The Boom is Over

It is all over Techmeme and FriendFeed: Sequoia Capital (the venture capitalists behind Yahoo and Google, to name just two), have called off the tech boom and told their companies to start preparing for the worst.

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Lets think about this for a second. Is the technology sector as a whole vulnerable to this downturn? Yes, but probably not that much.

Consider Google as an example. Google gets bundled with every install of Firefox ( and if memory serves, some OEM PCs as well). And Google is pretty much the homepage of the Internet. So Google’s traffic probably wont suffer that much.

However, Google make money off ads,and it requires advertisers to buy those ads (or be charged for them). Now this could be very bad or very good depending on the industry doing the buying.

For example, Jeremiah Owyang just said on FriendFeed:

“The economic downturn is a good thing for social media, it’s going to force innovation, revenues, and productivity benefits –the other tools will fall by the wayside. Agree or disagree?”

So either ads will become more aggressive in an effort to lure ever reluctant consumers into the open.

Or they will cut back. Some ads just don’t work as well as traditional methods.

My bet is that, as Jeremiah said above, the online space of ads and social media will be leveraged to an ever greater degree and firms try their level best to stay above water.

So why did Google’s stock drop yesterday? Again, I think that investors are nervous that Google, while having a very broad range of services, hasn’t spread its revenue streams widely enough.

Google need to figure a way to monetize Youtube ( for starters), rapidly. Youtube gets millions of views per day that Google earn $0 from.

I’ll tell you what Google should do. They should go to Adobe and license that audio-to-keyword tech in CS4 and run every video on Youtube through it.

Gmail is another one. Personally I have never EVER clicked on a link from the Ads in the sidebar. Sure they are accurate and frighteningly well targeted, but I have never clicked on them.

For the tech industry as a whole, software is integral to the lives we now live. It ain’t going away anytime soon.

iPhone Price Cut – Economics at Work

I just stumbled upon this article in Reason Magazine ( be sure to read the rest of the article):

Sure, it’s good economics—even if it’s bad PR, Apple did manage to sell 1 million iPhones in 74 days-but is it fair? Is it just? To find out, we need look no farther than question posed by rubber bracelets everywhere: WWJD? Not What Would Jobs Do?, of course, since we already know: he’d give in to the whiners and offer $100 credits good for Apple products in the future.

The parable of the workers in the vineyard is the Bible’s final word on this point, and takes a much harder line than Steve Jobs. Jesus tells the story of a group of workers looking for employment. A few are hired in the morning for one denarius. As the day drags on, more and more workers were hired, with the last batch brought to the field only at the eleventh hour. Then it comes time to cash out:

The workers who were hired about the eleventh hour came and each received a denarius. So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. When they received it, they began to grumble against the landowner. ‘These men who were hired last worked only one hour,’ they said, ‘and you have made them equal to us who have borne the burden of the work and the heat of the day.’

“But he answered one of them, ‘Friend, I am not being unfair to you. Didn’t you agree to work for a denarius? Take your pay and go. I want to give the man who was hired last the same as I gave you. Don’t I have the right to do what I want with my own money?”

As one writer put it: “if you’re still upset about ‘paying too much’ for your iPhone, take it up with the man upstairs.”

Or maybe this is all just an extraordinarily elaborate PR strategy after all. Consider a customer we’ll call “Katherine.” She would never wait in line for a gadget. She’s just not quite geeky/status-seeky enough. And she doesn’t track consumer electronics prices, nor does she browse in Best Buy or the Apple store for fun. But thanks to the hullabaloo about the price drop, she now knows that Apple phones are “cheap.” Hard to imagine the fact would have penetrated her consciousness so quickly or so thoroughly as it has without a controversy to reinforce the message.

Perhaps Steve Jobs did have the parable of the workers in the vineyard in mind after all. After all, the tale wraps up with that famous phrase, certainly applicable to iPhone prices today: “So the last will be first, and the first will be last.”

HD versus Blu-Ray

Note: I’m far from an expert on this subject, but have been watching from the sidelines

I was at ASDA yesterday (that’s Walmart here in the UK) and found a few titles in both HD and Blu-Ray formats. It was exceedingly modest compared to the huge “normal” DVD collection that surrounded it. It seems to drive home the point that a single, unified format that runs on all devices works.

My collection of DVD’s ( about 100) can be played on any capable device I can find. From my PC to the my laptop to the DVD player to the Playstation 2. The only thing that changes is the screen size and controller format. Simple – no thinking require, literally.

As far as I could tell (and I didn’t look that hard to be honest – I wasn’t planing to write this post), the only device capable of playing either format was the PS3 (of which there were only 4 on sale). The reason for the lack of a) players and B0 titles to choose from comes from the confusion over which title is going to make it to the big time. Its a rather chicken-and-egg problem. Do you take a risk and back one over the other and hope that it will make it with enough pushing? or do you sit it out and wait for it to make it to the big time.

The thing is that once a format dominates, both manufacturers studios and retailers stand to make huge amounts of money since all the confusion will have cleared up and consumers will feel much more comfortable spending large amounts of money. Its not just the disks, its the whole eco-system that surrounds it. I’ll have to buy a new CD-drive capable to playing the new format. I’ll have to by a new player for the TV. I’ll have to by a HD-TV ( already done). I could go a bit further an by a HD set top box. And then there’s the disks (both with movies on them and for burning stuff to )

Since there is so much to gain, I don’t get it when manufacturers are prepares to duke it out to the death (or one or the other does a repeat of VHS’s move against betamax)

The thing is,  a push is already happening:

On the one hand, it looks like Blockbuster is going all Blu-ray (in other words, no more discs that conform to the HD-DVD format). According to a story from the Associated Press as seen on Fox (there’s also a blog on News.com about it)

Could Blockbuster’s move mean the death knell for HD-DVD? Is Blockbuster even relevant in this market where people are getting their video on-demand and through outlets like Netflix?

Meanwhile, elsewhere on the Net, questions are being raised about Blu-ray discs engineering. Via Engadget comes a report that certain Blu-ray discs are “rotting” to the point that they’re unplayable.

I watch with interest, while I save my pounds and penny’s to spend on the winner – to the victor, the spoils.

Interesting Comparison

Frank at pseudorandom has this to say:

Since Bush took office, the Canadian dollar is up 39.76 percent. When you consider that Canada has a comparable (though much smaller) economy, a comparable standard of living, a border that’s essentially open to most trade, and a higher level of government services, this becomes an amazing statistic. It’s what happens when one government runs budget surpluses year after year, while its neighbor, after briefly running a budget surplus under one president, begins running unprecedented budget deficits under his successor.

Never thought of it that way.

Up Like an Escalator and Down Like an Elevator

Former Secretary of Labour Robert Riech makes this analysis of the stock market:

As of right now (11:15 am Pacific time, Wednesday), it looks like Wall Street is putting a the best face possible on yesterday’s “correction.” (A “correction” is a Wall Street euphemism for “holy shit!”)

He also said:

The wake-up call this time was Alan Greenspan, the Oracle of Ayn Rand, whose visage had been beamed by satellite to a group in Hong Kong on Monday (New York time). Greenspan warned the gathering of excess liquidity in global financial markets, leading to over-optimism, and he predicted a recession later this year.

Boom!

Too early yet to tell how big this explosion will be.

If you read his post you’ll see he mentions China. Anything that has an impact on the chinese economy, is of immideiate interest. The reason is right before you.

Fortunatly, I have no stocks to check 🙂