Category: Business

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The Merits of Excellence

SGI, Once Mighty Graphics Giant, Gobbled Up For Pittance – Wolfe’s Den Blog – InformationWeek

Considering the number of innovative, pioneering corporations that have fallen by the way side or disappeared in the rapidly evolving technology sector–names like Digital Equipment Company, Netscape Communications, and Sun Microsystems–one comes face to face with the fundamental question regarding the means by which the marketplace values innovation; or, perhaps, how the marketplace often fails to value innovation.

Silicon Graphics was a multibillion dollar corporation at its peak. It revolutionized the rendering of graphics by computers. It pioneered the application of massive parallel processing in server farms to establish computer animation as a means of “shooting” motion picture. Yet, like DEC, it has been bought for a pittance. The mighty Goliath of graphical processing was gobbled up for a measly $20 million. Just as DEC was carved up piece by piece before being purchased outright by Compaq in 1998, SGI has met its final demise in Rackable Systems.

Will SGI meet a better fate than DEC? Many of DEC’s technologies are still alive in many other products, even though Compaq itself ceased to exist after failing to capitalize on any of DEC’s remarkable technological expertise.

So, does the marketplace reward innovation? Pioneering companies like Netscape, Sun, SGI, DEC and many others are all dead after succumbing primarily to the Wintel (Windows + Intel) monopoly and secondarily to the Linux and the free software revolution. Even Apple’s recent success has come on the heels of its total abandonment of proprietary hardware in favor of the Wintel monopoly. (I run Windows on my Mac via Parallels.) Although conformity to standards is crucial to delivering value to the consumer, there doesn’t seem to be much evidence that the standards arise or evolve from innovation. The companies that innovate seem to be getting slammed in the marketplace by the bullies with the marketshare and the advertising dollars.

What incentive is there, then, to innovate? If the ultimate outcome is either selling out to a (hopefully) high bidder as an alternative to getting absolutely clobbered by the same bidder, what incentive is there for the someone to start the next SGI or the next Netscape or the next Sun Microsystems? If the only hope for survival is to become huge as Google did in a matter of a few years, then we can be assured of a marketplace devoid of innovation for some time to come because no specter of such a colossus is visible anywhere on the horizon.

The only certainty is that the creative atmosphere that allowed so many giants like SGI, Apple, DEC, 3Com, Netscape, Commodore, and countless others to arise out of pure inspiration is gone. The evaporation of the environment that nurtured creativity and innovation has far reaching consequences for the economy, of course. Its short term manifestation is the death of Venture Capital.

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First in Capitalism, Last in Broadband

BBC NEWS | Technology | Broadband World: Mapping the global picture

Extolling the virtues of a “pure and unadulterated capitalism” has always been in vogue in the United States, and it has never changed the fact the country is lagging in many critical measures of quality of life, chief among them life expectancy and infant mortality.

Now we can add broadband speed to the list, though broadband speed is hardly a measure of quality of life. It is a damn nice measure of excess, that one characteristic for which the USA is best known.

It’s nice to know to know that monopoly power is still worshipped in the United States  for the excess power and wealth it concentrates in the hands of the few. Who cares that monopoly power never delivers better service at a lower price, innovation (Microsoft still doesn’t get the iPod), improvements in infrastructure, or a functioning marketplace?

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On News, Knowledge and Information

U.S. Broadband Is Fine, Nothing To See Here – The New York Times methodically fixing all broadband issues.. – dslreports.com

Where do you turn when you need objective assessment of the state of broadband connections in the US? Not the New York Times, apparently. Dslreports.com, by far the greatest resource in the US on evaluating your own broadband connection and determining how much value you are getting from your broadband provider does a much better job of reporting on the state of broadband connections for consumers and the state of affairs in the telecommunications industry in general than the New York Times.

In other words, if you take away the most impressive broadband countries, then dismiss our still mediocre showing as a product of geography (which doesn’t explain our record on poor urban deployment, or the successes of say, Canada), the U.S. looks pretty good. With availability and speed issues solved, that leaves just high US broadband prices left to dismiss, which Hansell apparently can’t. “On prices, unlike speeds, those tantalizing reports from overseas are correct,” he says.

Like in France, where users can get 100Mbps/50Mbps fiber service, VoIP and IPTV for $40 a month — in large part because the country took our now-scrapped attempt at local-loop unbundling and made it work. Fiber carriers who were sharing the access lines of local incumbents are now building their own networks, which resulted in strong facilities-based competition and lower prices thanks to — get ready — regulation. Which brings us back to our first sentence, and a larger point we’d be interested to see Hansell engage.

It would seem, then, that we can count on the New York Times to deliver the same sort of hard hitting journalism it delivered in the buildup to the Iraq war in 2003.

So, yes, the bottom line from the New York Times is be happy that you are paying too much for mediocre broadband service. You’re better off than Mexico, and, sure, you may be worse off than the French, but at least you don’t have to worry about that pesky regulation that guarantees your rights and the sort of regulation that makes corporations compete for your money.

The New York Times commends you for being an American. Your life is better without regulation. Being ripped off by corporations against which you are powerless is the only privilege that you have as an American. You eschew it at your own peril.

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First Rule of Consulting

McCain: Obama needs to consult on stimulus | Politics | Reuters

The most important consideration one makes in seeking advice is finding a reliable source for the advice. Given that the entire economic crisis in the United States can be traced to Republican policies that de-regulated markets, that stiffled enforcement of white collar crime laws, that encouraged and rewarded profligacy and that absolutely choked competition by destroying the marketplace, John McCain’s demand that the Obama White House consult the Republican Party on the stimulus plan is tantamount to demanding that the doctor seek advice from a butcher in treating the terminal patient.

Obama is a rather steadfast fellow. The Democrats were given a mandate because the Republican Party failed so miserably in governing the nation. It’s not likely that Senator McCain will get the solicitation he so desperately desires.

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Tax Cheats: EU vs USA

BBC NEWS | Europe | German ex-high-flyer in tax trial

The attitudes toward white collar crime could not be any more different on the two sides of the Atlantic. The Deutsche Post executive who defrauded the government out of €1 million has faced two years of public humiliation and is now facing rather harsh consequences in a German court.

In contrast, American executives (such as, oh, Dennis Kozlowski of Tyco International) face little public criticism, enjoy lavish lifestyles, steal multitudes (hundreds of millions of dollars in some cases) more than this German executive did, and often manage to beat the rap and to go free.

The United States may well be the perfect place to be an executive, then. The combination of a flexible justice system, plastic and virtually nonexistent regulation and an ignorant shareholder population that is content being enamoured with its executives rather than being demanding of its executives creates the perfect environment for signing contracts that lavish golden parachutes upon even the most incompetent executive.

And, of course, if the executives fail especially miserably, they can always count upon their political pawns in the government for welfare, handouts and bailouts. This may very well explain why General Motors may be a hopeless cause. Absent all motivation to perform well, it should come as no surprise that many corporate executives are not performing at all. Therefore, after driving GM into the ground, what motivation could Rick Wagoner have to save the company?

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The State of “Journalism”

BBC NEWS | Business | Blogger brought down by dire forecasts

Living in modern times, one finds it difficult to find comfort in the misery of others. After all, modernity derives to some extent from the establishment of standards and the adherence to standards by practitioners of all stripe. Consequently, the lower standards to which less industrialized (i.e., less modern) societies conform provide no relief to the modern citizen. The educated, modern citizen will find relief only in the elevation of the higher standards in which he or she lives, and he or she will lament the deterioration of the high standards to which she or he has grown accustomed.

That said, it is pretty amazing to learn that economic journalism and prognostication in South Korea is about as pathetic as it is in the United States. A single, high school educated blogger seems to have outdone the entire South Korean economic journalism establishment in analyzing and predicting Korea’s financial course. Whether it was the government that ended the blogger’s career or a thoroughly embarrassed journalism establishment remains, consequently, a legitimate question.

Still, it would be nice if “journalism” had some meaning in the US, the Korean debacle nothwishtanding.

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Drawbacks of Online Advertising

On an October day when fires were raging all over Southern California, readers who wanted to be awed by the events were greeted with a very awkwardly placed Macy’s ad on the Los Angeles Times web site. Right next to the photo gallery that showed the awesome destruction that the Marek fire was causing Simi and San Fernando valleys was this strangely cheerful Macy’s ad for a Columbus Day Sale. 

Yes, the internet is taking over everything, but there clearly remain many, many kinks to work out. It’s highly unlikely that Macy’s wanted this event advertised on this particular page.

Then again, maybe the average Angeleno responds to disasters by shopping at Macy’s.

Macy's may not have wanted its ads on this Los Angeles Times Page
Macy's may not have wanted its ads on this Los Angeles Times Page

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The Nimble British Bureaucracy

Bloomberg.com: U.K. & Ireland | Bernie Madoff is Disqualified in the UK

This reminds me of a very politically incorrect Buddy Hackett joke. 

The Poles and the Italians are playing football. The lunch bell at the nearby factory goes off. The Italians think the game is over, so they leave the field.

Two plays later, the Poles score.

So, we got a guy out of jail and under house arrest, and the speedy British Financial Services Authority finally deems it worthwhile to disqualify the man from providing financial services in the United Kingdom. 

Of course, their failure to scrutinize the scoundrel Madoff for ten years (just like the SEC‘s failure) explains the doldrums of the British economy quite well. The results of the peculiar experiment are quite unequivocal: the American model doesn’t work. The only economy in the European Union to have emulated the American model of “capitalism” (corruption masquerading as capitalism, to be honest) is now failing like the American economy. 

No thanks to Bernie Madoff and the “capitalistic” governments that tolerated and deified such scoundrels.

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Which Idiot Thought This Was “Unexpected”?

Jobless claims jump, productivity soars | Financial News | Yahoo! Finance

In light of the remarkable string of bad news that has emanated from the American economic system for the past three years, one wonders who on earth found the sudden increase in unemployment “unexpected”. When every major economic indicator has been heading down for over two years and the financial markets are in the middle of a complete metldown, why on earth would it be surprising that companies are shedding jobs because they have less business to conduct? 

We know that the economy has been shrinking because the “growth” of the last four years was nothing but a house of cards built on subprime mortgages. Unfortunately, American journalism is far too incompetent to keep up with what’s going on.

Liberal media, my ass!

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The Microsoft Zune: Are You Playing It or Is It Playing You?

Microsoft May Build a Copyright Cop Into Every Zune | Bits | Technology | New York Times Blog

As if Microsoft had not provided its users sufficient reasons to abandon the Windows platform, it has now provided the ultimate reason. Microsoft is contemplating building a digital rights management scheme that will disable or erase content whose provenance it cannot verify. In other words, if your Zune player or Microsoft Windoze Vista cannot verify that you obtained your music or movie “legally”, it will prevent you from playing this content. Of course, “legally” in this context means through Microsoft’s proprietary means of ascribing legality: whether you bought it through Microsoft or not.

This report is very much on the rumor mill level of things, but it is entirely credible because it is not such a drastic departure from the existing Microsoft DRM schme. if it proves true, then every Microsoft user will have to register every CD she or he owns with Microsoft so that she or he can play it on the computers that she or he has authorized. Indeed, every Microsoft user will have to ask Microsoft for permission to play anything on her or his computer or Zune player.

“Thank you, sir. May I have another?” is the phrase that may be relevant to Microsoft users at this juncture. And, apparently, they do want to have another, and Microsoft is all too happy to deliver the blows.

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