microsoft's challenge

Well, Microsoft finally released it. The WinPen, no, Pocket PC, nope, XP Tablet, huh-uh, Smart Display, ha, Project Origami, oops, Courier, nada.

I refer, obviously, to the Surface, Microsoft’s vision of the future that was released yesterday. No, wait, in 2008. And it’s not so much released as it’s teased.

Microsoft deserves all of the sarcastic comments that can be thrown at it. They’ve been working on the basic current tablet form for over a decade, and in the meantime, Apple’s angle from the old Newton line not only came to market first, but the iPhone reconfigured the entire cell phone industry, and the iPad actually exists, now, in the present. For sale. By the time the Mac had been out for five years in the 1980s, Microsoft was already out with version 2 of Windows.

I’ve been working on a long piece ever since I started chewing on the whole Windows RT is called Windows but doesn’t-run-Windows-software-except-when-it-does strategy announcement. The reason is that for all the poking-fun to be had here, I think Microsoft really is moving forward with an innovative approach trying to transition to the next stage of computing, in stark contrast to most other companies (and most other industries, for that matter).

The short of the story is that the initial personal computing paradigm that developed in the late 1970s and early 1980s was a time of vibrant innovation and competition. What’s so remarkable about the business of the computer industry is that virtually every company died. Apple and Microsoft are basically the only two major companies that survived with any meaningful level of influence, and one way of understanding that survival is that they both were able to transition from an initial successful product to a second, improved product.

Same end result, but they got there in very different ways. Apple reinvested earnings from the Apple line of computers into the Macintosh line of computers. Microsoft leveraged its market power in MS-DOS to transfer market power to Windows.

Apple’s strategy is repeatable: a company can continually improve the customer experience over a very long period of time, if that is the focus of the company from the top down. Indeed, that’s what a market-based system of political economy is supposed to provide.

However, Microsoft was dependent upon a unique set of circumstances, a perfect alignment of the stars. Odds are that the legal, business, and technological environment of the 1980s will never appear again. Microsoft, unique among all of the tech companies, didn’t make ‘computers’ – they only made the operating system. It was IBM’s brand in corporate America, not anything technological in MS-DOS, that gave Microsoft market power. It’s also important not to forget Intel in the story, since the 1990s were really a Wintel duopoly more than a Windows monopoly. For three decades, Microsoft has sold MS-DOS and then Windows not to consumers, but to manufacturers, because being compatible with the IBM standard was paramount.

Today, IBM no longer even makes personal computers, and corporate buying represents a smaller overall share of computing purchases. Accessing networks (such as the internet, wi-fi, and cellular communications) and providing mobile form factors are the primary tasks assigned to an increasing number of devices. There are also a much greater number of users who have made their mobile computing choices today than had made their personal computing choices a quarter century ago. Microsoft’s challenge is how to make the next transition, how to be relevant in the mobile computing paradigm and beyond (assuming, of course, it wants to do that).

Does it try to leverage the market power of Windows to sell manufacturers on the next product, or does it try to make a device itself that will appeal directly to consumers? Both strategies are interesting, and personally, I think Microsoft could execute either one reasonably well. What I think is critically important to understand is that these strategies are completely incompatible with one another, and there are tradeoffs between them. I wonder if Microsoft’s senior executives understand that, or if they have actually drunk the Kool-Aid and think they can simply muscle into mobile touch-based devices the same way they transitioned to the mouse and desktop. In other words, would Microsoft accept being a top five manufacturer of mobile computing devices? Or would they rather bet the company trying to reclaim the glory years of the 1990s?

As a long-time Apple user, I do enjoy the delicious irony that Microsoft management has appeared increasingly trapped over the past few years by the very success of that silly toy of a user interface.

tech punditry and investment advice

I am obviously not a daily reader of MG Siegler's ParisLemon as I am commenting on something that was posted last week, which in mobile years might as well be last century. Anyway, the particular post is nerdspasm worthy - if you just so happen to be into both tech and finance.

Conveniently, I am.

Siegler links to Chris Dixon posting Warren Buffett's annual shareholder letter as CEO of Berkshire Hathaway (more specifically, the parts that are purposefully released PR-style for public consumption; the full letter is more detailed). Siegler's commentary reads (mostly)

Ask anyone why gold is so valuable and they’ll immediately tell you that it’s a rare commodity. And that’s true. But beyond its decorative value, which is minimal at best, what value does it actually produce? Very little.

Well, very little beyond selling it to the next fool who will pay more for it.

I don't know whether Siegler is casually interested or follows this more closely, but Buffett's letters are always fun fodder for the investment world and in particular the 2011 letter is quite remarkable. Indeed, this letter is darn near infamous.

First, Buffett yet again exemplifies that being a billionaire does not cause stupidity; it really is possible to be rich and maintain some touch with reality. Specifically, he acknowledges in the letter that he was wrong on housing finding a bottom. Contrast that kind of directness with how Manhattan financial firms operate, like Goldman Sachs Chief Financial Officer David Viniar giving his incoherent explanation of 25 standard deviation moves. Actually, don't contrast them. It will just make you cry (whether over math or the failing of our institutions, is in your hands). It's not that Buffett is always right, but that he puts his thoughts out there.

Second, Buffett has thrown himself in the midst of what has to be one of the greatest not-really-that-important controversies in the history of the internet. Except that if it's not important, why mention it?

And therein lies the rub. Warren Buffett is in the business of profiting off of information asymmetries. He wants to buy undervalued shares and sell overvalued shares. Warren Buffett, in other words, practices the art of the greater fool theory. He believes that fools exist at both ends, in fact! People dumb enough to sell him shares at below real value and people dumb enough to buy shares at higher than real value.

Once you see that Buffett is talking his book, in fact specifically referencing holdings like Coke and See's, the particular commentary on gold becomes even more fascinating. He needs people to put their money in financial assets because that's where he has leverage - political access, business contacts, legal resources, etc. Precious metals are a huge threat to that power base, not because they realize a return, but because they're not in the business of generating returns. Investing is incredibly risky. Saving is an entirely different endeavor - the whole point is to transport today's capital in a form accepted tomorrow, not to generate additional capital tomorrow. There are basically three types of precious metals investors: 1) conspiracy theorists/doomsday preppers, 2) savers, and 3) speculators. Note that while we colloquially use the word investing to describe this, none of these three types of activities are actually investing in the financial sense of the word. What's really dangerous is when people end up investing when they think that they are saving*.

(I of course do not give official financial advice, legal advice, tax advice, marriage advice, cooking advice...but personally, I am a big believer in investing in stocks. That is in no way inconsistent in also believing in saving in much safer vehicles that have nothing to do with equities, nor is it inconsistent with also believing in the value of diversity over concentration.)

It's the relationship between value and price that determines whether 'something' is a good investment or not. The utility of that something for some other purpose is irrelevant*. After all, if Buffett was simply a buy and hold forever investor, how come he sold all that Exxon Mobil stock he's so interested in talking about? If he is so focused on productive assets, why does he invest in companies that are so unproductive that they require government bailouts just to stay afloat?

So Siegler, if you really think gold has minimal decorative value, why is it so valued in jewelry? It rivals diamonds in popularity and global ubiquity even though the gold market lacks the monopoly equivalent of De Beers backing it.

And I would love to know where I can get a list of the companies that are going to be productive over the next decade. If this was known, if there were no risk, it wouldn't be investing. But perhaps most plainly, the greater fools theory simply doesn't make sense. If you bought something, that means you're the fool. The natural conclusion of this advice is to steer clear of the entire (secondary) equities markets.

Michael Dell went into the investment advice business in such a famous way that he singlehandedly demonstrated the importance of knowing when people are talking their books. If someone had shorted Apple and gone long Dell a decade and a half ago, they'd be bankrupt today. In fact, they would have gone bankrupt years ago.

*Note, there are huge incentives to confuse people about this, and not just in stocks and precious metals. The housing bubble was encouraged in no small part by the National Association of Realtors and the Federal Reserve pushing people to think of housing - something of value due to its utility as shelter - as somehow synonymous with the returns of investing and the safety of saving.

not you too macmall

In the increasingly bizarro world of mail-in rebates, MacMall has set a new bar.

Not only is the rebate itself dependent upon people not sending it in, but the next 'obvious' hurdle in the business model that views customers as idiots and employees as expendable is to simply make a policy of denying payments to people who do send in the rebate forms. The reject letter they mail doesn't even have order info to be able to call to complain; you have to look that up separately from your records.

Then when you do call, their poor customer service reps are obligated to maintain the farce that you aren't eligible for the rebate.

It's not until you ask if this is a standard business practice (or yell, or whatever gets through the script to the next response) that they consent and process the rebate. I had specifically emailed MacMall customer service about this precise rebate issue to ensure that there wasn't going to be a problem surrounding the new iMac release.

This is how one-off scammers and shady businesses do things, not legitimate companies that expect repeat business. This must be relatively new, because the last time I ordered I had to submit several different rebates, but at least they processed the ones I submitted.

Part of me wonders if sometime in the not-too-distant future basically every good we buy will simply be shipped from Amazon. Among other things, what interests me personally the most is that it's just dumb business. Instead of being mad at Apple for the delay in shipping the iMac, my memory of the shopping part of this experience will now be MacMall making it painful to do business with them.

closet artsy fartsy

So I'm on the mailing list for both the St. Louis Symphony and the Opera Theater of St. Louis. It makes sense in that I have bought tickets to both venues and do happen to reside in St. Louis.

However, no one would mistake me for having any insight whatsoever into orchestral pieces, choral arrangements, or opera productions.

Yesterday this officially got out of hand. I received a pretty fancy full color fold out mailer from the Artistic Director of the Des Moines Metro Opera. I don't take Julie to enough shows within close driving distance. I'm pretty sure I'm not driving hundreds of miles to do so. And if we were to travel, there's a slightly half decent chance it would be to a theatrical production of a certain relative of the Schroeder clan...

sony to stop charging fees

So I watch the Grammy's Sunday night and have fun with Valentine's Day yesterday, and I find out tonight that the world is up in arms about Sony and friends charging licensing fees to use Blu-Ray technology.

I mean, like, demanding money in exchange for nothing. The greed! The arrogance!

Oh, wait, sorry.

It's Sony and friends complaining that Apple wants to charge Sony and friends money in exchange for providing back office support and access to one of the most lucrative store fronts ever created.

It's flabbergasting how hugely massively enormous Apple's victory has been. If I started Nate's Emporium of Digital Magazines, Time Inc wouldn't go around whining that I was charging them 50% for placement in my store; they wouldn't care, because my store doesn't add any value to them.

Why is it that publishers care about the App Store? Aren't we all supposed to be doing everything 'in the cloud'? Aren't there mega transnational corporations that offer an alternative to Apple's ancient 20th century idea of having actual consumers pay actual money for actual content?

Hello?

google's next step

I'm increasingly curious to see where the new old management wants to take Google. Google's core business, Search, is now over a decade old. The concept that supposedly was behind Google's efforts to grow beyond search is the notion of doing everything on the web, 'in the cloud', so to speak. Instead of purchasing specific pieces of software to run on specific pieces of hardware, our data would be accessible everywhere for whatever we wanted to do with it. Users of Google products would provide their personal information for currency rather than paying money for products. After all, Google's core innovation is that they're not a tech company per se, but are rather an advertising company.

Facebook, a closed social network with similar monetization challenges as an advertiser, and Apple, a closed hardware vendor left for dead, have both grown faster than Google over the past few years.The classic knock on Microsoft is that they haven't developed growth strategies beyond Windows and Office. But the thing is, that's at least two products, with the Xbox business looking increasingly relevant, too.

Google's second big thing, their Office suite to the core Windows portfolio of Search, is Android and Chromium; at least, that's what Google has invested heavily in advancing. They've talked incessantly about the superiority of the cloud, of not making dedicated software for dedicated hardware. But now that these operating systems are out in the wild, actually being used by actual customers and developers, Google confronts a strategic landscape looking an awful lot more similar to the one Apple has spent the past few years hammering into consumer heads, not to mention other vendors making their own software, like RIM, HP/Web OS, and Microsoft/Nokia.

Far from being open, Google has been making explicit decisions to exclude support for certain standards in Chromium. And far from dismissing apps as being irrelevant to the web-based life, Android is being pushed for phones and tablets precisely via vehicles that emphasize specialized software separate from the browser. Or to say it differently, what's the point of Android Market in a world where computing happens in the browser, not independent applications!?!

'There's an App for that' has worked so effectively for Apple that even people in disputes with Apple over the future development of the business model use Apple's framework for computing. Specifically, Time announced they were releasing a special Android app for their Sports Illustrated subscribers. Now, the marketing folks may love that, because superficially, it's a public spat. Look, we have apps Apple doesn't.

But here's the scary question for Google strategy folks. Is that the message you want people to hear? That apps, not the browser, is the future? That Android is valuable because of the software developers provide outside the web, not because of its integration with the web?

I never dreamed Apple's digital hub strategy would have been this successful at redefining the computing landscape. It continues to surprise me how deeply the iPhone and now iPad are burrowing into our collective awareness; virtually every smartphone and tablet now looks and feels like Apple's products. I'm beginning to wonder if Google really has an alternative strategy in mind at all, or if they do, why they're having such difficulty communicating it to their partners.

Does this video still describe corporate strategy at Google in the post Eric Schmidt era? It will be an interesting year.

covey edition

In the back of my mind, I keep a list of somewhat humorous variations on 'there are two types of people in the world...'

You know, things like, there are two types of people in the world, those that wear boxers or briefs and those that don't; or, there are two types of people in the world, those who like chocolate and those who love it, etc.

Well, thanks to Olin I have added another one.

There are two types of people in the world:

Those who are familiar with Stephen Covey and those who aren't.

I would wager a small fortune the two worlds hardly even know the other exists

:)

hr manager needed, too

One of the reasons I have long liked Apple is that their business model makes sense. They sell stuff that customers pay for. So long as both parties are happy with that relationship, things will continue indefinitely; what will ebb and flow are simply users at the margins who move with fads and technological changes and so forth.

One of the interesting business models that's developed more recently in the tech world is one built upon advertising. Google is an advertising company; they compete with newspapers and radio stations much more than Microsoft or Apple. Like Google through its flagship Search product, Facebook delivers a valuable product in its core offering - the social network - but one that, like Google, isn't valuable because of the tech aspect. It's valuable because of the network effect, because 'everybody does it'. And like Google trying to monetize outside of search, Facebook faces the intriguing challenge of trying to monetize an idea that everybody knows. The phone book and the little black book and even contact management software have been around for ages. Heck, even digital directory programs predate Facebook; the program at my school was called Faces.

So when you're built on a model of extracting value discretely from users rather than billing customers directly, there's enormous pressure to cut corners at the expense of quality. When I saw this ad, I thought it beautifully captured the ongoing strategic challenges for an ad-based world.



They need a secretary themselves.

what a little bit of law school does to you

James Kwak has another interesting post up at the Baseline Scenario blog. It is entitled 'What a Little Bit of Economics Does to You'. He manages to touch upon several issues which I think are important. What is unusual for the blog is that the manner in which he does this is by being nearly completely wrong (generally, I tend to agree with most of what is written at Baseline Scenario). This is my somewhat tongue-in-cheek, but overall serious, take on the matter.

Kwak starts by discussing a paper that asked questions about various actions to see if people thought it was fair or unfair, reaching a broad conclusion that “The cardinal rule of fairness is surely that one person should not achieve a gain by simply imposing an equivalent loss on another.” I wholeheartedly agree; that seems like a great, succinct summary of the concept of fairness as it relates to economic transactions. This is why actions like fraud and torture are illegal; they are simply one person's gain at the expense of someone else's loss. This is why at the heart of capitalism lies the concept of consent of the individual.

However, Kwak then relates this broad concept to his current class.

"Today in class, the professor posed the first question from the paper:
A hardware store has been selling snow shovels for $15. The morning after a large snowstorm, the store raises the price to $20.”

In 1986, 82 percent of respondents thought this was unfair. In class, it was about 50-50.

As the professor said, this is probably because there are a lot of business school students in this class. Business school students are classic Econ 101 robots. They know enough to know that if there is a demand shift, not only is it OK to raise prices, but you should raise prices in order to clear the market. In this case, supply is fixed in the short term, so raising the price won’t increase supply; the Econ 101 argument is that raising the price allocates the shovels to people who will derive more utility from them (because they will pay more), thereby increasing social welfare.

This writing is rich in irony and confused reasoning. As business school students may be classic Econ 101 robots, so too are law school students classic law professor stenographers. If the professor said it, it must be true!

More substantively, we're talking about snow shovels here. That cost $20. Simply buying a replacement blade for the Snow Wovel costs $19.85, and that's based upon shipping to an area that is not encumbered by a snow storm. Moreover, the fact that someone would even need a snow shovel implies two very important things. First, they own property that needs care (a house with a sidewalk, a driveway for a car, etc). How many renters are expected to shovel snow? How many poor people have cars? Second, they don't currently have a snow shovel; in other words, they're being negligent in maintaining their property and free-riding off of others to bail them out when they want help. That's like complaining that the gas company shuts off your gas after not paying your bills for six months.

In addition, there's a lot of 'shoulds' in here. Notice, the question doesn't ask what students would do if they were the business owner. Rather, the question is if it's unfair for the business to raise prices. Finally, one point worth mentioning here is that this is all based upon insufficient information. It's speculation; one cannot conclude what people are thinking, or why, from the given information.

Kwak continues

But this rests on a huge assumption: that willingness to pay is the same as utility. Unfortunately, however, this assumption fails in the real world; poor people simply can’t pay as much for snow shovels as rich people, and as a result a price increase will allocate shovels to rich people, not to those who need them the most.* But people who believe Econ 101 only remember the demand and supply curves they saw on the first day of class, so they think firms should raise prices.

Note the bait and switch here, how Kwak almost subconsciously transitions from concerns about people who have to pay the higher price for the shovel to concerns about people who won't get a shovel. The people paying $20 for the shovel after a snowstorm are deriving greater utility from it, otherwise they wouldn't pay the extra $5. Now, for those who can't afford the $20, the question remains, why didn't they buy a shovel at $15? Are they too poor to afford even a $15 shovel? At that rate, we're talking about people too poor to worry about things like driveways and sidewalks. That kind of property is owned by rich people. Kwak would need to demonstrate some data that suggests that the marginal increase in the price of the shovel impacts the distribution of shovel consumption with respect to income. This is not academic, by the way. For example, one substitute good for buying a shovel is hiring somebody else to shovel your driveway. Guess who is more likely to do that? Richer folks! Another substitute good is calling in to work to take a day off. Guess who has more paid leave time? Richer folks! Another substitute good is bringing in shovels from someplace else. Guess what's going to attract other sellers to brave the snow and distance? Higher prices! Another substitute good is borrowing/renting a shovel from a neighbor. Guess who's more likely to live in an area where there are other property owners who would have shovels to share/loan? Richer folks! The point of all this is that higher prices might lead to more shovels being bought by poorer folks, not less; we would need actual data to determine that. The conceptual framework alone offers no guidance. That price increase can just as easily signal to richer folks that they should choose some other method at their disposal of clearing their property of snow as it can signal to poorer folks that they can't get a shovel because they can't afford the extra $5.

Also, this sentiment languishes in the same insufficient information purgatory. Since Kwak does not claim to speak for people who 'believe' Econ 101, he would need to present some actual evidence about what those people believe. He would also need evidence that law students at Yale are representative of the general population in the ways material to the original paper. Perhaps the problem isn't business at all; maybe it's our elite universities that create concepts of fairness alien to average Americans.

While the above academic fun is fun, the real meat lies ahead:

I suspect that belief in Econ 101 is not only stronger among business school students (and the businessmen they become) than among ordinary people, but is also stronger today than it was in 1986. The free market ideology teaches not only that businesses can maximize profits by any legal means, but that they have a moral imperative to maximize profits by any legal means, including generating profits by imposing equivalent losses on their counterparties. (Essentially all proprietary trading fulfills this condition.) And three decades of this ideology have probably changed people’s responses to these types of questions.

More fundamentally, the 1986 paper shows that Econ 101 is diametrically opposed to human beings’ intuitive sense of fairness. Yet public policy largely follows the dictates of Econ 101. Is that a good thing?

Notice the leap from 'Econ 101' to 'free market ideology'? That claim calls for a modicum of warrants, shall we say. And then we're back to this business of generating profits by imposing losses on counterparties. That may be what the laissez-faire 'free market ideology' types think, and perhaps Kwak shows his subtle cultural biases by assuming that's what everybody thinks. And maybe I just had great professors. I mean, I'd take Wash U over Yale any day (which is why you should recognize both of our biases in the odd event we played a basketball game or something). While I have great disdain for certain parts of the business community and great appreciation for certain parts of the legal community, I think overall there are probably too many lawyers and too few people who really understand business in our society. In fact, you could go so far as to argue that Kwak has the cause and effect reversed. Maybe the problem isn't that business education creates market fundamentalism, but rather, that those inclined toward the free market ideology are about the only folks who think business education is valuable? Maybe if we had more architects and painters and philosophers and social service agency staffers and gay rights activists and whoever-whatsie else's studying the basic concepts of business, both the economy and society would benefit?

Regardless of where you align on that particular mode of thought, consider the core inaccuracy of Kwak's assertion. The store selling the shovel for $20 isn't imposing a loss on the buyer. That's a stupid argument; I don't know how to put it more kindly. If the shovel wasn't worth $20, the buyer wouldn't buy it. In fact, refusing patronage to a store is precisely how one demonstrates that the legal actions of the store's proprietors are unfair.

I would also point out the misguided nature of his last statement. Our public policy isn't dominated by Econ 101. It largely ignores it. That's why we're in such the crapper at the moment, so to speak. Remember my comment about things like fraud and torture? Imagine if we actually prosecuted stuff like that which has been undermining both our economy and our democracy.

Kwak's footnote sums it up

* I’m not saying that there is a perfect way to allocate the shovels, just that using price isn’t perfect, and does have inequality effects

In other words, there is no perfect way to allocate scarce resources. Everything has inequality and inefficiency effects. The pricing mechanism in capitalism is just the best system we've got until we come up with something better. I highly encourage everyone to investigate Econ 101 and see what you think for yourself. I enjoyed my own professors, like Jackson Nickerson, who taught my Management 100 class, William Emmons, who taught my Microeconomics class, Dottie Petersen, who taught my global macroeconomics class, Russ Roberts, who taught my class on business and public policy, and Robert Pollak, who taught my course on business and the environment. These are only a handful of professors, of course, but I highlight them because they were teaching the fundamentals, the 'Econ 101' stuff that Kwak apparently thinks is destroying our culture. My beef isn't with the economic textbook written by Gregory Mankiw, George Bush's economic advisor; it was a great textbook. My beef is with the public policies our government enacts that ignore basic economics. I'm not worried about changes in public attitudes toward 'free markets'; my concern is when our public policies ignore the broad will of the people.

I can't wait until Kwak posts a piece about how personal finance education and financial literacy caused the DJIA/NASDAQ and housing bubbles!

the mobile computing paradigm is already here

James Kwak contributes to a great econ and finance blog called the Baseline Scenario headlined by former IMF economist Simon Johnson. Johnson is one of the people with whom I would most closely associate my own personal perspectives on the ongoing economic, financial, and social crises confronting us which I like to only-half jestingly refer to as the Republican Recession. Kwak specifically is currently a law student, formerly a consultant for McKensie. I don't know as much about Reggie Middleton, but he runs the intriguing investment website boombustblog.com with the tagline ‘micro views of macro markets’.

But this post isn’t about economics, law, and investing per se. It’s a bit closer to my own formal academic training, strategic decision-making by large organizations and the interplay of technology and business. (Warning: it’s also, like me, long-winded.) Kwak has written two posts on the Future of Personal Computing (Part 1 and Part 2), while Middleton has assembled a whole series of posts examining the market relevance of what he terms the paradigm shift to ultra mobile computing. They’re intriguing reads and certainly worth pondering if you possess any interest in these matters.

What I would like to do however is offer a dissent, or an alternative reading of the tea leaves from the two particular perspectives. First, specifically, I think Apple’s strategic choices are better than they allow, and secondly, I think the broader course of computing is a little different from the conceptual framework presented. In short, I argue Apple’s model delivers significant value for consumers, while I find ‘cloud’ computing to be less beneficial than Kwak describes and less disruptive than Middleton describes. I agree that we are witnessing a paradigm shift in the current phase of the computer revolution, but it seems like their analysis employs the frameworks applicable to older paradigms. I argue that Apple gets the shift better than perhaps any other company on the planet.

Here’s how I would lay out the digital computing revolution, or what I'll shorten to the computer revolution (we've been computing for thousands of years, of course, and there was a time when analog computing seemed to be the wave of the future). While no model is precise, I think this broad overview helps us see the major strands and developments over time. The computer revolution, I posit, is one of the most important and disruptive transitions in human history. There have been periods where a certain paradigm has been dominant, and as computing has evolved, a shift occurs which emphasizes a different aspect of computing. However, I would suggest that within the computer revolution, the old paradigm isn’t displaced. Rather, the new builds upon and complements what has come before. While the newer paradigms feel, well, newer, each successive shift is actually less revolutionary than what came before, analogous to the communication revolution that saw paradigm shifts in the development of language, and then writing, and then the printing press, and then the internet. The internet is awesome, but if someone was trying to theorize something as revolutionary as, say, language itself, that would require something much grander, like figuring out how to communicate in an entirely different way, such as by touch, or movement, or telepathy. The intertubes aren't anywhere close to replacing Real Life.

The first paradigm I would describe as mainframe computing, characterized by the initial developments in the computing revolution. This is where you input your information, go grab lunch, come back, and see what happened (okay, yes, this is way oversimplifying the matter). The second paradigm would be personal computing, characterized by getting computers into homes and offices – and getting people to use them. The third paradigm I would call network computing. Now that we have all these computers big and small, let’s get them all talking to each other. The fourth paradigm shift, I think, is mobile computing. Here the question is how to access these networks of computers anytime, anywhere. I think there are three key components: the device capabilities (hardware and software), the back-end e-commerce support, and 'cloud' computing.

The title of this post comes from the sense that the core absence from the arguments by Kwak and Middleton (among others presenting similar thoughts) is that we’re already well into the age of mobile computing. In other words, we’re not approaching the outset of a new paradigm. We’re already well into its development and implementation. Then Apple CEO John Sculley laid out the term Personal Digital Assistant (PDA) in 1992, about the same time IBM was developing Simon, the first smart phone. By the late 1990s, we had the Newton MessagePad and the Palm Pilot and the Nokia Communicator. Apple’s concept of the ‘digital hub’ is almost a decade old now. Blackberry has became a household name. Online gaming has been incorporated into everything from Microsoft’s Xbox Live to Blizzard Entertainment’s Battle.net. SharePoint services in Office are so widespread now that even non-profits are using the technology for sharing documents. From Dell to HP to Amazon to Apple to PayPal to Ebay to a host of other companies, e-commerce is here. Netflix streams movies. OnStar brings Big Brother to life, and more generally, computers are in everything from cars to clocks. The iPhone is now three years old – the blending of the MessagePad, Pilot, Blackberry, Simon, and other precursors in a device that is now copied worldwide. Social networking has been around for a decade, and even Facebook is now over six years old. And Google, well, it's been a long time since the early days of the search engine. When someone actually posts a comment on this Google blog, Google Mail sends my phone an email message with the comment. It's even been five years since Google bought Android.

In short, the main components of mobile computing, far from being in the infancy stage, are well on their way to maturation: the front end hardware and software, the back end e-commerce, and the nebulous concept of ‘cloud’ computing. Look at the new Android smartphones: a Blackberry or iPhone user would instantly recognize them as a smartphone. More interestingly, a Newton MessagePad or Palm Pilot user would recognize them. I predict that the phones and tablets on sale this Christmas will be recognizable as mobile computing a decade from now. Sure, like Apple’s Quicktake digital camera, or Microsoft Windows 95, or Google Search from 1999, they’ll look clunky and slow and almost embarrassingly outdated. But you’ll know what they are.

Let’s dig into commentary specific to Apple. This is from Kwak’s Part 2:

“ …But I think the important point is that they are promoting a model of personal computing where most of the developers write for the iPhone OS, and if you want to use their applications you have to buy an Apple hardware product. Yes, Apple makes great hardware, but I think consumers will do better with an open model; if you look at smartphones, it’s already the case that many phones running Android — Google’s open-source operating system — are better than the iPhone at many different things. (The iPhone may still be the best overall, but there are many good reasons why you might pick a particular Android phone over the iPhone.) And Android has already passed the iPhone as the number two smartphone (measured by new sales), behind the BlackBerry... “

Kwak’s position is that Apple wants tight control over the hardware and software, and then significantly, that this desire conflicts with the best interests of Apple’s consumers. The former is absolutely true. It’s the latter part of the assertion where Kwak fails to substantiate his claim. Rather, it’s stated much more as a premise upon which to base further analysis rather than a claim which must be proven in and of itself, before any other conclusions may be drawn from it.

And here I think Kwak applies a more legalistic approach to what is really a business question, or to say it differently, he does what a lot of business analysts do. They forget to make the customer #1. They assume models and logic and processes can replace or circumvent or take precedent over the preferences of consumers. But at the end of the day, from drugs to diapers to digital devices, one ignores the actual wishes of the consumer at one’s own peril.

Apple’s model doesn’t restrict consumer choice. It embraces it. Choosing not to participate in the Apple experience is itself one of the choices Apple presents to consumers. If you prefer a Blackberry or a Droid or a Pre or an Evo, well, go buy one (interesting side note: just in the time period I’ve been drafting this piece, HP has bought Palm and the Pre isn’t even on sale any longer – a great illustration of the pace of change in mobile computing and also how the ‘personal computer’ makers are still quite relevant and profitable even in the age of the internet and smartphones and cloud computing). Same for a Zune MP3 player or a Dell laptop or an HP desktop. That’s competition, choice, consumer freedom, whatever you like to call it. Most citizens of our globe are not Apple customers. More philosophically, if you don’t want a fancy smartphone, or don’t want a cell phone at all, that is also your choice as a consumer (although the latter option in particular is increasingly open only to those who unwittingly or purposefully shun connecting with modern society, which presents its own potential line of philosophizing about what choice really means).

Rather, what Apple’s model does is impose restrictions within the Apple ecosystem. If you think Google’s online calendar application is superior to Apple’s iCal, well, then use it. That’s choice. That’s openness. The ability to choose different ways of interacting with technology. The fact that one of those ‘ways’ – tight restrictions upon and integration of hardware and software – is, in a limited sense, not open, doesn’t in any way restrict the consumer’s ability to choose among the various ways of interacting with technology. The closed system is itself one of the choices, and it’s precisely Apple’s customers who value the simplicity of that system that make Apple profitable. Consumers like me are willing to pay a finite but economically real premium to have ‘applications’ on our ‘computers’ that mostly ‘just work’. At certain times in Apple’s history, there have been fewer of us, and at other times, more of us, and Apple’s effectiveness at delivering on the strategy has varied over time, but that in a nutshell is why Apple is a multi-billion dollar transnational corporation. They offer their customers something for which their customers are willing to pay dollars. And yen, euros, and other currencies, too. For Kwak to perform a more rigorous analysis of Apple’s strategic stance specifically, he’ll need to bring to bear a sharp focus on why Apple customers are Apple customers, not on why non-Apple customers aren’t Apple customers.

Similarly, Middleton seems very interested in why Google’s Android is growing in smartphone marketshare. It’s a little tricky evaluating the nuances of his position, because he doesn’t really publish his full position. His pieces are mainly teasers to get people to subscribe to his investing research and analysis, and you can see that tone in the headlines, like “RIM Smart Phone Market Share, RIP?” and “Empirical Evidence of Android Eating Apple!”. More than a passing resemblance to entry worthy into the Apple Death Knell, in my opinion. However, because Middleton is primarily pushing his subscription model, you have to take the tone with a grain of salt: of course he’s trying to be controversial and exaggerate trends at the margins in order to attract eyeballs. Recognizing various cognitive biases is important for both investing and strategic analysis.

In the first piece in the series, Middleton lays out his overriding thesis:

“While everybody is celebrating the Ipad and the IPhone 4, pushing Apple stock through the plasmoshere (I actually like Apple as a company, a literal marketing market – what Microsoft use to be), Google is quietly creating a technological, business model and strategic advantage wherein there will be no way in hell Apple will be able to keep up if things continue to progress at the current pace. In essence, Apple will be relying more and more on marketing prowess and less on capability and competitive technological innovation to maintain margin and revenue growth. That is a dangerous place to be. Simply observe the speed upon which the Google/Android/HTC ecosystem has developed and the power, flexibility and usability of this early product after just two years on the market.”

The title tells you where he’s going: “There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All”. I would suggest, however, that this is ‘old-paradigm’ thinking. Middleton is claiming there’s a paradigm shift and then applying analysis from the old paradigm. Two key points stand out to me at this juncture. First, there are more companies involved than Apple, Microsoft, and Google. Second, this isn’t going to be winner-take-all.

Let me elaborate on this second point. The Wintel and Office ecosystems at the heart of the personal computing phase are notable precisely for their rarity; there are extremely few instances of natural monopolies (or duopolies) existing in the private sphere where government actually helps the monopoly rather than trying to create competition. This is due to the way patent and copyright law has intersected with the network effects of IT products. Microsoft’s methods for communicating in its Windows OS and Office productivity suite have been recognized by the government as intellectual property owned by Microsoft. This is a once-in-a-billion arrangement. It’s like the power company owning the electrical standard in your outlet, or the phone company owning the concept of dialing numbers, or the water company owning the idea of a copper pipe, or GAP owning the use of cotton in clothing.

The paradigm shift that is mobile computing isn’t like that. The fundamental network effect of a smartphone – can it call other phones – isn’t owned by a private company. AT&T users can call Verizon users. Blackerry users can call iPhone users. An iPad or Kindle can access the data parts of cellular networks without even having to offer voice capability at all. This is critical to understanding the paradigm shift: smartphones and cloud computing and tablets and e-commerce and so forth lends itself more to oligopoly than monopoly (which itself builds upon the network computing phase that rendered the Wintel and Office dynasties less suffocating for established firms like Apple and HP and new entrants like Google and Amazon). Multiple firms will be creating the IT landscape of the future, and multiple firms will be profiting from it. In fact, I would argue, multiple firms have already created much of the landscape, and multiple firms are already profiting from it.

Now as for the cloud computing component of mobile computing specifically, there is great potential in distributed networks, in information flowing freely among different computers, or more generally, in stuff being available anywhere and everywhere. In the US, we have many ‘cloud’ systems. The electrical wiring my laptop uses to access the power grid from a condo complex in St. Louis works just as well to access the power grid from a hotel in Minnesota. That is not a small accomplishment, either of engineering prowess and manufacturing capacity or of effective government involvement in describing and enforcing the rules of the game for markets to follow. But there are still reasons that I want to take ‘my’ computer with me on the trip rather than using machines supplied by the airlines, hotels, restaurants, car rental places, and other vendors I encounter along the way. There’s also a reason that laptops, cell phones, and other mobile devices have batteries to complement the ‘cloud’ system that is the electric grid – sometimes the cloud just isn’t accessible.

Kwak suggests that

“ …The obvious alternative is Google, which has its own operating systems (Android and Chrome), but doesn’t particularly care if you use them or not — as long as you are using the Internet, where they sell their ads. I’d like to see an Android tablet with a real browser that can handle anything on the Web, and then I simply wouldn’t need most of the apps I have on my iPad (Calendar, Contacts, Notes, Maps, AccuWeather, Netflix, NPR, Bloomberg, etc.). Now, Google isn’t pursuing an open strategy because it’s nice; they’re doing it because they want everyone to go to the Internet to see their ads. But ultimately I think that’s a better model for consumers, because you avoid lock-in on the development level (developers don’t have to commit to the iPhone OS) and on the hardware level (anyone can build an Android device, which is already providing more innovation and choice when it comes to smartphones)… “

But this falls apart on several levels. Google also is a multi-billion dollar transnational corporation. They are this size because, like Apple, they deliver products people like. But unlike Apple, their users and their customers are two vastly different groups of people. Google’s customers are people paying for advertising. They sell their advertising by attracting users, from Google Search to Google Mail to Google Blogger to Google YouTube. At a fundamental level, it is far from obvious to me why a model which extracts value from users for the benefit of customers (advertisers) is inherently best from the user’s perspective. At a business level, Google is a corporate entity, overseen by a private, non-governmental Board of Directors. It is not obvious to me why Google is inherently a different model of governance than most other transnational corporations. [Note, generally speaking I ascribe higher value overall to the leadership and governance among technology companies than most other industries, like financial firms, energy, agribusiness, healthcare, telecommunications, and so forth.]

And most relevant for this analysis, I don’t follow Kwak’s reasoning at a technical level. The cloud only works when you can access it. You have to have some sort of standard terminal – just like a plug for an electric outlet – to ‘plug in’ or ‘dial in’ or ‘remote in’ or whichever is your favorite metaphor for what exactly we’re doing. The amount of stuff to download has expanded faster than the speeds at which it can be downloaded (just look at HD video for example). Now, Kwak has a very reasonable defense: offline access. But here’s the thing. The more computing is designed to seamlessly integrate ‘online’ and ‘offline’ information production, the more it resembles…Apple’s model! That quite literally describes the relationship between, say, an iPod, a PC, and iTunes, or for something Mac-specific, a MacBook, Mail, and Gmail.

You have to have ‘apps’ running on a ‘computer’ that is ‘local’ in ‘your’ possession. A lot of us like that model. I for one love using Blogger and Gmail and Google Search. I use FaceBook heavily, too, and Flickr. But I like (most of) my games and my contacts and my pictures and my music and so forth with me, where I am, rather than sitting on another computer somewhere else that I may or may not be able to access, that may or may not be part of a commercial advertising agreement between a third party who cares not the least what happens to my data. Yes, some of my personal data is on FaceBook. But it’s the data I want to be publicly available. Yes, some of my finances are online, from checking to retirement accounts. But I expect that those financial firms will keep that data private from third-party folks. Yes, Blogger lets you type directly through the browser. But a post like this I’m writing primarily in a stand-alone word processing application running on my local computer.

Is that more expensive than ad-supported cloud computing? Yeap.

But it costs a heckuva lot less today than that first Apple IIe I used over a quarter century ago. That’s value creation. Mainframes will of course remain valuable, too. And for the foreseeable future, over the next couple decades, personal computers aren’t going anywhere – except more and more of the places we like to take them. The cloud isn’t displacing servers and PCs; it’s built on top of them, rendering them even more important. The Apple model, where software and hardware is tightly integrated around a core of personal computing with a periphery of devices accessing networks and extending mobility and ease of use around the core, isn’t going anywhere. And Apple has bet the corporate farm not just on personal computing generally, but specifically on the market segments within personal computing that value tightly linked hardware and software devices that appear to the end user to simply work seamlessly together.

Now don’t get me wrong, I’m not an app-fiend on the iPhone. I bought one for using about half a dozen apps, not hundreds of apps. My total purchases at the iTunes App Store over the almost three years I’ve had my iPhone are less than $100, or less than three months’ worth of DSL/cable data connectivity thanks to the real market failures in our system, the telecommunications companies delivering internet access. But I don’t see the web browser replacing those other categories of applications any time soon. Rather, I’m on the ‘convergence’ bandwagon. Stand-alone applications are simply too valuable to people like me, for issues ranging from ease of use to features to data privacy to frustration with the telcos. What we want to be able to do with our computers is to continue realizing convergence with other aspects of our lives, with the computer as hub.

The losers in the shift to mobile computing aren’t going to be the likes of Microsoft, Google, or Apple. The real losers are the Sony Walkman and the newspaper classified ad and manufacturers of VHS tapes and entertainment companies that would like my iPhone data plan monthly budget and so forth. The computer revolution’s disruptiveness is seen particularly well through this light. The major IT firms are competing with non-IT products and services as much as they’re competing with each other. Individual firms can always go the way of Xerox, from iconic company to marginal bit player. RIM is perhaps most at risk of this fate at the moment. But with regard to Apple, I think they continue as a defining force in the computer revolution for years to come. As Windows 7 is basically the GUI personal computing experience known as a Mac, and as Android 2 is basically the multi-touch combined PDA/cell phone known as an iPhone, I think whatever competes with the iPad will basically, well, be an iPad. And that’s the other part that’s exciting for Apple customers. Apple continues to show a knack for popularizing what works in computing. The profits may not always accrue to Apple for this, but enough do to keep Apple at the cutting edge for the foreseeable future.

This is particularly true of mobile computing, where Apple’s iPhone is quite literally what the competition looks like, the iPad is basically Tiger Woods of the past decade (as in, Tiger vs. the Field), and for Apple shareholders, it has garnered a simply unfathomable amount of total industry profit in a sector where there were already established, major transnational corporate players. If Apple market share falls to around 10% long-term of the global smartphone market, that’s a phenomenal ROI from the Newton MessagePad a decade and a half ago. Combine that with the Office-like grip of the iPod, and the continuing business of core personal computing, and Apple has all the resources it needs to be relevant for whatever comes down the pike too far out in the future to predict today. Apple has figured out how to commoditize the underlying bits of computing, buying lots of stuff in huge quantities. The markup, the value-added, is in assembling a simple package of these components for consumers. Apple's entire core product line basically consists of three desktop computers (Mac mini, iMac, Mac Pro), three laptops (MacBook, MacBook Pro, MacBook Air), three music players (iPod Shuffle, iPod Nano, iPod Classic), and three iOS PDAs (iPod Touch, iPhone, iPad). This allows Apple to buy the underlying components by the millions while distinguishing their commoditized bits from the same commoditized bits used by other companies. There's a segment of the market that appreciates Apple doing this kind of work and giving them a manageable number of options and choices. Apple plays around at the margins, such as with Apple TV and MobileMe, to see how much it wants to incorporate things like cloud computing into its core products. Video streaming, for example, was part of that original Steve Jobs keynote on the digital lifestyle.

As regards Google, they’re actually in a more precarious state than I think Kwak, Middleton, and others allow. The shift from brilliant behemoth to blundering invader of Russia in winter is pretty subtle. Perhaps Google can compete on multiple fronts with upstarts and established players galore while maintaining a business model that extracts value from the company’s users for use by the company’s customers. But, perhaps Google comes to appreciate that companies like Microsoft and Apple and RIM and Nokia and so forth are more natural business partners than competitors. Does Google want to provide support for Android and Chrome if it starts making firms think twice about how much data Google collects via its prime moneymaker, Google Search? Can Google actually support multiple OSes over time? That I think becomes a very interesting strategic decision, a ‘what if’ scenario of more risk than anything Apple (or Microsoft) currently faces. What if, say, Microsoft, Apple, RIM, Nokia, Dell, and HP got together to make Bing a true competitor to Google Search? What if Motorola and HTC and LG and Samsung didn’t like being dependent upon Google for updates and support? What if Microsoft renders Exchange synchronization and other features less workable on Android devices? What if Google’s efforts to monetize its non-search properties for advertisers simply drives users somewhere else, undermining the one product Google has successfully monetized? What if the negative customer attitudes of the telcos rubs off on Google's brand as they work closer together?

Let me emphasize, my proposition is that all the major computer IT firms (Microsoft, Apple, Google, and many more) stand to benefit from the mobile computing paradigm shift in the ongoing computer revolution. I throw out the Google discussion here to push back against what I see some people suggesting that either the ‘old guard’ just doesn’t get it, or that somehow the new players aren’t susceptible to their own grand business risks, too.

Of course, the best judge is the passage of time. If Android-powered smartphones and Chrome-powerd tablets/netbooks/whatever leapfrog so far beyond the iPhone and iPad and MacBook as to leave them unrecognizable, then hey, maybe I’ll help out my hometown carrier Sprint by picking up the 2015 version of the HTC Evo and whatever iPad-killer actually, you know, ships.

is apple obsoleting the mini?

Last week I was looking at computer configurations and it just seemed the iMacs were a little stale. It's all Rich's fault really because he got excited about StarCraft II and so I was poking around recommended specs and things like that. My MacBook is great, and I've really been laptop first ever since my iBook, but you do compromise on graphics and RAM especially with a low end laptop. Well, it turned out Apple thought the iMac line dated too, as they revamped the whole desktop Mac product line.


But the Mini revamp leaves me scratching my head. In an era where most of the 'major' leaps in PC computing power are behind us, it latches onto another selling point - its compact size. It also addresses the planned obsolescence problem: if you buy an all-in-one computer in the flat screen era, the monitor stays decent longer than the system, creating a fixed cost that lengthens the amount of time you're attached to the system (and the keyboard and mice issue affects most unattached systems, too). The Mini allows you to replace the whole system during the life of the monitor and peripherals, or even operate without a monitor. Unlike HP and Dell, Apple doesn't offer a low end tower system.

So this iteration of the iMac line seems like a really good value. The base level system with a 21.5 inch monitor is a 3 GHz Core i3 with 4GB RAM, 500 GB HDD, and Radeon 4670 graphics card for $1,200. If you like playing the instant rebate game, HP and Dell have exciting websites to navigate, although at the moment, it seems like Dell is mainly interested in pushing either the lower end Celeron and Pentium chips, or the i7. They don't seem to have much of the i3 variety yet to peruse.

At first glance, the new Mini is significantly cheaper at $700 vs $1200. But I think this vanishes astonishingly quickly when one looks at the difference. There's a lot of stuff the Mini doesn't have - a monitor, stereo speakers, webcam, microphone, wireless mouse and keyboard being the most obvious. We could approximate that at roughly $300, which is over half the gap right there. But worse, the Mini has noticeably inferior technical specs in its core system. It has a 2.4 GHz Core 2 Duo, representing both much lower clock speed and an older generation of chips. It has a 320 GB HDD that is both smaller and slower. It has 2 GB RAM, which is both half as much as the iMac and also slower. It has an integrated video card instead of the discrete graphics in the iMac.

What's really funny is trying to configure the Mini to be more like the iMac. When you upgrade the specs to this:


you have a better system, but one that is still inferior to the iMac. Yet it costs just $12 less. Try buying a monitor from Apple for that.

I really like the concept of the Mini. But if Apple is going to create such extreme price/performance gaps, I wonder if they've decided it's not as cool a business strategy as it is a concept. I was thinking of getting a Mini as my next computer purchase. That has now been put on hold, and I'm not sure where to go next. If I were doing marketing for Apple, I'd suggest strongly that the price and product aspects be revisited - unless the purpose is to phase it out slowly, which I think this might do gracefully.

Here's what I'd like to see instead: three models, instead of two. You do the inexpensive one at $599, perhaps cutting back on the hard drive and the processor if that cuts too deeply into margins (for example, a 2 GHz C2 Duo and 160 GB HDD). Then you add a $799 model with, say, a 3 GHz core i3, 4GB RAM (1066 MHz), and discrete video card. This still lets the low end iMac be better with the faster RAM and a bigger and faster hard drive while rendering a value Mini at this price point. Then you keep the third Mini option at $999 which is the server version.

So the business gamble Apple presents is something like this. I might get a new iMac, which is a little bit more computer than I need in that I have a TV/monitor and keyboard/trackball currently. However, I might also not do anything at all this year. Essentially, Apple is jeopardizing $600 - 800 worth of sales, my future interest in the Mini line, and the likelihood of my next computer purchase being within the next three years (as I'd keep the iMac longer than the Mini), all in exchange to get me to pony up another $400 now. Or maybe it's just really expensive to cram this new stuff into the Mini, and Apple's marketing team is running into the problem that 'small form factor' and 'inexpensive consumer machine' are becoming more conflicting than complimentary.

strategy and sports

Athletic games themselves involve lots of strategy. But a different kind of case study in decision-making has unfolded for us over the past week or so as we've moved past speculation to action. I think I'm just not a big enough Colorado or Nebraska fan to get why they would see the grass as greener to the west and east. Whatever their ultimate calculus, what's done is done.

So now the most interesting question is viewed from the perspective of the remaining Big 12. What to do?

The safe answer, the likely answer, the easy answer, is to stand pat. Execute on a strategy of making a ten team league successful. That's what I'd recommend as a consultant. I'm about 95% confidant that's what will happen.

But that other one chance in twenty nags at me. I'm a big believer that the flip side of challenge almost always is opportunity. Over the weekend, the Big 12 was in its weakest position as a conference in the history of its existence. Today, however, it's at its strongest point in years, perhaps ever. The Big 12 faced the most direct threats possible to its future from a variety of sources and for whatever mixture of reasons you care to elaborate, ten schools decided to stick together. Furthermore, as the Pac-10 and Big Ten in particular went after Big 12 schools, that gives the Big 12 a window of opportunity to strike in 'self-defense', as a reaction to having lost two universities to the aggressiveness of other conferences. Finally, as the Big 12 lost two teams, but to different conferences, there is a unique opportunity to offer entrance to a pair of schools.

The following options, again, are neither likely nor something the Big 12 can necessarily implement. Rather, they're options that recognize an important part of strategic decision-making: if you never think about the moon, you'll never get there. And you only have a few windows suitable for launch. This is one such window.

I would be quite interested to be able to have a quiet conversation with these schools just to see what they would think.

Scenario 1:

Take the game to the Pac-10. The more I've been thinking about this one, the more it's been nibbling at me. Do you think Arizona and Arizona State might fit better in the big 12? One thing that's always bugged me is how the Big 12 doesn't have its own BCS bowl. The Big Ten and Pac-10 have their 'granddaddy of 'em all' in LA. The SEC has the Sugar Bowl in New Orleans. The Orange Bowl is in Florida. But Big 12 conference champs get sent out to Arizona. It's not that the Fiesta Bowl is a terrible one. It's just that it's nowhere near the (current) Big 12. We can fix that, creating regular conference trips to Arizona in the process. Arizona adds a growing population demographic and a chance to make 'southwest' and 'central' divisions, returning OU and OSU to competing with MU/KU/ISU/KSU. Separately from football, it also allows UA to compete in a stronger basketball conference. Imagine an annual KU/UA conference basketball game. It's also worth noting, for UA/ASU, that the Big 12 has received more national attention and more revenue than the Pac-10. BCS bowl games would get to be played in Arizona.

Scenario 2:

Invite Utah and BYU. The Pac-10 can't do this because they have an odd number. I think we could make the case that coming as a pair to the Big 12 is better than being left in different conferences. And with the loss of Colorado, Utah and BYU maintain a Big 12 presence in the Rockies/interior West. These schools could be added to the Big 12 North and leave the South as is. In addition, don't overlook the Morman connection. BYU gives Baylor a fellow private religious school generally, while specifically a lot of Mormons stuck around Missouri instead of migrating farther west to Utah.

Scenario 3:

Return the favor to the Big Ten. I can't help looking at a map and wondering if it's possible to split the Big Ten in two. Of course it's not really that realistic, but you never know until you ask Illinois and Indiana. A week ago I would have said it would have been impossible for Nebraska to leave the Big 12. But this wouldn't just be to vengefully carve out the mid-section of the conference just below Chicago. Indiana is a basketball program in a football conference. Trading IU basketball would almost make up for NU football on the tradition front. Meanwhile, the most natural rival for Illinois is Missouri. Both IU and IL are essentially the same distance from St. Louis as they are from Chicago. This directly deals with one of the challenges - that some MU fans actually want to move to the Big Ten - by making St. Louis a central city in the Big 12 rather than a border city. The schools would also fit in very nicely with the rest of the Big 12 North, even down to the I-70 corridor running from Topeka to Indianapolis. I would point out ever so subtlely that the state of Indiana owes us a big favor, too, and this is a great time to collect. Do this move and we'll move past your theft of the NCAA headquarters from the city that invested so heavily in making collegiate athletics what we know today.

Scenario 4:

Now I'm getting quite unrealistic. There's an intriguing geographical quirk to the south and east of the Big 12. Northwest Arkansas is actually closely associated with the states of Missouri, Oklahoma, and Texas. Fayetteville is so remote from the rest of the SEC that Arkansas plays some games in Little Rock. Arkansas has history with the Southwest conference where it was a founding member with schools like OU and UT. Meanwhile, Memphis is down the Mississippi River from St. Louis, on the border with Arkansas, and is not currently in a major conference. Memphis doesn't really have much of a football program at the moment, but by pushing the Big 12 through Arkansas and into Tennessee, I don't think it would be that big of an issue - the point would be to bring recruiting space and geographic range, not replace the tradition lost with Nebraska. It would also allow ISU and Baylor to have a comrade near the bottom of the pecking order. In basketball, Memphis would add a high-win school, which helps as RPI is important in basketball (unlike football). An annual KU/Memphis basketball game would be another great conference schedule addition.

Scenario 5:

Feeling out Kentucky and Louisville is my last 'what if' for the night. They fit nicely in the existing Big 12 North/South division, putting basketball state Kentucky with basketball state Kansas. In fact, you already see these teams together from time to time when St. Louis hosts an NCAA tourney round and fans come in from both directions. This would also get Louisville (Big East) and Kentucky (SEC) into the same conference, and what a basketball conference that would be. Unlike Memphis, Louisville and Kentucky do have competitive football programs they would bring, but not good enough they would threaten OU and UT. Plus, I like the town of Louisville, so I'm sure some arrangements can be made for my sake.

Unlikely, sure.

But somebody had to start the conversation that made Boulder look to the Pacific and Nebraska abandon KC. For a brief moment in time, the Big 12 is both strongly unified and able to make bold moves without being the aggressor. There's certainly a lot to be said for the ten team arrangement for both of the major revenue sports, football and basketball. In football, it allows a round robin format and eliminates a conference championship whose primary consequence recently seems to be giving good teams losses. In basketball, it allows annual home and home series while improving the RPI by shedding the two worst programs in the conference.

Still, the Big 12 as ten teams now has no margin of error. There's a part of me that wants to throw a long pass and see what happens. Otherwise, unless there's some breakdown in another major conference, this is the peak of the Big 12. We get more vulnerable over time to a raid from any direction, and the next one will be fatal.

an apple world

I remember 15 years ago when Apple ran some playful ads 'welcoming' Microsoft to concepts like the recycle bin and file names with more than 8 characters related to the release of Windows 95. For the Windows world, 95 was an impressive event, ('Start Me Up') and I think it's one of the core steps along the path to one central mechanism for interfacing with electronics, in the phrasing of today, of convergence.

These are a couple of my favorite Apple ads




Apple executives certainly made the 1990s an interesting time to be a Mac user, but I've never quite related to the 'Mac vs. PC' debate for two main reasons. First, it's a matter of personal preference. If you like Windows, fabulous. Computers should be a source of help and fun, not stress and disappointment. Second, it's a little like 'boxers vs. briefs' or 'Republicans vs. Democrats' - it's an artificial dichotomy that restricts the picture rather than providing insightful answers. 'Computers' are more than a big box that sits under your desk, and Apple gets that as much as any company on the planet.

I've been an Apple user since before Macs and Wintel machines. Companies like IBM, Microsoft, and Intel have been business competitors of Apple, but they've also been business partners of Apple. And if you want to know about me, don't ask about rock bands from the 80s or TV shows from the 90s or politics in the 00s. The single biggest influence, or connection, you might say, would be with Apple. It means to me what 'muscle cars' meant to prior generations of Americans, and I'm very grateful to have grown up in the 'interesting times' of the PC wars and the browser wars and the smartphone wars and whatnot.

I've spent the past two months of my life basically getting my work ready for rolling out a major upgrade investing in our IT infrastructure. I would love of course to simply buy everyone iMacs and run Mac OS X server, but I don't have any moral qualms about that not being an option. I've sold plenty of Apple gear over the years; enthusiastic customers are far better marketers than the paid staff of an organization. I know Microsoft gives lots of IT peeps job security. Heck, my brother is a well-compensated Microsoftie. Unless I go run Apple one day, he is by far going to pursue the most financially lucrative career of all of us.

But the comment I find myself coming back to today, as we're nearing the end of this upgrade, is the invocation of another song, a classic from the opening of Independence Day, itself a classic product placement before companies were quite so direct about that.

I think with Windows 7, It's the End of the World As We Know It. It took a decade and a half, with fits and starts along the way, but I think the convergence between Mac OS and Windows is complete. There's not much more to do. Everyone today is buying a Mac. Apple produced superior products and has had what I think is a permanent impact on how we interact with technology.

I feel fine. I wonder how Windows folks feel. Deep down, are they a little embarrassed that the eye candy and user interface won out over complexity and features and customization? Sure, Windows still has that stuff underneath the hood. But most Microsoft customers these days aren't even interested in learning how to change the oil.

i heart matt taibbi

There's a writer/journalist/all-around-troublemaker who has been particularly focused and intense recently that I think is very worthwhile reading if you are not familiar with him.

Matt Taibbi's blog can be found at True/Slant, and he has had some large pieces in outlets like Rolling Stone.

I wanted to point him out because he's been hitting a nerve that's a lot of why I went to business school. There has been such a void of real leadership in the business community that a lot of anger and outrage and disgust has been generated in society. Pew did a study recently that asked people to rank various professions that contribute to the well-being of society. The category for 'business executives' saw only 21% agree with an assessment of contributing a lot. Even lawyers were more widely regarded as contributors.

We're more and more confronting a crossroads, a major fork, of the whole concept of economics as it works in the United States. If you agree with Taibbi's general thrust, his reading is some of the most fun and in-depth you'll find anywhere. If you don't agree, I would argue, his stuff is that much more important to be aware of, because he's one of the writers that takes the time to spell out in detail his positions without losing the bluntness and passion that many people feel without being able to articulate quite so clearly.

If those of us who want to largely save a capitalist, market-based system don't deal with the factors that cause such disgust with the whole system, then ultimately we are going to face a much larger period of transition and dislocation. The longer we deny that excessive feeding of ego and greed cause systemic problems, the less credibility we have in offering tweaks to the system in the face of calls to overhaul the whole thing in favor of something much different.

call senator bond

(P) So I tried to do my part and give my members of Congress my opinion on the bailout package.

It turns out quite a few other people have also been doing so. The voice mail boxes for Senator McCaskill and Representative Clay are full!

Interestingly, I was able to leave a message for Senator Bond. So either our senior Senator gets a fancier vm system, or apparently more Democrats are upset than Republicans.

In either case, call Senator Bond. Let's see if we can fill up his mailbox, too!

(202) 224-5721

And if you have his more, uh, personal numbers, make sure he gets messages about how we feel on those, too. This is a classic case where people of all stripes understand the basic concept; outrage is a nonpartisan reaction. A guy who made $700 million at Goldman Sachs is trying to steal hundreds of billions of dollars from us to give to his buddies.

illicit markets are the coolest

Jodi and I are watching a show on PBS about illicit markets. Aside from the exaggeration of the uniqueness of now (as if black markets haven't always existed) it's pretty cool. I find illegal markets a lot more intellectually stimulating than legal ones. There's just so much going on, so much innovation, you always have to be a step ahead of the people chasing you. The power of people's individual choices to overwhelm the best laid plans of governments and corporations. The reminder that criminal is a label of one's relation to arbitrary laws (and the arbitrary enforcement of those laws), not a statement on one's abilities in sales, marketing, operations, strategy, entrepreneurship, interpersonal relations, or other valuable, marketable, productive skills.

And of course, the overwhelming economic, human, and national security case for ending crime as we know it by decriminalizing much of what we call crime. Consumers get inferior products when pushed into gray and black markets, taxpayers get screwed by the massive bills which don't do anything, and organized crime and terrorist organizations have access to massive revenue and transportation networks.

But hey, it's hard to compromise on good public policy when it comes to issues like this. After all, the GOP is all about big government, and they hate free markets.