nihao!
A busy few weeks for our adventurous heroes, as we flew from one side of the world to the other and back again.
But first, a warning. Mainly for the men out there, but it may apply to women as well.
Background #1
As some of you might know, I like to travel with a hat. A brimmed hat so I can pull it down over my eyes to sleep on planes and busses and things, and it also keeps the sun off my rapidly diminishing hair. Lucky bald guys are sexy. They are right? Yeah, super hot.
Anyway, I like to wear hats. My previous hat (which I took to china) I had bought in a hurry in some tiny shop in Mexico, to keep the sun off my sexy/semi-shiny head. I pretty much grabbed the first one I saw, but when I tried it it was small (I have a big head, in all senses!) and so I rushed back and grabbed another. I don’t pay much attention to fashion, I make my own fashion, so didn’t think much of it at the time.
Gisela wasn’t too impressed with my hat, not really at all, could even be said to dislike it strongly. But, I know best, so I wore my hat. It was pretty comfortable, and when you get to my age, comfort rules.
Background #2
If you’ve travelled with Air NZ, you know they have a reasonable number of male flight attendants. Not my kind of job, but they seem to like it. They’re pretty friendly, and do a good job. They are also all gay, something gisela pointed out to me since Im not really very good at paying attention to other guys sexual inclinations. Whatever works I say!
These friendly gay attendants seemed to be particularly friendly to me. “He’s trying to pick you up!” Gisela would say laughingly. “Rubbish” I said, although in truth I probably wouldn’t notice if anyone male or female was trying to pick me up. We laughed it off, some of us a little more forced and uncomfortable than others.
So anyway, we’ve done quite a few trips, and this scenario kept repeating, only on Air NZ, who seem to have a policy of hiring gay guys to be flight attendants. Gisela found this more and more hilarious, and I found it more and more… um… shall we say, disconcerting? But finally, on our flight to China, which I’ll get to soon, we worked it out.
Background #1 +#2 =…
So from deep introspection and wondering if I give off random gay signals and what they were, and was I holding my wrist straight at all times, and is there a special way you hold a cup or was I sitting in a gay way, or was my choice of literature some kind of gay literature, we finally figured it out. It was the hat.
Now most of you know (and I guess its pretty obvious when anyone sees me) that I don’t pay too much attention to what I am wearing. But its pretty standard, and I am fairly confident its pretty non-gay too, particularly my travel clothes (I never had any encounters normally, only when traveling). Except the one thing I always have on overseas trips, because I want to try and sleep. My… hat.
I ripped the hat off my head, and examined it closely. On the front is a reclining frog badge that says Tulum, a small beach place in Mexico where I got the hat. Once I put my glasses on, I realized the frog was actually reclining in a kind of a gay way. And had quite a gay glint in its eye (if I knew what a gay glint was, which I don’t!), and it had its legs crossed in a very gay position (again, I don’t know what that means, but guys in general don’t cross their legs in gay ways). And it dawned on me that I had accidentally bought a “I am gay” hat.
So we arrived in Beijing, and my hat was very firmly placed in my bag and left there, which was probably just as well because it was freezing in China, and anyway a super-spy doesn’t need a “I am gay” hat cramping his style. Because if you’re going to the largest communist country around, you might as well be a super spy.
So Beijing, 17 million people all performing all manner of capitalist endeavors under a large red communist umbrella. Gisela and I were there for a week, after I accidentally won a $1 auction 2 weeks previously. And it was cold. Snowing cold. Snowing freezing grey cold.
We were staying in a local boarding house, in the middle of a hutong, a traditional neighborhood. Being immersed in the local Beijing scene was both good and not-so-good. The good, great local restaurants, an authentic experience, and very few tourists. The bad, the dodgy local plumbing and the variety of less than savory smells emanating from the bathroom. And the super-hard mattresses. But great people and a great place.
Beijing is super easy to get around, given the awesome subway, and we put it to good use in our quick tour. Generally we were woken in the mornings by the gentle sounds of the morning chorus, which in Beijing sounds remarkably like a whole bunch of men sucking quantities of phlegm into the backs of their throats and then spitting it vigorously. In fact, this is what it was, and the congealed contributions of the male (and sometimes female) population lay, semi-frozen and glittering in the early morning light. Yum. Spitting does seem to be pretty acceptable there, so we slalomed our way around the mini-puddles as we walked to get our early morning jasmine green tea.
“Moi se-un sen lu cha” I said, after writing down what it sounded like the day before and practicing on the walk.
“uh…” he replied…” coffee?”. The communication was a bit hit and miss, but it was funny going into some local restaurants and trying to communicate. We generally ended up with a flock of waitresses around us, each with a little bit of english, hoping that combined, their powers could bring sense to what we wanted. Most times this worked, and we ate Peking Duck, mongolian hotpot, ma po tofu and steamed buns, breakfast savory pancakes with bean paste, sweet and sour chicken, and some outrageously spicy concoction that was sezchuan in origin. The food was really good, and generally really cheap, except for the mongolian hotpot, where the poor guy who probably had never seen a tourist in his restaurant gave us a menu without a word of english. Obviously, this was pretty funny, but after about 1/2 an hour, we somehow managed to order a literal mountain of food, all to be cooked in the hotpot, a bubbling witches cauldron of broth. It was great and we stuffed ourselves.
The weather was as varied as the food. In short order we got cold, snow, sand storms, sun and blue sky and rain. That was within our week, which was pretty impressive even for Wellingtonians. Sand storms blow in from the gobi desert, which seems to be chewing up more and more of china every year, and turn everything a lovely shade of orange, which makes for some interesting photographs. The only downside being the choking dust. On the bright side, the dust covers the big globules of spit.
so second day, we saw the great wall, and walked for 10km along its dodgy, ice covered, slippery as hell and partially dilapidated surface. It was misty and evocative, not much of a view but really good. And it was pretty hard walk, up and down for 10kms, sometimes assisted by local farmers obviously trying to sell things. “Mongolia” one of the farmers said, pointing to the north, “china”, pointing to the south. That was pretty much the point of the great wall. We got to the end (via flying fox over a semi frozen lake), ate lunch, and then I discovered the outdoor marble ping pong table. I immediately challenged gisela to a game, and was in the process of wasting her when some locals turned up and wanted to play. So, Gisela and I put aside our competition and proceeded to trounce the locals. We’re awesome(!) at ping-pong, so we soon cleaned up the locals, before jumping back on the bus. But great fun.
the rest of the time was liberally scattered between sight seeing, visiting temples and shopping. Clothes are… cheap. Genuine (except theyre not genuine) dress shirts, jeans etc are about 10 each, and indistinguishable from anything in a jean shop in NZ. Shopping is pretty hectic, and bit of a show, lots of “no, thats too low”, sighing, anger, happiness. Gisela jumped right into the bargaining and negotiating side of things, so I mostly left her to it as she turned smiles of affection into grimaces of pain with her offers. Most of which were accepted with a rapid “ok, ok, your price” when we left, vowing never to return. General rule of thumb seems about 1/5 – 1/10 of asking price works.
In quick succession, we saw the forbidden city where the emperor lived (very big, with alleyways and rooms everywhere), tianamin square (no blood stains or tank tracks, full of tourists and guards), the summer palace (full of chinese, really nice), and a lot of temples (buddhist, confucian, and tao). Sometimes the language was easy to understand, without understanding a word of the language. Like the time at the summer palace, where a sweet old chinese couple were about to take a photo. The conversation went something like this (translated from original mandarin)
Her – this would be a nice photo I think
Him – yes dear.
Her – you should get in the photo, my mother would like that.
Him – no I don’t think so, your mother doesn’t like me, just take the photo dear.
Her – GET IN THE BLOODY PHOTO RIGHT NOW OR I’LL COME OVER THERE AND…
Him – mm, grrrr, mmm (gets in the photo)
Communication differences are so often overstated. Somethings, you just kinda pick up on whats the right thing to do. Like when I wandered into a public toilet to use the urinal, and about 2 feet away staring at me was a guy squatting doing some business. Its hard to know what to say in those types of situations, nearly all small talk seems inappropriate, even if I did speak mandarin (e.g.: hows it going? whats happening? how are you doing?). Even hello seems a little bit out of place when you’re in touching distance of someone taking care of some pretty personal and not very appealing stuff. So we tried to ignore each other in a manly way which seemed to work pretty well.
Nearly got into a fight with a drunk, who I think got pissed because I said “Nihao” with a really bad accent. He kept running away, pretending to punch trees and then pretended to punch me. I sent Gisela up ahead, but didn’t feel particularly threatened, so just wandered up with him trying to explain something by shouting at me in loud manderin, and then running off, pretending to punch trees, running back… it was a bit tiring after a while, but we wandered back into the temple of heaven and safety before I started an international incident.
Not too many problems other than that, beijing felt like a pretty safe sort of a city. A few people running around asking if you wanted a guide, or to buy some local junk, but pretty much everyone took “no” for an answer. Although some of those grandmotherly figures could be pretty persistent.
And we drank a bucket load of tea. There are chains of tea shops around, and wandering into one will sit you down for 1/2 an hour while they brew every kind of tea in case you might like one. Obviously, this works pretty well, since we ended up coming back with a bag full of tea. So that was pretty much our week in Beijing. Really good, first time in Asia and it was all pretty interesting.
and then we flew back, 14hours of gay flight attendants, and not even a hint of out-of-the-ordinary friendliness. Time for a new hat!
New options blog
I’ve just been talking to a number of people about my new found enthusiasm for options trading, and trying to explain the main concepts behind it. So I decided to start a new blog focussed solely on options (and stocks and valuations), which hopefully people will find interesting, and will keep my thoughts together.
The new blog is: options4newbies.wordpress.com
Its a quick and hopefully informative romp through my intro to options, and how I went about trading US options from New Zealand (which doesn’t have an options market, and even if it did, it would be hard to recommend…).
Let me know what you think!
iPad versus kindle? everyone wins!
So theres a lot of noise around about the iPad, and how great it is, and how it will kill amazons Kindle Wireless Reading Device (6
Which it may do, I’m not too sure. The basic kindle is a lot cheaper than the iPad, and probably has scope to get much cheaper again, and Apple is after netbooks/low cost notebooks, and probably isn’t supremely concerned about the kindle.
There is a much more interesting fight happening, which no-one seems to be say much about.
In… the…. red… corner, we have the tag-team from heaven, the e-ink on the brink, the best from the West (Cupertino, CA and Seattle), the electric duo, the Mighty (brown) Kindle, and the Fabulous (and absorbent) iPad. Who would have thought they could ever team up? In the same corner, backing each other through thick and thin? Best mates 4eva, Jobs and Bezos. I’m not sure why Jobs just smacked Bezos with his shiny new iPad, but I’m sure theyve got each others backs.
And… in the blue corner… the boyz from the wood, the oldest team in wrestling, the Gutenberg Goliaths, the Publishing companies.
Lets… get… ready… toooo ruuuummmmbbble!
So, on one hand, we have the e-readers and e-books in general, and their associated e-stores. Theres a secondary fight there, but its not too relevant at this point. But the publishers… hmm. What are they offering now? Are they not in exactly the same place as the music publishers? So theres no shipping, no packaging, no printing, no up-front capital costs. Just some editing, and publicity.
Now the iPad will force this decision on more and more people. Paper or electrons? And if electrons, how much do you want to pay? And why do authors need publishers anymore? Previously, they needed someone to actually make books, and ship them all around the world, and bill bookshops etc etc. There was a whole logistical chain that a given author didnt want to deal with. But ebooks…?
So the publishers are on thin ice here. They are trying to maintain margins when more people are switching to ebooks. And people just aren’t willing to pay that much for a collection of ordered electrons. Its the The Innovator’s Dilemma
What interesting times we all live in!
PS. Has anyone tried to download ebooks via bittorrent? An ebook is going to be… tiny compared to music.
iPad rocks!
so, the iPad. Everyone has an opinion, and since I have an opinion on everything, even new technological tools I havent even seen, I should write a post.
My prediction: Another win for Apple, it might be a bit of a sleeper, like those damn commie agents during the cold war. Sure, theres things missing, namely a web-cam and a SD-card slot. These are the big omissions I think. And the geek boyz will whine about things like multitasking (lack of), and no flash. My responses, I couldn’t care less about multitasking, similarly to how I don’t care about multitasking on my iphone. Flash is rubbish, and its been in Apples sights for a while now. I think the iPad is the final nail in the coffin for Flash. RIP.
Version 2 of the iPad will solve all these issues (without the flash), and Apple will completely take over the sub-$1000NZD network market. The iPhone and iPad are computing done right, people are looking for simplicity and function, and Apple are the only company delivering at this point. Very nice.
Disclosure: I own Apple stock…
Apple 3rd quarter earnings…
Apple have just released their eagerly awaited 1st quarter 2010 earnings. Pretty exciting stuff!
Its kind of exciting
By any accounts, Apple had (another) pretty stunning quarter. Sure, coming out of the recession we were bound to see a pickup. But, net income for the entire 2008 year (ended Sept 2009) was 8.2 billion dollars. The net income for the 1st quarter 2010 was 3.4 billion. So in 1 quarter, Apple produced 41% of their previous years income. Thats pretty good, even if 2009 was a ‘bad’ year (which it really wasn’t).
(note: these figures are those using the new accounting practice for IPhone and Apple TV, so the 2008 year will differ considerably from that in the 2009 annual report).
Mac sales continue to increase (cos macs are cool!), but surprisingly, their desktop sales rocketed. ITunes is contributing around 1.1 billion, which is up 10% across the dec quarter. I would have hoped for a bit better there, since I see Itunes as one of their big growth areas – particularly due to iphone sales, but maybe I’m being greedy. The mighty IPhone (which is actually much better than you might have expected), contributed 5.6 billion, compared to 13billion for full year 2009, or this quarter produced ~40% of the last years entire iphone contribution. Very surprisingly, IPod sales were stable compared to the dec 2008 quarter, around 3 billion. Who needs an IPod when you have an IPhone?
But the IPod touch is a Iphone without the phone, so I’m guessing plenty of people are buying the touch. And, if you add skype, your touch becomes a phone.
I’m not quoting a target price for Apple, since I’m not that far through my valuation book! But if you take their earnings per share in the quarter of $3.67, annualise it by x4 (silly because december is the xmas quarter) and round it ridiculously, you get about $14 per share. How much would you pay for something that earns you $14 per year? Or to put it another way, how much would you have to invest to earn $14 per year? BNZ are quoting 4.8% on their term deposit, which means (ignoring taxes) that you’d need to invest $281 to earn $14 in interest. So, as a completely whacked out price guide that I think errs towards conservatism… $200-$300!
flames welcome!
total immersion, or how I learnt not to sink like a stone with a lead weight…
So in 2009, I started learning to swim.
“Learn to swim?”, I hear you cry, “you can’t swim? But you’re so amazing!”
Well shucks. But no, I basically couldn’t swim. Sure, I could splash to the end of a 25m pool with the elegance and grace of Michael Phelps (thats Michael Phelps the concrete electrocuted octupus (with a lead weight belt)), but that was about it. Gasping and choking, I’d grab the pool at the end, trying to suck in oxygen while simultaneously attempting to look like I’m…. just stretching my arms. Kinda like runners do with their legs when they’re really tired, leaning up against a lamppost. “Just FORGET IT!” I shout to you all, “WE KNOW. Its ok, you are tired. You don’t need to stretch, we know you want a beer and a chair!”. I’m like that with swimming.
So anyway, I decided to learn to swim, more out of stubbornness than any particular enjoyment. Never really liked the pool much. Splash, sink, inhale, swallow gallons of water, blow more water out my nose, lurch for the air, gasp in a huge breath, overextending my lungs until popping point, splash again, sink… etc.
The four hour work week blog served as some inspiration, waxing lyrical about total immersion, a method of swimming developed by Terry Laughlin (whose got all sorts of distance medals and basically doesnt swim like the above).
Total Immersion: The Revolutionary Way To Swim Better, Faster, and Easier
Buying from Amazon (did I mention I love amazon?), it arrived in 8 days, and then I was on my way to the pool. One of the best things about Total Immersion is it gives you very specific drills, so you don’t feel you *have* to swim when you’re at the pool. You’re allowed to not struggle to the end 3 times, give up and see you next year stinking pool! Progress without struggle. So I spent the next 2 months doing drills, learning to float (which is not natural unless you’re a 4 day old victim from a CSI show) and generally working out how to streamline.
A few weeks ago, I did 6 lengths of the pool (33m). Thats 200m without a stop. This is borderline miracle stuff really. I was expecting TV cameras to turn up, and feature me in the news right after the “miracle dog saves cute human child from burning building” story. That didn’t happen, no wonder I don’t watch much TV. Wankers, I hate them all.
But truly, its awesome. I’m still not ‘there’, theres times when its good and bad (like most exercise!), but… I’ve at least got rid of the lead belt and the splashing. And most of the water inhaling. My overall goal is to go swimming in the sea for a ‘reasonable’ length, and actually be able to swim!
so check out the dvd
and the book
Electrifying New Zealand…
So early this year, John Key kicked off a summit to generate ideas to improve NZ. Not too much came from it, mainly a cycle-way. Its taken me a while, but heres my big idea:
Make all our cars electric.
Ok, its not a guaranteed success, but… heres some quick numbers:
2.5 million passenger vehicles in new zealand, travelling on average 12500kms/year, using (on average), 10 litres of petrol per hundred kilometres, at $1.69/litre… equals: 2.5mill*125*10*1.69=
so, every year NZ spends around $5 billion NZD in fuel.
So, the big idea is… spend it on something that has a big payback. Electrify the car fleet. All of them.
Heres a super-quick cost/benefit, based on made up numbers:
1. Remove our dependency on foreign fuel, release about $5 billion in overseas spending
2. Spend the $5 billion on upgrading our electricity network, R+D into new/better ways of generating electricity. We need to do this anyway, since our electricity demands will continue to increase. No coal plants, but green-tech.
3. Centralise pollution to the electricity generation centers, rather than the impossible to police distributed pollution centers that are cars.
4. Reduce our greenhouse gas emissions, actually achieving something re: kyoto, instead of some random “spend money to make ourselves feel better” emissions trading scheme or some other nonsense.
5. Sell our new-found expertise in green-tech, electrification, R+D to other places. Actually kick start some R+D, and niche expertise that is actually worth something.
6. Continue to save $5 billion. Per year.
So what would it take? A lot of leadership, and some capital spending. We need:
1. Infrastructure. Electricity generation would need to be increased a lot. However, we need to do this anyway to cope with increased demand. So we have to answer the question.
2. More infrastructure, electricity outlets. Probably in service stations.
3. A selection of electric vehicles.
4. Increases in petrol tax to pay for subsidies to change to electric vehicles.
5. R+D funds in the identified areas.
6. A million other things… I know.
This is the kind of big thinking I want to see from New Zealand. Not just a cycle-way (although I love the cycle-way!), but someone with the guts to have a ‘big idea’, think it through, and to do it.
What do you think? Is this crazy? Problems? Greg for Prime Minister?
Iphone thoughts…
I finally bought a shiny new iphone 3gs, firmly cementing my apple fan boy status, to go my my macbook pro and multiple mac minis, and ipods.
I like apple products. The main reason I like them is you get a feeling that somewhere, someone actually cared about the users experience. Truly cared. We love you Steve!
To the Iphone! The iphone (is it IPhone, iphone, iPhone…?) is a nice piece of kit. My major concern, that I wouldnt be able to type on it as fast as on my treo 600 (with keyboard) proved to be groundless. The keyboard works really well, like the entire phone.
So its the greatest thing since sliced bread. Even makes phone calls.
But the astonishing thing about the iphone for me is the the appstore. Buying games, music, getting pod-casts. Really, really easy, and cheap.
I have bought 3 games for the iphone. I hardly ever buy games, because I don’t play them that much, and they’re pretty expensive. So 3 games for me is a lot. Except, under the covers, something fundamental about the game (and software) industry has changed, through my shiny new iphone.
My 3 games cost me in total, $6.47. And… these games are … good. Nice graphics, gameplay, more or less what you’d expect on a console. $6.47 in total, less than I pay in parking in a week.
So, we have high quality games, selling for mm, over an order of magnitude difference. Why buy a PSP? or a Nintendo DS?
PSP – $328 average game costs $30-$80
Nintendo DS – $257 average game costs $40-$60
Sure, the games you get on a PSP/DS might be better. But… I don’t care. I rarely play games, almost never complete them, and only use them while waiting for flights (or pretending I’m not on a phone call when picked up by the cops for driving and talking! just kidding!). And I think there are many more people like me.
So the iPhone is great. But… I think sneakily, under the covers of the iPod (which is destined to die very soon), apple have scored a massive, major, world-changing win. iTunes, and the integration with the iPhone. People will start very soon to expect to pay $2.59NZ for a quality game. This I believe is the true game-changing power of the iPhone, and I think its an astonishing testament to apples vision. I know, I sound like I have “I (heart) SJ 4eva” tatooed on my chest. But when you think about the scope of the vision, that started with MacOSX, and the IPod, then iTunes, then the iPhone, all in order to make the apple products, and the app-store the easiest, cheapest way to get applications, redefining an acceptable price for software in the process, taking on Nokia and Sony and Nintendo and Microsoft and Dell and HP in spaces that those companies thought they owned, and had a massive head start in? whew. Thats ballsy. Will see what happens with google.
So my question is, why would you buy a blackberry/HTC/android phone when the iphone is the same price?
disclaimer: I own apple stock
Amazon, the power of scale.
I recently ordered some books from Amazon.
In the current situation, this should be a bad move, the NZ dollar is buying $0.64US, the amazon shipping charges are a significant component of the price, so why would I do that?
I bought 4 books that were recommended on the fourhourworkweek.com blog, from amazon, 56.73USD + $24.95 shipping. So, $132 NZD + how ever long it takes to get here.
I ordered on the 28th June, and it arrived on the 9th of July.
If I had bought those books in NZ from fishpond.co.nz (a NZ online bookshop), it would have cost:
Rules of thumb: $50.58, 6-10 days
8 weeks to optimum health $34, 3-5 weeks
Science of influence $73, 10-12 days
Vagabonding $31, 24hours
Fishpond give free shipping on orders over $50, so ignoring that, total is: 188.58. And it probably would have taken significantly longer.
So its no contest. Amazon wins, from the other side of the world, hands down. Faster, and significantly cheaper. It really is an amazing service.
Restaurant Brands CEO steps up
I’ve just noticed today that Russell Creedy, CEO of Restaurant Brands has bought 45,000 shares in the company he runs. This brings his total shareholding to… well… 45,000.
I think highly of senior management who take positions in the companies they run, and think this is a great move by Russell. Obviously, 45000 is not a lot of shares, and I will be watching to see if such purchases continue. At the moment, only the Chairman of Restaurant Brands, Mr Danny Diab (a director), and now Mr Creedy own shares in the company, and only Mr Diab has a shareholding of significance.
But a good move from the CEO, perhaps coming on the back of some criticism at the AGM.
FPH. How does that work?
I’ve been looking a bit at Fisher and Paykal Healthcare recently, an innovative company from NZ specialising in breathing related medical products. Ive always been interested in this company, and it has been a darling of the NZ sharemarket.
Its recently dropped in price, so I thought I would have a quick glance at its financials. When I look at a company, I quickly work out whether its making cash. Not net profit, but free cash flow. So, at the end of the year, does its bank account have more money than at the start, which can then be used for paying off debt, lavish parties etc. The theory is, so long as the company is spinning off cash, things arent going to go too far wrong.
Now, I was a bit surprised to find the FPH results. FPH makes a ‘reasonable’ amount of money from operations, 44 million in 2008 (2009 results not out yet). But they spent a chunk of that on capital expenditure, ie, expenditure that the company needs to make to continue operations, plant and equipment upgrades etc. So, you take that out of the money they make from operations. And then… they paid out 60+million in dividends. Now, if you only make 40 something million, and then spend 10-20 million on capital expenditure, and then spend another 60+ million on dividends, um, you’re left with a kinda sizable deficit.
So, where does that money come from? From borrowings. FPH does not appear to be able to afford their dividend payout, and this can be seen in the increasing size of their debt. Its not clear why their dividend policy is the way it is, but it doesnt seem sustainable, particularly if banks start being a bit more conservative in their lending policy.
Thoughts? Are FPH on the verge of profitting massively from their patents and innovative technology? Am I being way too bearish on a cool kiwi company?
2009 update: The 2008-09 FPH annual report shows the same trend. 62million cash from operating, minus 22 million of property/plant/intangible spending and 66million of dividends, leaves -26million in free cash flow, funded by… 37 million of new borrowings.
SGI, hit by the innovators dilemma bus…
When I was at Uni, SGI workstations were the workstations to use. I wrote my 4th year project, an Artificial Life simulation with 3d graphics, neural networks and the like on a SGI workstation, and it was like… woooo. SGI were big in graphics processing, and big in servers for big government organisations. Their hardware was seriously cool, and seriously powerful. And… expensive.
SGI was a computing icon, . Every geek knew about SGI, and they were cool. All the cool graphics apps ran on SGI processors. They bought Cray Supercomputers, the well known manufacturer of well… cray supercomputers. An icon.
And last week, their assets were bought by rackable systems (who?) for 25million. The end.
I find it fascinating, that a company that had such an iconic status, failed completely in about 20 years. 20 years is… a pretty good innings in technology terms, but SGI I think offers a lesson in the Innovators Dilemma.
SGIs market was high end computing. 3D graphics, moving processing from main frame computers to workstations for the first time. Unfortunately for them, the bus didnt stop there, but continued on to companys like ATI and Nvidia for 3d processing, and Intel/AMD for processing power. All the things that distinguished SGI became commodities, and their market became smaller and smaller as people shifted to those lower cost options.
Its a fascinating illustration of the innovators dilemma. What we can see now is that the bus still has not stopped, and companies like Nvidia struggle to reinvent themselves after years of growth led by increases in power. These companies might be the next victims of the innovators dilemma bus, as their products become commoditised. Unless these companies find new markets, it seems likely they will follow the path of SGI.
the crazy copyright struggle continues…
So, heres a story about the Pirate Bay guys getting pinged for providing Pirate Bay, which is a site that provides bit torrent, which is a peer to peer protocol that lets people download files from other people all around the world.
So they got done for copyright infringement. Does anyone else see the massive irony here? Technology has opened up these markets like never before, records and cassettes, cds, for music, and VHS and DVDs for movies. The long tail and all that. This technology allowed both musicians, actors, movie producers, and … the recording and production companies to make more money from more people than ever before. If you think about it in the movie case, before the advent of the video player, the only way people watched movies was at the theatre or on television. So movies had a really short shelf life. As far as I remember, that technology took off in the late 80s, so this market, of movies being purchased and watched by consumers has only existed for 20 years. Before that, the movie industry was profitable and popular. Before records, there were musicians who performed.
So the industry is complaining that the extension of a technology that made them more money than ever, is infringing on copyright. They are in fact having their ‘rights’ infringed, their right to make as much money as humanly possible from their artists. A ‘right’ that didnt exist 20 years ago (or 80+ years ago for records). A right that was provided by the very technology that they are trying to prevent people using in clever ways. It seems the industry want to have their cake (the technology that allows them to distribute further and cheaper than ever before) and eat it (no one else is allowed to use this technology).
This situation is not efficient. Information is free, so there need to be different methods of rewarding artists. Perhaps artists should only be rewarded for live performance? Maybe movies should only make money from cinemas? In any case, I think the record labels and distributors are a problem in themselves, and the sooner the internet make them obsolete, the better.
kiva, entrepreneurship in the world
We just got started with kiva.org which is a charity site aimed at microloans for people and groups in the 3rd world. You sign up, choose a entrepreneur who has a business idea to make some cash, send them a portion of the cash, and as soon as other investors join you and donate enough, the loan gets sent to that person. They go away, and make regular loan repayments. In the end, you… get your money back (theoretically!) and do it all again. Theres no interest involved.
I just really like the concept, and kiva is super simple. We made our first donation to a group of woman in Africa who wanted to buy food for a restaurant selling food to workers. That was about the scope of the business plan, but we decided on them mainly because they looked like what I imagined Precious Ramotswe (of Alexander McCall Smiths Number 1 Womens Detective Agency). Hardly the basis of successful investment, but then again, I invested in Telecom because I thought it couldn’t fall past $4.00. I’m betting on the African women before Telecom getting past $4 anytime soon.
So check it out if you have an entrepreneurial bent, mixed with a splurge of social responsibility, coupled with just a cool idea in action!
No Gordon, Greed is NOT good
As I’ve taken a more intimate interest in stock picking and trading, I’ve noticed something that I’ve never really experienced before. A sense of… greed.
For example, one of my stocks has been improving recently. So I feel this urge to put more money into that stock so I “don’t miss out!”. Pure simple greed. I have overseas shares, and I feel an urge to time the exchange rate fluctuations (ignoring the fact that I have no idea what the exchange rate will do!) to make more money. I recently sold Xero shares on the assumption that they would go out to the market to raise more capital, diluting the current shareholder base substantially and thus devaluing the shares. Now, Xero have gone to the market, they have devalued the share base, but the shares have shot up about 40%. I feel an urge to buy more Xero shares to not miss out! Even though rationally, I have little idea other than speculation why the shares have appreciated so much.
Pure, simple, unadulterated greed. I find it fascinating that it appears to be a very base emotional response. Now I’m very aware of it, so my rational mind can (most times!) crush it, but I never realised it is such a fundamental part of me. And I’m guessing I’m not alone…
predictions 2014
A few months ago, Shane, Kelvin and myself, along with Carl for a little bit, found ourselves in a bach on Waiheke island. It was lovely and sunny, the beach was about 100m away, so we stayed inside all day and talked about just about everything. And of course, predicted the future.
A quick summary of our predictions, so we can check these in 2014 (these are 5 year predictions).*EDIT* It should be pointed out that… we didn’t exactly agree on all of these. I’ve indicated the ownership and agreement/disagreement *EDIT*. In no particular order:
1. Obama gets 2nd term.
2. Stagflation period in the US, ie, recession coupled with inflation (Kelvin, I didn’t know what stagflation was…).
3. Digital camera market tanks, subsumed by cellphones.
4. PC Hard drive market vanishes, subsumed by flash memory (Shane partially disagrees, argues HDs will continue in big servers etc. Greg thinks big servers will also use flash memory to save power).
5. Android (or similar open platform) dominate mobile space (Kelvins, Greg disagrees)
6. Apple licenses Mobile Mac OS to drive people to ITunes (Gregs prediction)
7. Oil > $80/barrel
8. National second term, introduces a capital gains tax on property (Gregs, Shane disagrees).
9. Xero returns to market for funding in 2009 (looking like a pretty certain bet!). CORRECT.
10. One I forgot, Apple branded PCs have share of PC market > 20%!!! (Gregs, Kelvin disagrees and Shane 50/50)
11. Michael Jackson returns with a bigger album than Thriller (Ah, Kelvin. Greg and Shane…er… well… yes. That Kelvin…) As Shane said in comments, the odds of this one happening now are… slim.
The longer range forecast includes Shanes prediction of true machine intelligence within 20 years. It might be best to hope he is wrong about that!
Copyright and the sun.
Rowan has asked a pretty pertinent question, following the scrapping of the Section 92a of the copyright amendment act.
For those not up on the play, 92a basically said that people could have internet suspended if they were accused, presumably by music/movie companies, of infringing on their copyright. The ‘accusing’ word got a lot of people rightly worked up, and considering how ridiculous the clause was, it got a long way before being stopped. Judith Tizard, who in a fit of , well, not sure really, I guess just a fit, was the champion of the amendment, got this completely wrong. And so, after a lengthy process, the clause has been scrapped.
So Rowan asks… now what?
So my comment, and partial answer is: The landscape has changed forever. This cannot be legislated against. If I want to download your song/movie/et al that you spent ages and millions making and its on the web, I can. For free. You can argue about right and wrong, but you might as well argue against the sun coming up.
The thing that can be legislated against is me downloading your song, then using it in a commercial enterprise. This is already covered by copyright law. If it can be established that I am making money by unlawfully leveraging your IP, sue my sorry ass.
But if I am playing your song/movie, and giving it to my mates and they’re giving it to their mates, that is the nature of the landscape. There are winners and losers, I suspect more winners than losers, but thats another story. This is the reality. You cannot legislate against reality. Oh look, the sun is up.
So what does this mean? Whats the solution? There are a million examples of highly profitable industries being buried by technology changes. Artists need to ensure that people want to pay for the add-ons only they can provide. Movies need to generate revenue from cinemas. Like, well, you know, they used to, profitably, before the advent of the video player. Musicians sell concerts, and meta data type add-ons. And industry companies sell convenience, eg, ITunes store.
The industry has changed. In some senses, its just gone back about 50 years in terms of how to raise money from being an artist. In others, like being able to reach billions more people, the future is here. The world for artists therefore, should be a much bigger, better place. Interested in comments…!
the commoditisation of browsers
One thing you often see in business is a new company produces a product, which is great, but because its the first, its not the best thing since sliced bread.
A bit of time passes, then… another company brings out a competing product, with some better features. The first company responds and the arms race begins!
After a while, all the consumers have their needs met, and so new features are not very compelling to the marketplace. So the companies start competing on other things, customer service and the like, and finally, in the death throes of the market, on price. The product has become a commodity.
Like web browsers. Sure, web browsers have mainly been ‘free’ (unless you count IE!), and netscape/MS/mozilla/apple/google et al, have been competing on features. A new ‘better’, more secure, faster, etc way to browse.
I contend, no one really cares anymore. The browser is a commodity. In the past few months, I have used, IE 6, IE 7, Safari 3, Safari 4, Firefox 2 and 3, and Google Chrome. Now the IEs arent fabulous, but its not going to kill me. Everything else? Pretty much indistinguishable. I flip with wanton promiscuity between Firefox and Safari, and scarcely know I’ve changed. Everything kinda works. I don’t care anymore. Does anyone?
Browser market is dead.
xero comments
Kelvin has an excellent commentary on Xero, NZs own online accounting provider. I suspect Xero will have some very big problems this financial year, but all power to them! My major concern is simply the burn rate, and the fact that the Xero model relies on SMEs and SME accounting service providers converting to Xero. This appears to me to be a low speed model of acquiring customers, basically organic growth. Now this strategy is fine, if you have enough money to survive until customer numbers reach breakeven point. My suspicion is Xero doesn’t.
Xero is awesome. Its a fantastic piece of software, super-easy and very useful, and everyone should be using it. I just hope Xero has enough time to enlighten the world to its superiority.
back!
Phew, a busy few weeks, finishing up last contract for a cool startup, some time in Rarotonga which is a fabulous little island in the pacific, hooning around like a crazy man (well, a crazy man who doesnt go over 40kmh) on a little scooter, getting up at the crack of dawn to throw coconuts at crazy annoying roosters, and other island enjoyments. Then, house hunting and shifting in very short order. Fortunately, we have eliminated most of our heavy furniture by donating it to various charities, and the look of relief on the movers faces was touching.
Now, everything is back working. Except me, which is fabulous!
One thing I have been doing in my ‘spare’ time is investigating my share investments. I have a reasonable amount invested in shares, mostly bought on whims like “it just dropped 20%, must be a good time to buy!” (note, just because it dropped 20% doesn’t mean it can’t drop another 50%), and “I like what they’re doing” (which doesn’t mean anyone else does). And of course, Telecom. Why Greg, why?
So, I have been doing some fundamental analysis on the financial reports. Which is fun in a super-geeky, don’t tell anyone you want to impress, kind of way. I’ve found it pretty educational, and have recently invested in Restaurant Brands (RBD.NZ) and Michael Hill (MHI.NZ), so you can follow how I do! It is however, quite hard work on the NZ stock market, simply because to get the information, you need to sift through years of annual reports. So I wonder, how many people following the NZ market actually do this? Does your investment advisor?
An IQ test…
ok, so heres a little test.
You know how bacteria are dumb, and ants are smarter than bacteria, mice are smarter than ants, cats are smarter than mice, and dolphins and whales are meant to be even cleverer, and chimps and apes are pretty up there on the whole smarts thing right?
And right at the top of the heap is humans. The very top. Except that stupid guy and the drunk slapper you met at the pub the other night. Except them. But humans… we’re at the top. The peak of the intelligence scale. We’re all that. And a bit more.
Ok. Given that you’re so smart, heres a thought test….
Can you imagine, seriously imagine, something, smarter than you are? Not just a little bit smarter, like nerdy geeky guys, but a whole lot smarter? Like so smart, you can’t even begin to understand. You are to it, as cows are to us. That sort of difference.
Go on. Try.
keep trying. What would it be like?
And you can’t. Bet you. I can’t. I can imagine that such a thing would exist, but I can’t imagine how it would be. So, if such a thing were to turn up, what would we do?How would it be for us? To no longer be top of the heap, just somewhere a bit further down, with a vague realisation that there is something much greater out there, but not really having enough intelligence to work out much about it.
But… of course, no such thing will turn up. We’re the top of the heap, the pinnacle. Yessiree, its great to be us. The top of the heap….
We are, arent we?
compulsory rests for code monkeys
im a pretty good coder. i can code pretty much anything, and it turns out pretty good most of the time.
but one thing that keeps popping up is I find myself too close to the problem. I get this kind of tunnel vision thing happening, where I see a complex solution and go for it. And my mind gets taken up with the complexity of implementing the solution. And at the time, it appears the only solution to the problem.
unless I go for a walk. If I go for a walk, or a run, sit in a park, soak up the ‘sun’, often a new, more elegant, simpler solution will just present itself. I don’t even need to look for it, it just turns up. I sorta go “Hey man, I was expecting you”, and I implement the new solution, it works and is orders of magnitude better.
So I’m trying to train myself to go for more walks while developing. Sit in more parks when I have something complex to do. Its sometimes difficult, because as with my previous post, its impossible up-front to always appreciate the complexity of a given task, but I’m trying. Because the solutions found this way save massive amounts of time and money, and exponential amounts of maintenance down the track.
Now, imagine what this looks like to anyone ‘managing’ me.
“See you!”, I call cheerfully as I wander out the door, “I’m off to sit in the park for an hour or so… I’ll still be charging BTW!”
The 1st law of software.
Law: Complex software is hard, and increasing complexity leads to exponential increases in difficulty (and corresponding likelihood of failure).
Everyone needs to understand this law. It is a law.
This law, or more correctly, forgetting this law, is the reason for “massive budget overruns”. Its the reason for all failures in IT (except the one where the dev team get abducted by aliens).
Corollary: It is impossible to completely predict complexity before starting development.
Bugger. In other words, the difficulty of your project is impossible to accurately estimate. But it will get more accurate as development proceeds.
Therefore: Keep projects small. Build small. Then add bits. If you need to build a system that appears big, build bits at a time. “Impossible!” you cry at my foolish words, “We have to do the whole system, not just bits!”. That may be true. It probably isn’t, but it may be. But you’re forgetting the 1st law. Its a law dude. It doesnt go away because the client says “You have to do the whole system!”. You will do the whole system. Just bit by bit. This process takes a lot of up-front thought, always focussed on reducing complexity. Its a harder way to develop. But, because of the 1st law, its the way that leads to the maximum chance of success.
PS. Don’t use IBM products. Anything from IBM will suck your project under faster than a greased titanic. And … sorry J2EE, .Net, RubyOnRails et al. There is no silver bullet. Not even a shiny bronze one.
the end of ferrit
Telecom has shut down ferrit, according to http://www.stuff.co.nz/4816111a13.html.
I know a lot of people will be surprised at this, principally at how long it took to shut it down. Ferrit when it launched was a massive misfire, demonstrating Telecoms complete misunderstanding of the online shopping market. Ulitimately, if you bought things off Ferrit, you paid more than if you went to the shop.
Anyone who had used the internet (at all!) understood immediately that this wasn’t going to work, and lots of various commentators commented something like “Um, Telecom, this isn’t going to work. People want selection and a bargain shopping on the internet”. Telecom however, replied convincingly, “Yes it is”. And we all went… “huh? Why?” and they said, “it just is”. And so they spent millions proving us wrong… i mean… right.
It wasn’t that the idea was necessarily wrong, simply that the execution so misunderstood the use of internet for shopping. If you can go down to the shops and buy it for the same price, for most things people will do just that. If you start to save… >=20% (I made that number up, but it sounds about right), people will buy online.
And that includes shipping. The interesting thing is that a million people told Telecom this after the launch of Ferrit, a million more must have said beforehand, it was as obvious as the meteorite that killed the dinosaurs, but… Telecom knew best. I find that fascinating…
