Author Archives: Baruch

Is the Nokiandroid an inevitability?

Posted on June 21, 2010 | 5 Comments

Priceless post by Jean-Louis Gassée on an imaginary conversation at Nokia between the amusingly named CEO Olli Pekka Kallasovo and his head of mobile devices Anssi Vankoji. The key point is where Fake Oily says to Fake Anssi:

This leaves us with one choice: Android. I have made the decision and I want you to implement it.

Go read it. It’s very funny.

More seriously, dear readers, I actually think it’s going to happen. I don’t share Jean Louis’ pessimism on this. These Finns are totally fucked. Symbian 3, Symbian 4, Maemo, Meego, no-one knows what to write code for, and everyone is just tired of listening, of attending another bullshit launch of another car crash handset. In his discussions with analysts, salespeople and other investors, Baruch feels a tipping point has been reached. Nokia have lost all credibility with investors and developers and will very rapidly fade into irrelevance unless they go Android, and do it while they can still make a difference in deciding the outcome of the war between Android and iPhone.

Needless to say, OPK and the current set of Finns will have to go.

Just think of the consternation at Motorola and HTC. Much gnashing of teeth. It’s a delicious prospect. Android is going to suffer a severe setback later this year when Verizon, the major refuge of the Androids, goes iPhone. Google getting Nokia on board, still the leading handset player in the world with a lock on the higher end in developing countries, would pretty much cancel that out and equalise the playing field. Needless to say, Nokia would immediately become Google’s préféré, the recipient of the latest updates to the OS.

Ultimately, Finns are nothing but pragmatic. I think this is going to happen and I think it will be sooner rather than later.

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Posted in Uncategorized

The thin veneer

Posted on May 9, 2010 | 12 Comments

Baruch is staring-eyed and stressed. This sovereign debt crisis is beginning to wear him down. He’s beginning to worry. He wouldn’t mind if he was just dealing with risk; he can quantify and hedge that. No, he feels deeply uncertain. Here’s why:

The general hopelessness of european policymakers is just too evident. We don’t have a fiscal head, a SecTreas, to make reassuring noises. We have a cacophony of differing national agendas, and a bunch of governments up for re-election. Arguably reasonable when they do stuff separately, when they act together everything they do has an air of compromise, half measure, and to the uncharitable, incompetence. The ECB, as the heir of the Bundesbank, should have a certain astringency when it comes to dealing with crisis — which in Europe hasn’t come about very often — that the Fed has long since abandoned. If the Fed, especially under Greenspan, was always the loving Mommy, the Bundesbank was the harsh Prussian Vater, prepared to let its kids die if they thought it was good for them. We think that’s what the ECB is supposed to be like, but we just don’t know. It might also tend more to the Banque de France part of its inheritance, which was if possibly even more of a pushover than the Fed is. It’s essentially untested. That’s not risk; that’s uncertainty.

This general European hopelessness in the face of this particular crisis is actually surprising considering how much is at stake. That’s because it is not just about trivial economic issues: what is at stake are key national interests and core principles of post war foreign policy, harking back to a period where tanks roamed the continent blowing things up. It’s also about domestic policy, the fabric of the settlements between right and left in Europe, insofar as what seems to be happening is that the world has decided to stop funding Europe’s social model.*

Baruch was taught to understand the Euro, and the whole European project, in the context of a historic compromise between France and Germany to prevent war from ever breaking out on the continent again. Germany was permitted to become a normal state again, and to thrive, so long as it was separated into BDR and GDR, and vitally, integrated into a number of key institutions, in which the French would be the senior partner (and French the main language — they like that sort of thing). They started with the European Coal and Steel Community, and moved on to the EEC, the Single Market, and later, the EU, gathering more and more members on the way as it was clearly proving to be A Good Thing.

The USSR falling to bits put paid to this cosy arrangement; suddenly half the bargain was going to be broken as the Germans clearly wanted their Eastern relatives back. That this was a real problem at the time is easily forgotten; the Blessed Margaret famously fretted whether Reunification should actually be “permitted” at all. EMU and the Euro was the agreed-on price. Unified Germany would be even more tightly integrated to the rest of Europe, with the added bonus that, at a stroke, the more feckless European economies would be given the envied central banking credibility of the Bundesbank, the model for the ECB. For countries like Italy and Greece, where the smallest notes in circulation had lots of zeros on them, this was also seen as A Good Thing.

This is up in the air now. The Euro is at more risk than it has ever been. And for the new generation of politicians in France and Germany the compromises of the 1990s may not mean so much. We don’t know how much they are prepared to risk to defend the status quo. They don’t have direct memories of firebombed cities, of fathers not returning home, of mothers and sisters raped by the Red Army. I don’t think we’d have the same worry if Kohl and Mitterand were still around. We would trust them more not to fuck about. Again, like the ECB, Merkel and Sarko are untried; their being in charge implies less risk, more uncertainty. And the French disengagement on this whole issue worries me.

I think that what I learned in 2008 about debt markets and leverage (they seem to go together) is that there’s nothing there without confidence; take it away, and trillions can become worthless in the blink of an eye. And all you get is a stupid coupon. Say what you will about equities (yes, Felix, I like the videos), there tend to be tangible realities behind them, stuff you actually own. Even if it is the nebulous brand value of a TV sock puppet selling online petfood, it is more than zero. This, Baruch thinks, is why bonds are not an asset class for serious people.

Subprime blowing up and its ramifications were, with hindsight, pretty obvious for some time before the crap really hit the fan. When confidence there evaporated the implications for valuing other asset classes were only indirect. The debt of developed western governments may be another matter. Aren’t they the anchor for the whole risk spectrum? All my company DCF models use respective 10 year government yields for the basis of the rate I discount their earnings at. Banks around the world have worked to derisk and delever their balance sheets in the past 2 years; you don’t get safer than AAA/AA government bonds. They must be stuffed to the gills with it. Mrs Baruch turned to me the other day and whispered, you know dear, after all this, corporates are going to be viewed as less risky than governments. She’s almost always right when she talks like this. I don’t know the ramifications of that. I have no idea. The limited bits of CAPM I remember don’t include that contingency. Again, uncertainty, not risk.

Confidence in bond markets is a veneer. We saw what was underneath in 2008 when the veneer thinned. I feel it thinning now, and am really worried that if subprime blowing up meant that commercial lending disappeared, and factories in Shanghai closed their doors for a month and global economic activity froze, the blowup of Eurozone sovereign debt can easily have the same impact.

As I write, eurozone finance ministers are meeting and, we are told, Have a Plan. I hope it is fittingly thermonuclear.

* this is not my original line, it came from an obscure Korean fund manager quoted in a Bloomberg article I read last week. I can’t find it any more. 유감스러운.

UPDATE: Wow, Angela Merkel must read my blog! Wait — hang on — did I just save the Eurozone . . . ?

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Posted in Lens grinding, Stupid Cartesians

There. You see?

Posted on April 22, 2010 | 2 Comments

Much is being made of this video among the various Apple groupie blogs.

Readers will of course recall the fascinating one-two punch on the iPad delivered by myself, Baruch, and my dear colleague in blogging, Bento. His contention was the the real audience for the iPad will be older people. It is, he wrote, “a complex computer, simplified”, perfect for those intimidated by all the fiddly things you have to do to make them work:

It does one thing at a time. Your finger is the cursor. There is no need to tap things twice before stuff happens. You are allowed to turn it off with the power button.

No, Baruch contended, or rather, yes, but it is also or primarily a simplified computer for busy, empowered women: who as a group are perfectly capable of doing all those fiddly things but who don’t see why they should have to.

So one might think, “bravo Bento, you finally got one over on that loudmouth Baruch; look at Virginia, the 99 year old lady in the video using the iPad as her first computer. Proof of your thesis.”

Ha! Not so fast! Because of course Virginia is also a woman.

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Posted in Fellow Collegiant, Lens grinding

Thoughts on The Big Short by Michael Lewis

Posted on April 18, 2010 | 12 Comments

Just devoured the Michael Lewis book: flipping marvellous it was, too.

Baruch has 3 major takeaways.

Takeaway One: I wrote not so long ago that “investing should be a solitary activity” — in a (-nother overlong) post which was nicely taken up and expanded upon by Tadas at Abnormal Returns. What I meant was that you shouldn’t be dependent on Baruch and others for your investing results. The Big Short is a reminder of something else: that the independence of mind working alone creates is a huge asset. All the guys in the book were “out of the flow”; Mike Burry because of his Asperger’s, Cornwall Capital because it was just too small for anyone to want to service it, and Steve Eisman, well, because he was on a mission to punish evil-doers. And being out of the flow allowed them to see the unclothed nature of the Emperor. Baruch has lived through bubbles; he knows the attractions of being well-connected, getting “first call” on the hottest new trend or IPO. But its mostly bullshit; an invitation to join the current groupthink.

Takeaway Two: out of the three investors in the book, Baruch identifies most with the Cornwall Capital guys. He largely shares their epistemology, as described by Lewis. They and Baruch are Talebian investors, people who know the opportunity is that they live in Extremistan, but many things are priced like it’s Mediocristan instead. Betting on mispriced, assymetric outcomes is what Baruch tries to do too, and tech investing is great place to find opportunities like that. It’s odd though that Taleb isn’t mentioned by Lewis in the sections relating to Cornwall, as he is sort of the intellectual father (OK, maybe uncle) of investment strategies such as Cornwall’s — but never mind.

Shorting subprime debt via buying credit default swaps, which weirdly amounted to, as Lewis makes clear, something akin to writing subprime CDOs, was the classic Talebian strategy: a small outlay for an outsized payoff in the case of an outcome wrongly judged by the crowd to be highly improbable. Situations like that can be excessively profitable for the smart punter on the right side of the trade, yet the other side is correspondingly highly dangerous. In the case of subprime, the other side was the financial system. If we ever do somehow “fix” everything, remove the leverage, create redundancy and robustness in the system, it struck Baruch, might we not also partially remove from the system the ability to make big bucks? I hope not. After all, that’s how I put food on my children, as George Bush used to say.

Takeaway 3. I’m not sure how to feel about Lewis’ conclusion about overall financial system. He thinks that when the big old Wall Street partnerships went public it removed all restraint and socialized all the risks; the managers of partnerships with unlimited liability, Lewis thinks, tend to be more careful with the money, which after all belongs to them, than when the capital belongs to faceless shareholders. This is a good insight, and should not be controversial.

However, could the old partnership structure sustain the massive expansion of financial services in the past 30 years? Many would say that is exactly the point, that our current financial system is far too dynamic, too big. But really, can we be sure there aren’t positive aspects to this as well? The past 30 years also happen to be the period where, despite the odd systemic crisis, more people around the world have been brought out of hopeless poverty into the global economy than ever before, and while we have created some undeserving super rich, I suspect that when you consider the relative change in real incomes in BRIC markets, wealth inequality on a global basis might have actually fallen. It may only be a coincidence that the two phenomena occured at the same time. Then again, it may not. If an economy gets bigger and more complex, might it not need an increase in the size and complexity of its circulatory system?

Anyway, let’s see. Roll on the next crisis if it means another book as good as this one.

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Posted in Uncategorized

No Stock Recommendations here; move along

Posted on March 28, 2010 | 5 Comments

Baruch recently found himself commenting on Wall Street Cheat Sheet, on a post by Damien Hoffman, who seems to really dislike Jim Cramer. The post was about some investigation of TheStreet.com by the SEC, which Damien thought highly amusing, perhaps because he also runs a competing subscription-based financial edutainment site. Now, Baruch doesn’t pay attention to Jim Cramer on TV, but in fact quite likes him in print. He reads his posts on theStreet.com, and respects his track record as a hedge fund manager and pioneer econo-blogger. So Baruch felt a brief moment of annoyance about seeing someone he liked being unecessarily trashed, but soon his heart was filled with forgiveness and understanding again. We must not be too harsh; snark is Damien’s job, what he gets paid for. He is a financial blogger-journalist, and being cheeky about mainstream media figures is part of that David and Goliath thing blogging used to be all about.

Anyway, this post is only a bit about Jim Cramer and Damien Hoffman. The exchange got Baruch thinking about the differences between journalists/bloggers (or whatever you want to call them) and investors, and what it means to communicate about investments with the public. Baruch finds this terribly interesting, because of course as an amateur econo-blogger and a professional investor, he has a foot in both camps.

Some of Baruch’s best friends are, or have been, financial journalists and commentators, on blogs and print. Being a financial journalist is a good, interesting job, and very important to the proper functioning of a marketplace. Journalists can do things, find things out, and explain things the public and investors need to know in ways investment professionals can’t, at least without risking jail.

But in the end journalists are explainers, commentators. They are dependent on market participants to provide them with things to write about. They review what others do. They work with the huge advantage of hindsight. And when it comes to giving advice about what what should be done, most media commentators are no better than the rest of us. Probably worse; they don’t get as much practice at it.

The major problem that commentators have is that rewards are based on reputation. Praise from peers and increased readership is the only way they have of knowing how good at their jobs they are. This is dependent on how smart the writer sounds, rather than how good he or she is at giving actual foresight. It’s a difficult thing, having to appear smart all the time. A well publicised prediction gone wrong can be pretty devastating to a reputation and undo lots of less well-publicised predictions which went right. Many writers solve this problem by not making many predictions at all. This is why most analysis pieces in newspapers and mainstream blogs end up in prevarication and fence sitting. Most journalists these days are smart enough not to end their articles with the words “only time will tell” — but they may as well.

The need to constantly appear smart also incentivises some to find a shortcut. A good and quick way of appearing relatively smarter is to find some fellow commentator who has broken the cardinal rule of journalistic punditry and actually had a stab at predicting something in a clear, falsifiable way — and got it wrong. Pointing out someone’s errors is a good way to come up with copy when you can’t think of anything constructive to say.

Ironically, consumers of financial media are actually crying out for someone to tell them what to do, rather than the prevarication they are confronted with everywhere. So pundits who do state clear positions tend to get eyeballs pretty quick. This unsettles their peers, who are universally relieved when these outliers inevitably cock it up, and they can now write gleeful articles about how it was obvious their colleague didn’t really know what he was talking about in the first place. Realising this, even sites which purport to give readers actionable intelligence, such as Lex, don’t actually tell them what to do, which would be too risky. A conclusion is always hinted at, but never made as plain as ” we think you should sell”. Instead you get some coded priggishness, like the chairman of company X “should enjoy the view from the top while he can”. Which gives the Lex writer enough wiggle-room to appear clever whatever the outcome for shareholders. This is, after all, the point of his writing, which he would freely admit to you as well if you bought him a pint.

Compare financial journalists now to actual market participants. While every now and then hedge funds get in a feeding frenzy and will short your longs and go long your shorts if they think you are in distress, the rest of the time professional managers are remarkably civil about each other in print, in person, and in front of clients. They don’t have cat fights very often. Continue reading →

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Posted in Fellow Collegiant, Lens grinding, Stupid Cartesians, What Would Spinoza Do?

Econobloggers need their crisis back

Posted on March 7, 2010 | 30 Comments

I think so, dear readers. With the advent of peace and plenty, as we move to the broad sunlit uplands of The Recovery, I fear some of the spice has gone out of the commentary on sites like this one, and its friends. Where people used to read econoblogs to actually understand a crisis that CNN and Fox News soundbites didn’t seem to encompass anymore, as the meltdown recedes into the past there’s now just a dull ennui. And with that, the econoblogosphere is moving back to where it used to be, which is to cater to a niche, broader than most, but a niche nonetheless, with a circumscribed influence.

The high point of bloggy “power”, we shall probably find in retrospect, was when a number of bloggers were invited to the US Treasury department and fed some by all accounts delicious cookies, as well as being ferociously spun to by the Goldmans guys whose turn it was to be on sabbatical at the Treasury that when it came to financial reform and what had gone wrong in the banking sector they did in fact Get It, whatever It was.

Since then, of course, we have had Obama praise the bonuses to “savvy businessman” Lloyd Blankfein, who as we all know is doing god’s work; mind-numbingly massive “trading” profits from all the big commercial, investment, commercial investment banks at the same time as accepting government and Fed largesse*; an even more hideous clusterfuck over finance reform than exists over healthcare reform in the US; and this despite none of the proposals under discussion seeming likely to properly change anything worthwhile, other than maybe the Volcker prop trading rule and this last seems fairly dead in the water.

What really rankles this blogger is that the Great Spinozist Republic is being subverted again. Regulatory capture is one thing, the total inability of a political system to make any steps to reform itself when what is wrong is staring at you in the face, is quite another. Political money and public ignorance has corrupted civic decency in the US to such an extent that doing the right thing for the Republic appears quite impossible.

All these things should make econo-bloggers all quiver with righteous anger, which we would communicate to our readers who would then rise up en masse against the legislators captured by Big Banking, and some form of actual reform might even take place.

But something along the chain has broken. Either we have lost interest or, more likely, the world has. To be sure, there are brave souls who carry on the fight. Felix does an admirable job of keeping us up to date with the nuts and bolts of finance reform. Taibbi provides the rhetoric (“vampire squids”, indeed). Calculated Risk and Naked Capitalism carry on doing their thing, as does Zero Hedge in its batshit sawn-off shotgun way. TED gives us the lowdown and I mean low, on what it really means to be a banker (though TED’s next post is just as likely to be about his favourite type of upholstery. Thanks for including us in the list of blogs you read, BTW). There are others, and Abnormal Returns continues to aggregate them. But the rest of us seem to have stopped caring so much. The minutiae of practical policy is much less amusing than making lots of money in financial markets that really, truly appear to be on the mend.

The wider global economy seems to be much better too. Sure, the US seems a bit screwed up still, and unemployment is high, but frankly that’s not where the action is at anymore. Baruch was astonished to read that Gartner is predicting 20% year on year growth in PC units globally. We can talk about overleveraged consumers until we’re blue in the face and we’ll still be wrong. That’s a crapload of PCs, and someone’s buying them. You don’t sell craploads of PCs like that unless there was something going fundamentally right in more places than where things are going fundamentally wrong.

But a better economy just makes people fat and happy, and fat and happy people aren’t likely to be roused by righteous anger. Fat and happy people are not likely to want to change much. Fat and happy people are much more likely to assume the light at the end of the tunnel gives out onto a large outdoor buffet than the next oncoming crisis. Hell, fat and happy people are more likely to do the stuff to bring on the next crisis, to binge, to borrow more, stoke the next bubble wherever that may be and feel pretty smart doing so, just like we did in 2006 and 2007. Reformed Broker Josh captures the new Zeitgeist rather well just today when he lists the things people no longer appear to be interested in e.g. financial reform, unemployment, etc and says

most market participants have instead turned their focus to finding secular growth stories, deep-value high yielders to replace the lack of money market interest and other such assorted baskets to put their eggs in.

Fine with me. I could use a break from the “news” myself.

I can’t say much better. Josh is saying what lots of us think.

Baruch isn’t really the person to do anything about this himself. He isn’t Spartacus. It was no co-incidence he was not invited to hob-nob at the Treasury; David at Aleph Blog was kind enough to suggest he and some others should be next time, but Baruch would probably have just eaten more of the cookies than was fair and got bored and played Homerun Battle 3D on his new iPhone until it ran out of power, annoying everyone. Baruch is one of those who likes to analyse what Is and try and make money out of it. He is not very interested in, or good at, what Should Be, though is slightly envious of those who have strong opinions in this direction. Less “designing better futures“, more buying the right ones. Even if Baruch had a prediliction to think about policy he doesn’t have time to think about more than what he writes about already; he has a day job, and a very intense one, which soaks up what mental energy he can muster these days.

But buying better futures are not what the best blogs in this space are about (and not what Nick Gogerty’s blog is either). Posts about the latest chart formation in the S&P500 are not memorable. They help no-one. Blogs about how best to trade can be interesting, but remain narrow and mercenary. So in the end are posts about how many iPads Apple will sell, the stock-in-trade of UB recently. Myself and Bento are just not that qualified to do much else and don’t have the time to post as often as we want. But there are other bloggers who are and who can. At its best, the econo-blogosphere can be the last haven of truly independent, non-captured, and crucially, informed, commentary able to affect policy and opinion makers positively. It used to do just that. It may not help in the end but let someone at least try.

Get your game back on, people. Get some fire in the belly again. A crisis is a terrible thing to waste, and it looks like we are on the verge of wasting ours.

* the irony is of course, is that the millions in banker wodge financing the lobbyists is at least partly the hot money doled out by the Fed to banks in that extraordinary money machine called ” quantitative easing”: Fed buys up at full whack the treasuries it issues to banks at a discount, financed by cheap rates set by the Fed itself. Said banks, busting out with Fed-invented cash, or more properly, “trading profits”, refuse to lend it to small businesses like they’re supposed to in the textbooks and support the economy. No, they plow it into awarding themselves big bonuses and, most pricelessly, pay lobbyists to pay off politicians to subvert both good sense and a public opinion which is as viscerally opposed to big banking as it is ignorant and pliant, and make sure the status quo ante crisum is restored. An edifying spectacle.

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Posted in Blogroll, Fellow Collegiant, Lens grinding, Philosophising, What Would Spinoza Do?

In defence of the Verizon iPhone

Posted on February 13, 2010 | 13 Comments

Baruch has already forgotten about the iPad. Whether chick magnet or large print e-Reader for the elderly, any ideas we have about its significance are speculation at this point, and will probably unravel in the face of reality. The most tangible action at the moment is in the iPhone, and the most interesting thing that didn’t happen last month is that Verizon didn’t get their own CDMA iPhone announced alongside the iPad.

This was seized on last week by a number of Wall Street analysts who concluded that poor old Verizon won’t get an iPhone at all this year. Credit Suisse reckons there’s a “75%” chance the iPhone stays with AT&T in 2010. I read the research, which also suggested that AT&T might have made some interesting concessions in order to persuade Apple to play along. Barclays Capital (I haven’t read theirs) thinks the fact that Apple is sticking to AT&T for the iPad is a “vote of confidence” in the AT&T network; that, and the comments Apple have made to the effect that they think the AT&T network is very nice, thanks, and they are very happy with it. They don’t see a VZ iPhone in the works either.

Hey, sell side analysts! Are you totally, like, stupid!? There is no way you can make that conclusion on the facts we have so far. The rudest understanding of what Apple is trying to do here and the opportunity set it faces would tell you that the most mind-bogglingly idiotic thing Apple could do would be to keep the iPhone as an AT&T exclusive a moment longer than it has to. And I am not alone assuming that Apple is not mind-bogglingly idiotic. Continue reading →

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Posted in Lens grinding, Philosophising, Stupid Cartesians

iPad: forget the old people — it’s a chick magnet

Posted on January 29, 2010 | 45 Comments

The iPad: Bloggers hate it. Investors hate it — AAPL is down 4% in the cold light of the day after. Fake Steve Jobs doesn’t seem to like it much. Even Andrew Sullivan is down on it.

What do all these people have in common? They’re all (mostly) men. What are their complaints? The lack of multitasking; no Adobe Flash; no front-facing camera; it’s just a glorified iPod Touch; where’s HDMI? it doesn’t fit in a conceptual box — it’s not a smartphone, it’s not a netbook; 64 gig NAND Flash isn’t enough, why not 128? Where can I put it? Do I have to carry it under my arm?

Many of these complaints may be justified, but are missing the wood for the trees; we are men. We are nerds and geeks, we love specs, and compete for mastery over each other by comparing the wattage of our hi-fi systems. But we are only half the population. The women I have asked about the iPad (admittedly not a statistically relevant sample) seem to be viscerally enthusiastic.

Bento, you will be surprised to find I totally agree with your post below, even as I am extremely vexed you got yours out in front of mine on the subject and are thus getting all the glory. The iPad is as you say “a complex computer simplified”, and ideal for baby boomers like our parents. I was going to put it slightly differently however, and say it is a complex computer, turned into an internet appliance. Yes, it is to the internet as a blender is to food and as such it will attract the old and decrepit, it is true. But that’s a bit of a sideshow, if you don’t mind me saying so. As an appliance, iPad has the potential to tap a much greater prize, that vast hard-to-reach segment of consumer tech: busy, empowered women.

Men don’t like appliances. We want things that can do lots of different things, that we can tweak and fiddle with, and then argue with each other about which one is better. Women aren’t like this, and because of this I have a feeling that it’s women who actually determine the eventual winners in consumer tech; I believe but can’t prove that Nokia, for instance, came out on top in mobile phones in the 1990s and early noughties because it was the brand of phone women liked the most. It worked. It was simple. It didn’t attempt to wow you with numbers and specs. Nokias had great battery life so it didn’t matter if you forgot to charge it the day before. Nokias were nice to look at, in a non-flashy way. Women can accept and love mobile phones, a way to communicate, much more readily than they do PCs, for instance, which most males have used for solitary gaming or porn. That’s changing now pretty rapidly, but is still probably why almost 1.5 billion mobile handsets will be sold this year, and only 200 million PCs.

Women will like the simpleness of the iPad not because, like an increasingly creaky boomer, they cannot put up with computing complexity; they can. They just don’t see why they should have to. They can’t be arsed. They multitask in their heads; they don’t need it on their screens as well. How many gigahertzes it has is not important — does it do the job it is supposed to? And what is an Adobe Flash anyway? Embarrassingly, I am not sure I know myself. Women do not worship at the altar of technology.

Mrs Baruch often forgets to charge her mobile phone . This often drives Baruch up the wall, especially when he needs to get in touch with her. She knows it needs charging, but trusts that it will last that bit longer when she needs it. Why shouldn’t it? And really, she’s right, it should. The month-long standby time of iPad will mean this is a problem much less often. The large iPad screen should be good for sharing, for doing things together with the kids, showing things she finds interesting to all her friends over lunch, simultaneously, rather than having each of them hunch over an iPhone one by one. Through tied media content, she can buy fashion magazines full of glossy adverts and miniscule amounts of irrelevant content, and keep them on hand for instant recall while shopping. She doesn’t have to worry about carrying the iPad under her arm — she has a handbag it will fit into rather neatly.

For developers, this will be great – iPad has the potential of opening key new demographics, and will keep them working on the Apple OS platform to the exclusion of Android, Windows, and everything else. That’s the key for Apple here, I think. iPad doesn’t need to be a massive 50 million unit hit product for it to work (one hears of a production run of 5 million this year FWIW). It just goes to cement the edifice of Apple’s mobile internet platform dominance even more firmly — something we have written about before.

The other, highly important, meaning of the iPad is that it opens a wholly new battleground; it is the first new category we have seen in tech for some time. It is effectively a smartphone with gigantism– largely all its innards are shared with the iPhone — and as such it is finally signalling the collision of the PC with the mobile phone, with first round to the mobile phone. We are likely to see an explosion of me-too products from PC and smartphone makers, using Intel Atom or ARM-based processors, and a swathe of different yet similar sizes and form factors are likely to emerge. On the platform side, Windows, Windows Mobile 7, Chrome, Android and other Linux-based OS are all going to be vying for supremacy. It’s going to be a very exciting time, and I can’t wait to see what’s going to happen.

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Posted in Lens grinding, Philosophising

Dirty, rotten scoundrels

Posted on January 1, 2010 | 10 Comments

Felix is far, far too kind to the telcos of the world, when he writes in an otherwise excellent post (picked up by Krugman), of the lack of decent network coverage in NYC:

If I were an AT&T shareholder, then, I’m not sure how much money I’d want my company to spend on beefing up 3G wireless in New York and San Francisco, especially when there’s little obvious return on such an enormous investment. Sometimes you make more money with cheaper unhappy customers than with more expensive happy customers. And this could well be one of those times.

Firstly, let Baruch share his amusement at being cited as an expert in the physics of radio networks; he is at heart a poncy arts student, and is more likely to think an Erlang is a seminal German film director than the measure of network whatever-it-is that it is.

Secondly, and more importantly, western telco operators are in fact hapless, scrooge-like con-men, who have consistently misled their investors and customers about the extent of their next generation network investment. They have scrimped on 3G spending for years, preferring instead to provide investors improbably fat, 10% plus, free cash flow yields, and 5-8% dividend yields. As of this point, 10 years after getting the spectrum, they have still not properly built out their 3G capacity; and now the chickens, in the form of iPhones, have come home to roost. Continue reading →

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