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Everyone is on the Red Cross bandwagon these days.
But that was not the case before Katrina. The Red Cross was fiercely criticized for its reaction to 9-11. The criticism was bipartisan.
All was forgotten once Katrina hit. The only alternatives offered for giving wre overtly-religious organizations, ranging from the Salvation Army to Pat Robertson's Operation Blessing (number two on the Administration's hit parade).
Besides, you've got to figure, this was really more up the Red Cross' alley than 9-11, which in the end only took out the center of a well-insured central city, and completely displaced only a few tens of thousands. This was different, not just New Orleans but the parishes around it, and Mississippi all the way up to Jackson.
So how are they doing?
Let me take a stab at explaining Google's grand strategy.
Well, sort of. You may, instead of buying Microsoft Office, suscribe to Google's GMail and have a rudimentary office system with a gigabyte or two of storage.
But to say Google is going after Microsoft, the way we said Microsoft was going after IBM, is really to damn with faint praise.
Google isn't aiming at Microsoft, or at IBM. It's aiming at the entire computing-telecommunications complex, building out what I'll call the Google TeleComputing Environment.
The idea is to take advantage of not only the Internet's ability to disintermediate clients, but its ability to disintermediate the phone network at the same time, and to do this in an entirely open source way.
What do I mean? Here are the ingredients:
Google is flattening the world. More on what this means after the flip.
Skype, like most VOIP companies, is a tax arbitrage play.
The idea is that you avoid the tax costs of telephony by running your voice calls over an Internet connection. As everyone gets broadband, telephone service dies a natural death.
But neither the Bells, nor the governments they feed, are willing to go away quietly. I've written often about how it's done here. But it's done everywhere.
The same day eBay announced it would buy Skype, China started cracking down harder on Skype, and its Internet-Phone version SkypeOut. Unlike the situation with, say, Falun Gong, this is an effort where telephone firms are, not reluctant, but eager co-conspirators.
"I'll take Bubble for $100, Alex." (That's 2004 Jeopardy mega-winner Ken Jennings, whose 15 minutes of fame are now up.)
And the answer is, "The final proof of the second Internet bubble, in 2005."
"Correct. eBay paid $2.6 million in cash and stock for a company that had few revenues, no profits, and hardly any business model, and whose operations were completely incompatible with eBay's own."
"I could understand the stock, and even understand the press claims the deal was worth $4.1 billion. It's the cash that gets me."
Over at ZDNet, Steve Gillmor (left) has a wonderful commentary that got me thinking about a financial disease, one to which corporations like Microsoft are addicted and by which users like us are burdened.
I call it Upgrade-itis.
Back in 1985, you would have spent big money to get an Intel 386 chip, with over 100 Megabytes of storage, and a local network that ran as fast as 1 megabits per second.
I know I didn't have one. The closest I saw to one that year was an entrepreneur 10 miles north of me who had a Digital Equipment PDP-8 minicomputer in his office.
Yet that is just what you see in the picture to the right:
George W. Bush's Bridge to the 19th Century has deposited us in 1881, in the era of the Spoils System.
The spoils system was instituted by Democratic President Andrew Jackson. "To the victor goes the spoils" meant that every government job belonged to the party in power. Postmasters, and port managers (big jobs in those days) were all political hacks.
The movement against the spoils system was led by a Republican named James A. Garfield. He was elected President in 1880 alongside a representative of that system, Chester Alan Arthur, former port commissioner for New York. He wasn't a perfect vessel for reform, but he moved in that direction.
The picture illustrates what happened next. Garfield was shot, killed, by Charles J. Guiteau, a "frustrated office seeker," in other words, a party hack who was upset that Garfield wanted to bring competence to government. (Guiteau, in fact had visions of becoming Ambassador to France.)
I think nearly all Americans can now agree that the biggest mistake made after 9-11 was avoiding a call to sacrifice.
(Picture from the BBC.)
My generation has never been "in" to sacrifice. It was our parents' thing. They went hungry during the Depression, they risked their lives during World War II, and then they stayed together, working hard, so that their kids (us) would have "everything."
Which we do. Our lives are very comfortable. Most Americans have cars, and TVs, and air conditioning, and healthy food in our refrigerators whenever we want it. We can take vacations. We can get fat. Then we can pay to have the fat stripped away and get fat again.
Maybe that's the real Vietnam syndrome. Those of my generation who felt the call to sacrifice as young people died in rice paddies, or had their dreams shot away. Frankly it doesn't matter why anymore. No matter what side you took in that war, get over it. We're in a different era.
These days sacrifice must be forced on us. And for many this week it has been.
Cingular has apparently agreed to offer the Motorola-made iTunes phone.
Don't you all feel better now?
A Great City must be evacuated. Then it must be rebuilt.
After the people are gone -- all the people -- the logistics of what must happen in New Orleans next are daunting. We're talking about debriding America's gaping wound and rebuilding a kidney on a massive scale:
It's the biggest civil engineering job ever attempted.
Om Malik has a wise commentary today on how peer-to-peer services (p2p) is the killer app for broadband.
He offers a Cachelogic chart showing how p2p services (but more specifically eDonkey) are driving total Internet traffic. In fact, more than half the total Internet traffic monitored by Cachelogic, according to the chart, is eDonkey traffic. (The illustration was copied from Malik's blog, but credit should go to Cachelogic.)
Then Malik makes some really key points (boldfacing is mine):
There's a news report out that Hawaii wants to cap the wholesale price of gasoline, because it has gotten too high.
Of course we know that won't work. Refiners will simply ship their product elsewhere if it can get a better price elsewhere.
But ever since I visited the Big Island in 2001 I have felt that Hawaii's energy situation is, frankly, reversed. The island has immense stores of natural energy -- waves, wind, and vulcanism.
All you have to do is tap it.
See if this sounds silly.
There's a chain of bookstores in South Georgia that hold a secret.
I discovered it on the way back from a convention in Orlando one day, desperate for some present to give my book-loving wife.
Stacked floor-to-ceiling in these stores are "best-sellers," nearly every "big" title from a right-wing hack delivered over the last decade or more. There's Laura Bush's autobiography, alongside the Swift Boat attack on John Kerry and titles from the whole Fox News pantheon. There are right-wing preachers, firebreathers, and a ton of get-rich-quick books by folks who, if they really knew that much, would have gotten rich some other way.
Do you know anyone reading this dreck? You might not.
NOTE: Many of the claims made in the item below have been questioned by Russell Shaw. See the full story here.
It's ironic, but my first invitation to use Google Talk came from Pakistan. From Karachi, actually.
Specifically it was from a long-time online friend named Tariq Mustafa (known as Tee Emm), who works in the high-tech sector there.
I am really excited on this Google IM thing (and so would be tens of millions of users very soon). I think I was ahead of you just because of the time-zone difference. Anyway, here is the summary I wanted to share with you of the excitement.
Why the excitement? IM has been around for ages.
The excitement is because this isn't really IM. Or it's not just IM. It's VOIP, integrated from the start with IM.
What this does is absolutely kill international long distance in a way Skype only dreamt of. I'm actually a naive user, but I was able to download, and load, a VOIP client (with IM) in less than a minute.
So can anyone else, anywhere else.
More from Tariq after the break.
Krystal restaurants (think White Castle with mustard, Kumar) have finished a full year with their free WiFi hotspot program, and have decided to extend it to all 243 company-owned restaurants (as well as recommend it to their 180 franchises.)
The evidence of increased sales are anecdotal, but CIO David Reid told CMO Magazine he has already tracked a bottom-line advantage.
That's the day the new bankruptcy law kicks-in, and credit card banks get hit by a double-whammy of their own creation. (Illustration is from Howstuffworks.) Be careful of what you ask for, because you just might get it:
How can this be bad for banks, who after all pushed for the legislation?
The asking price is $334,900.
I remember the Garys, from back in the day. Nice people. Salt of the earth. He was a deacon at the church. She loved him desperately. The mantle was already filled with pictures of grandchildren when I met them, in the early 1980s. I went there regularly for block meetings. They said we were crazy to pay $49,000 for our house.
Mr. Gary passed away in the late 1990s. (God rest his soul.) She finally moved out with some of those grandchildren, a few years later.
They had gotten an unbelievable offer.
Oil, like other commodities, is priced based on a contunuous auction, demand measured against supply. (The picture is from a primer on peak oil, courtesy Energybulletin.net.)
Supply has become inelastic. Not just the oil, but its refining. No one is building new refineries (not in this country). When supply gets really tight we actually import gasoline.
The problem is that demand has also become inelastic. I'm talking to you, mister. No one seems willing to make a change, to reduce their demand for oil, gas, and electricity. Back in the 1970s people switched to smaller cars, they didn't drive as much, they even boosted the thermostat. Now, nothing. We get in our SUVs, we take the freeway 40 miles to work and back, we drive all over hell-and-gone for various reasons (kids, shopping, etc.) and we usually leave the A/C on high while we're gone.
So we have an episode of the BBC's show Cash in the Attic.
When old business patterns die, those who lived by them become confused. They often start throwing money in a variety of different directions, many of which they probably know are Clueless, in hope of picking up the scent of profit. (This picture, from Pravda, came up in Google Images when I entered the keyword mystery.)
It's unusual for many industry leaders find themselves in this position without a full-on economic panic ensuing. In fact, the economy is in pretty good shape right now.
But the tech portion of the U.S. economy is in full-on crisis mode, as you can easily see by looking at a few headlines:
Today's politics is cultural.
Even economic and foreign policy issues are, in the end, defined in terms of social issues. This creates identification, and coalitions among people who might not otherwise find common ground -- hedonistic Wall Street investment bankers and small town Kansas preachers, for instance.
I am coming to believe the next political divide will be technological. That is, your politics will be defined by your attitude toward technology.
On one side you will find open source technophiles. On the other you will find proprietary technophobes.
It's a process that will take time to work itself out, just as millions of Southern Democrats initially resisted the pull of Nixon. Because there are are divisions within each grand coalition we have today, on this subject.
This latter split gets most of the publicity, because more writers are in the cyber-libertarian school than anywhere else.
Initially, the proprietary, security-oriented side of this new political divide has the initiative. It has the government and, if a poll were taken, it probably has a majority on most issues.
But open source advocates have something more powerful on their side, history. You might call it the Moore's Law Dialectic.
Either my wonderful mother (who still walks among us, to my great joy) failed to check the box indicating I was a citizen on my Social Security application, or some clerk failed to do so when the data was entered because there were separate forms then for citizens and non-citizens.
The clerk who put me through this hell blamed "Homeland Security." But I think he was really responding to the reality of how this number is used.
As I've noted many times before, the Social Security Number is an index term. Everybody has one. Everyone's number is different. By indexing databases based on Social Security Numbers (SSNs), government and businesses alike can make certain there's a one-to-one correspondence between records and people.
Stories like this AP feature don't really address this need, this fact about how data is stored. Without the SSN we'd have to create one. Some companies like Acxiom do just that. Every business and individual in their database has their own unique identifier, created by the company. Which also means that the Acxiom indexing scheme is proprietary. The only way toward a non-proprietary indexing scheme, in other words, is for government to provide one. Which gets us back to the need for an SSN.
Sam Walton was devoted, first and foremost, to his employees. (That's the cover of his autobiography at right.)
He was famous for driving around the country, arriving unannounced at stores, leading employees in cheers. It was almost Japanese.
People forget today, but Wal-Mart salaries in its early days represented big raises for rural people who otherwise faced lives of poverty, absent the small luxuries city folk took for granted. Thanks to Sam Walton, Wal-Mart employees could afford to shop at Wal-Mart. He transformed America from a land of rich city-poor country to one of middle class uniformity, and if you once lived on the poorer side of that divide it made him a great man.
Henry Ford was the same way. His River Rouge plant didn't just turn out a low-cost car (the Model T) . It turned out well-paid workers who could buy those cars. Ford, too, revolutionized America, making this a nation on-the-move.
My point today is that, in both cases, there were side-effects, which demanded renewal and change. And the refusal to change just delayed these crises -- it didn't prevent them.
I should not be a fan of Dr. John Rutledge (left).
His economic prescriptions are unrelentingly right-wing. He's a social Darwinist, a raging bull.
But he's not an idiot. He understands money. He knows trouble when he sees it. And, on his blog this week, he sees it.
The process of China's inevitable Yuan revaluation has begun.
In a series of blog entries Rutledge ticks off what's happening.
Amid the hullaballoo over CardSystems International, here's a little story that you missed.
Not just any bank. A special kind of bank. An industrial bank, in Utah.
No offices, no direct deposit. Mainly, they exist to handle credit cards and other consumer loans. I'm sure the terms are very favorable, because big corporations are hotter for these than Donald Trump is for endorsement dea.s GE, Merrill Lynch, American Express and Target all have them. Berkshire Hathaway is setting one up to make loans for its R.C. Willey Home Furnishings stores. (Betcha didn't even know Buffett sold furniture.)
Readers of The Chinese Century know it begins with China allowing the Yuan to float against the Dollar, and then pushing the Yuan up in the market.
The first step toward that reality was taken today. (The image is from the China Daily article.)
Instead of having a fixed rate against the dollar, China will let the Dollar rate float against a "basket of currencies." So if the Dollar falls against, say, the Yen (and it did in response to this news) or the Pound (ditto) or the Euro (mega dittoes) further moves might be made.
The Optimist Club, otherwise known as Wall Street bulls, suggested this will make our exports more competitive. That would be great if we had exports. In fact, it makes imports more expensive. It imports inflation.
It also reduces China's own production costs, because oil (for now) is priced in Dollars. With fewer Yuan needed to buy Dollars, the price of oil to China goes down.
Adam Penenberg channels
IDC IDG head Pat Kenealy (left, by Jay Sandred) on another of those occasional "you're going to have to pay for Web content someday" pieces we see every so often.
Well, he's right. But he's also wrong.
He's right because there's already some Web content people do pay for. Dow Jones loses reach and influence, but does make money selling online subscriptions. Lexis-Nexis and Dialog haven't gone free with the dawn of the Web. Last time I checked iTunes was selling songs online, at a profit.
He's wrong because he insists that "micro-payment technology" will stimulate the growth of pay-for-play content. We've been hearing that one for 10 years now, and it's as wrong now as it was in 1995.
There's already a micro-payment program in place. A very successful one.
Let us now praise a famous brand, Visa.
One of the differences between card processing and many other businesses is that you're totally dependent on a few big players for survival.
Of the three big guns -- Visa, Master Card and American Express -- the first is most important. The bank association's changing requirements are generally a road map for other processors, defining necessary changes under enforced deadlines.
When Visa pulls its business from a processor, even for a little while, it's terribly destructive. When they do it permanently, and publicly, it's time to get out the resumes. When they do it alongside American Express, it's a corporate death penalty.
UPDATE: My saintly wife (that's the original St. Jennifer there to the left) notes the AmEx decision is effective at the end of August. Visa's decision becomes effective at the end of October, so you might call them the "good cop" in all this.
What I found most fascinating, however, was what was below the headline.
Monty Python used to have a running gag called the Gumbys. They would put on moustaches, shorts, place diapers on their heads, and talk sheer lunacy for effect. CORRECTION: There's an update to this piece below the fold which could make this reference even-more apt.
This guy is so Clueless that, in an age when any wingnut can practically become a millionaire by snapping his fingers, he can apparently get his stuff published only in the New York Sun, a right-wing daily with few readers, no business model, and a crappy Web site that won't let you inside its home page without giving them tons of personal information. So no link.
Instead, you'll have to read the whole thing:
Since Mark Hurd left NCR to run the mess Carly Fiorina made of Hewlett-Packard in March, he has been fighting to turn the old boat around. The company turned in solid numbers in May, he hired away Dell's CIO, Randy Mott, and now he has the credibility with his board needed to prune the deadwood.
H-P has a lot of deadwood.
In buying Compaq, her signature move, Fiorina took on a lot of old, tired, even worthless brands, like DEC and Tandem. Compaq's latter-day strategy had been to buy these outfits for their book of business, and Fiorinia's deal was the apotheosis of this old-line industrial strategy. She insisted at the time there would only be a few survivors of the PC wars, and buying Compaq was the only way to make sure H-P would be one of them.
She was wrong. What works in steel does not work in tech. A book of business is worthless, because computers are short-term capital goods. It's not what you did for me, or even what you did for me lately, but what you're going to do for me tomorrow that counts.
But enough about the past.
For people who like gaming, their games (or online environments) are their main interface to the Web. This has been true for some time, and unremarked upon.
There are other new interfaces that many people depend upon. The iTunes player can be an interface, when linked to Apple's Music Store. Any music player, or multimedia player, is a separate Web interface, which may or may not connect to a Web page at any time. People who swap files use those programs as interfaces.
The point is in many niches the Web browser has already been replaced as the main interface to the Internet. Microsoft's five-year campaign to dislodge Netscape was worthless, which may be why they're letting Firefox run off with so much market share.
And now, even readers are getting their own, separate interface, the RSS reader.
I use FeedDemon. Steve Stroh uses NetNewsWire on his Mac and calls it fabulous. This field has yet to shake out.
I have noticed some big differences occur in my work when I'm using FeedDemon instead of the browser as my interface to the Web:
Steve Stroh has more after the break:
A reporter can make a good living just covering Microsoft.
This is not a good thing.
One fact that attracted me to technology journalism in the first place was its social mobility. I often write about companies I call "Clueless" and find they have disappeared practically before I can get the piece into digital print. Those that are "Clued-in" can also fall quickly, corporate management in this space being much like tightrope walking.
Intense competition makes for rapid evolution. Call this Dana's First Law of Competition. Markets in India and China are intensely competitive. You can't let your guard down for an instant. This is a very good thing.
It's not what human nature wants, of course. As people we want to relax, to enjoy our lives, to set the competition aside sometimes so we can, say, raise our families, get more education, or retire with dignity.
Both Microsoft and the government had opportunities to prevent this, to re-ignite competition. They chose not to take these opportunities.
Bill Gates had one vision for Microsoft, but the company has gone beyond it. He was wise to pass the baton to his majordomo, Steve Ballmer. Ballmer is all sales, all the time, a whirling picture of aggression. (He's also, admittedly, what we call on this blog a Truly Handsome Man (grass don't grow on a busy street) but looks ain't everything.)
Ballmer's vision isn't really about technology. It's about exploiting advantages and making money.
So at Microsoft's recent Worldwide Partner Conference in Minneapolis (Minneapolis?) we got headlines like these:
This is just one corner of the news Microsoft made last week.
The search for online business models is a continuing fascination of mine at A-Clue.Com.
You may have great merchandise, you may have great service, you may have a nifty shopping cart. But if you can't bring the values of your shop floor to your Web site, you won't succeed online. Over time you may not succeed offline either.
An editorial mission replicates the value of your store online. What is your Unique Selling Proposition (USP)? For Amazon it's a database, a huge variety of merchandise. Works for Amazon, works for Wal-Mart, but it won't work for you.
In fact, Wal-Mart's failures online can be attributed to this editorial mission failure. They were unable to replicate the values of a real Wal-Mart in their online efforts. While the store looks a jumble, regular shoppers know you can actually get what you want there fairly quickly. What they should have enabled was a form of "shopping lists" that people could print-and-use at home, adapting to their own needs, then input regularly on the site, along with a delivery service.
The difference between editorial values and commercial values is that the one defines what you are, and the other puts your name in mind. If branding is to be worthwhile you must deliver the values the brand promises. That is exactly how editors think, too. What you call your reputation they call credibility.
NOTE: That's the royal crown magnolia from mytho-fleurs.com. Like it? It's yours.
A long evening spent reading Lasica's book brought the title to me: King of Irony.
Remember, this is a book. Thus it is subject both to a book's business model and its rights regime.
Want a copy? $25.95 plus tax and (if you buy it online) shipping get it for you. Or wait for it to appear at your local library. Or borrow one from a friend, free. Or wait some months for it to appear in a discount bin, or a remainder lot, or a garage sale. The price you pay is a function is a function of the time you're willing to wait for it.
What can you do with this book? I typed an excerpt today by hand. The length of the excerpt, again, is a function of time, and the cost of my time to produce it, unless I want to string it out a page or two. In that case, technology might be deployed -- a scanner -- plus a few minutes with the scanner's OCR software, some cutting-and-pasting, and voila!
Want to steal some more? Production costs are going to get you. A Xerography process may give you a bound book for just a few dollars, if your order is small. An offset process costs less per book, but the order in that case must be bigger. I guarantee the printer will want to know you're a Wiley fella (or lady) before they take the order.
And we haven't even cracked the cover yet. Easy to see where Lasica's crown comes from.
Given the direction of antitrust law recently I was surprised to see the recent suits by AMD and (more recently) Broadcom. They left me scratching my head.
But there is an answer to my quandary.
Antitrust has become a process. It's not a goal, but a weapon in the business war.
The idea that Qualcomm has a monopoly in the mobile phone industry is laughable. It may abuse what position it has, charging chip makers like Broadcom the equivalent of an "intellectual property tax" in areas which use CDMA (and its variants). But GSM is the major world standard. It would be like calling the Apple Macintosh a monopoly.
The Broadcom antitrust suit comes right after it filed a patent suit against Qualcomm, accusing it of violating Broadcom patents regarding delivery of content to mobile phones.
The first shot didn't open up the Qualcomm ship, maybe the second will. All lawyers on deck!
Don't like fiction? I understand.
But you still need your summer reading. The season is upon us.
So might I offer you the latest from my new friend J.D. Lasica, Darknet
I've been covering the Copyright Wars for nearly a decade, and wish I had looked up from the day-to-day to try something like this book. Its subtitle is Hollywood's War Against the Digital Generation, and it covers a ton of ground.
If you're not familiar with the digital underground, or what digital editing is capable of, then Lasica's book will be a revelation to you. Even for old hands like me it's good sometimes to get it all down so you can ponder it as a whole.
When the Comdex show closed its doors a few years ago a lot of people threw up their hands and decided it was some sort of secular turning-point, the lesson being that people didn't do trade shows anymore.
Well it was a turning point. But not of the ind they thought.
Fact is, Comdex lives. It lives in Taiwan, and it's called Computex.
The show just finished, and the reports are still dribbling in. But what's clear is that the same spirit of innovation, the same corporate social mobility, and the same establishment of distribution that marked the Comdex show in its heyday all took place in Taiwan.
This is meaningful on several levels.
It's nice when "real" (paid) market analysts agree with one of your premises. Especially when it's a key premise to you, as Always On is to me. (This is advertised as an Always On Server, from Virtual Access.)
So I was pleased to read Chris Jablonski's recent piece at ZDNet, Forget P2P, M2M is where the next party is.
M2M stands for Machine to Machine (ironically this sits right below an item about how poor most tech nicknames are) but we're talking about the same thing, intelligent sensors linked to wireless networks. Programming the sensors to deliver some result, then automating delivery of the result in some way (sending an alarm, telling the user, etc.) is what I mean by an Always-On application.
As I have said here many times the tools are already at hand, and cheap. We're talking here about RFID chips, WiFi and cellular networks, along with standards like Zigbee that let these things run for years on a single battery charge.
There are problems with every application space, however:
AMD is the most infuriating company imaginable.
If Intel is the big dog of the chip world, AMD is the little dog jumping around it, nipping at its heels, acting like it (not Chipzilla) owns the street.
Its latest legal assault may be its dumbest move yet.
Strictly from a timing standpoint, it sucks.
This Administration does not look kindly at anti-trust claims. They settled with Microsoft, they gave the cables and Bells a duopoly (leaving America a third-world broadband country), and they seem content to let China monopolize world trade while India gains control of services. All this is in pursuit of an ideology that becomes less-and-less distinguishable from Putinism and Kleptocracy by the day.
Short form. If they had a case they should have filed it in Europe.
The recent theft of 40 million card numbers at CardSystem Solutions is a turning point in the identity theft wars.
Previous thefts involved third parties, insiders or numbers left in bins, things that are easily fixed.
The CardSystems case stands out, first, because it happened at an actual processor and second, because it involved the use of a computer worm.
My wife works at a payment processor in Atlanta (most processors, for some reason, including CardSystems, are based here) that has (knock on wood) not been hit (yet).
Former RIAA president Hilary Rosen finally gets it about copyright.
This volume needs to be embraced and managed becasue it cannot be vanquished. And a tone must be set that allows future innovation to stimulate negotiation and not just confrontation.
Her column at the Huffington Post (she apparently chose not to take feedback on it) is filled with honesty about both the tech and copyright industries, honesty she never admitted to (in my memory) while shilling for the RIAA.
But is it possible that this honesty is what finally caused her to leave? (Or did her life, and its imperatives for action, take precedence?)
That would be a shame, because the fact is, as she writes, that the answers here must lie in the market, not the law courts. For every step the copyright industries take in court, technologists take two steps away from them. This will continue until the copyright industries really engage consumers with offerings that are worth what they charge, and which aren't burdened with DRMs that restrict fair use.
Irregular readers of this blog may think Gordon Moore invented the microchip.
He didn't. Moore did have a major role. He was part of the Fairchild team, co-founder of Intel, and his Moore's Law article popularized the changes that chips would bring.
But Jack Kilby won the Nobel Prize for the microchip, in 2000. He died today.
The original invention, designing multiple devices on a single piece of substrate, was invented in two places at once. One team, which Kilby headed, worked at Texas Instruments. The other team, with Moore, Robert Noyce, and other key men, worked at Fairchild Semiconductor.
The resulting patent was shared, but it was Kilby's team that created the basic technology. The key contribution from the Noyce team involved manufacturing process.
More on Kilby after the break.
The topic this week might be called the new media's old media problem, with a proposal for solving it. (I have no idea whether the book here is good or not. If someone can send me a link to sales, we'll see.)
In software terms blogging and commerce are incompatible. They're two trains running on different tracks.
Bloggers aren't really thinking of making money. They may put up begging bowls, and they make take BlogAds, or put in Google AdSense, but their Achilles Heel is that, when they think of money at all, it's in Old Media terms.
Let's sell ads.
Community Networking Systems like Scoop, Slash and Drupal also share this problem. They have an advantage over blogging systems in that they can scale. They can take a lot of traffic, and a lot of users. Those users are empowered to create their own diaries, or polls, or multi-threaded comments. But again commerce is secondary, in this case even tertiary. The most successful "commercial" community sites are those, like DailyKos and Slashdot, that direct people off-site to give money or time to important causes. There is no built-in business model.
Critics of the idea we're in a housing bubble usually bring two main arguments to the table.
I don't buy it.
It should surprise no one that "professional" journalists hate Wikis and blogs.
A little history lesson shows you why. Only this one's fun. As part of your summer reading get yourself a copy of H.L. Mencken's Newspaper Days. (That's Mencken to the left.) It's his memoir of Baltimore's newspaper business around the turn of the last century.
Newspapermen at that time were lower class, hard drinking, smoking, swearing, worthless ne'er do wells. You wouldn't bring one home to mother. They hid in saloons, spun lies, spied on people, made less than the corner grocer, and were generally shiftless, lazy bums. Despite this, they considered themselves a class apart.
This last is still the case. But today's newspaper writers are either middle-class bores or upper-class twits. Those who report on Washington, write columns or work on editorials are among the most twittish. Many make more than the people they cover, especially if their faces are on television.
Blogs, wikis and the whole Internet Business Model Crisis threaten these happy homes. (Although I've got news for them -- stock analysts treat newspaper stocks like tobacco stocks and their ranks are being thinned like turkey herds in September. They'd be a dieing breed even without the Net.)
What's most galling to "professional" journalists is not the loss of jobs, or money, but their continuing loss of prestige. On the upper rungs of the ladder they're being replaced by "players" -- sports stars, lawyers, politicians, former entertainers. On the lower rungs they're being driven into poverty -- we've talked before of the corrupted tech press. And in the middle rungs you've got these blogs, wikis and the continuing problems of being treated like a mushroom. (You're in the dark and they're throwing manure on you.)
Our times are, in many ways, a mirror image of the 1890s.
The people you want working for you are not necessarily the people who want to work for you.
This is one of those hard truths that everyone knows and no one talks about.
Because it's not just a truth at Microsoft.
Ledgard's post, which she later felt duty-bound to soften, told a real truth, and the fact she felt compelled to soften her tone speaks loudly to just how bad the problem is -- across corporate America.
The people doing the hiring, and the people seeking those positions, both think working at Microsoft (or wherever) is the greatest thing since pasteurized milk. In some ways it is. Look at the medicine cabinet you get to use at Microsoft (at the top of this item). Look at the salaries, the benefits, the family-friendly attitude. It's paradise.
I guess I felt a little down this week -- about the direction of technology, about the economy, about a lot of things.
There are times when history, like television, goes into re-runs.
We have literally turned Iraq into another Vietnam. But we've seen this movie before, so when Rumsfeld does his McNamara imitations, or Bush plays like LBJ's dumber brother, we change the channel.
Yet the fact is that when history repeats (unlike television) it does so in spades, in triplicate.
World War I was horrible. World War II was worse.
Iraq is not the only Vietnam repeat out there. We're doing the same thing with the Internet.
We're ignoring history. We know what would work to secure our computers, and the networks they run on. But we don't act. So we get this incremental escalation, this drip-drip-drip that leaves us, in the end, worse off than we would be had we taken decisive action at the start.
There are laws on the books that should deal with spam, with spyware, and with the problems of identity theft. They can be found under headings like fraud, theft, and fiduciary responsibility. Nothing is being done today that wasn't done before - only the means have changed.
Instead of moving against these problems together, as was attempted in the 1990s, we're leaving everyone on their own, and sometimes the cure winds up being worse than the disease.
When evolution accelerates size becomes a disadvantage.
It's true in nature, and it's true in technology as well.
The Bells (and Comcast) are the big bottlenecks in our technology universe. With Moore's Law sweeping through the telecomm landscape they are competitive liabilities in our economic ecosystem.
There is no malice in saying this. The Bells can't help being pointy-headed bosses. They are bureaucrats. Their loyalty is to the inside of their system, not to the customer. In a stable environment the ability to retain such people is a boon. In an unstable one it's disaster.
More proof comes today from Techdirt. It's a so-called BellSouthWiMax trial. But it isn't WiMax. It isn't new technology. It's an excuse to keep charging $110/month for DSL ($60 for the phone line) when the phone component is (with VOIP) unnecessary.
The 1990s were all about the Internet. (The picture is from a great site called i-Learnt, for teachers interested in technology.)
This decade is all about gadgets.
Digital cameras, musical phones, PSPs, iPods -- these are the things that define our time. While they can be connected to networks their functions are mainly those of clients.
In some ways it's a "back to the future" time for technology. We haven't had such a client-driven decade since the 1970s, when it was all about the PC.
In some ways this was inevitable. The major network trend is wireless, so we need a new class of unwired clients.
But in some ways this was not inevitable. If we had more robust local connectivities than the present 1.5 Mbps downloads (that's the normal local speed limit) we would have many more opportunities to create networked applications.
When something is overpriced there are always excuses.
I had a friend tell me the other day, with a straight face, that housing is still a great buy because the population will keep growing. Maybe so, but prices are a function of the amount of capital available to buy the goods, not the size of the population. Just because there are a lot of people in Soweto doesn't mean you should plunk down 100 million rand for a shanty.
The housing bubble, in other words, is based on unrealistic expectations. People are taking out interest-only loans, adjustable rate loans, and loans of over 100% of the purchase price, because they expect prices to go up faster than interest rates, indefinitely. True the length of a bubble economy is indefinite, but it definitely bursts in time.
Here's another bubble. Google. Sorry, it's not worth $80 billion. It's worth some multiple of its earnings, and with earnings growing quickly it's worth a premium on that. But it's not worth 25 times its sales of $3.2 billion. No company is. Some part of that valuation, maybe a large part of it, is pure speculation.
The folks at CNN fell for the hype from a project called RepRap, a rapid prototyper from the University of Bath in England. (The picture is from the CNN story and shows a robot built with RepRap.)
The machine that can copy anything was their breathless headline.
Well, yes. And no.
The folks at RepRap would like you to think they've got something truly revolutionary. But they don't. The technology has been around for some time. You need to input a lot of files to make anything, so there's a lot of intellectual capital involved.
And here's the kicker.
This week I returned to the topic.
The reason why publishers have no editorial budgets with the move to the Web is simple. (Image from Websitecenter.)
None engage in Deep Commerce. Instead, they still just sell ads.
The word for today is consolidation. (The illustration is from a report on market consolidation in the business intelligence software business, from The OLAP Report.)
It is a very bad word, scary in fact.
Let's use it in a sentence, shall we?
Why is consolidation such a bad word?
Because it means that innovation is over, that the business is now about squeezing out profits. Unemployment inevitably follows. So too does bad service.
When businesses consolidate consumers have fewer choices. It's harder for them to go somewhere else when they're pissed off. This creates an enormous financial incentive for companies to do just that. And they do.
What's the cure for consolidation? There's really only one.
We do have a values problem in this country. (The illustration is from a Mormon-oriented marketing outfit.)
Too many of us have short-term values.
I could go off on our leaders over this, but leaders need followers, so I'm going after you instead.
We see this on the Internet all the time. I think this new XXX TLD is a perfect example. It doesn't answer the question -- what's sexual and what should we do about it? Just build a ghetto and toss Jenna Jameson in there -- oh and Planned Parenthood too. Then what, Adolf?
It is so easy to outsource our software production, to let Taiwan and China make our chips, to do everything we can to discourage kids from getting into tech. Our kids want to win American Idol. India, meanwhile, has a reality show called "the search for India's smartest kid."
Which country do you think is going to win the future, hmmm?
As the graph shows, the phenomenon is familiar to anyone who blogs, and the challenge is to find a way to profit from it.
Stuff on the left side of the curve has business models. Stuff in the middle is struggling for a business model. Stuff on the right has no business model.
As you can see by looking at the endorsements on the left side of Anderson's blog, the Digirati are reacting like Anderson just discovered fire. And the Long Tail is no less obvious.
What's non-trivial is finding a way to profit from these atomized markets.
Google does it. TiVo does it (sometimes). But must those who profit from the "market of one" all be scaled? What about the creators? And what are the consequences of that?
What we've seen in the market, since the rise of the Internet, is an increasingly-shorter tail. Middle market books don't sell. Independent movies are having more trouble getting produced, not less. Musicians who used to live decent lives on record company contracts find today they can't get a sniff.
Are you an American in e-mail contact with your doctor?
I didn't think so. (This fine bronze of a cadeusus, the medical profession's symbol, is by James Nathan Muir, who wants patrons for putting copies on all the world's continents.)
There are two reasons why you're probably not in e-mail touch with any of your physicians:
As a result most doctors remain in the Land of Lud. And the cost to their patients is immense. I just spitballed a few:
Often the very thing you criticize others for is your own blind spot.
This was never more true than in Nick Kristof's piece (that's him at the left) yesterday called Death by a Thousand Blogs. China's authorities can't keep up with the content produced by broadband, he says. Their legitimacy is drowning in the resulting revelations.
He could have added the impact of cellphones to that. The ideographic Chinese language lends itself to delivering great meaning, even in small files, as the country's cell phone novella make clear. With 90 million new phone users just last year, with every year's phones becoming more data-ready, there's no way the Great Firewall of China can stand.
But what's good for the goose is also sauce for the gander. Kristof's very point speaks to the bankruptcy of pulling his column, and those of others, behind a paid firewall. They are too easy to replace. Their financial value is minimal compared to their value to the discussion. Losing the latter to gain some of the former is truly cutting off your nose to spite your face.
This is not the only lesson.
Juan Cole today headlines a think piece on Iraq, "Sometimes You are Just Screwed."
I don't disagree. The insurgency has become a meat grinder, but bugging out would mean total defeat. The Army lacks volunteers, and there's no appetite for a draft. It is (as I feared it would be years ago) a Tar Baby, and it's destroying our economy as well as our military.
If that were all that was going wrong it would be bad enough. Vietnam cost 58,000 American lives and Iraq has already wounded one-third that number -- over 12,000 troops, over 6,000 contractors.
Getting into a second Vietnam is bad enough. But that's just one of three terrible fates facing the U.S. today.
Now that high-tech corporations are being held up (by smaller companies) there's a move afoot to reform the patent system.
Here is a simpler proposal, one in keeping with the intent of the Founders.
There's a reason why journalists should be paid, one that people like Fuad Kircaali ignore at their peril.
If you're a "volunteer" (unpaid) editor at a Sys-Con publication, and a vendor offers you money to spin a story their way, what's the risk in your taking it? Sure, if the boss finds out you might lose your job. But you're not being paid. And this assumes that you're being closely monitored -- the quid pro quo of being a volunteer editor is generally that you're not.
On the other hand, if you're a working journalist and your income (thus your family) is dependent on pleasing the publisher, we have a different calculus. Now a vendor approaches you with an offer and you see a risk in taking it. Not only will you surely lose this job, but you're likely to lose all hope of future employment. (If you're a volunteer editor your employment is not in journalism, remember.)
You can only hold professional journalists to journalistic ethics. Publishers who don't pay editors hand their good name to people beyond their control.
Where does blogging fit into this?
Many think the secret of Fox' dominance of news is political. A generation brought up on the myth that an objective press is biased to the left, then given a right-wing Pravda, sees the latter as "fair and balanced."
That's a small part of the story. Identifying a niche and serving it is as old as the magazine business. Older. It's as old as Poor Richard's Almanack.
The real secret is much simpler. The "network" is actually a studio. Few bureaus, no big investigation team, no bench, little support. Who needs writers when most hosts can wing it. It's talking heads. It's radio economics.
No, it's blog economics, or Blogonomics.
On the creative side, blogs are just as likely to care about journalism, public service, and lies as any other media.
On the business side, however, nearly all bloggers do things backwards.
That is, we look at the content from the writer's point of view. Journalism looks at all content from the reader's point of view.
This is no small point. You can see it clearly in examining the "blog journalism" companies which have found success -- Weblogsinc, Gawker Media, and Paid Content. Jason Calacanis, Nick Denton and Rafat Ali all defined the readers they wanted, created a business model, then hired writers to fulfill the mission.
There are days when I dream of a White House presser where a reporter snaps a Queen of Hearts at the President, just to see if they can trigger something.
If this guy were created by our enemies to destroy us he couldn't be doing a better job.
The strength of an economy, like that of a society, depends on social mobility. That means the poor can rise to wealth. It also means the wealthy can end up poor. (This old cartoon, from what folks like to call THE Ohio State University, pre-dates Wal-Mart by generations.)
A recent online conversation with Vijay Gill brought this home to me. The topic was actually our recent piece on The Myth of Scarcity. I liked it, posted it to Dave Farber's list, and Vijay responded quite thoughtfully, his point being that telecommunications is hard, some parts are scarce, and real technical knowledge is even scarcer. Maintaining total connectivity in the last mile without protecting the monopoly is harder than I make it sound.
This set me thinking in two directions at once.
Why is it that politicians have done a better job on the Internet than publishers?
It has to do with a concept I call Pitch Credibility.
Journalists understand the concept of credibility. It's the trust readers place in us. If there is a journalism profession, it's based on this idea of credibility. I took a huge hit to my own credibility when I screwed-up an item on Ev Williams. I went through hell on that not to regain my credibility, but to minimize the losses, and in hope the damage would not spread to innocent Corante authors.
But just as editorial work must have credibility, so must advertising. That is the innovation the Internet makes necessary.
Moveon.org understood this right away. It knew that if it suggested you give to Candidate X, then Candidate X better fit the desires of the Moveon audience, or the endorsement would damage Moveon. Because it had pitch credibility with its audience, Moveon was able to gain honest information (a mailing list) from its members, and even financial support, based solely on its promise to deliver.
While Moveon failed in these last two cycles as a political force (ask Presidents Gore, Dean and Kerry) it has succeeded in creating a business model that everyone else on the Internet needs to pay attention to.
So if Roger Simon, for instance, is to succeed in his efforts to unite the right-wing blogosphere and extract money from its members, he must retain pitch credibility. He better not let anyone like me in because I'd damage it. And he better use that credibility only to solicit for products, services and people the audience will surely endorse.
Perhaps you can see now why this idea is easier for a politician to understand than a businessman. Politicians are attached to what they're selling in ways businessmen aren't.
Belief is at the heart of pitch credibility.
How can we take advantage of this in the business realm?
Click to find out.
The bidding war between Verizon and Qwest for MCI is based on a myth of scarcity. That is, both think they can make the deal pay by squeezing customers for the scarce resources represented by the MCI network.
Moores Law of Fiber rendered that inoperative many years ago. There is no shortage of fiber backbone capacity. And there are ample replacements for Plain Old Telephone Service -- not just cable but wireless.
The myth on which this deal is based is, simply, untrue.
Yet the myth persists, and not just in the telecommunications business.
Market research companies specialize in the third kind of lie, namely statistics. While these companies were originally created to help clients deal coherently with the market, that's no longer the sole source of income.
The process of market research has been corrupted by paid research done on behalf of:
Yes, the categories do overlap. More, and what to do about all this, after the break.
I have not written much about Voice Over IP in this space because I'm not an expert in it. (Yes, I hear you say, this never stopped you before.)
Actually I didn't think I had anything original to add to the conversation. I still don't. But I want to point you to someone who does.
That someone is Tom Evslin (left). Evslin recently completed a wonderful series on the economics, politics, past and future of VOIP, on his blog, which I heartily recommend to anyone interested in this area.
Evslin calls this year a "flipping point" driven bythe mass distribution of VOIP software. It's not really free although, once you have your set-up, each call carries no incremental cost. The market battle between Skype and Vonage are driven by Metcalfe's Law, control of end points. Evslin offers the best explanation I've yet seen of Skype and its business model, which is rapidly evolving into an alternative phone network.
I have one suggestion.
Last week I took a dispassionate look at economic cycles. This week let's take an equally dispassionate look at political cycles.
Political cycles are generational in nature. (The cartoon is from 1800 and AmericanPresident.Org. ) They're set in a time of great crisis. They're re-set when a new crisis occurs that the old assumptions can't deal with.
But they also wear out. Ideologies are like roads. You set off in a direction but, at some point, go beyond your destination. Yet the road keeps leading you on. And the kids finally say, let's go a new way.
The secret to being a successful entrepreneur is learning how to handle NO.
I learned this lesson from an entrepreneurial friend of mine today, and it's so important I had to blog it.
Entrepreneurs bring ideas to businesses and people. They sell these ideas, as businesses. They take a lot of meetings. And most of the time, maybe over 99% of the time, the answer at the end of the day is No.
"You have to turn it into an opportunity," my friend said. You do that by finding someone else -- a money source, another business -- who will either run with your idea, finance your idea, or buy it outright.
And you keep moving.
The difference between entrepreneurs and other businesspeople is that most businesspeople are in the yes business. In a going concern you mostly hear yes. People do come in the door, people are satisfied, you do create systems that wind up giving value for money. If you're not doing this, you're out of business quickly.
Entrepreneurs, on the other hand, are constantly being told no. It's only when they get the yes that they have the chance to build that business they were describing, and this is usually the end of a long, long process. Yet the businesses an entrepreneur launches are often much better than those run by businesspeople, because they've been tested, vetted, and designed to grow fast.
Back in the 1990s a lot of Americans wasted a lot of bandwidth worrying about the Digital Divide.
Americans were wealthy. We could afford PCs and fast networks. Those poor black and brown people were being left behind by the future. There were even proposals that Americans tax themselves so that poor people could get broadband faster.
Now, a decade later, the digital divide is back.
And this time Americans are on the other side of it.
Our broadband networks now stand 13th in the world, behind those of our trade rivals. Chinese, Japanese and Koreans are being offered speeds and prices we can only dream of. Asian cellular networks are years ahead of those here, and mobile broadband is common. In the most remote parts of Africa, cellphones are being turned into makeshift phone kiosks, or simply rented on a per-call basis, so folks can stay in touch with markets and the growing world economy.
Meanwhile, a decade of growing monopolism in this country means broadband take-up is now below the rates elsewhere. Cellular networks are two years behind those in Asia. You pay more to get less bandwidth than people in most of the world, and the situation is getting worse.
The best way to understand the future is to look into how chips are changing.
Two transitions are transforming Moore's Law. The original article, in 1964, described only the density of circuits on silicon substrate.
The rule implied that chips could get better-and-better, faster-and-faster. Doubling bigger numbers means bigger incremental changes in the same time. Over the years chemists and electrical engineers learned to apply this exponential improvement concept to fiber cables, to magnetic storage, to optical storage, even to radios, so that 802.11n radios will transmit data at over 100 Mbps -- twice what earlier 802.11g models could deliver, but still 50 Mbps more.
The transitions have to do with what we mean by better.
China puts more people to death each year than any country in the world. (Yes, even more than Texas.) China is a brutal dictatorship that oppresses its people as no other country, the most Totalitarian regime on Earth. My mentioning this may get Corante blocked to all of China, by the state's firewall system, the most extensive Internet censorship regime on the planet.
By contrast, Emperor Hirohito and the brutal system he led are dead. Japan acknowledged its sins in the 1951 Treaty of San Francisco and has since been a functioning democracy where politicians must accomodate the views of voters. Japan's Constitution forbids it to make war on its neighbors. Japan contributes more to good causes than any other national governnment.
This is power politics. China is pushing Japan out of the world power picture, letting Taiwan know that resistance is futile, and successfully challenging America's status as a Great Power. Just 12 years ago we were The Hyperpower. Now we're becoming second rate, losing our status to tyrants.
The reaction in the U.S. to all this has been silence. Deafening silence.
Few U.S. outlets have covered the story. The right-wing Cybercast "News" Service actually offered a balanced perspective. The New York Times offers only a fearful editorial on possible Chinese revaluation of the Yuan -- at another time this would be called appeasement.
The reason for this silence is not subject to dispute.
The point lost by my stupid mistake is that Google, despite its enormous short-term success, is showing cracks in the armor.
We all think of economic cycles in terms of the general U.S. economy. But that's not the whole story.
There are, in fact, regional and industrial cycles underneath the general cycle, cycles that are far more important and whose impact can be permanent.
Let's start with an example from the past. Back in the 1980s we had a recession, then a general recovery through 1987, then a slump after the stock market crash and a second recovery.
Underneath all that, we had an honest-to-goodness depression in Texas (and in the rest of the oil patch), and a tech boom followed by a near-bust starting around 1986, otherwise known as the waiting-for-Windows period. During this time Japanese manufacturers had their heyday in the U.S. market.
The Texas oil industry never recovered from the bust of the 1980s, as the chart above (from a Dallas Fed analysis) shows. It's not like things could just stay quiet until needed, then go back to the way they were a generation later.
Now let's apply that lesson to today.
The success of Google has been based on the fact that technology drives its train. Technical success is the most-sought value.
This is becoming a problem.
In many of the new businesses Google has launched, technical values (while important) are not going to be the sole drivers of success. In blogging, in RSS, in Google News, in Google Desktop, in Google Local, and in other areas, other skills are required.
Business skills. Marketing schools. Journalism skills. Political skills. Artistic skills.
Leonardo DaVinci (celebrated above) could not get a job at Google today. In a well-rounded company, his genius would find a place.
The need for these various skills will only increase with time. Google must find a way to recruit these skills, and to reward these skills, without giving the people with these skills control of the company.
This will not be easy.
Want a career in the exciting, fast-paced world of 21st century journalism?
Don't go to journalism school. You can learn to write anywhere. The way to write better is to practice. If you love writing you can pick up the rest on-the-fly.
Instead, go to business school. Why? Because the only way you're going to have a good career in this business is to have the skills of a publisher. And those are the skills taught in business school.
In my first lecture at Northwestern's Medill School of Journalism, in 1977, we were told firmly that if you wanted to make a good living there was a fine businesss school on campus, the Kellogg School, and we should go there. So I've got their logo at the top of this item. I should have taken the advice.
More on why you should go to business school to learn journalism after the break.
It's already starting to bite.
I often feel it in reaction to items I write here or on ZDNet. Excuses. Reasons not to try. That will never work.
Young people new to a field don't think like that. Back in the 1970s and early 1980s, we didn't think like that. Whether or not our politics become more conservative as we age, our lifestyles do. A 50-year old programmer worries more about what they're making and fears the future, while a 20-year old thinks about what they might make and embraces the future.
It's a cliche, but that doesn't make it less true. Young Americans are shunning technology for business, for real estate, for law, for things that redistribute wealth rather than create it.
Leaving the future to be made by others.
Because technology changes so rapidly, we feel the impact of change here very, very quickly, and this is like a cold wind in November.
Want some good news?
The key benefit of open source is transparency. (That's a transparent Mozambique garnet, from CLDJewelry in Tucson, Arizona. Transparency doesn't have to be perfect to be beautiful.)
The key benefit is not that the software is free. It's not that you can edit it. It has nothing to do with the obligations of the General Public License. It's inherent in every open source license out there.
The key advantage of open source is you can see the code. You can see how it works. You can take it apart. You can fix it. You can improve it. Most people do none of these things, but all benefit from this transparency.
The benefit became clear when I got responses to a ZDNet post called Is Linux Becoming Windows? The news hook was a Peter Galli story about how some folks were getting upset over the feature bloat now taking place in the Linux 2.6 kernel.
Those who responded said simply that the complainents, and I, had lost our minds. Kernel features aren't mandatory. Just because something is supported doesn't mean you have to do it. You can pick and choose among features, because you can see the whole code base -- it's transparent. You can look at the various builds out there and, if there's something you don't like, something you can do better, you can fork it, and maintain your own enhanced code base.
When Microsoft changes its software it makes things incompatible. When Linux software changes this doesn't happen, because the change is transparent. New builds are transparent, and if you come to a fork in your operating system road you can take it.
Transparency is the key term. And it doesn't just apply to software:
But is this just another Marty Rimm study?
Rimm, you may or may not remember, wrote a paper at Georgetown Law in 1995 claiming 85% of Web traffic was dirty pictures. This was later disproved, but the damage was done and Congress passed the ill-fated Communications Decency Act.
Mike Godwin, the former EFF counsel who fought the Rimm study and is now senior counsel at Public Knowledge, remains skeptical, noting that the Cachelogic study hasn't gone through peer review. He also notes that, since Cachelogic sells systems to control P2P traffic, it has a natural bias.
The Cachelogic claims may have logic behind them, however. Many ISPs do report that over half their traffic is on ports commonly used by P2P applications. Brett Glass of Lariat.Net, near the University of Wyoming, says the claim seems accurate, noting that unless ISPs cut-back capacity to those ports (a process called P2P Mitigation), the applications quickly discover the fat pipe and divert everyone's traffic to it, filling it at the cost of thousands per month.
And that is at the heart of the problem.
A friend introduced me to a blog I'm adding to the blog roll, one that is only marginally about technology.
Seth Goldstein runs Majestic Research, a New York outfit that produces very high-end (and I hope very expensive) reports on trends for hedge fund managers. Before that he ran Site Specific. He advises Del.Icio.Us. He's smart.
His blog consists of long essays, published at long (for me) intervals, on a wide range of subjects. Recent pieces include one relating client Del.icio.us to German essayist Walter Benjamin, whose Frankfurt School was overwhelmed by the horrors of the Hitler era, another calling APIs "the new HTML," and a third seeking a system of PeopleRanking, very similar to my own piece Finding the Good Stuff.
Last month Intel's mobility chief Sean Maloney was in the hunt to head H-P, a job that eventually went to Mark Hurd of NCR. (Watch out. Dana is about to criticize a fellow Truly Handsome Man.)
But how well is Maloney doing his current job?
Intel's role in the development of Always On is crucial, and its strategy today seems muddled. It's not just its support for two different WiMax standards, and its delay in delivering fixed backhaul silicon while it prepares truly mobile solutions.
I'm more concerned with Maloney's failure to articulate a near-and-medium-term wireless platform story, one that tells vendors what they should sell today that will be useful tomorrow.
Intel seems more interested in desktops and today's applications than it is in the wireless networking platform and tomorrow's applications.
Incoming CEO Paul Otellini says Intel is going to sell a platforms story, not a pure technology story. Platforms are things you build on.
I'm a big James Surowiecki fan. (Not a Truly Handsome Man yet, like I am, but don't you think his barber is starting to get creative?)
When I got into journalism, nearly three decades ago, I harbored a secret dream of writing for The New Yorker. I never got a sniff. But I harbor no grudges because Surowiecki did. And he's run with it.
The headline his editors give the piece is "In Yuan We Trust." His point is that our debts to Japan and China are so massive neither can afford to end their support for us. Thus the air will go out of our financial balloon slowly. We won't know the dollar's a peso until it's reached par. He concludes, "So be afraid. Just dont be very afraid."
That's the part I take issue with.
In a nice commentary about how Wired is now Tired, David P. Reed (left) got me thinking about what today's key economic good might be.
The answer is attention. The world is entering an attention economy.
In many ways this is not news. What's news is how we're bifurcating our attention -- splitting it into parts -- and how media must now compete for slices of it. (Would this item get more hits if I called it The ADD Economy?)
It's a worldwide phenomenom because cellular or mobile service is worldwide. Mobile service competes well in the Attention Economy. Watch people chat on their phones while driving. (It's like elephants tap-dancing -- what's amazing is they do it.)
More after the break.
The following appeared today in my free weekly e-mail newsletter, A-Clue.Com, now into its 9th year of publication.
You can get it free any time.
The next U.S. recession will result from a real estate crash. (The picture is actually from the inspiring story of an English school, but you don't want your home portrayee as rundown, do you?)
U.S. residential real estate is overvalued because its purchase is subsidized. It is the only good consumers can buy while writing off the interest. Builders also have a host of tax incentives to build. Most have been in place for generations. While there has been enormous abuse of these tax loopholes over the years they will have nothing to do with what is to come.
The whole idea of a home as an investment needs to be questioned. An empty home does not get more valuable. It falls apart. We have one on my street and, even in today's white hot market, it's falling apart. It won't bring back the investment of the idiot who owns it.
Much of the media ignored or downplayed Alan Greenspan's remarks yesterday on Fannie Mae and Freddie Mac, the two huge mortgage guarantors.
History may well show this to have been a significant event. Greenspan admitted the U.S. economy has no clothes.
Greenspan said he wants the two agencies limited to holding $200 billion in paper. Right now they hold $1.3 trillion. The regulator in charge of these agencies has quit, in an "accounting scandal" that may result in a "restatement of earnings" totaling $9 billion, and while Greenspan downplayed the potential impact of a change, mortgage experts know better.
I will have more on how this could play out in my a-clue.com newsletter, being sent to subscribers tomorrow. A copy of that story will then be posted here.
Here's an interesting juxtaposition of headlines. (The lovely idiot is from UC Berkeley.)
Hitachi Eyes 1 Terabyte Drives, writes MacWorld, noting new technology the Japanese company says lets it put 4.5 Gigabytes of data on a single centimeter of hard drive.
I'm like, don't the first people read the second paper?
Moore's Law of Storage is rocketing along right now even faster than Moore's other "laws" (as described in The Blankenhorn Effect). Magnetic storage is eliminating the cost of physically maintaining content, any content, with profound implications for everyone.
Neither effort is serious, in terms of 2005 serious. Both are attempts to place markers on the future and gain agreements with the content industries they think will mark the future.
And this is just what's wrong with them.
You don't open up a new market by focusing on the seller side of the transaction.
You open up a new market by focusing on the buyer side.
An IEEE study shows the excesses of venture capital in the late 1990s actually stifled innovation.
The image, taken from the IEEE Spectrum story, shows what a venture capitalist should be doing, looking for ideas. In fact, as the study indicated, most 1990s' VCs replaced that light bulb with a dollar sign.
It's something I strongly suspected at the time. It's one reason I called my newsletter a-clue.com, because I saw so many Clueless people drawing such fat checks and directing such big funds toward the cliff.
But it is nice to get some confirmation.
In the study by Bart Stuck & Michael Weingarten, over 1300 public offerings over 10 years were analyzed, and scored 1-5 for innovation, with 1 being very innovative and 5 being me-too.
The study's conclusion is poignant. "Based on our experience, we believe that VCs really aren't the risk takers they're often made out to be."
Here's what I think really happened.
The cost of making something good is directly proportional to the complexity of the tools needed to create it. (The picture is from Freeadvice.com.)
This blog item is quite good. The tools needed to create words are very cheap. Even if the tools were more expensive, as they were when I began writing, my cost to create this text would not go up much. And the likelihood of its being of high quality would be just as high.
If I read this on the radio it would not be as good. The tools needed to create a Podcast require knowledge of radio or music production values. Even if Podcasts were as cheap to make as blog items, the proportion of good ones would be smaller than they are for blog items.
Now that youve read my latest dismissive screed against the government, the question may have occurred to you.
What might a proper telecommunications policy consist of? (Very pretty flower, I know. Here's where I got it. The picture is called Simplicity.)
Its really quite simple.
Click below and I'll tell you.
That game is predicated on the assumption that there can only be a few big "winners" and everyone else is a loser.
Wall Street also believes that tleecommunications is fearfully expensive to provide, that it is a "capital-intensive" business.
In this analysis, Moore's Law is ignored. Forget how fiber becomes more efficient with each passing year. Forget how we use bandwidth more efficiently, or how the cost of processing goes down.
To Wall Street, telecommunications is capital intensive and there can only be a few winners. Period. The end.
I have made few comments about the so-called conspiracy against the Apple iPhone.
The story was that Motorola was ready to release a cellular phone that was also an iPod device, but it couldn't find any carriers for it.
What's more interesting to me is the tug of war now taking place among entrepreneurs between these two technologies.
And, surprisingly, cellular is losing.
The reason has to do with business models and open standards. (Thus the picture above of standard pawns, available from the good people at Rolcogames.)
The real Hardball isn't the game show on MSNBC, where politicians lie and yap at one another.
It's something far more serious, played every day, by huge corporations that masquerade as guardians of the public interest, but are in fact as corrupt as the rest of us. (That's LA Times founder Harrison Gray Otis on the right. More about Harry Otis here, near the bottom of the page. I direct David Shaw's attention to the quote from Theodore Roosevelt.)
The prerogatives of these corporations and their hirelings, who call themselves journalists (then deny this status to you and me) is under threat on this medium as never before. They're scared, and they're playing Hardball.
Their right, earned by corporate might, to define what is and what isn't news, what is and what isn't fair comment, is under threat, right here, right now.
And they don't like it one bit.
The game is being played mainly on three search engines. On MSN note how these corporations are given, not dominance, but exclusivity. The same is true on Yahoo. Note the list of "resources" at the top-right of the Yahoo page. Note too the prominence given one outfit's stories, the newspaper co-op called AP.
In both cases what you see on your screen is the result of business negotiation. News value is determined by people, meeting in rooms, and (perhaps) money changes hands (we're not told).
Is this fair? It may well be. It's certainly business as usual. And -- here is the key point -- the process is completely opaque.
On the other hand, we have Google News. What you see here looks similar but it is, in fact, quite different. While the stories of the giants do get prominent play, so do other organizations, and other types of news coverage.
At 11:15 AM for instance I checked Google's "coverage" of Laura Bush's trip to Afghanistan, sorted by relevance. Position four was held by a right-wing group, the Conservative Voice. Position seven was held by a left-wing site, Counter Currents, posting a blog item from Counterpunch.
The results on all stories change moment-to-moment, and only a small part of what we call the blogosphere is represented, but the fact is that Google News is offering a far wider set of sources than its rivals. These include "official" outlets like Voice of America and Pravda. They include newspaper sites requiring registration. They also include many sites from outside the U.S.
In some cases, they even include blogs. Yes, even this one.
But that's not the full extent of Google's challenge to the news industry.
This weekend Slate offers a feature of Philip Anschutz, a conservative businessman (and big soccer fan) who has launched printed papers under the name the Examiner in Washington and San Francisco.
Jack Shafer syggests Anschutz needs to invest more in editorial and consider the Web in order to be taken seriously.
Correct and double correct.
I wrote about this several weeks ago, and what follows is that original copy. You can get it free
I have a love-hate relationship with newspapers. (This newsboy is advertising news of the Titanic's sinking.)
The business has been at the heart of my "profession" for a century. The whole idea of a journalist as a professional is also a product of this business. I took my graduate degree from the Medill School of Journalism. Joseph Medill was the old reprobate who built the Chicago Tribune empire.
But as I've said many times here this whole idea of a "journalism profession" is a fraud. Professionals can make it on their own. Journalists can't. If you don't have a job you are not part of the fraternity. Even if you build a journalism company based on your vision of what the profession should be, you are always nothing more than a businessman.
The New York Times recently quoted a newspaper consultant as saying "For some publishers, it really sticks in the craw that they are giving away their content for free."
Here in one sentence we have the utter cluelessness of the industry. Here is an opportunity waiting for someone to exploit it.
Perhaps I should be skeptical, given that this is a company-funded study with a result favorable to the company that funded it.
But the evidence is just too compelling. The cure for the Digital Divide is the mobile phone, and the results are so obvious no big subsidies or taxes are needed to make the change happen.
Here are some facts that really jumped out at me:
The Gibson Safety Dance, named for sci-fi author William Gibson, involves companies changing their software simply to keep other programs from accessing it.
It's increasingly common. We've seen it in Instant Messaging, we saw it recently with Microsoft Office, and now we're seeing it with Apple's iTunes.
Jan Johansen, the Norwegian programmer who wrote DeCSS so he could play DVDs under Linux, has entered the fray with a program that breaks the iTunes DRM so Linux users can buy them from the Apple store. Apple's response has been to change the software and keep this from happening.
Technology moves in waves. What's passe in one place may be very cool in another. This is how you can cross the digital divide.
Here's an example. At the same time NTT DoCoMo is closing down its Personal Handyphone System, moving customers to more advanced forms of mobile telephony, it's growing like topsy in China, and Atheros is rolling out a new PHS chip.
How does this work?
Throughout the dot-boom Barry Diller stood aloof. He promised he would never overpay for "Internet real estate," that he would grow his business by finding bargains. (The picture is from this Wired article where he displays far more wisdom about Internet valuations than displayed today.)
For several years he stayed true to that. You can justify the prices paid for Home Shopping Network, Expedia.Com, Hotels.Com, and Ticketmaster based on revenues and earnings. They sold stuff -- toasters, travel packages, concert tickets -- and earned real money.
Sorry, Barry, you finally drank the Kool-Aid.
When a currency becomes overvalued it gets tossed like confetti. This is what happened in the late 1990s, and it's happening again. (The allusion, of course, is to the hit song 1999 by the man at left, known again by his given name, Prince Rogers Nelson.)
It doesn't matter whether acquisitions are made with cash or stock. Cash acquisitions, after all, can easily be handled by the company selling stock. Yahoo has been especially active in this area.
Companies of all sorts want this currency, and thus we have both Yahoo and Google on an acquisition binge.
The great financial Curse is to have money coming out of the ground.
I didn't believe this when I started in journalism. I started in Houston, whose economy was based entirely on the concept of money coming out of the ground - Black Gold, Texas Tea.
For most of history, money has mainly come out of the ground. Assets were what you could drill for, what you could mine, or what you could grow. The exceptions to this rule were those of trade. If you sat astride a trade route, if you had a deep water port, if the railroads decided that your location would work for a station, then your land had value.
Moore's Law has changed all that. The Internet has changed that for all time.
Folks who should know better, like Steve Gilliard, are gleefully piling on a story from New York about an IBM executive who was fired because his Reserve commitment rendered him worthless to the company after September 11.
The story, by columnis Denis Hamill (left) is a righteous bust. IBM is going to lose the suit. IBM deserves to lose the suit. And the only reason I get to write about this at all is because IBM is a tech company.
But the issue goes deeper than any one employer.
African leaders are pushing a "Tech Tax" that would go into a UN-sponsored fund and build the technology infrastructure of developing countries.
NOTE: Please visit the page where I got this illustration, by Los Cybrids. The words here express my overall view of the matter better than this blog item can.
On the surface, a "tech tax" sounds like a very good thing. It has a laudable goal. I'm very much in favor of telecommunications development everywhere. It brings markets together. It raises people up, brings them education, gets them into the mainstream. It's great.
But in practice, this proposal sucks. It sucks big time. Here's why.
Where's the money going?
When John W. Berresford speaks, the Bush Administration listens.
Berresford is the FCC's senior antitrust lawyer and a professor at the right's favorite school, George Mason. He has power and the connections to turn his statements into policy.
So when he came out with a paper today about spectrum policy, it was bound to be read avidly.
In his paper Berresford favorably compares the law of land property to that of spectrum. He notes how property rights and spectrum rights are limited under the law, often in the same ways, and states that "efficiency" should be the watchword in spectrum policy.
We should know what we're in for when, in his first paragraph, he mischaracterizes the debate:
Debate rages about whether the allocation and management of the radio frequency spectrum should be mostly a political process, treating it as The Peoples Airwaves, or mostly market-driven, treating it as private property.
That's not the debate. The debate boils down to science and markets. What treatment of spectrum best serves the market, that of a government-owned monopoly or a carefully-managed resource?
We haven't just "discovered" how to use vast new areas of spectrum in the last 20 years. We've learned a lot about how such spectrum can be re-used, again-and-again.
Thus the argument of property vs. commons isn't a left-right argument (as Berresford supposes in his introduction). It's an argument over science and efficiency.
And the plain fact is that the spectrum which is most efficiently used in this country, which makes the most money per hertz, by far, is the unlicensed spectrum.
Berresford ignores both the science and market forces behind this fact.
Cynthia Webb (left) is sporting a collection of recent U.S. media reports claiming a "renaissance" in America's consumer electronic market share.
There are more American labels around. Apple. Motorola. Microsoft. The U.S. companies are good at seeing the opportunity and writing software that works.
Our balance of payments is not helped by it.
As Cynthia notes (deep in the article), these boxes are being made in China. (Actually most of them are being made in Taiwan.) Some of the software conceptualizing is being done here, as is the marketing (although I suspect some of that software work was off-loaded to India).
Those failing, flailing Japanese outfits she mentions, meanwhile, are still doing everything in Japan. Or they're doing "too much" in Japan. Except for Sony and Nintendo Japanese companies were never good at anticipating demand. Mitsubishi, Canon, C. Itoh, Ricoh, et al -- they were manufacturing houses. They were China before China was cool.
But the Japanese are getting wise. American Howard Stringer is Sony's new CEO. He knows the game. Expect most Sony stuff soon to come with a "Made in China" label.
What's the real story?
What should a rational U.S. technology policy include? Very simple:
Fortunately, someone gets it.
Dean Kamen (right) gets it.
Yeah, the Segway guy. Here's how he puts it on the home page of the educational organization he founded, US First:
"Create a world where science and technology are celebrated... where young people dream of becoming science and technology heroes..."
I can't say it any better.
Best of all, his words are backed by action. What follows is my personal testimony to this:
Sony released its Walkman phone yesterday.
It is what it is, a phone with a half-gigabyte of storage in it, enough room for about 500 songs.
Those songs are subject to Sony's DRM, just as iPod songs are subject to Apple's. Both now face the wrath of France because their DRM schemes are incompatible. Unfortunately for France, another unit of the government had previously ruled the link between its proprietary format and its iTunes store is OK so this is going nowhere.
And the Walkman phone is going nowhere in the market.
Karl Marx was one of the great moral philosophers of the 19th century. But his vision was perverted, in the 20th century, and made the center of a system that imprisoned billions of people, one that required decades of war to eradicate.
Ayn Rand, who was born 100 years ago, was one of the great moral philosophers of the 20th century. Her novels, The Fountainhead and Atlas Shrugged , have become as important as Marx' Das Kapital was to Communists, in defining the ideology of modern Conservativism.
It's just as imprisoning.
Unlike my novel, The Chinese Century, the following is true.
China now outconsumes America on most goods (gasoline being an exception).
This fact carries with it some important economic implications. Let's discuss them:
Perhaps the most vital asset to any technology company today is its reputation.
It's not money. It's not assets. It's certainly not patents.
It's what people think of you, your reputation.
Paul Robichaux recently wrote that he thinks Google is pulling a fast one, with a Toolbar feature called AutoLink that turns unlinked items on a page into linked ones, automatically.
When Microsoft tried extending its Smart Tags feature, which sounded awfully similar, into Internet Explorer, Robichaux wrote in Exchange Security, "the furor was incredible. Walt Mossberg, Dave Winer, Dan Gillmor, and a host of other influencers immediately started screaming that Microsoft was taking control over web content and generally acting like an 800-lb gorilla. The EFF even opined that the MS smart tag implementation might be illegal."
He's right. But does it matter?
Microsoft has used its power for a decade to extend its monopoly across desktop applications and into the Internet itself. As a result it has a very poor reputation.
Google, on the other hand, has offered optional services, in software, on top of its search service. It has a stellar reputation.
The Cato Institute claims to be an advocate of free enterprise, by which we are meant to think free and open competition. (That's the logo from one of their standard online products.)
They are, in fact, huge supporters of untrammeled business power, of oligopoly. Hey, where do you think their funding comes from, rabbits?
Here's a great example. It's a blog they call Tech Liberation. It takes a few clicks to learn this is a Cato shop, but they're not really hiding it.
The piece is by Adam Thierer (left), who works full-time at Cato as "director of telecommunication studies.". Its theme is the latest round of telecom mergers. Its message is don't worry, be happy.
"We can safely conclude that the communications / broadband networking business can be very competitive with 2 or 3 or even 4 major backbone providers in each region providing some mix of voice, video and data services."
Evidence for this? A Wall Street Journal piece noting that SBC wants to get into cable television. Other than that, a lot of chirping crickets. And some very nasty lies.
Want a taste?
A few years ago I speculated publicly about Sony buying Apple. (That's Sony chairman Nobuyuki Idei at right, from his biography on the Sony.Com site.)
It was a popular thought back then.
Sony blazed new trails among Japanese manufacturers, preferring proprietary control of its technologies, emphasizing design and its brand name, acquiring American firms and integrating them. In the 1990s, on the other hand, Apple was a troubled PC maker with a small market share.
This was before two things happened. Apple's genius returned to his throne, and Sony's faded from the scene.
Sony Founder Akio Morita, who passed away in 1999, was a legendary entrepreneur, a visionary, a genius. In Tokyo, Elvis has indeed left the building.
Still, in the first year after Morita's death, Sony could have done the deal easily. And the spirit of a man equal to Morita in vision, Steve Jobs, would be working for Japan Inc.
The Copyright Police keep coming up against stubborn facts, some of their own making, that throw their arguments into the dumper.
First is a joint study by Harvard and University of North Carolina researchers indicating "Downloads have an effect on sales which is statistically
indistinguishable from zero." Felix Oberholzer (Harvard) and Koleman Strumpf (UNC) matched a set of downloads to record sales in coming to this conclusion. "Even in the most pessimistic specification, five thousand downloads are needed to displace a single album sale," they write.
The second piece of news comes from the industry itself.
It is, simply, the launch of Napster's "rental" service. For $15/month, you can download all you want. It all disappears when you stop paying, but the industry approved this business model, which estimates the actual value of unlimited downloads at $180/year. Spread that over 10 years, give Napster 15%, and you get an actual industry-estimated "loss" from unlimited downloading of $1,500. Not much.
This will make for some fun when I speak this weekend at the University of Virginia's VJOLT Symposium.
In a New Yorker profile of chef Mario Batali (left) there's a wonderful scene of Mario rooting around a waste pail, looking for what the author-turned-prep chef has tossed away.
Our job is to sell food for more than we paid for it, Mario lectures him. You're throwing money away.
Apple Computer is the greatest exponent today of what I call Batali's Clue. Your job, as the maker of products, is to get more for your creation than the cost of the electronic "food" that goes into it.
It's a vital Clue because components in the Moore's Law age spoil like dead fish on a wharf.
Here's an example plucked from today's headlines. (Well, the ad pages.)
Mobile carriers are trying to make an impossible transition.
They want to move from a data world where every bit is precious, and where every file is controlled, into a broadband world where phones have PC functions. And they want to do it without changing their business models.
It can't happen. The industry's dirty little secret prevents it.
That secret is that most cellular minutes today are wasted. Perhaps as many as 80% of the minutes customers are allocated in their contracts each month aren't used. And this has been the source of immense profits. (The illustration, in time for Valentine's Day weekend, is a Korean product for women that also enables the creation of twin secrets.)
Modern cellular marketing is all built around contracts, with a fixed monthly charge for a fixed number of minutes over a fixed term. To get contracts incentives are offered, including free phones.
But look at what happens. Marketing convinces people to pay high prices for plans with high limits. Cingular's "rollover" plan costs a mininum of $40/month, which comes out to about $45 with taxes and other fees. Advertising convinces people they need high limits to deal with "ugly over-age charges." But it's difficult to measure your usage in the middle of the month, and the vast majority of customers don't come close to their limits.
When the contract term expires, usually in a year, customers can theoretically leave that carrier for another one, taking their phone number with them, and even get a new set of incentives, like a new, more advanced phone. But most are as ignorant of their contract expirations as they are of the status of their minute bucket. (Quick: what's your contract expiration date?)
Carrier profitability thus depends on ignorance, customers with old phones who don't take out new contracts and don't use their gear. And in that environment, who needs broadband? Where is the market for PC functionality?
Exactly. It doesn't exist.
Middleware was a very big buzzword a few years ago. (Image from the Southern Regional Development Center.)
By middleware, vendors meant software that let people below take advantage of resources above. Queries that delivered reports to managers on how stores were doing, or that placed real corporate data into neat little graphs.
But every organization of any size is based on human middleware. School principals are human middleware. Store managers are human middleware. Party committeemen are human middleware.
These people sit between the decision-makers at the top and those who carry out orders on the bottom. When we like them we call them "sir" or "ma'am." When we want to disparage them we call them bureaucrats.
America has the greatest bureaucracies in the world. We have done more for our human middleware than people in other societies. (Try getting your driver's license renewed in Mumbai if you don't believe me.)
But we can do much, much better.
Software can be part of that solution, but it's only a part.
I love the Brits. (But I love everyone.)
As executives, Brits have developed this wonderful, pugnacious, straight-talking chip-on-the-shoulder attitude in our time. It's a kind of "oh yeah, sez you" that owes more to soccer yobs than fox hunting.
And for a journalist it's great fun.
Carly Fiorina's reign at Hewlett-Packard was defined by her acquisition of Compaq.
The merger didn't work.
She was fired today. The press release doesn't say "fired," of course. (It never does.) Various stories say the board "dismissed" her, that she "suddenly quit," that she's "stepping down, effective immediately."
She's out because her strategy was doomed from the start. She tried to treat computing as a traditional industry, where the pattern is that once growth slows to a modest level you get consolidation, companies merging together until just a few are left and profits are regular.
This doesn't work because Moore's Law prevents it. Moore's Law means the nature of systems are always changing. Companies rise because they know something about the market, and fall when they lose touch. No amount of consolidation can change that. The merger that created Unisys didn't save Univac and Burroughs, merger didn't save Digital Equipment and Compaq, and it didn't save Hewlett-Packard.
Fiorina's key ad campaign, "Invent," implying the company was going tback to its roots in the garage, turned out to be just that -- an ad campaign. What has H-P invented under Fiorina, except financial manipulation. Anything?
So she's out, for the same reason that, say, Tony Samuel (left) is no longer coach at New Mexico State. (Go Aggies.) His color had nothing to do with his firing, and her gender had nothing to do with hers.
Some big news went unnoticed last week .
This is fascinating because Sprint, alone among U.S. telcos, has a unique business model, at least in cellular.
Lots of companies, from Virgin to Earthlink to Disney, have gotten into the cellular game by re-selling Sprint's capacity. They all have their reasons. They all have their own branding, their own marketing, and their own niches.
The point is Sprint is profiting from wholesaling capacity to these companies. Profiting big time.
Why hasn't this been pointed out?
We have read for the last year about the death of the PDA, and it's true the stand-alone version (one without a phone) is fast disappearing.
As Tom's Hardware notes, PDA sales have fallen to a five-year low. I have one, but it was free.
As David Linsalata, the IDC analyst who delivered the report noted, ""Consumers don't see the need to invest $600 in a handheld device if a smart phone can do the same basic tasks."
But isn't this "death of the PDA" business simply a matter of semantics? Isn't this merely the creation of analysts who put technology in boxes, when everyone knows the first thing people do when they get technology is take it out of the box?
Maybe. Here's the headline on a recent story published in Ireland on the subject. "Smartphone and PDA sales go skyward."
Erin go wha?
Perhaps no technology today splits analysts to the degree that WiMax does.
Which is it?
Maybe both. Maybe neither.
This is because WiMax is still vapor. The delivery of a final standard has been delayed until summer, which means products won't come out until late this year.
There's also Intel's move to make WiMax mobile to consider. Making the 802.16 standard mobile will take more time, mobile operators are building 3G networks as fast as possible, and purchases of the coming standard may be delayed by people waiting for the better one.
Unlike the situation with 802.11 we have no guarantee that 802.16 implementations will be fully backward-compatible. The gear out there now isn't even guaranteed to be compatible with itself.
So what will WiMax become?
I agree with President Bush on something.
Lawyers represent a major threat to our economy.
But I'm not worried about defense lawyers, or plaintiff's lawyers. I'm worried about the newer scourge of so-called "intellectual property" lawyers.
You won't find the phrase "intellectual property" in the Constitution. (It's often credited mainly to James Madison, left.) There, patents and copyrights are covered by a subsection of Article I, Section 8, whcih gives to the Congress power "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."
For limited times. To promote progress.
Because economic power has shifted, in our time, from our hands to our heads, and because technology is now able to move the product of our minds around the world at the speed of thought, American lawyers have done just what their British counterparts did two centuries ago. They've tried to make our economic leadership permanent through the language of law.
It's not capitalism. Capitalism does not by itself guarantee competition. (Image from Clint Sprott at the University of Wisconsin. Go Badgers.)
That is does is the biggest lie told by political conservatives.
Capitalism, in fact, evolves toward monopoly, or to its cousins duopoly and oligopoly, just as ecosystems evolve toward a "climax" state that can only be re-set by catastrophe.
The only mechanism we have to protect competition against this natural tendency is government.
Only a government strong enough to stand up against the biggest enterprises can guarantee competition.
This is difficult to assure.
It's difficult to assure because money corrupts, and corporations -- not government -- are the source of money. It's your money, and unfortunately corporations are considered as people under U.S. law -- immortal people who can't be jailed.
Assuming SBC does swallow AT&T (no doubt for less than BellSouth was offering earlier) would provide important lessons. (The image is from FreeBSD developer Greg Lehey, and was originally produced in 2002.)
First and foremost, it would be the murder of a great company by the government. It was government that broke up AT&T in the 1980s, and it was government that made AT&T non-competitive in our time.
Second, of course, it means that business tributes to the U.S. government are even more important than previously imagined. If the government can murder the nation's largest company (albeit over time and in chunks) it means no company is safe from a rapacious government, regardless of party. (Is is coincidence that AT&T was forced to divest during the Reagan Administration, and killed under Bush II? Check the campaign contribution files for the answer to that one.)
But wait, there are more lessons.
The Elliott Wave people ask, "Is the Greater Fool Era Ending?"
Here is proof. Strategy Analytics has recently published another of those truly loony market studies, this one claiming that mobile phone operators will lose $12 billion from broadband wireless over the next several years.
It's nonsense because its premise is false, namely that those profits are out there to lose.
Yes, it's possible that if WiFi and WiMax didn't exist that all broadband revenues would go to cellular. It's also true that if freeways didn't exist all inter-city traffic would be by railroad. But that does not mean I impute a loss of billions to the railroads.
Gary Wolf has a piece at Wired which had me shaking my head for some time.
Several folks have pointed me to it. It's an imagined memo, dated three years into the future, after Linus Torvalds has supposedly gone to work for Mr. Bill Gates.
The idea behind the imagined memo, something I've written about extensively recently over at ZDNet's Open Source, is based upon building a Linux desktop suite. Wolf's point, apparently, is that Microsoft moving to Windows isn't that far-fetched, that Steve Ballmer doesn't get it, and that Gates has the imagination to listen to the market rather than the yes-men in Redmond.
Well, yeah. But so what? Ain't gonna happen.
The Administration has begun its campaign against Iran through infiltration (which it denies) and by trying to cut Iran's arguments off the Internet. (Picture from CNN.)
This is an immense favor, both to Iran and to the neighboring Arab world. It forces Iran to seek alternate Internet server access for its arguments, and it will. Maybe these will be in Bahrain or Dubai (I'm guessing the former). Maybe they will be in the Ukraine. Or Russia. Or China.
To the State Department.
Brazil isn't going to open source because they hate Windows, or Gates. They're going toward open source for rational, even reasonable reasons. With open source, Brazilians control their own code base. With Windows, Gates does.
I have been singing the good news about Moore's Law for many years now. It spurs productivity, it spreads knowledge, it increases the rate of change across the board, etc. etc.
But there is a dark side to all this that most who write on technology don't talk about. (The image is from Youngstown State University in Ohio.)
That's what I call Moore's Inverse Law of Labor.
Simply put, Moore's Law makes large productivity gains absolutely necessary. To compete in a Moore's Law world, you have to continually replace people with technology, and move folks' time into more productive tasks, or they fall behind.
This is true for individuals, for business, for government, for nations. It has very profound implications for all of us.
Let's think about some of them:
One of the dumbest things a company can do is pay big bucks for a domain name. (That's CSpan's flower, by the way.)
What does eBay mean? What does Amazon mean? For that matter, what does Google mean? They mean what they have become. There was no intrinsic value to the name when it was purchased.
So why should picturephone.com be worth $1 million? There's no good reason. The fact that the company which owned the name changed its name so as to sell-on the old name is proof of this.
Declan's point is that it's available. Critics point out that it's slow, expensive, and more people have it in other countries than here.
The question they're all asking is, how can the situation be improved.
The correct answer is one word.
The triumph of liberty in the 20th century was basically a technological triumph. It was Moore's Law that did it. Moore's Law, and all its antecedents, changed the rules of the economic game, of the power game, and the balance between rulers and the ruled.
Moore's Law, the idea that things get better-and-better faster-and-faster, means that trained minds are the key to economic growth. Willing hands, the key to economic growth in the industrial age, matter far less than they did. Chains may keep trained hands working. They don't do so well with trained minds.
In America the result, as Dr. Richard Florida (left) wrote, was the rise of a new "Creative Class" that could dominate societies and drive economic growth. These were people, accused of wealth and guilty of education, whose values were intellectual and meritocratic, and (perhaps most important) were capable of economic satiation. Creative people have, on the whole, risen through Maslow's "hierarchy of needs," and are in search of self-actualization, not food or even luxury.
Chris Davies offers a fine dissent on open source spectrum today.
If you look at his example it even looks compelling.
There are problems with power management, with computing requirements, and with wave attenuation in the open spectrum idea. But the problem isn't inherent in the spectrum proposal of Kevin Werbach (left), and the solution isn't to sell spectrum to the highest bidder. That doesn't really deal with the problem.
The problem is two words: real estate.
A few months ago Forbes had a nice article on NTT DoCoMo's iMode service, and Kei-Ichi Enoki, the man behind it. (Forbes stories are all about heroic executives, since the rich strivers are the only people who matter to it.)
The point, for us, is the direction mobile data services may take after the obvious niches, like e-mail and games, have burned out.
Enoki's answer -- remote controls. Not in the sense of point it at your TV, but in the sense of remote control of life functions. Enoki is turning iModes into electronic wallets, personal shoppers, GameBoy and iPod replacement.
There's also an answer to the item that follow this (and was written a few minutes before):
Charles Leadbetter, a freelance analyst who works with Demos of the UK and others (sort of like me but with better management), offered some great insights into the need for regulation recently that have been making the rounds of the blogosphere. (That's one of his books over there.)
How to Profit from Ignorance posits that regulation is needed to regulate ignorance. As life gets more complicated, we become more dependent on experts. Regulation becomes the experts' stamp of approval.
But there's another way of putting the same point -- transparency.
I've been looking up-and-down this proposed $35 billion acquisition of Nextel by Sprint.
It's the worst deal I've seen since Time Warner bought AOL. And it's going to hurt the whole industry.
Glenn Fleishman drew a lot of admiring attention over the weekend for his experiment in frugality, trying to see just how little he could pay for the telecom service he needs. (The picture is the thumbnail from Glenn's blog.)
Basically he moved calls to his mobile phone and DSL line, using Vonage and SkypeOut. He also spent $3/month for a Cingular service called FastForward that moves all calls to his DSL when he hits the limits on his calling plan.
Glenn figures he's saving $130/month. (Your mileage may vary.) I wish I could do as well.
Philadelphians are celebrating an agreement with Verizon which, they say, allows them to offer a citywide Wi-Fi network despite a law, signed (shamefully) by Governor Ed Rendell yesterday, aimed at stopping the municipal WiFi movement.
But they need to read the fine print.
Wetmachine has the story:
HB 30 prohibits the state or any municipality (or any municipally owned or operated entity) from providing any sort of telecom or broadband service for any kind of remuneration. The bill grandfathers any existing systems, tho, so no one will get cut off.
Sound good? Read on:
Well it's my own fault, I figured. I'm looking for everything on a specific keyword, and if some store is keyed to that word I'm going to get their stuff. Yes, a good RSS editor should be able to filter-out that stuff, allowing me to unsubscribe to anything that I don't like, but still...
But now that trend has taken another step, so I feel compelled to come back to the subject of my humiliation.
If you don't want to hear about it, don't click below:
The BBC has a wonderful series of articles on its Web site about the failed state of Somalia. (The picture, of downtown Mogadishu, is from the BBC Online series.)
Since American troops abandoned the country to its warlords a decade ago the place has been a study of anarchy and Hobbesian choices. There is no government to educate the people, or to protect them. Private checkpoints that extort money from everyone and line the pockets of those manning the checkpoints are everywhere.
Many people live in makeshift structures "made from branches, orange plastic sheets and old pieces of metal" on what were the lawns of schools and hospitals. Even aid agencies have left, citing the danger.
Yet there is a success story to be told here, mobile technology.
There is a myth in the U.S. that innovation is mainly driven by a desire for money.
At a recent Mobile conference in the United Kingdom David Wood (pictured), executive vice president for research at Symbian (a small kernel OS maker for mobiles) brought two slides that really show you what Moore's Law means.
NOTE: The above paragraph originally said the conference was in England, but Chris Potts corrected me. Also, the folks at Semacode deserve credit for extracting the slides and pointing them out to us.
First was a chart tracking the cost of making a smartphone over time, going back two years and forward six. (These are PDF files.) Despite the fact they're getting a lot better, they're also getting cheaper -- the bill of materials cost could be cut in half in four years.
How is this possible?
In the end peer-to-peer has nothing to do with copyright. It's the way the Earth links.
For linking people and ideas, P2P is simply a better topology than client-server. It conforms to the way people are. Capitalism is a peer-to-peer economic system. Socialism is client-server. Democracy is a peer-to-peer political system. Autocracy is client-server.
The difference is just that stark.
The myth of the "Intellectual Property cult" is that the products of intellect are unique, complete, all-in-all. They are not. "If I have seen further it is by standing on ye shoulders of Giants." That's Sir Isaac Newton.
This applies to all products of the intellect:
If you could get the heart of all technology for 18 times earnings, when the stock market as a whole is selling at 22, would that interest you?
I have written several times about how antiquated computing is in the area of health care.
Politicians are starting to take notice of the same thing. (Registration Required)
Fortunately this is a bipartisan recognition. The Post comment above is written by the Republican Senate Majority Leader, Bill Frist (right, from CNN), and a leader of the minority Democrats, Hillary Clinton.
But what are they really proposing?
Despite everything -- despite the Playboy interview, despite the lowered valuation, despite the stupid allocations, despite the Yahoo deal -- despite everything, Google changed the world today.
By going public through a Dutch auction, and stiffing the investment banking community out of much of its usual fees, Google has changed the face of the stock marketplace forever.
Peter Thiel (right, from Clarium Capital), co-founder of Paypal and now a manager at Clarium, a hedge fund firm, tried to explain this to those slaves of Wall Street at CNBC this morning. They looked at him like he had lost his mind, but his point was dead-on.
The rules of the IPO game have changed.
The power of Windows lies in your ability to create and market profitable applications using it.
Yes, there's a limit. Once Microsoft decides it wants your market, your cost of defending the market will likely exceed any incremental sales from that effort.
But Linux lacks Windows' ability to make software profitable. And that is why Windows, not Linux, will lead the next evolution in cellular equipment.
If H-P Chairman Carl Fiorina had to report a bad quarter, which he could blame on one group, and if he then sacked the heads of that group, we'd call Carl one tough hombre.
But the H-P Chair's name is Carly, not Carl. (Actually, it's Carleton.) So guess what you were thinking when you read the news? (Picture from PBS.)
Yes, indeed, sexism is alive and well, even after you break through the glass ceiling.
With very little fanfare, technology stocks are crashing again.
Following a disappointing earnings outlook from Cisco (a fearful view shared by other tech heavyweights) the "tech-heavy" NASDAQ average has plunged to about 1760. (The chart is from TA Professional, a German magazine specializing in technical analysis of stock trends.)
How much lower might it go?
Each time a member of my family needs any type of medical care I'm frustrated. (The image is from the good people at Tympanitis.com, fighting the good fight against otitis media, and is used here completely out of context.)
Mainly I'm frustrated by paperwork and waste. I'm frustrated with filling out forms, and dealing with bureaucratic clerks.
I'm frustrated because it's all so expensive, and all so unnecessary. There are technologies available today that will cure this problem, solutions that can be implemented now.
If big insurers gave clients smart cards, and insisted that all members of their networks take smart card readers, it would be a big start. Entire medical histories, and biometric identification, could be mounted on the cards cheaply. Read the card and the doctor's network automatically knows what it needs to do, about the patient and the billing.
Why hasn't this happened yet? In a word, privacy.
Lycos was just sold for 111.1 billion!
Happy days are here again!
What began as an attempt to de-fang the wolves of Wall Street has descended into a Silicon Valley farce.
The problem with Google's IPO delay does not lie in the technical glitches of the system. And it doesn't lie in the really silly price being quoted -- $110 per share.
It lies in the great scandal of the 1990s -- stock options.
A very important political story snuck by us last week. I blame John Kerry for it.
The story is the new push by Intel for 802.16 WiMax spectrum.
While there are lots of high frequency bands in which WiMax could live, the inescapable fact is that the lower your frequency the farther your waves can travel. That's why AM stations can be heard across the country (when conditions are right) while FM stations have trouble being heard across town.
Intel executive vice president Sean Maloney (above, from the Intel site) is lobbying China, the UK and the U.S. to open up space in the 700 MHz band, frequencies UHF TV stations will be abandoning as they move to digital broadcasting, for unlicensed use as WiMax transmission bands.
His first hit was called Ogre. (This image is from Goingfaster.com, a gaming enthusiast and Jackson fan.) At a time when the big cost of producing games was making, and printing, all the cardboard game pieces, Steve cut costs in half by having one player take one piece, the Ogre.
In the real world, of course, the Ogre can't win.
A recession occurs when people around you are unemployed. (There is help in coping where I found this image.)
A depression is when you're unemployed.
I thought I was recessed, but I found out recently I've been depressed this last year.
The Times has an article on how pathetic Silicon Valley feels.
I can't decide which is more pathetic, the mood or the article. (The image, however, is from the Cullen sculpture garden at Houston's Museum of Fine Arts.)
First, the mood. It is like Houston was in 1984, although conditions are very different. In the oil bust, whole neighborhoods were abandoned, the keys just left in mailboxes. Anyone with a job was just waiting to lose it, and in any case their salary was falling behind their bills. Billboards that weren't empty were filled with ads for preachers. The filth, the fear, and the despair were palpable. Everyone I know who lived through that time, in that place, was scarred by it.
Silicon Valley isn't that bad. Traffic is lighter, and hangers-on have moved on.
But in some ways, the situation is much worse.
First, it's true. My dear wife is a programmer and morale is down at her place. There's real fear out there. There's fear of India, but more than that, fear of being replaced by someone younger and cheaper.
"Do you know they don't even call themselves programmres?" she asked me one night. "Now they're developers."
I'm still a Craig Barrett fan.
Barrett has a year left to run Intel before turning it over (most likely) to Paul Otellini. It's a reflective time. And in a recent talk with News.Com, he reflects on the "complacency" of America.
As Intel CEO this doesn't matter much to Barrett. The company can grow anywhere. But as an American it must upset him, especially since, before joining the company he was an assistant professor of materials science at Stanford. He's walked the walk of education.
So what should Craig Barrett do next? I have a few ideas.
The TV financial news today is filled with ads for outfits that, to my way of thinking, should not be sucking financial oxygen.
There's MCI and Putnam Investments. There are Citigroup and Janus Funds. Tyco is still around (it's making money I hear). Even Enron has yet to be totally liquidated.
What happens when you or I commit a crime is we are tried and convicted. This is very hard to do when the crime is done with a pen, behind the corporate shield. The states' batting average is low. What usually happens, instead, is that the company pays a fine -- sometimes a massive fine -- but usually without admitting wrongdoing. The cover-up, in other words, winds up being sanctioned by the court.
Add to that the complete failure of corporate governance in catching these crooks before the vaults are looted, and you have what I call Dracula Inc., corporate immortality, and immortal immorality. (Somehow, Bela Lugosi will always be Dracula to me, and obviously, to the folks at Shillpages too.)
I think it's time to stick a stake through some corporate hearts.
Way back in high school, nearly 35 years ago now, I lost my first newspaper job. (The illustration is from a Buddhist temple. Cute, huh? Keep reading for enlightenment.)
Well it wasn't a job, actually. I was canned from the school newspaper, along with the rest of the staff, after some editorials appeared against the Vietnam War.
Most of the "old" staff did what you expect. They went to their parents and got the money to distribute their own paper, one that was just as slick as the regular paper.
I took a different route. I went to the market. I sold ads. I kept my costs down and generally broke even. Kept it up for nearly three years.
The lesson stuck with me. Begging isn't a business model.
I associate this lesson with conservatism, but in our time it's often ignored. Young conservatives have an easy time getting money -- from parents, from foundations, and from publishers more interested in propaganda than truth.
Anyone else is left to beg.
Here's a note to the beggars. Get off your knees.
My Indian readers may be in a panic today over the sudden collapse of their stock market, so for their benefit, let me offer a little history lesson.
America's stock markets crashed periodically throughout the 19th and early 20th centuries. These were known as "panics" and were given by year. The Panic of 1837, the Panic of 1893, the Panic of 1907. Enormous quantities of capital were wiped-out, and government intervention was demanded.
The intervention came, but stock collapses didn't stop taking the economy with them until decisive action was taken.
That action was the 1934 creation of the Securities and Exchange Commission. Well, it wasn't just the SEC's creation, but the ascension of its first chairman, Joseph P. Kennedy.
Yeah, as in father-of-Kennedy. That Kennedy. Ever wonder how the old bird got his dough? He was a stock market swindler, one of the best in the 1920s. Knew all the tricks. Used them, too. The story is he got out before the crash because he heard the shoe shine boys talking about their own stock picks, and recognized the market had grown frothy.
Could computerization be pushing the world's democracies leftward? (Image from the BBC.)
Exhibit A is India. Despite American paranoia over outsourcing, the fact is jobs are still very hard to come by there.
As The New York Times reported last week, India's economy is growing like gangbusters but the prosperity hasn't been trickling down quickly enough to rural villages, which are becoming as economically bankrupt as North Dakota farming communities, and for the same reasons.
Warren Buffett, "the sage of Omaha," always has a lot to teach at his annual meeting, no matter your politics.
This year, Buffett was joined by a co-star, 77 year-old, Los Angeles-based Berkshire-Hathaway vice chairman Charlie Munger. Many felt Munger stole the show. (Personally, I always look to the straight man -- he's usually the better gag-writer.)
But no matter. Warren Buffett was never about star power, but about investing discipline. And he's still got it. Following are some highlights from this year's Buffettfest:
Normally I would ignore the hype. But this IPO offers important issues, chief among them the power of Wall Street to control the financial markets.
While the markets are located around Wall Street, brokers should not be controlling them. Yet they have controlled them, for over a century, manipulating prices through "analyst reports" with clear conflicts of interest.
And in this case, the conflict is manifest, because it's in the analysts' interest that this IPO fail.
I've looked over coverage of President Bush's broadband plans, and they're "the old switcheroo." (Image from TechCentralStation.)
That is, they sound good on a superficial level, but a look at the fine print shows a different picture.
The problem is how we get there. The Bush plan is simply not market-oriented.
Back in the late 1990s the "Four Tigers" of Southeast Asia (Thailand, Singapore, Malaysia, and Korea) overheated, their economies fell, and the U.S. caught barely a sniffle.
Well it's about to happen to China and this time we're going to get pneumonia, maybe worse. (Jeremy Wolff took this lovely picture, a mural featuring a Chinese child playing with bubbles, on a recent trip to that country, and posted the picture at Inch.Com, a New York ISP.)
China's demand for production goods is already driving prices for raw materials higher in the U.S., leading to inflation, thus higher interest rates, a falling housing market and (probably) an end to the nascent recovery.
But that's just the first course. (You know how Chinese meals are -- good ones anyway.)
Let me state something that's going to get me in more trouble with my conservative friends.
The results of economics are not inevitable, like the tides or volcanic eruptions. They can be adjusted, if we choose to, and their effects can be adjusted, if we choose to.
A century ago, under a Republican President, we made that choice. Maybe, in this case, we will make a different choice.
But to deny there is such a choice is to deny reality.
The Heritage Foundation has issued a paper giving ideological reasons attacking any public interest in wired communications.
Before reading where they stand understand where they sit. The Heritage Foundation is the grandfather of right-wing lobbying organizations. Its money comes from rich men (and women) devoted, through their "charity", to pushing their own self-interest.
Nothing wrong with that, but since conservatives now claim full disclosure is a substitute for regulation, I thought mentioning that fact would be fair and balanced.
Personally I haven't noticed one. Prices are up, aross the board, but they're not up beyond folks' ability to pay. There's a new $400,000 house across the street, but the area's been gentrifying for nearly a decade, and (unlike my house) it's in a suburban city which not only delivers services, but personal service.
In Atlanta, builders are keeping prices from skyrocketing by adding to our housing inventory, turning factories into lofts, and putting houses onto every small plot of land they can find.
"You shouldn't think of offshoring as a recent phenomenon. This has been happening for decades. It seems the press has just discovered it recently because it is an election cycle, especially in the United States."
And as I read that it occurred to me...why should Intel care where its jobs are?
It's time someone said it.
Employers are on strike against health care costs. (The picture, by the way, comes from the Harry Bridges Center for Labor Studies at the University of Washington.) Politicians, and those who follow politicians, are starting to take notice.
Who can blame them, really? You can control direct costs, moderating salaries and wages based on the economy. But you can't control health care costs.
And in America, they are out of control.
Let me give you one example. I'm a healthy man in my late 40s, with controllable hypertension and high cholesterol. Based on the latest research, my doctor recently added a third medicine to my regimen, aimed at raising my "good cholesterol" levels.
After writing the previous item on credibility, I decided the subject should not pass without honoring a real American hero on the question of credibility.
Ladies and gentlemen, once again, Warren Buffett. (The picture is from today's BBC story.)
"The Sage of Omaha" has always understood that the purpose of a credibility account is to be heard when it counts. He is a unique man, who has used his annual Berkshire-Hathaway shareholders' letter to sound off on issues that need sounding off on. And, note this, he chooses his issues carefully. He speaks, on the whole, to issues of interest to small shareholders. Despite his immense wealth, he remains their advocate, their friend, their neighbor.
Matthew Yglesias has an interesting blog item up on the subject of "credibility laundering." (The picture is from his blog.) His complaint is on universities giving their names to wealthy patrons' dubious projects. This lets political partisans pretend that their nonsense has some sort of academic credibility, which it often does not.
Of course, credibility is sold and traded all the time. Michael Jordan earned credibility as a basketball player and sold it through a long list of commercials. Jerry Seinfeld earned credibility as a comedian and sold it through American Express.
We expect this, and accept it. The ability to be a seller in the credibility market is one of the perks of fame. It's how notoreity turns into money. (This cartoon of former Viagra spokesman Bob Dole is courtesy Brian K. White of Glossy News.)
But there's a limit. If you saw Antonin Scalia or Alan Greenspan hawking cheeseburgers or soda pop, you would be appalled. They should at least wait, as Bob Dole did, until they're out of office.
Yet increasingly, they do not.
A long time ago, in a galaxy far, far away (actually it was the 1830s), the United States of America went on a canal-building binge.
The idea was to link the rivers, over the mountains, and enable trade to flourish between east and west, north and south. Huge bond issues were floated, some backed by state governments.
But technology got in the way. The plans were impractical, costs skyrocketed. Meanwhile, a little invention called the railroad made the whole scheme obsolete.
As a result, America went broke, starting in 1837. The bonds defaulted, despite their state backing. Thus, no European investor wanted to touch anything American for over a decade. We were seen as charlatans, con artists, and gullible fools. So we were.
Fast forward to today, and watch Libya doing the exact same thing. (The picture above is from the New York Times article linked-to in that last sentence.)
It's time to be blunt.
The Bush Administration is destroying the currency, with the approval of the Federal Reserve chairman.
The idea is that imports will fall, and exports will rise, because the former will cost more and the latter less. Thus, a higher GDP and lower trade gap heading into the election.
But it ain't going to work, not even in the short term. The reason? U.S. oil demand is just too inelastic.
Foreign news sources may bemoan this but those are crocodile tears. The fact is that oil prices are stable or falling against currencies like the Yen, Euro and Pound.
He is going to five different colleges, trying to convince kids to study computer science.
Given that his head appeared in my church recently, as part of a collage called "Images of God," this move to pitchman might be considered a come-down. (Although the page where the picture came from claims he's an atheist.)
When I wrote recently about the need for Alan Greenspan to go, I wasn't trying to start something. I am not a trained economist. I was offering my opinion.
It's nice that someone trained in that field, Paul Krugman, apparently agrees. Krugman's column attacks another issue, Greenspan's call to cut Social Security, against my mention of how we're losing the battle for sharp minds.
But the point in both cases is the same. Alan Greenspan, who was appointed by Reagan, re-appointed by Bush II, then re-appointed twice by Clinton, needs to retire. We need to stop acting like this guy is the Oracle of Delphi. He's just another partisan, with a partisan pitch to make.
The picture, by the way, is of the aforementioned oracle.
Alan Greespan gave one of those speeches yesterday where he tiptoes around something important but leaves that subject alone. (The picture is from MSNBC.)
He talked about intellectual property rights. He said they're increasingly important.
But while most commentators will take this as a chance to go on-and-on about the Copyright Wars or the Patent Wars, it's far more important to think about where ideas come from -- people.
The battle is on for smart people. We have always been ahead. But we are deliberately losing ground. Years from now people will refer to this era as the American Brain Drain, and we only have a limited amount of time to reverse it before its effects become irreversible.
The Economist's print edition has a long screed claiming that outsourcing concerns are phony, and everything is A-OK.
The statement was originally made by the Administration's chief economic advisory, Gregory Minkiw (pictured, from his home page) and has since become a political lightning-rod.
In theory the magazine is right. Most of the jobs being lost overseas are jobs we're well rid of. How many Americans really want to put together stuffed toys, or be an "operator standing by?" The magazine claims that a huge spurt in job growth is just around the corner, good jobs with good wages.
To which I respond, not necessarily.
The Internet Bust of 2000 taught us nothing. (The image is from PBS, an article for students on the Crash and its aftermath.
To most investors, the lesson was confined to a single sector. The lesson, as it was understood, was that you don't overpay for companies without earnings.
But that's the wrong lesson. The real lesson must be, you don't overpay, period.
Over the last year, we've seen some recovery in profits, especially among the biggest companies. But we've seen even more of a recovery in those companies' stock prices.
Remember, the historical average P/E (price-earnings ratio, the number of times you have to add up a company's annual earnings to reach its stock price) is 15. But look at some of these:
Alan Greenspan's power is based on the claim he's both infallible and above politcs.
We're now coming out (maybe) of the second recession we've faced under his watch. He was late raising interest rates in the late 1990s, leading the the bubble, and then didn't lower them in the 2000 election year, making the recession worse. (The picture above came from here.)
But lately he has gone beyond partisan. His recent testimony is nothing but sunshine, irrational exuberance in a hearing room.
Claiming that "spending cuts" will balance the budget is ludicrous. Spending in many areas could fall to zero and the budget would still be out of whack. Requirements are written into the law, not the budget, and costs are already being passed on, through state and local taxes. So the economic impact of domestic "spending cuts" is minimal. He knew that. He said it anyway.
But that's not the worst of it. Not by a long shot. Asked about China's growing hoard of dollars, he suggested that foreigners are using hedge funds to limit their risk, and then added he wants no regulation of that market.
Quite simply, countries like China who are getting tons of depreciating dollars for their goods are going into the market and betting on the dollar falling further. Then, when the dollar does fall further, some of their own losses on holding dollars are offset.
Greenspan doesn't want to do anything about it, doesn't want to look under that rug at all. China can destroy our economy at a stroke, simply by calling its broker, and Greenspan doesn't want to do anything about it. We have an imminent threat to our national security, the economic equivalent of 100 hydrogen bombs sitting over our head in Beijing (what are you going to do if your money becomes worthless tomorrow) and he doesn't want to go there? He doesn't want the rest of us looking at it, either, let alone trying to do anything to stop it.
This takes political cover too far. He's past retirement age. Let's find a banker who understands banking, and hasn't gone native to the politicians he serves.
In many ways this has not been a good year for Siemens, the giant German telecom company.
The company announced job cuts of 2,300 last summer, as it continued to lose share in mobile commuications. The company, with its joint-venture partner Fujitsu, admits "the boom days are over" in PCs. Do we have to talk about the telecomm equipment business?
So what do you make of this chart. It shows the value of Siemens' American Depository Receipts (ADRs) over the last six months. From a low of about $30 per share in October 2002 you've nearly tripled your money, to over $80. Just in the last six months you're up over 25%.
What gives is the U.S. dollar, and its value against the Euro. A few years ago a Euro cost 85 cents. Now it costs $1.27. A pound will set you back $1.87 and you can only get 105 Yen to the dollar.
This is helping no one. In the short term European recoveries are slowing, because their exports are costly.
But in the long run there's a silver lining, and I don't just mean Frenchmen all getting cheap trips to Disneyland (although it means that too). The total value of everything in America -- including the Disney Co. itself -- is falling in Euros, in Yen, in Pounds.
Siemens, for instance, is now worth $74 billion. What's left of AT&T -- mainly its long distance unit and international cables -- is worth just $15 billion. Siemens does not have such grand plans in store. For now it's content to just buy Chrysler's electronics plant, in Huntsville. (Sprechen sie Deutsch, y'all?)
The reason we haven't seen a wholesale looting of American equities by foreigners is simply because the value of the dollar continues to shrink, as does the cost of those assets. It's when the elevator hits the ground floor that you're in for the big surprise. That's when the chickens start coming home to roost.