd be arrested. Why? All we're
trying to do is give the local economy a shot in the arm!
I mean, that's how we can fight the recession!
When you and I counterfeit money, all we are doing is
violating copyright law. Our unbacked fiat money is as
much tied to something of historic value as the FED's. In
fact, our money is more closely tied to something of
historic value than the FED's is: paper and ink. Alan
Greenspan counterfeits the FED's money with nothing more
than entries in a computer -- the cheapskate!
THE FEDERAL RESERVE SYSTEM
There are lots of academic textbooks on the FED, and
most of them aren't very good. I have never seen one that
gets the FED's economics and its history straight. It is
legally a private corporation that is run by a Board of
Governors that is an agency of the U.S. government. The
proof of this is this: the Board of Governors does not pay
postage; local FED branch banks do.
The best economic analysis of the FED is available on-
line free of charge. It was published in 1983 by Dr.
Murray Rothbard. I wrote the Web version's Foreword.
http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf
Rothbard also knew the history of the FED. He has
written a good little book on this, THE CASE AGAINST THE
FED. But there is still no major book on the FED's
history. The FED's files are not open to the public,
including Congress.
The FED controls the monetary base. On this is built
various money supplies: M-1, M-2, M-3, MZM. The FED
doesn't control these directly.
The FED is worshipped by the academic economics
profession and the investment world. It is the one major
government-created economic monopoly that is never
identified by academic economists as a monopoly.
Every school of academic economics except the
Austrians (Mises, Rothbard) accepts the legitimacy of the
FED. The investment world cries for the FED to create new
money every time there are signs of a recession. Writers
who call themselves free market believe that this
government-created monopoly is far more efficient than a
free market in banking could ever be.
Almost everyone believes that the FED can keep a
depression from happening. How can it do this? By
creating new money. This is why we hear continual calls
for more monetary inflation today. We are in a recession.
In the latest issue of THE AMERICAN SPECTATOR, which
high-tech columnist George Gilder bought this year after it
almost went bankrupt, we read an analysis by Gilder and
Bret Swanson. (I wrote for SPECTATOR in the early days,
1970-75, back when it was called THE ALTERNATIVE, before it
became a neoconservative tabloid -- just old fashioned
conservative.)
Gilder believes in high tech in a nearly religious
devotion. This same religious commitment to high
technology was what lured millions of gullible investors
who chased the NASDAQ over the cliff in pursuit of easy
wealth. I think they were fools, and I said so in February
and March of 2000, when the NASDAQ was at its peak.
Gilder's WEALTH AND POVERTY (1981) was a great book, and
THE SPIRIT OF ENTERPRISE (1984) was almost as good. But
ever since he wrote MICROCOSM (1989), he has become a full-
time apostle of high technology. High tech is a great
thing for consumers, but not very good for long-term
investors. He now promotes high tech investing. (As a
person who has been earning money as a writer since 1965,
let me say that Gilder's writing style began to decline
when he took up high tech. I have always regarded WEALTH
AND POVERTY a rhetorical masterpiece, not just a logical
presentation. But as he has aimed his mind into the
microcosm -- the quantum, as he calls it -- his writing
style has become quantum-like: unexplainable and
increasingly random. It has also become more like
Microsoft's code: bloated.)
Gilder believes in tax cuts. I do, too. But unlike
Gilder, I don't believe in fiat money or the FED. I see
fiat money as the cause of unsustainable booms that lure
the sheep to the slaughter. Gilder criticizes Washington's
politicians.
The cosseted, cretinous world of Washington
economics and media punditry sees economic growth
as an effect of the Prozac of "consumer
confidence" and government spending. It imagines
that seven trillion dollars of wealth can
disappear because of bubble-headed investors
rather than bubble-headed policy makers.
I agree entirely with Washington on this issue. The
bubble-headed investors were indeed greedy. They thought
they were on a one-way ticket to Easy Street. Then the
FED's inflationary policies made their greed seem rational.
Greenspan gave speech after speech lauding the new economy
and its new technology. Meanwhile, he continued to crank
the money machine's digital handle. Gilder continues:
Congressional pundits aver that all we need to
overcome a deflationary spiral is avid avoidance
of permanent tax rate reductions and artful
application of stimulus from the dildonic pen of
Paul Krugman.
Well, it's not proven yet that there is a deflationary
spiral. Money is being poured into the economy at 8% per
annum -- high for a recession period. This began before
the recession hit. Prices are still going up, especially
if we look at the median CPI. As for tax cuts, they are
always welcome by me. But to expect anything major along
these lines in a nation that is politically divided right
down the middle on this issue is incredibly naive. The
Senate is Democrat-controlled. The House is closely
divided. Bush didn't win the popular vote in 2000.
Besides, Clinton got a tax hike in 1993, but the economy
boomed anyway. Bush, Sr. threw the economy into recession
in 1990 when he got Congress to hike taxes. He listened to
idiot advisors who were not economists. That cost him the
presidency.
So, it's still anti-business as usual in Washington.
Gilder needs to find another scapegoat. This won't do it:
Prosperity, we are told, comes from taking
money and benefits from productive and ingenious
people -- thus reducing their productivity and
investment -- and giving it to tax avoiders, thus
ensuring that they stay out of work.
So, what's new? That's been the Republican Party Line
ever since Abe Lincoln went to war in 1861 to keep the
tariff high and mighty. (On this point, see the book by
Charles Adams, WHEN IN THE COURSE OF HUMAN EVENTS.) It has
been the Democrats' Party line ever since William Jennings
Bryan delivered his "Cross of Gold" speech in 1896.
Gilder then turns to the technology sector. I agree:
this sector is in the bad shape that he says.
In key technology sectors, capital spending has
sunk some eighty percent. Semiconductor sales
have been halved since autumn 2000. Our most
innovative fiber optic equipment firms now
exhibit revenue half-lives of about three months.
Running at $10 billion a month, defaults by
Internet carriers are helping push bankruptcy
levels to record highs. Even the producer price
index, one of the foggy rear-view mirrors
Washington favors, has just plunged 1.6 percent
in a single month, the largest drop since 1947.
Forty percent officially -- but in reality more
than one hundred percent -- of our economic
growth since 1995 derives from technological
advance.
But then he adds a conclusion: "A high-tech collapse
portends not mere recession but depression." This doesn't
follow.
The high tech sector is in recession because the
naive, inexperienced kids who ran the companies thought
that investment bankers were a bottomless pit of money to
fund projects that had no visible market. For years, the
venture capitalists conformed to the script. The best and
the brightest were all greed-driven, gullible fools. They
figured that profits would come from lowering prices. They
wanted by be Henry Ford. Well, Henry Ford almost went bust
after General Motors's Alfred Sloane imitated Ford's
assembly line and invented a new management structure to
crush Ford. The competition was fiecre. The gtechies
nalways fighured that they would win the competition.
Pareto's 20-80 law has now wiped out the plans of most of
them. While learning this lesson, investors shoveled
ocrans of money down a high tech rat hole. Consumers were
ready to pay only discount prices.
The world of high tech is the world of Moore's Law: a
doubling of chip capacity every year, which means a loss of
the value of last year's computer investment by something
approaching 50%. Not quite 50%; software stays the same
and learning curves are high. You can't actually take
advantage of most of the chips' increased capacity, which
is why I'm typing this on a 1983 keyboard, using a 1990
piece of software on a 166 megahertz computer.
This world is also the world of Pareto's law. At
least 80% of the players won't survive the cut.
The bright, techie types in Silicon Valley who thought
it would be fat city forever, along with the greedy,
bonehead venture capitalists who threw their investors'
money down hundreds of digital ratholes, are now wailing
for help from Alan Greenspan. Well, there is no help. The
benefits of high tech are for consumers, not investors.
This is what the free market is all about: serving
consumers. The depreciation rate is five to ten times
faster than depreciation on old economy plant and
equipment.
To sustain the advance into the microcosm, as Gilder
has called it, is to require ever-greater quantities of
capital that will, in most cases, come a cropper when the
companies falter and get replaced by innovators. In the
world of high tech, "buy and hold" is like buying and
holding a computer. If you can use it personally, fine,
but the asset depreciates by about 50% per year.
Competition never ceases in the high tech world. It grows
more severe as new technologies appear. The price of this
accelerating competition is ruined companies and well-
served consumers.
The law of diminishing returns is alive and well in
Silicon Valley. The bankrupt ex-millionaires who are
trying to sell threir homes are testimony to its power.
The falling price of homes in Silicon Valley are also
testimony to its continuing power.
Dinesh D'Souza wrote a good book, which came out in
2000: THE VIRTUE OF PROSPERITY: FINDING VALUES IN AN AGE OF
TECHNO-AFFLUENCE (Simon & Schuster). It begins with a
description of a 1999 party of young multi-millionaires and
several billionaires in Silicon Valley, "home of 250,000
millionaires." That was in 1999. Chapter 1 is titled, "A
World Without Limits." That was in 1999. The NASDAQ
giveth, and the NASDAQ taketh away. The book was written
at the top of the NASDAQ bubble. The hot-shot kids got hit
by a dose of economic reality in March of 2000. Lo and
behonmd, there has to be consumers willing to buy the
output of all those high tech firms.
I will say it again: capitalism is based on consumer
sovereignty, not producer sovereignty. When you hear cries
of pain and calls for government aid from businessmen who
thought the system favored them rathrer than consumers, you
are hearing the call for mercantilism once again. The call
for the FED to inflate is one more call for the governmnent
to bail out inefficient entrepreneurs who lost their
competitive edge. It is mercantilism revisited.
A collapse of high tech firms' markets and also their
stock prices portends a return to sanity. Every recession
is a re-pricing period in which widespread bad economic
decisions are eliminated by free market forces. If
depression arrives, it is because of fractional reserve
commercial banking and a government-created central bank
caused widespread distortions with fiat money. The
toppling houses of high tech cards were built by the FED's
prior policies of monetary inflation. Yes, high tech
investments were a house of cards in early 2000. So is the
S&P 500 today, with its price/earnings ratio of 39.
Industry needs to get its earnings up. If it can't, then
the market will at some point get stock prices down.
The inflationists-mercantilists want the FED to create
a new round of expanded debt and misallocated resources,
which the FED has been doing for over a year. They are
like a tavern full of alcoholics who want another round of
govcernment-subsidized drinks. What they need is not
another round of drinks. What they need is some quality
time spent in a de-tox center. That's called a recession.
What is Gilder's answer? More fiat money. He writes:
That most have failed to grasp deflation as part
of this equation is understandable. Not only has
it fooled policymakers, but it has also swallowed
some of the nation's best business managers. . .
.
Deflation has hobbled Japan for a decade and
demolished the airline, auto and telecom
industries. Because it is so rare, and because it
mimics inflation, deflation -- nothing more or
less than an insufficient supply of money -- is
inconspicuous. In an inflation, the government
prints too much money. In a deflation, people and
firms hoard scarce money in risk-averse accounts
more likely to be included in government M
statistics. Unlike inflation, however -- where
people quickly spend their depreciating dollars -
- a deflationary rise in the Ms is coupled with
much slower money turnover. The economy needs
more money to sustain even diminished economic
activity. The famous monetarist Friedman, who
assumes constant velocity, warned recently of
imminent inflation. But today, with some seventy
percent of all dollars circulating overseas, the
monetary Ms are nearly irrelevant. Even as the Ms
expand at record pace, real liquidity -- signaled
by plunging spot commodity prices -- is not
rising.
Constant velocity seems logical to me. I know; the
statistics published by the St. Louis FED indicate lower
velocity. Whatever that statistic means, and however it
was compiled, it is true that whenever it appears in the
data, price inflation slows. It may be, however, that the
statistic merely indicates that price inflation is slowing,
and economists blame this on something they call lower
velocity. My point is this: every dollar of FED reserves
that isn't used for currency will get used by the
commercial banks. Somebody is spending bank account money.
Most money is bank account money. Gilder continues:
Likewise, a lame and lagging indicator is the
consumer price index. Automobile sticker prices
are not falling, but ubiquitous zero percent
financing has the same effect. Big Three
incentive packages, averaging $2,400 in October,
are $1,000 more than a year ago. Annual sales of
16 million vehicles, therefore, means reduced Big
Three revenue of $16 billion. "That's almost
double the combined pre-tax earnings last year of
Ford, Chrysler and General Motors," said Saul
Rubin of UBS Warburg in Barron's. "The Big Three
are going to post tremendous losses for the
foreseeable future," writes analyst Michael
Churchill of Polyconomics. "The auto industry
provides an excellent illustration of why and how
deflation trumps interest-rate cuts in terms of
their impact on the economy."
This sounds very bad for the auto industry. They have
shot their wad in 2001. Who will buy new cars at higher
interest rates in 2002? They bought this year instead.
To every man and nation comes a moment to decide
whether to embrace reality and truth, however
harsh and harrowing, or to indulge in evasions
and alibis. Cleaving the global economy like a
titanic force of nature are two imperious trends.
Originating in the private sector, one is
overwhelmingly positive and redemptive: the ever
accelerating advance of technology. But it faces
a powerful force of negation and decline.
In short, man shall not live by bread alone,
especially when it is getting cheaper. He must live by
fiat money. "Let them eat digits!" (Marie Gilder.)
Goods are supposed to get cheaper when there are more
of them to buy. Computers get cheaper. Why not other
things?
The problem is not the fall in prices of consumer
goods and raw commodities. The problem is that the
financial house of cards that was created by fiat-money
misled investors is now shaking. The idiots created the
NASDAQ's house of cards, especially the dot-com house of
cards, and it toppled. Now the fractionally reserved house
of cards of the interlocked daisy chain of debt is looking
shaky. "I'll pay you when he pays me." There is in the
range of $100 trillion of these promises to pay. All of
them rest on an assumption: central banks will keep
cranking out digital money and buying government debt with
it.
CONCLUSIONS
The best and the brightest got their heads handed to
them in 2000. The insanity of the NASDAQ's 207 P/E ratio
finally got exposed for the insanity it was beginning on
March 10, 2000. Now the industry's defenders are calling
for Greenspan to increase the money supply. WHAT DO THEY
THINK HE HAS BEEN DOING FOR OVER A YEAR?????
Americans are trapped in a world of debt that they
voluntarily entered into, one by one, contract by contract,
on the assumption that the FED will forever crank out
unbacked counterfeit money.
These deflation-fearful advocates of ever-more fiat
money really need to read Rothbard's MYSTERY OF BANKING and
his 60-page masterpiece, WHAT HAS GOVERNMENT DONE TO OUR
MONEY? (1964).
The problem with today's economy isn't Americans'
supposed distrust of high tech. We love high tech. We
want more high tech. And we want it at half the price that
the kids in Silicon Valley have pasted onto sales tags this
month. We'll get what we want, too, if necessary when the
kids' companies go belly-up, and the liquidators sell off
the inventory.
High tech is for us consumers. We don't give a rip
about the producers who just can't cut it, nor should we.
That's what the free market is all about: a denial of
producer's sovereignty (mercantilism). High tech is all
about rapid depreciation and the creation of consumers'
surplus. If the kids can't stand the heat, they should get
out of the kitchen.
Then what is the economic problem? The problem is the
government-granted monopoly of central banking, the
fractional reserve commercial banking system that central
banks protect, and a government that is addicted to debt,
taxes, and fiat money.
What is the solution? A full gold coin standard, 100%
reserve banking, the abolition of the Federal Reserve
System, the abolition of the IRS, and the replacement of
the income tax with a national sales tax.
The solution, in short, is less government -- not the
supply-side economists' version of less government, but the
Austrian School's version. Or, to quote the original
Austrian economist, the prophet Samuel,
And he said, This will be the manner of the king
that shall reign over you: He will take your
sons, and appoint them for himself, for his
chariots, and to be his horsemen; and some shall
run before his chariots. And he will appoint him
captains over thousands, and captains over
fifties; and will set them to ear his ground, and
to reap his harvest, and to make his instruments
of war, and instruments of his chariots. And he
will take your daughters to be confectionaries,
and to be cooks, and to be bakers. And he will
take your fields, and your vineyards, and your
oliveyards, even the best of them, and give them
to his servants. And he will take the tenth of
your seed, and of your vineyards, and give to his
officers, and to his servants. And he will take
your menservants, and your maidservants, and your
goodliest young men, and your asses, and put them
to his work. He will take the tenth of your
sheep: and ye shall be his servants. And ye
shall cry out in that day because of your king
which ye shall have chosen you; and the LORD will
not hear you in that day. (I Sam. 8:11-18).
The day that politicians cut the U.S. government's tax
rate to a flat 10% is the day that we return to good, old
fashioned tyranny -- traditional tyranny. Spare me the
Laffer Curve. I go by the Samuel Curve. Don't cut taxes
so that government revenues will rise. Cut them until
government revenues fall. Then cut them some more.
* * * * * * * * * * * * * * * * * * * * * * * * * * * *
Kazaa to court: Don't stop the music
By CNET News.com Staff
Special to ZDNet News
December 21, 2001 5:01 AM PT
By Jasper Koning
HILVERSUM, Netherlands--Nearly a week after a court-ordered deadline to institute anti-piracy controls, the operator of Kazaa, a popular file-swapping network, is continuing to negotiate with copyright holders over its fate.
In a decision last month, Judge Orobio de Castro told the network to block customers from trading illegal files by Dec. 13 or pay a $45,000 a day fine. As of now, however, the service has not altered its business practices, company attorney Christiaan Alberdingk Thijm said Thursday. The service was developed by Netherlands-based FastTrack.
"You could derive from that, that the negotiations have went in a such a way that for now no fines have to be paid," he said.
Kazaa is one of several products that allow people to find and copy digital files stored on each other's hard-drives. Purveyors of the technology, known as peer-to-peer networking, have drawn a flurry of lawsuits from copyright holders who allege that the products are nothing more than an open ticket to piracy.
Kazaa faces suits in both the Netherlands and the United States, where it was sued along with Grokster and MusicCity by the record industry and Hollywood studios.
The Dutch court decision came in a suit brought by Kazaa against Dutch copyright organization Buma/Stemra, which has been in on-and-off licensing negotiations with Kazaa. The software maker charged Buma/Stemra with antitrust violations for refusing to negotiate. Buma/Stemra then countersued Kazaa.
Last month's decision also ordered Buma/Stemra to resume licensing talks, which broken off last month after the Recording Industry Association of America and the Motion Picture Association of America filed their copyright infringement suit in Los Angeles against Kazaa and several other makers of file-swapping software.
Copyright holders have so far been successful in shutting down peer-to-peer companies, most notably Napster, which popularized the concept. A federal judge ordered the company late last year to filter copyright material from its network, effectively forcing the service to close while it develops the necessary technology. The company plans to reopen next year as a subscription service using fully licensed material.
According to defense attorneys in the Los Angeles case, new developments in peer-to-peer technology may have changed some of the underlying legal assumptions in such suits.
Early peer-to-peer services helped customers trade files by offering search directories hosted on individuals' computers, among other services. Such features were almost necessary at the time to help ease network bottlenecks associated with sending bulky media files over the Internet.
The second round of peer-to-peer litigation potentially poses some tougher legal questions, the technology's advocates argue, since companies such as FastTrack merely make and market software products and play no other role in assisting file-trading among their customers.
Bluetooth set to outdistance wireless LANs
By Darrell Dunn and Bruce Gain
EBN
(12/20/01, 11:43:17 AM EST)
Despite persistent rumblings of discontent from participants and sideline observers, Bluetooth wireless technology has begun to take root with end-product implementations and lower-cost silicon.
The promise of tens of millions of sockets has Bluetooth poised to overtake wireless LAN technology in the coming year due primarily to significant adoption by high-volume cellular handset makers, according to analysts and silicon providers for wireless connectivity.
At the Bluetooth Developers Conference in San Francisco last week, silicon suppliers rolled out chipsets that they expect will hit the long-sought $5 price point that market observers say is needed for full-scale adoption. Observers also believe that, like most emerging technologies, a supplier shakeout is looming that will boil down the 30-company base of suppliers to a handful of players in the years ahead.
It remains unclear how many Bluetooth chipsets will have been shipped in 2001, as forecasts range from the 5 million units predicted by Micrologic Research to In-Stat Group's forecast of 13 million. Both research groups believe the market will grow significantly next year to between 45 million and 90 million units, reaching 1 billion in 2005.
To date, Texas Instruments Inc. has shipped more than 1.5 million Bluetooth chipsets and the company estimates that nearly 7 million will be shipped industrywide this year, said Bryce Johnstone, TI's worldwide marketing manager for Bluetooth products in Dallas.
TI projects at least half of next year's Bluetooth shipments will be used in cellular handsets, which means that anywhere from 5% to 10% of the 400 million mobile phones the industry expects to ship in 2002 could be equipped with Bluetooth.
Growing beyond 'geekware'
“Bluetooth is building momentum,” Johnstone said. “You're starting to see Bluetooth in retail channels. Like virtually everything, it starts off as geekware but will end up becoming a fashion item. It will start to capture the imagination when people start seeing [Bluetooth-enabled] wireless headsets being used.”
Jim Oursler, vice president of marketing at Ericsson Microelectronics North America, Richardson, Texas, said that while Bluetooth “is not the be-all-to-end-all in wireless connectivity, it definitely has a very useful space in applications concerned with power constraints and security. Next year we're going to see a significant number of household, name-brand consumer manufacturers with Bluetooth as an option in their products.”
Last week, TI introduced its latest Bluetooth chipset, consisting of an ARM-based baseband with ROM and an RF transceiver, which the company said will be in production in the second quarter of next year for $5 in quantities of 2 million. Motorola Inc.'s Semiconductor Products Sector (SPS) plans to move its baseband and RF chipsets into production at about the same time for $5.90 in quantities of 1 million.
Downplaying the cost factor
“I've heard the argument that as soon as Bluetooth is available for $5, the volume will take off,” said Gary Montgomery, director of marketing at the wireless local connectivity division of SPS. “I don't agree with that philosophy. I believe that as soon as the cost of implementing Bluetooth is exceeded by the benefit of Bluetooth, it will take off.
“To date, the Bluetooth market has been overhyped, and in some cases almost criminally. The fact is, the radios are fairly complex, and it's a complex standard,” Montgomery said.
Ericsson's Oursler also believes the cost equation has been overplayed, and said price quotes in million-unit quantities provide little guidance. Ericsson, a founding member of the Bluetooth Special Interest Group, has created the most comprehensive solution, he said, which can be implemented for less than $15, moving to less than $10 next year.
“Everyone knows what their product is worth,” Oursler said. “I'm a little skeptical about how well [$5 chipsets] will perform in the real world. People can end up with shortfalls in their designs.”
One-chip vs. two-chip solutions
John Hodgson, chief executive of Cambridge Silicon Radio Ltd. (CSR), Cambridge, England, said a significant advancement for Bluetooth was last week's announcement by Microsoft Corp. that it will support Bluetooth in its Windows XP operating system.
Hodgson said CSR has gained an advantage in the Bluetooth silicon battle by offering a single-chip baseband solution with integrated RF. “The typical space budget in Bluetooth applications is significantly smaller than most other applications,” he said.
Oursler said the single-chip path is not critical to Bluetooth advancement at this stage. “Ericsson has continued down a steady path of separating the radio and baseband,” he said. “It's not a heroic experiment, but we're getting to the market with real-world production. We have a total run rate now of about 400,000 units per month.”
There will be separate requirements for both one- and two-chip solutions, according to Joyce Putscher, an analyst at In-Stat, Scottsdale, Ariz. In stand-alone applications such as headsets, a single-chip implementation will best meet requirements for the smallest form factor, she said. In cellular handsets, however, a separate RF chip will often improve performance and reduce interference from the handset RF. In time, the Bluetooth baseband will be incorporated into the handset baseband, Putscher said.
E-Music Industry Gets Into A Groove
by Maureen Sirhal
A flurry of deals reached between record labels during the past six weeks is a harbinger of good health for the online music business, say industry members, but concerns lurk behind e-music business models and possible regulatory oversight.
These new services tout themselves as keys to meeting hungry consumers' demand for online content, but some observers are wary about the long-term viability of their business plans. Moreover, some rival groups have questioned whether, without regulatory oversight, the recording industry truly will deliver the content consumers want at a fair price.
A Model For All?
Listen.com's Rhapsody system and MusicNet are the latest high-profile services to hit the market.
Rhapsody combines on-demand music with "contextual data," such as artist and album information, and technology that can track listeners' tastes. A month ago, Listen.com signed deals with music publishers to license the rights to music, a key challenge that several other venture still face.
MusicNet, a joint venture among AOL Time Warner's Warner Music, Bertelsmann's BMG, EMI and RealNetworks, also launched its RealOne service last week. RealOne delivers on-demand music as a "tethered" download -- a digital music file that operates while the consumer's computer is connected to the RealOne site.
Pressplay, a joint endeavor of Vivendi's Universal Music Group and Sony Entertainment, promises much the same. It is still "on track to launch this fall," according to a spokeswoman.
Other ventures like Full Audio and Echo Networks have secured agreements with several recording labels. And each stands to benefit substantially from a deal brokered in June between music publishers and the Recording Industry Association of America (RIAA). The deal would provide full rights to the music of RIAA member firms.
For most of the firms, the business model is relatively simple: Users pay a monthly fee to access streaming music from Web sites. In turn, the firms close as many licensing agreements as possible to lure consumers who seek the most musical choices.
But to access the huge array of music that major recording labels can offer, users must "stream" the files, a process that the service providers say protects the intellectual property of recordings. The services rarely let users download songs to their computers for "burning" onto a compact disc or sharing with other portable devices.
"We are a streaming-only service," said Tuhin Roy, executive president of Echo. "You won't be able to get anything on demand. What you will be able to do is set up ... [an Internet radio] station to share with the community."
Quality Vs. Quantity
While it is still early to assess the services and their long-term prospects, some industry observers have noted that most of the paid services will continue to be measured against the Napster model -- free music downloads that can be copied onto CDs and shared with other listeners.
Before music industry lawsuits, Napster created one of the biggest attractions to the Internet, and huge demand for more bandwidth or high-speed Internet connections. Since a federal court ruling required the file-swapping site to restrict its use of the "peer-to-peer" technology by screening copyrighted materials from its system, traffic on the Napster network has declined dramatically.
"Basically, you had Napster in the beginning that offered consumers an incredible experience and one that they really loved," said Lee Black, director of research at Webnoize, a digital media research firm. Major recording labels "are having to change their entire business model around to embrace that, and that is not an easy thing for these huge businesses," he said.
"Consumers will feel somewhat cheated when they discover that they are unable to 'keep' the music files they access through the subscriptions," said one industry source.
He added that the major subscription-based models offer little in the way of "compelling selections" and, to make the services even more confusing, force consumers to be mindful of which recording label acquires rights to various artists in the name of protecting intellectual property. Black noted, "The down side [of subscription models] is that there is limited content. You compare that with a peer-to-peer site, where you can find everything. It doesn't compare."
The new services also face a major threat from several Web sites that still offer free music. Analysts predict that free online music via sites may have increased significantly, despite the well-publicized litigation that has crippled Napster.
Webnoize reported that the activity on free-music sites like Aimster, MusicCity, Kazaa, Grokster and FastTrack has more than doubled in recent months. It also estimated that the number of users of FastTrack likely would exceed 1.57 million, the peak of Napster's success.
RIAA, along with members of the film industry, filed a lawsuit in federal court in California in October against MusicCity and its affiliated service Grokster, as well as FastTrack, which operates the Kazaa file-swapping site
Some subscription services do offer free downloads, although most of them are severely limited and expire once stored on a hard drive. Still, backers of the services believe their models will offer advantages over the lower-quality files once available on Napster, Black noted.
The New Business Of Oversight
Some groups attempting to offer online music have criticized the new subscription services, charging that major industry-backed services use the Web as a means of deterring government oversight but offer products that are weak and unfriendly to consumers. Citing the limited choices on the services, observers have said that the major recording firms are not serious about making the Internet a major distribution channel for music.
The House Judiciary Committee is slated to examine such issues this week. Similar concerns led to an ongoing Justice Department antitrust investigation of the music industry, to price-fixing concerns at the European Commission, and to congressional oversight hearings -- all of which have been factors in "motivating" recording labels and their publishers to license more content to potential online competitors.
"It's been a long process" to obtain recording and publishing licenses, said Sean Ryan, president of Listen.com. "It's gotten significantly easier in the last few months. ... Let's face it, there is a Justice Department investigation going on and significant pressure out of Congress. They are seeing a risk out of not licensing."
RIAA President Hilary Rosen recently told a conference of peer-to-peer providers that the recording industry was moving more quickly to unveil options for consumers and noted that the industry's reluctance to get online might have "encouraged piracy ... by not filling the vacuum of consumer demand."
The recording industry and music publishers have protested against congressional intervention in the online music space, arguing that mechanisms already are in place for the market to function fairly. Arbitrators at the U.S. Copyright Office, for example, are close to setting royalty rates for fees that webcasters will pay recording and publishing firms for the right to re-broadcast musical works on the Net. That process likely will be used to establish final royalty rates for subscriptions services to licenses recording and publishing rights.
National Journal's Technology Daily
Attn: All Accountants????...
If I buy an e.Digital MXP-100 voice recorder for use as a business tool...is the cost tax-deductible? The fact that it has music download capabilities is irrelevant....right?
I could really use a great voice recorder!
CC Reviews: Grain of Salt...
Just a guess but don't be surprised if the vast majority of Jukebox reviews are written by shareholders "talking-up" the product. Not that there's anything wrong with this but we do have a vested interest in the product's success.
Further, most people tend to speak highly of anything they purchase simply because buying decisions are based on research and no one wishes to admit they made a mistake and appear stupid.
The info is likely skewed but, works to our benefit. Keep it up!
Sentinel: "I cannot see why people here believe they are part of the manufacturing, marketing, and sales departments for EDIG. There is a process in place and we should see how well it does before messing wiht it."
I am not confused regarding my relationship with e.Digital. As an owner of the company I am entitled to gather as much information that may be legally disclosed and gathered. Since there is a lack of independent, third-party research it is imperative that I/we maintain vigilance in how management tends to our affairs.
I have a high level of confidence in the company's managerial skills but will investigate any and all available options as part of my continuing due diligence. "Messing" to me connotes interference or taking a proactive role in directing e.Digital's future. This is not my intention. Waiting to see if they screw up, though, is not an acceptable alternative.
As for what I might learn from my or someone else's call to Combined Luck...don't know ..haven't even thought of a question yet.
Blind faith? Not for me!
Combined Luck Industries...
888-756-4330
Has anyone called them yet?
Just got back from CC. Display unit was buried under a computer set-up. Sample was very cheap in appearance and obviously a mock-up with a fake stick-on LCD screen.
Salesperson said there were plenty in stock in the back room and the unit cost $279 as per his computer inventory ( a correction of the $299 he originally quoted ).
Anyway, sticker on back of unit included the above name and number which I don't recall anyone mentioning.
FWIW-RP Addresses a Couple of Questions...
Re: Still Photography and Video
"We expect our technology to be in most all of
the DataPlay-based OEM-branded music players at launch and in other devices
later in 2002. There are DataPlay-based still image and full motion video
product opportunities for our developing product platforms."
Re: Data Compressed CD's
"We are working on OEM projects that could incorporate and feature hybrid
technology."
RP Addresses a Couple of Questions...
Re: Still Photography and Video
"We expect our technology to be in most all of
the DataPlay-based OEM-branded music players at launch and in other devices
later in 2002. There are DataPlay-based still image and full motion video
product opportunities for our developing product platforms."
Re: Data Compressed CD's
"We are working on OEM projects that could incorporate and feature hybrid
technology."
Is MXP100 Tax Deductible?...
The costs associated with investment research is usually tax deductible. My evaluation of EDIG necessitates that I buy an MXP100 to verify that they put out a quality product.
The rest is between you and your IRS agent.
Online Movie Biz...
From The Street.com:
Big Studios Cramming Into the Online Movie Business
By George Mannes
Senior Writer
09/05/2001 07:28 PM EDT
It all looks so eerily familiar.
Only a few months after the world's biggest record labels split into two camps in an attempt to conquer the online music business, get this: The world's biggest movie studios have split up into two camps in an attempt to conquer the online movie business.
But with the launch of the movie ventures yet to be determined, investors are left wondering whether the actual services will be as exciting as the studios' press releases promise. In other words, are these warring armies fighting over a gold mine or a money pit?
So here's how the opposing forces are lining up: After the market closed Wednesday, Disney (DIS:NYSE - news - commentary) and Fox Entertainment Group (FOX:NYSE - news - commentary) parent News Corp. (NWS:NYSE - news - commentary) said they would launch a video-on-demand service in 2002. To be built atop Disney's current Movies.com site, the service will offer movies and other programming to households served by VOD-capable cable systems, and deliver movies via computers to other households served by high-speed Internet connections.
Details on the technology, price and distribution of the Movies.com service were scarce, but the companies said the service would include films from Twentieth Century Fox and live-action films from Disney and its Miramax division. Disney's child-pleasing animated features apparently aren't part of the service.
The news follows a similarly vague announcement in August from movie studios controlled by AOL Time Warner (AOL:NYSE - news - commentary), Vivendi Universal (V:NYSE - news - commentary), Sony (SNE:NYSE ADR - news - commentary), Viacom (VIA^B:NYSE - news - commentary) and Metro-Goldwyn-Mayer (MGM:NYSE - news - commentary). They say they'll launch an Internet-delivered VOD service at some unknown point in the future.
Several of these parties are lined up in a different arrangement in their efforts to launch for-pay music services on the bones of Napster. Sony and Vivendi Universal are cooperating on the yet-to-launch pressplay, while AOL Time Warner is off with EMI Group and Bertelsmann working on the (of course) yet-to-launch MusicNet.
The new Movies.com service hasn't hired a CEO yet, and it has had only very preliminary conversations with cable operators who would be potential partners, says Peter Levinsohn, Twentieth Century Fox executive vice president of worldwide pay television and pay-per-view. But he says Movies.com is significantly different from the other recently announced service. For example, while the service announced by AOL Time Warner, Sony and the others appears to be focused on the Internet, Movies.com will be focused on cable as well, Levinsohn says. In addition, Fox and Disney content would appear on Movies.com with a limited period of exclusivity during which it wouldn't appear on any other cable- or Internet-deliverd VOD service.
Of course, there's no money in this business yet, but both music and movies have a chance to be colossal over the Internet. Just like the ad-supported businesses that have already taken off.
Cancellation Confirmed at H/S...
Just got off the phone. Treo has, in fact, been removed from their catalog due to "manufacturing delays". This particular rep had no knowledge of product defects.
They received 50-60 units, were back ordered a few hundred and saw no reason to continue taking orders about a week ago.
Apparently the demand had been extremely strong.
The woman said that many of the reps had expected this cancellation to happen. In the past, heavy demand for such innovative products often surpassed the manufacturers capability.
Re: Ham/Schlem...
I don't think that any of the customer service people really know what is happening with Treo.
Last week a rep said the product was delayed due to Napster related copyright concerns.
Yesterday I received the following response regarding voice command capability.
By the way, last week the folks at Hy-Tek indicated general distribution in the second week of September.
Go figure.........
Thank you for your inquiry. The DIGITAL MUSIC PLAYER LONG MEMORY does not have voice command capabilities. Item #63769 is backorder until it becomes available on or around Sept. 2, 2001. Once the item is received in our warehouse, it will ship out within 24-48 hours.
Please understand this is not a guaranteed date, but an expected date given to us by our vendor. We will try to fill your order as close to this date as possible. I apologize for any inconvenience this may cause.
Your satisfaction is a priority at Hammacher Schlemmer. If you require any further assistance, please contact me by any of the methods listed below. Thank you.
Best regards,
LuAnn Trueman
customerservice@hammacher.com
Hammacher Schlemmer
9180 Le Saint Drive
Fairfield, Ohio 45014
Voice: 1-800-233-4800 (8am-mid EST, 7 days a week)
MrGreeg, Re: Ham/Schlem Response
I asked them what the reason was for the continued delay of Treo shipments. I was surprised by the copyright response since I had heard other/different reasons for the delay previously.
E-mail from Ham/Schlem
Thank you for your inquiry. I do not quite understand who is holding up delivery, but involves copyright regulations. This has to do with the recent uproar about music sites, such as Napster.
Your satisfaction is a priority at Hammacher Schlemmer. If you require any further assistance, please contact me by any of the methods listed below. Thank you.
Best regards,
Jay Bressert
customerservice@hammacher.com
lickily: Sorry, I didn't make myself clear. Treo was omitted from the recently mailed print catalog. I'll assume you're referring to the website.
And....don't get your panties in a bunch. Those comments are best saved for RB. Besides, weren't you told to never mind the bollocks.
Treo No Longer in Ham/Sclem Catalog eom
Important Read from George Gilder...
For those that may have missed it, this article from Monday's WSJ Op-Ed should concern all of us who hold any hope for meaningful content via the Net.
Tumbling Into the Telechasm
By George Gilder. Mr. Gilder, editor of the Gilder Technology Report, is author of "Telecosm: How Infinite Bandwidth Will Change Our World" (Free Press, 2000). He may own stock in the companies mentioned in this article.
When Bill Clinton assumed office nine years ago, I predicted he would enjoy one of the greatest economic booms in the history of the world. Impelled by the spread of the Internet, the onset of fiber optics, and a tenfold increase in venture capital -- unleashed by the lower tax rates and deregulation of the Reagan administration -- the Clinton economy had it made. Moreover, until the election year of 2000, Mr. Clinton actually pushed the economy along with beneficent trade policy, an astonishing opposition to Internet taxes and restrictions, and a 30% capital-gains tax cut that yielded hugely more revenues than projected by demand-side models.
Devastating Crunch
The Bush economy, unfortunately, not only possesses no such immunity to bad policy, but also is gravely vulnerable to policy mistakes accumulating by the end of the Clinton term. A high-tech depression is under way, driven by a long siege of deflationary monetary policy and obtuse regulation that has shriveled hundreds of debt-laden telecom companies and brought Internet expansion to a halt.
The entire telecom sector -- what I term the telecosm -- is engaged in a heroic capital-intensive buildout of a communications infrastructure thousands of times more cost-effective than today's. Promising to make interactive video as pervasive as voice telephony today, such infrastructure projects create demands for funds that outreach the resources of venture capital. Just as some $200 billion of junk bonds from Drexel Burnham and others sustained the previous hybrid build-out of optics, cable and cellular, similar debt issues are crucial to the new infrastructure of all-optical networking. But there ends the similarity with the previous build-out, which emerged during a time of real supply-side tax cuts, OPEC tax collapse, deregulation, and general monetary stability, and was vindicated by soaring cash flows and equity valuations. By contrast, the far more promising new infrastructure is withering in the face of monetary, tax and regulatory blunders.
For debt-burdened companies, nothing is so oppressive as deflation -- a dearth of money -- which inflicts soaring real interest burdens, sinking asset values, and collapsing growth. The leaders of the telecosm have to pay off debt in appreciating dollars while cash flow and collateral declines, and banks deny the kinds of rollovers that saved the likes of MCI in the 1980s. Real interest rates are now drifting upward faster than the Federal Reserve can reduce them. Monetary economists prattle about too many dollars while the dollar soars against deflated currencies, such as the yen, with its interest rate near zero. From industrial staples such as steel (down 42% in four years) to the monetary tocsin of gold (down 40% in four years), commodity prices lie in a deep trough.
Meanwhile, the Bush "tax cut" degenerates into a ten-year gantlet of meaningless shifts and shuffles, the OPEC tax hike persists in its wanton gouge, and regulations strangle the broadband Internet.
Essential to the Internet economy is the expectation of a steady increase in the speed and capacity of connections. Nearly every dot-com was betting on it. The glitches and delays of dial-up modems abort 70% of all intended Internet transactions and bar the business plans of thousands of dot-coms and Internet service providers, not to mention vendors of streaming video, distance learning, video telecommunications and Internet malls.
The only reason for the so-called "fiber optics glut" is the near deliberate starvation of connections to homes and small businesses. It is a classic socialist famine, where the warehouses are full but the people are starving for lack of market distribution systems. Part of this is because of a few poor business decisions in the industry, but most of it comes down to intrusive regulatory policy in an era of deflation.
Typical of bad regulation is a Federal Communications Commission policy called Total Element Long Run Incremental Costs, or Telric, summed up simply as a price cap on what telephone companies can charge for links to homes and businesses. Designed in the late 1990s to prevent "monopoly rents," the cap is based on an estimate of costs that would apply in a fully competitive environment when bandwidth is a commodity.
But in dynamic technology markets such as Internet broadband, monopolies are inevitable, virtuous and fleeting. Every innovation creates a monopoly at the outset, and monopoly rents pay for financial risks and costs entailed in bringing innovation to market. Like any price-control scheme, Telric choked off supply, taking the profits out of the multibillion-dollar venture of deploying new broadband pipes.
Compounding Telric were "open access" and "unbundling" rules that require companies installing advanced Internet gear to share pipes with others. The goal was to stop monopolies, but what regulators did was to bar Internet investment by privatizing the risks and socializing the rewards. No entrepreneurs will invest in risky, technically exacting new infrastructure when they must share it with rivals. At first restricted to telcos, the open-access rules have since been extended to cable, where they balked Michael Armstrong's bold AT&T plan to compete with the Bell companies using cable TV plant.
The absence of broadband local loops also withers the optical Internet. The $44.8 billion write-off and $8 billion loss announced last week by JDS Uniphase signals the devastation of the most promising communications technology in the history of the planet. Treating JDS Uniphase as a budding monopoly, the Federal Trade Commission permitted its merger with SDL only on condition that it sell its Rushlikon pump laser facility to Nortel.
Some monopoly. Uniphase last week devalued its SDL pump laser acquisition by some $35 billion. The write-off -- the largest in business history -- was partly because of the collapse of last-mile traffic growth. But it was also because an efflorescence of new laser and amplifier technologies -- from such companies as NP Photonics and Princeton Optronics -- are already making conventional pump lasers obsolete. Regulators can't keep up.
Before the FTC attack on Uniphase, regulators casually destroyed the Internet strategy of WorldCom. Under Bernie Ebbers, Worldcom planned an attack on the real telopolies around the globe through the use of Internet for both data and voice. Suffering from mazes of conflicting connections, with each data packet making some 17 hops between routers before reaching its destination, today's Internet competes only fitfully with the telecom establishment. But by purchasing and upgrading the Internet facilities of MCI and Sprint, WorldCom planned to transform its portions of the Internet into a coherent broadband system.
Instead, upholding the fantastical view that WorldCom was becoming an Internet monopolist, U.S. regulators defended the existing monopolists against the WorldCom challenge, forcing the sale of MCI's Internet facility to Cable & Wireless in Britain and barring the acquisition of the Sprint network. By upholding a false notion of competition -- one in which no one can win or make any money -- the FTC largely wrecked WorldCom, the most aggressive monopoly buster on the planet.
Internet Sclerosis
As difficult as it may be for Republicans to acknowledge, they have become part of the Internet sclerosis. Led in Congress by regulation lovers such as Sen. Ted Stevens of Alaska, pressed by Republican governors such as Nevada's David Levitt to impose Internet taxes, and beset by conservatives who blame the Internet for pornography (rather than prosecuting pornographers), the party is imperiling the crucial expansion of the Internet economy.
Meanwhile, the president is preening for pollsters and junk science greens while hundreds of telecommunications companies tumble into the telechasm, choking on debt easily sustainable under favorable tax and regulatory conditions, but now rendered devastating by a global deflation.
bostonredsox: B&O story on last evening's "The Edge" on CNBC was a relatively short, biographical piece regarding the Danish manufacturer of high-end consumer electronics. The 75 year old company has recently decided to discontinue distribution through electronic retailers and will continue to open their own stores in upper income communities. They plan to open 20 stores this year.
A representative of B&O made it very clear that nobody "needs" their products with televisions,for example, selling at $8700.
They sell the best. That which others are measured by...
Kind of like Jeter and all other shortstops.... ;0)