Not so long ago Google announced a new cloud streaming video game service called Stadia. Instead of consumers purchasing a console (i.e. like a Xbox or Playstation) all games would be streamed from Google's cloud infrastructure.
Sony already has such a service called Playstation Now and Microsoft has announced a future one called Xcloud.
Lots of people are speculating about whether Google's gaming platform can be a console killer, but what I found so interesting is that no one seems to be talking about Google's #1 problem, and that's games.
Any first party exclusives produced by Sony, Microsoft, or Nintendo will have zero chance of going onto Google's platform. This includes huge titles like Halo, Zelda, God of War, etc.
One presumes that any AAA third party titles (lets take as an example the Grand Theft Auto series) that will be on Stadia will presumably be on all the other platforms it currently has, such as PC, Playstation, and Xbox.
So what buy in does a consumer have to actually play games on Stadia?
1) Google has to create it's killer game.
It has started a gaming division to produce first party titles for their platform, but it's anyone's guess if they will be able to create that truly ground breaking title. Microsoft hit the jackpot with the original Xbox and Halo, but who knows if Google will be able to do the same.
2) Pricing.
This is where I think Google can actually make a difference. Google can compete on pricing and undercut their competitors in one of two ways:
A) Offer a cheaper subscription service.
In the beginning I think this is going to be an absolute requirement. As of this writing, Playstation and Xbox's subscription services have around 700 & 100 games respectively. These of course come from both company's vast library of titles. A casual glance shows that Xbox includes titles like Minecraft and Playstation has games from the God of War series. Google will likely not have a library anywhere near as good from the start, so they will have to undercut these other services.
B) Amortize the cost of a console over many games.
If consumers don't have to purchase a console to play games, this makes games net cheaper, as the savings from the lack of a console can make games net cheaper. Google has yet to announce the price of their game controller, but we can safely assume it is much cheaper than a console.
For me personally, I never actually keep games. I buy them and then sell them after I beat the game. So I spiritually "rent" games. So a subscription service from Google would be more than welcome way for me to "rent" the games I want to play. But that latter part is the kicker, it has to be something I want to play.
Showing posts with label financialanalysis. Show all posts
Showing posts with label financialanalysis. Show all posts
Thursday, May 2, 2019
Tuesday, November 6, 2018
IBM acquisition of Redhat
True story, my wife and I were watching TV when my wife asked, "What's Redhat?". I then explained that Redhat was a company that (loosely) packaged open source software together and sold support for it. Because my wife was familiar with Cloudera, I told her that it was the Cloudera of the Linux operating system world.
Then she blew me away by then asking, "Why would IBM want to buy them for $30 billion dollars?"
As a software developer that has worked almost exclusively on Linux in his career, it was a huge announcement.
After sitting back and pondering it for awhile, I was beginning to think about the move and it was a good move by IBM.
In my opinion, it is a great move for IBM. But the probability of it being a success is low.
In one article I read, a Redhat engineer said: "I can't imagine a bigger culture clash." I think that pretty much sums up the thoughts of myself and many other engineers.
Here were some differences I thought about after the sale was announced:
I read a tweet (which I'm having trouble finding), but it said something to the effect:
Then she blew me away by then asking, "Why would IBM want to buy them for $30 billion dollars?"
As a software developer that has worked almost exclusively on Linux in his career, it was a huge announcement.
After sitting back and pondering it for awhile, I was beginning to think about the move and it was a good move by IBM.
In my opinion, it is a great move for IBM. But the probability of it being a success is low.
In one article I read, a Redhat engineer said: "I can't imagine a bigger culture clash." I think that pretty much sums up the thoughts of myself and many other engineers.
Here were some differences I thought about after the sale was announced:
- IBM engineers are typically told to be wary of the GPL to avoid potential code pollution, Redhat engineers work with the GPL all of the time
- IBM often requires signed license agreements for code contributions to their code base, Redhat works with the open source community on tons of things as is
- IBM legal likes to get their hands into the middle of many things
I read a tweet (which I'm having trouble finding), but it said something to the effect:
- IBM just paid 30% of their market cap for Redhat
- Redhat's headcount is only 3% of IBM's
- Unlike IBM, Redhat does not really have much intellectual property (IIRC, IBM has the largest patent portfolio of any US company)
- Unlike IBM, Redhat does not really have much capital assets
- Unlike IBM, Redhat gives away its product for free
- Unlike IBM, Redhat employees can leave Redhat and take leadership of their product with them
Sunday, October 30, 2016
What they don't tell you about buying vs renting
Every once in awhile I run across some article about the "rent vs buy" argument. Inevitably, you'll come across some calculator that you crunch numbers into and it'll spit out an answer on what is more favorable to you financially. Recently I saw Adam Conover had a piece about the "is buying a house a good investment?"
While I don't disagree on any of the things mentioned in the articles or the above video, I'd like to mention some of the subtleties, benefits, and downsides they don't tell you in the "rent vs buy" argument.
I originally had this listed as "Pros" and "Cons" in this article, but I eventually realized that it's somewhat relative if they are a Pro or Con. So I'm just going to list them all down here in a somewhat random order.
1) If you don't buy a house, you have to save/invest money like the calculators say you should
This is the absolute most important subtlety that none of the articles or calculators tell you. If the calculators say it is a better financial decision to not buy a house, you have to remember that you have to actually follow through and do what it says. You have to actually save/invest all the money that you aren't using on a mortgage or home maintenance.
How confident are you in your ability to do that? Every vacation, nice night out for dinner, etc. eats into this calculation.
2) If you buy a house, you have less disposable income
While you may be "ahead" financially by buying a house, your day to day disposable income will probably be lower. After all, a nice chunk of your money is now tied up in a home's equity.
I sometimes wish I had traveled more when I was younger, but without that disposable income it was hard to do. I don't necessarily regret the decision, but it's something that may bother some people more than others.
In contrast to #1, #2 can somewhat be viewed as a way to have a "forced savings account". Some percentage of your mortgage goes towards equity, so it is forcing you to save that money. If you're not good at managing your finances, forcing you to not be able to spend money may be the best way to save money.
3) If you buy a house, you become more responsible and learn a lot things
I bought my first primary residence when I was relatively young, I believe 24-25. It was much earlier than many others I know that bought a house.
The responsibility of taking care of the place, dealing with a mortgage, managing your finances, etc. makes you mature as an adult much faster. Whether you view this as a pro or con is up to you. I remember suddenly viewing most financial transactions in "mortgage payment" units. Others I've spoken to said the same. Vacations, nicer cars, etc. were all calculated within these units.
In addition, maintenance of the property makes you learn a lot of things you otherwise probably won't have. I can't speak for every home owner, but when you realize it'll cost you a thousand dollars to hire someone to fix X in your house, you eventually figure out how to do it yourself. Everyone will have their comfort level thresholds on what to do themselves vs hire someone (I draw the line at most plumbing tasks), but you will figure a lot of things out.
4) If you buy a house, your time will be eaten up by chores
Following up #3, all those things you learn about and do on your own will eat up your time. But if you have less disposable income, perhaps it doesn't matter :-)
5) If you buy a house, you can rent it out
For some reason, many of the articles talking about loss of flexibility don't bring up the fact that you can rent out your place if you really need to move.
Obviously one needs to judge the rental market in your area, how much you can rent out your property compared to your mortgage costs, your time to manage the property, etc. But it is an option that can be looked into. If you buy a beginner property (e.g. condo) the numbers certainly play out much better than a single family detached home.
6) If you buy a house, costs are stable OR If you don't buy a house, costs can be unstable
Anyone who has lived in the San Francisco Bay Area for the last 5 years can tell you about the horror of seeing their rent increase over 10% per year for the last 5 years. If you buy a house, while costs can be higher initially, you atleast know what the costs will be and it shouldn't change much. So one might consider this a cost of purchasing stability. You are trading some higher costs for known stability, which can be a benefit in a way. While my property value wasn't great during the financial recession in the early 2010s, the fact I was still paying less than the rental market made me feel really good that I had bought a place.
7) If you buy a house, consider your finances after 30 years
One thing that doesn't seem to be discussed in the articles and the calculators is that they don't consider your finances after you pay off your mortgage. At some point, you will pay off the home and no longer have a mortgage. I think most of the calculators only think about your net worth after 30 years of mortgage payments.
Obviously, one must consider how long you realistically think you'll be in a property, but you should atleast think about it.
While I don't disagree on any of the things mentioned in the articles or the above video, I'd like to mention some of the subtleties, benefits, and downsides they don't tell you in the "rent vs buy" argument.
I originally had this listed as "Pros" and "Cons" in this article, but I eventually realized that it's somewhat relative if they are a Pro or Con. So I'm just going to list them all down here in a somewhat random order.
1) If you don't buy a house, you have to save/invest money like the calculators say you should
This is the absolute most important subtlety that none of the articles or calculators tell you. If the calculators say it is a better financial decision to not buy a house, you have to remember that you have to actually follow through and do what it says. You have to actually save/invest all the money that you aren't using on a mortgage or home maintenance.
How confident are you in your ability to do that? Every vacation, nice night out for dinner, etc. eats into this calculation.
2) If you buy a house, you have less disposable income
While you may be "ahead" financially by buying a house, your day to day disposable income will probably be lower. After all, a nice chunk of your money is now tied up in a home's equity.
I sometimes wish I had traveled more when I was younger, but without that disposable income it was hard to do. I don't necessarily regret the decision, but it's something that may bother some people more than others.
In contrast to #1, #2 can somewhat be viewed as a way to have a "forced savings account". Some percentage of your mortgage goes towards equity, so it is forcing you to save that money. If you're not good at managing your finances, forcing you to not be able to spend money may be the best way to save money.
3) If you buy a house, you become more responsible and learn a lot things
I bought my first primary residence when I was relatively young, I believe 24-25. It was much earlier than many others I know that bought a house.
The responsibility of taking care of the place, dealing with a mortgage, managing your finances, etc. makes you mature as an adult much faster. Whether you view this as a pro or con is up to you. I remember suddenly viewing most financial transactions in "mortgage payment" units. Others I've spoken to said the same. Vacations, nicer cars, etc. were all calculated within these units.
In addition, maintenance of the property makes you learn a lot of things you otherwise probably won't have. I can't speak for every home owner, but when you realize it'll cost you a thousand dollars to hire someone to fix X in your house, you eventually figure out how to do it yourself. Everyone will have their comfort level thresholds on what to do themselves vs hire someone (I draw the line at most plumbing tasks), but you will figure a lot of things out.
4) If you buy a house, your time will be eaten up by chores
Following up #3, all those things you learn about and do on your own will eat up your time. But if you have less disposable income, perhaps it doesn't matter :-)
5) If you buy a house, you can rent it out
For some reason, many of the articles talking about loss of flexibility don't bring up the fact that you can rent out your place if you really need to move.
Obviously one needs to judge the rental market in your area, how much you can rent out your property compared to your mortgage costs, your time to manage the property, etc. But it is an option that can be looked into. If you buy a beginner property (e.g. condo) the numbers certainly play out much better than a single family detached home.
6) If you buy a house, costs are stable OR If you don't buy a house, costs can be unstable
Anyone who has lived in the San Francisco Bay Area for the last 5 years can tell you about the horror of seeing their rent increase over 10% per year for the last 5 years. If you buy a house, while costs can be higher initially, you atleast know what the costs will be and it shouldn't change much. So one might consider this a cost of purchasing stability. You are trading some higher costs for known stability, which can be a benefit in a way. While my property value wasn't great during the financial recession in the early 2010s, the fact I was still paying less than the rental market made me feel really good that I had bought a place.
7) If you buy a house, consider your finances after 30 years
One thing that doesn't seem to be discussed in the articles and the calculators is that they don't consider your finances after you pay off your mortgage. At some point, you will pay off the home and no longer have a mortgage. I think most of the calculators only think about your net worth after 30 years of mortgage payments.
Obviously, one must consider how long you realistically think you'll be in a property, but you should atleast think about it.
Sunday, May 24, 2015
The Game Theory of Online Dating
I just learned this morning that John Nash, the famed economist/mathematician, passed away. I know of John Nash mostly through the famed "Nash Equilibrium" taught in most beginning economics courses and the theories I learned in a game theory class I took in college.
The game theory course I took in college is one of my favorite courses from college. Not so much in that I used the class in my career, but I liked the principal that you could try and apply mathematics/game theory to everyday normal life. And if you view life through these principles, it might help explain life in better (or minimally different) ways.
One of the ways I applied game theory in a conversation sometime ago was online dating. Myself and many of my friends have done online dating to various degrees of success (... or failure depending on your perspective :-|). One day I came up with the following conversation/theory.
(To anyone that I don't know reading this, please take this with a grain of salt. It is just a way to think about things.)
So this conversation/theory only applies to people looking for a relationship.
Assume all people in the world are classified in two groups:
However, nobody knows what group anyone belongs in, including themselves. A person may believe they want to be in a relationship, but they don't. A person may believe they don't want to be in a relationship, but really do.
Online dating, while becoming more socially acceptable, is not the traditional first route for dating. There are gajillions of other ways to meet people: school, church, work, your neighborhood, general social activity, etc. Online dating, in my opinion, is second or third order. Something people try when the other ways haven't worked out. I could be wrong about this, but I get the strong impression it is for most people.
So here in lies the question. If all people in the world are classified in the two groups I list above, who are the people doing online dating?
As I state above, online dating is second or third order. So, presumably, all the people that want to be in a relationship are already taken. Since there are a gajillion ways to meet people before online dating, they've presumably already met someone.
So are the people doing online dating a whole bunch of people who don't want to be in a relationship?
Now the above is just the setup and way to think about it. Reality is really different.
People aren't in the two classifications I list above. Instead, everyone's personality and desires falls along a spectrum like the below:
I'll be single forever! <------> I want to get married now!
Everyone in the world is in this spectrum.
People who want to be single forever, they probably are not doing online dating at all.
The people that want to get married now, they are already taken.
The people doing online dating are in between. There will be those who broke up with someone and really want to be in a relationship again. They are going to be towards the right side of the spectrum. There will be those who may have the attitude, "ehhh maybe I'll meet someone". They may be towards the left side of the spectrum.
But what does the population of people doing online dating look like?
I don't know for sure. But based on my theory on the two classifications, I speculate there are many people more towards the left side of the spectrum than the right doing online dating. In other words, there's perhaps a reason why a person is still single. This isn't meant to imply that a person is single for a terrible reason. It's for very normal reasons: career, location, commitment, what makes you happy, etc. etc.
So, what kind of questions can be gather and think about from this thought process.
If you're someone that really wants a relationship, is online dating the right avenue? Perhaps not. Or perhaps its the best out of a lot of crappy options.
If you're doing online dating and think you really want a relationship? Do you really?
The game theory course I took in college is one of my favorite courses from college. Not so much in that I used the class in my career, but I liked the principal that you could try and apply mathematics/game theory to everyday normal life. And if you view life through these principles, it might help explain life in better (or minimally different) ways.
One of the ways I applied game theory in a conversation sometime ago was online dating. Myself and many of my friends have done online dating to various degrees of success (... or failure depending on your perspective :-|). One day I came up with the following conversation/theory.
(To anyone that I don't know reading this, please take this with a grain of salt. It is just a way to think about things.)
So this conversation/theory only applies to people looking for a relationship.
Assume all people in the world are classified in two groups:
- A person wants to be in a relationship/get married
- A person does not want to be in a relationship/get married
However, nobody knows what group anyone belongs in, including themselves. A person may believe they want to be in a relationship, but they don't. A person may believe they don't want to be in a relationship, but really do.
Online dating, while becoming more socially acceptable, is not the traditional first route for dating. There are gajillions of other ways to meet people: school, church, work, your neighborhood, general social activity, etc. Online dating, in my opinion, is second or third order. Something people try when the other ways haven't worked out. I could be wrong about this, but I get the strong impression it is for most people.
So here in lies the question. If all people in the world are classified in the two groups I list above, who are the people doing online dating?
As I state above, online dating is second or third order. So, presumably, all the people that want to be in a relationship are already taken. Since there are a gajillion ways to meet people before online dating, they've presumably already met someone.
So are the people doing online dating a whole bunch of people who don't want to be in a relationship?
Now the above is just the setup and way to think about it. Reality is really different.
People aren't in the two classifications I list above. Instead, everyone's personality and desires falls along a spectrum like the below:
I'll be single forever! <------> I want to get married now!
Everyone in the world is in this spectrum.
People who want to be single forever, they probably are not doing online dating at all.
The people that want to get married now, they are already taken.
The people doing online dating are in between. There will be those who broke up with someone and really want to be in a relationship again. They are going to be towards the right side of the spectrum. There will be those who may have the attitude, "ehhh maybe I'll meet someone". They may be towards the left side of the spectrum.
But what does the population of people doing online dating look like?
I don't know for sure. But based on my theory on the two classifications, I speculate there are many people more towards the left side of the spectrum than the right doing online dating. In other words, there's perhaps a reason why a person is still single. This isn't meant to imply that a person is single for a terrible reason. It's for very normal reasons: career, location, commitment, what makes you happy, etc. etc.
So, what kind of questions can be gather and think about from this thought process.
If you're someone that really wants a relationship, is online dating the right avenue? Perhaps not. Or perhaps its the best out of a lot of crappy options.
If you're doing online dating and think you really want a relationship? Do you really?
Friday, February 15, 2013
Apple TV vs Xbox/Playstation
I saw this article, The Fall TV Lineup May Include Apple Dominating Gaming, and wanted to comment, because I couldn't help but disagree.
The author makes the argument that an Apple TV would completely crush Xbox, PS3, Wii, etc.
Here are some of the arguments in the article:
The TV is not a casual entertainment device, it is a serious one.
People spend a lot of money on better sound, better definition TVs, etc. because they want a much higher quality experience when they sit down.
They pay a premium on cable, on video streaming, and movie disks (i.e. blue ray vs. DVD) simply for the privilege of experiencing this higher quality content.
On phones, people can play Angry Birds or Words With Friends in 5 minute increments, but I don't believe people do that on a TV.
This isn't to say there isn't a casual market for this. After all, the Wii sold 100 million units. There is a market for the casual, but is it one that can destroy the Xbox or Playstation? I'm skeptical. This is not a world where a Zynga can thrive, it is one where an Activision can thrive, where investing $50 million in the development of a game results in huge sales and profit.
Now, this isn't to say there won't be people that develop the $50 million dollar game for the Apple TV, I'm sure they will. But will they develop it only for Apple TV or also for Xbox & Playstation? If you're willing to put $50 million into the development of a game, I can't imagine it being for only one platform.
The author makes the argument that an Apple TV would completely crush Xbox, PS3, Wii, etc.
Here are some of the arguments in the article:
Apple is going to dominate where their rivals cannot simply because of the support of small, third-party app developers.
That the Apple TV is already nearly powerful enough to run [games like Call of Duty]. Perhaps not the highest of the high end, but give it a year or two. That’s the thing: Apple will likely push yearly hardware (and software) updates for anything they do. Microsoft has not updated the Xbox in over 7 years. Huge mistake.I disagree with these based on one major theory:
the audience for non-hardcore games when Apple opens up an Apple TV SDK will be much larger than the audience for the hardcore games.
Apple will not win this space by playing the game that Microsoft, Sony, and to some extent, Nintendo, are playing. They will win by changing the rules of the game. And that game is all about developers, developers, developers, developers.
The TV is not a casual entertainment device, it is a serious one.
People spend a lot of money on better sound, better definition TVs, etc. because they want a much higher quality experience when they sit down.
They pay a premium on cable, on video streaming, and movie disks (i.e. blue ray vs. DVD) simply for the privilege of experiencing this higher quality content.
On phones, people can play Angry Birds or Words With Friends in 5 minute increments, but I don't believe people do that on a TV.
This isn't to say there isn't a casual market for this. After all, the Wii sold 100 million units. There is a market for the casual, but is it one that can destroy the Xbox or Playstation? I'm skeptical. This is not a world where a Zynga can thrive, it is one where an Activision can thrive, where investing $50 million in the development of a game results in huge sales and profit.
Now, this isn't to say there won't be people that develop the $50 million dollar game for the Apple TV, I'm sure they will. But will they develop it only for Apple TV or also for Xbox & Playstation? If you're willing to put $50 million into the development of a game, I can't imagine it being for only one platform.
Wednesday, January 2, 2013
High End Fashion - I Just Don't Get It
Not so long ago I went on a date and a conversation about clothes and fashion happened. My date told me, "You know a lot about fashion and brands." I responded, "Haha, don't read too much into it, everything I learned I learned in the last two weeks."
With the opening of the Livermore Outlet Mall, I became personally curious about fashion, brands, and the retail business of it (see previous post).
One thing I still find personally curious is how some of the high end fashion can simply cost so much. I simply struggle to understand how it can be so many multiples higher than what I buy.
For example, I looked up the following retail prices for standard white crew neck t-shirts.
Old Navy - $9.94
Gap - $16.95
Banana Republic - $24.5
There are always sales (the Old Navy one is actually $8.00 as of this writing), but we're going to use these retail values for the discussion.
I specifically picked these three stores b/c they are all within the Gap family. I find it very interesting from the lowest priced brand (Old Navy) to the highest end brand (Banana Republic) the t-shirt price is only a multiple of 2.5X.
While I don't fully understand everything about clothes, I can believe better quality cotton and better quality manufacturing can make a plain white t-shirt softer and better, so a 2.5X multiplier on price doesn't seem that unreasonable.
What spurred this analysis was this white crew neck t-shirt I saw on Armani's website.
Yup, that's a $125 plain white t-shirt. At first I thought maybe this t-shirt was made out of something fancy like cashmere. Nope, it's just plain 100% cotton that you can machine wash. At first it didn't look like this t-shirt even had a logo or branding on it, but if you look very closely there is a white silhouette of the Armani logo on the front. It's only barely noticeable (it's not like a different colored Polo or Lacoste logo).
So that shirt is a 12.5X multiple over Old Navy and a 5X multiple over Banana Republic. The law of diminishing returns convinces me that this shirt cannot be of such a quality that it is worth 5X over Banana Republic.
Personally, I just don't understand how the brand of Armani can be worth such a price to someone. As someone who has lived so practically for most of his life, the concept of a veblen good is just foreign. It's the same reason I cannot understand why someone will buy Cristal.
What spurred this blog post was a flip flop I saw on Zappos just by chance. Yup, Salvatore Ferragamo flip flops for $170. They have a rubber sole (which might be better than the cheap flip flops I normally buy). But there is absolutely no quality difference than can make me think they are worth a 34X multiple over what I normally pay for flip flops (i.e. $5).
With the opening of the Livermore Outlet Mall, I became personally curious about fashion, brands, and the retail business of it (see previous post).
One thing I still find personally curious is how some of the high end fashion can simply cost so much. I simply struggle to understand how it can be so many multiples higher than what I buy.
For example, I looked up the following retail prices for standard white crew neck t-shirts.
Old Navy - $9.94
Gap - $16.95
Banana Republic - $24.5
There are always sales (the Old Navy one is actually $8.00 as of this writing), but we're going to use these retail values for the discussion.
I specifically picked these three stores b/c they are all within the Gap family. I find it very interesting from the lowest priced brand (Old Navy) to the highest end brand (Banana Republic) the t-shirt price is only a multiple of 2.5X.
While I don't fully understand everything about clothes, I can believe better quality cotton and better quality manufacturing can make a plain white t-shirt softer and better, so a 2.5X multiplier on price doesn't seem that unreasonable.
What spurred this analysis was this white crew neck t-shirt I saw on Armani's website.
Yup, that's a $125 plain white t-shirt. At first I thought maybe this t-shirt was made out of something fancy like cashmere. Nope, it's just plain 100% cotton that you can machine wash. At first it didn't look like this t-shirt even had a logo or branding on it, but if you look very closely there is a white silhouette of the Armani logo on the front. It's only barely noticeable (it's not like a different colored Polo or Lacoste logo).
So that shirt is a 12.5X multiple over Old Navy and a 5X multiple over Banana Republic. The law of diminishing returns convinces me that this shirt cannot be of such a quality that it is worth 5X over Banana Republic.
Personally, I just don't understand how the brand of Armani can be worth such a price to someone. As someone who has lived so practically for most of his life, the concept of a veblen good is just foreign. It's the same reason I cannot understand why someone will buy Cristal.
What spurred this blog post was a flip flop I saw on Zappos just by chance. Yup, Salvatore Ferragamo flip flops for $170. They have a rubber sole (which might be better than the cheap flip flops I normally buy). But there is absolutely no quality difference than can make me think they are worth a 34X multiple over what I normally pay for flip flops (i.e. $5).
Sunday, November 11, 2012
Livermore Outlet Mall Analysis - Competing with Vacaville and Gilroy Outlets
So a new outlet mall just opened up in Livermore (Paragon Outlets). I don't know everything about retail shopping and brands, but it seems pretty damn nice. It's headlined by the Saks, Bloomingdales, and Neiman Marcus department outlets. There are also outlet stores for premium brands like Prada, Aramani, Burberry, Barneys, Kate Spade, Coach, and others (which to be very honest, I had never heard of the brand Kate Spade and did not know about its popularity until I saw a line of 20 women lined up outside of their store at 10pm). There are many "middle tier" stores that I shop at like Gap, Banana Republic, Jcrew, Lacoste.
Anyways, I ran upon this article about the affect the new outlet mall would have on Gilroy and their revenues. There was the following quote:
As far as I can tell, there are two other major outlet malls in the bay area that are at the same level of Livermore's, one in Vacaville and one in Gilroy (although many believe Livermore has more/better stores/brands, but we're going to ignore that). There's one in Napa, but its much smaller than the others so I'm not going to count it. (Update: Someone reminded me that the Great Mall in Milpitas is sort of like an outlet mall. But I'm not going to count that either, it's really a half outlet mall and half normal mall.)
Using Google Maps, the following are travel distance times from a number of Bay Area locales to these outlet malls. Presently, the new Livermore Outlet Mall is not on Google Maps, so I will use the Target across the highway as my destination point (Livermore's outlet mall is the south exit off the highway, Target is the north exit at the same spot. I also forced Google Maps to reroute the Target directions to use the same exit instead of a 1 minute faster local road.).
As you move South, towards Fremont & Milpitas, the Gilroy Outlet was significantly closer than the Vacaville one, presumably getting all the business from this area. The Livermore one is now significantly closer for many of these areas and you would expect could take away those shoppers.
Anyways, I ran upon this article about the affect the new outlet mall would have on Gilroy and their revenues. There was the following quote:
"“I think they are far enough away that there isn’t a lot of angst here that they will create competition,” said Susan Valenta, Gilroy's Chamber of Commerce CEO. "This quote got me thinking, is it really true? I know that there are people out there that do the following analysis for a living, but I'm going to play business analyst and see what I can come up with.
As far as I can tell, there are two other major outlet malls in the bay area that are at the same level of Livermore's, one in Vacaville and one in Gilroy (although many believe Livermore has more/better stores/brands, but we're going to ignore that). There's one in Napa, but its much smaller than the others so I'm not going to count it. (Update: Someone reminded me that the Great Mall in Milpitas is sort of like an outlet mall. But I'm not going to count that either, it's really a half outlet mall and half normal mall.)
Using Google Maps, the following are travel distance times from a number of Bay Area locales to these outlet malls. Presently, the new Livermore Outlet Mall is not on Google Maps, so I will use the Target across the highway as my destination point (Livermore's outlet mall is the south exit off the highway, Target is the north exit at the same spot. I also forced Google Maps to reroute the Target directions to use the same exit instead of a 1 minute faster local road.).
| City | To Livermore | To Gilroy | To Vacaville | Closer to Livermore than Gilroy | Closer to Livermore than Vacaville |
|---|---|---|---|---|---|
| San Francisco | 49 mins | 86 mins | 66 mins | 37 mins | 17 mins |
| San Mateo | 43 mins | 65 mins | 85 mins | 22 mins | 42 mins |
| Foster City | 40 mins | 64 mins | 84 mins | 24 mins | 44 mins |
| Redwood City | 49 mins | 60 mins | 93 mins | 11 mins | 44 mins |
| Palo Alto | 51 mins | 52 mins | 96 mins | 1 mins | 44 mins |
| Mountain View | 45 mins | 46 mins | 99 mins | 1 mins | 49 mins |
| Cupertino | 49 mins | 42 mins | 103 mins | -7 mins | 54 mins |
| San Jose | 42 mins | 35 mins | 97 mins | -7 mins | 55 mins |
| Milpitas | 36 mins | 44 mins | 90 mins | 8 mins | 54 mins |
| Fremont | 31 mins | 52 mins | 82 mins | 21 mins | 51 mins |
| Castro Valley | 20 mins | 68 mins | 68 mins | 48 mins | 48 mins |
| Oakland | 37 mins | 80 mins | 56 mins | 43 mins | 24 mins |
| Walnut Creek | 28 mins | 82 mins | 46 mins | 54 mins | 18 mins |
| Concord | 34 mins | 87 mins | 44 mins | 53 mins | 10 mins |
| Pittsburg | 44 mins | 98 mins | 51 mins | 54 mins | 7 mins |
So what do I get from this chart?
Not surprisingly, anything in the East Bay is now significantly closer to a major outlet mall. Many East Bay communities that were closer to the Vacaville outlet than Gilroy's will find themselves closer to Livermore's outlet now, even the Northeast cities like Concord and Pittsburgh will still find themselves closer to Livermore than Vacaville.
As you move South, towards Fremont & Milpitas, the Gilroy Outlet was significantly closer than the Vacaville one, presumably getting all the business from this area. The Livermore one is now significantly closer for many of these areas and you would expect could take away those shoppers.
If you live in the South Bay closer to the San Jose area, this is where the Gilroy Outlet finally becomes closer than the Livermore one. However, it's not significant. For both San Jose and Cupertino, the time travel savings is only 7 minutes.
As you move north on the peninsula, Gilroy gets further away and Livermore gets closer thanks to major highways/bridges (most notably 92). It's basically a wash once you get up to just the Mountain View and/or Palo Alto area. Once you get into the Foster City and further North area, Livermore's outlet mall is over 20 minutes closer.
So it appears that for pretty much most of the bay area, Livermore's new outlet mall ranges from a "bit closer" to "much closer" than the Gilroy or Vacaville outlet malls. Even in the areas where the Gilroy or Vacaville outlets are closer, it's not enough of a time difference to make up for any major brands and/or stores shoppers really want to aim for.
Conclusion? Gilroy & Vacaville should be concerned of increased competition if they are only thinking of distance to location.
As you move north on the peninsula, Gilroy gets further away and Livermore gets closer thanks to major highways/bridges (most notably 92). It's basically a wash once you get up to just the Mountain View and/or Palo Alto area. Once you get into the Foster City and further North area, Livermore's outlet mall is over 20 minutes closer.
So it appears that for pretty much most of the bay area, Livermore's new outlet mall ranges from a "bit closer" to "much closer" than the Gilroy or Vacaville outlet malls. Even in the areas where the Gilroy or Vacaville outlets are closer, it's not enough of a time difference to make up for any major brands and/or stores shoppers really want to aim for.
Conclusion? Gilroy & Vacaville should be concerned of increased competition if they are only thinking of distance to location.
Tuesday, June 5, 2012
How will the Wii U fare in the market?
E3 is this week and Nintendo is unveiling the new Wii U. I have a feeling the Wii U is going to fare pretty poorly in the market. Here's my reasoning with an analogy.
Some people wonder why first person shooter (FPS) games never sold well on the original Wii. Despite having more systems out there than Xbox 360 or PS3 (~95M to 66M to 64M as of this writing), many of the best FPS games on the Wii just don't sell well. As an example, the top two highly rated FPS games on the Wii are Metroid Prime 3 and GoldenEye 007 (90.16% and 83.77% on Gamerankings.com). Vgchartz shows Metroid Prime 3 sold about 1.62 million units while GoldenEye sold about 1.65 million units. Several of the Call of Duty games have sold over 1 million units on the Wii, with Call of Duty 3 topping out at 2.15 million units. I couldn't find any other FPS games on the Wii that sold over 1 million units.
In comparison, the sales numbers for FPS games on the Xbox 360 and PS3 blow these numbers out of the water. I count ten FPS titles that have sold more than 5 million units on the Xbox 360 and five FPS titles on PS3 that have surpassed 5 million units. There are tons of FPS games on both that have surpassed 1 million units.
Why the huge difference in sales? I think the answer is simple. If you are a fan of FPS games, you probably already possess a system (Xbox 360, PS3, or PC) that already has a ton of FPS titles that you would enjoy. With so many great FPS titles on those systems, you have little incentive to buy a Wii to play them. The Wii owners aren't FPS gamers.
If by chance you own a FPS popular system and a Wii, why would you want to play an FPS title on the Wii? The second highest rated FPS on the Wii is Golden Eye at 83.77%. The Xbox 360 and PS3 both have dozens of FPS titles rated above that. So the sales of FPS games on the Wii are for those few customers interested in FPS games but do not possess one of the other FPS gaming devices.
I believe the low sales of FPS games on the Wii will be an foreshadowing of how the Wii U will fare in the market. From all reports, it appears that the Wii U's hardware is only comparable to the Xbox 360 and PS3. It is not superior. While the tablet controller is a nice feature, it doesn't appear to have the same appeal that the original Wii had.
If you are a consumer who enjoys non-Nintendo video games (i.e. not Mario, Zelda, etc.), enjoys HD video streaming (Netflix, Hulu, etc.), you probably already possess the Xbox 360 or PS3. This is especially true given the fact those systems were released in 2005 and 2006 respectively. I'm not sure what the incentive will be to own a Wii U for most consumers. Add in the unknown price for the Wii U, a likely price drop for Xbox 360/PS3, a set of launch titles (Mass Effect 3, Assassins Creed 3, Ninja Gaiden, etc.) that will also be on Xbox 360/PS3 (or already are), I don't have confidence in the Wii U's wide adoption.
Some people wonder why first person shooter (FPS) games never sold well on the original Wii. Despite having more systems out there than Xbox 360 or PS3 (~95M to 66M to 64M as of this writing), many of the best FPS games on the Wii just don't sell well. As an example, the top two highly rated FPS games on the Wii are Metroid Prime 3 and GoldenEye 007 (90.16% and 83.77% on Gamerankings.com). Vgchartz shows Metroid Prime 3 sold about 1.62 million units while GoldenEye sold about 1.65 million units. Several of the Call of Duty games have sold over 1 million units on the Wii, with Call of Duty 3 topping out at 2.15 million units. I couldn't find any other FPS games on the Wii that sold over 1 million units.
In comparison, the sales numbers for FPS games on the Xbox 360 and PS3 blow these numbers out of the water. I count ten FPS titles that have sold more than 5 million units on the Xbox 360 and five FPS titles on PS3 that have surpassed 5 million units. There are tons of FPS games on both that have surpassed 1 million units.
Why the huge difference in sales? I think the answer is simple. If you are a fan of FPS games, you probably already possess a system (Xbox 360, PS3, or PC) that already has a ton of FPS titles that you would enjoy. With so many great FPS titles on those systems, you have little incentive to buy a Wii to play them. The Wii owners aren't FPS gamers.
If by chance you own a FPS popular system and a Wii, why would you want to play an FPS title on the Wii? The second highest rated FPS on the Wii is Golden Eye at 83.77%. The Xbox 360 and PS3 both have dozens of FPS titles rated above that. So the sales of FPS games on the Wii are for those few customers interested in FPS games but do not possess one of the other FPS gaming devices.
I believe the low sales of FPS games on the Wii will be an foreshadowing of how the Wii U will fare in the market. From all reports, it appears that the Wii U's hardware is only comparable to the Xbox 360 and PS3. It is not superior. While the tablet controller is a nice feature, it doesn't appear to have the same appeal that the original Wii had.
If you are a consumer who enjoys non-Nintendo video games (i.e. not Mario, Zelda, etc.), enjoys HD video streaming (Netflix, Hulu, etc.), you probably already possess the Xbox 360 or PS3. This is especially true given the fact those systems were released in 2005 and 2006 respectively. I'm not sure what the incentive will be to own a Wii U for most consumers. Add in the unknown price for the Wii U, a likely price drop for Xbox 360/PS3, a set of launch titles (Mass Effect 3, Assassins Creed 3, Ninja Gaiden, etc.) that will also be on Xbox 360/PS3 (or already are), I don't have confidence in the Wii U's wide adoption.
Monday, March 19, 2012
Apple's Dividend - Why All the Excitement?
So earlier this morning Apple announced a dividend. I don't understand the fuss.
A) It's simply what mature/big companies do. Perhaps Apple's culture and customers had a tough time accepting this? Perhaps it's part of what Tim Cook wants to do as CEO at Apple? Make Apple a bit more mature?
B) The dividend is very average. At $2.65 a quarter, that gives us a yield of 1.7%. It's good, but nothing stunning. By my calculations Walmart is at 2.4%. Microsoft is at 1.9%. GE is at 2.9%. It's higher than Cisco & Oracle, which started issuing dividends not so long ago (both were around 1 percent).
A) It's simply what mature/big companies do. Perhaps Apple's culture and customers had a tough time accepting this? Perhaps it's part of what Tim Cook wants to do as CEO at Apple? Make Apple a bit more mature?
B) The dividend is very average. At $2.65 a quarter, that gives us a yield of 1.7%. It's good, but nothing stunning. By my calculations Walmart is at 2.4%. Microsoft is at 1.9%. GE is at 2.9%. It's higher than Cisco & Oracle, which started issuing dividends not so long ago (both were around 1 percent).
Monday, January 23, 2012
Intel acquires Qlogic's Infiniband Assets - End of Infiniband?
So today, it was announced that Intel had acquired Qlogic's Infiniband assets for $125M. My immediate reaction was, "uh oh, is the age of Infiniband in HPC over?"
Why would this be the end of Infiniband? Here's my analysis and thinking on the topic.
In 2005 there were five early players in the Infiniband market worth mentioning: Topspin, Voltaire, Mellanox, Pathscale, and Silverstorm.
So no worries yet for Infiniband, there were still 2 major players left. Well lets look at the financials.
So the big question is, why did Intel buy Qlogic's Infiniband assets?
So how is this the end for Infiniband? Well, if my guess above occurs, you'll only have Mellanox as the player in the Infiniband market. While I have respect for Mellanox, I have a hard time believing they are going to care about standardizing their hardware or pushing changes to standards groups if they are the only ones manufacturing it. Eventually, Infiniband would become synonymous with whatever Mellanox produces, and Infiniband itself will be gone.
Update (4/26/12):
Heh, from #5 above:
With that acquisition, that's a lot of networking HPC expertise to be buying up and absorbing. Perhaps this enhances my argument that Intel is gathering forces to create a new HPC interconnect technology?
One colleague suggested that Intel might be trying to have a "portfolio" of different products. It's certainly possible that they are, but it doesn't seem like something they would want to do. Having a portfolio of products is more up the alley of an HP or an IBM. It'll be interesting to see what Intel does, but the full manifestation of this will probably not be seen for years.
Why would this be the end of Infiniband? Here's my analysis and thinking on the topic.
In 2005 there were five early players in the Infiniband market worth mentioning: Topspin, Voltaire, Mellanox, Pathscale, and Silverstorm.
- Topspin was acquired by Cisco in 2005 for $250M. Cisco shut down their Infiniband R&D in 2009.
- Silverstorm and Pathscale were acquired by Qlogic in 2006 for $60M and $109M respectively (total $169M). Pathscale's compilers were sold for undisclosed amounts (or atleast I can't find the number online). Given they are undisclosed numbers, its unlikely the numbers were big. So Qlogic likely couldn't sell their Infiniband assets for even the price they paid for them.
- Mellanox acquired Voltaire in 2010 for $218M.
So no worries yet for Infiniband, there were still 2 major players left. Well lets look at the financials.
- Mellanox has been profitable for awhile. Last year (2010) they profited $13M on $154M in sales. Analysts say that Mellanox had huge sales this year at $258M. Going off old income statements, $50-$60M of that is from Voltaire, so that's some decent growth. Of course, a non-trivial portion of this profit is not from Infiniband, but from Mellanox's Ethernet sales. How much? Unfortunately I can't find breakdowns.
- I couldn't find breakdowns in revenue/profit for Qlogic, but given the sale of their Infiniband divisions was for $125M, it indicates it wasn't much (Qlogic had a market cap of $1.6B starting today).
- As far as I can tell from data sheets, Voltaire never had a single profitable year.
So the big question is, why did Intel buy Qlogic's Infiniband assets?
- Were they interested in the ~$5M profit that Qlogic's Infiniband assets could net them? I doubt it. (I derived the ballpark $5M because this article puts Mellanox as owning about 85% of the Infiniband market.)
- Perhaps Intel thinks they can do some bundling to increase the profitability of Infiniband. Hypothetically, put them on Intel motherboards. It's certainly possible. But how much gain can they really get for a market that appears to not be interested in Infiniband? Turn the $5M into $20-$30M in a few years? It seems hardly worth it for an Intel.
- Intel thinks they can turn Infiniband around as a data center/HPC solution and make it far more popular. If this were 2005, I would be willing to believe it. I think the lack of wider adoption of Infiniband is a bit cemented. Newer/better Ethernet solutions are now catching up too, so it's not the same market as 2005.
- Support Infiniband as a community service. With Mellanox having 85% of the market, there was a decent chance Qlogic's Infiniband could eventually sink. Without a competitor and decent prices, the HPC community could buy less Intel chips. There is a good argument for this, although I think the odds of this are low. Intel could completely ignore the HPC community and they would still buy tons of their chips. Perhaps less overall, but is it enough of a difference for Intel to do a $125M community service for them?
- This is an aqhire move, designed to give Intel the talent necessary to make the HPC networking product they really want to make. While it could be based on Infiniband, it's unlikely to be standard Infiniband or standardized as Infiniband. There are very few companies/groups out there that know how to make HPC networking equipment, and the Infiniband group at Qlogic is one of them. They could have bought Cray, but they'd be buying a lot of software assets they probably weren't interested in
So how is this the end for Infiniband? Well, if my guess above occurs, you'll only have Mellanox as the player in the Infiniband market. While I have respect for Mellanox, I have a hard time believing they are going to care about standardizing their hardware or pushing changes to standards groups if they are the only ones manufacturing it. Eventually, Infiniband would become synonymous with whatever Mellanox produces, and Infiniband itself will be gone.
Update (4/26/12):
Heh, from #5 above:
They could have bought Cray, but they'd be buying a lot of software assets they probably weren't interested inand what do ya know, Intel bought Cray's interconnect assets earlier this week.
With that acquisition, that's a lot of networking HPC expertise to be buying up and absorbing. Perhaps this enhances my argument that Intel is gathering forces to create a new HPC interconnect technology?
One colleague suggested that Intel might be trying to have a "portfolio" of different products. It's certainly possible that they are, but it doesn't seem like something they would want to do. Having a portfolio of products is more up the alley of an HP or an IBM. It'll be interesting to see what Intel does, but the full manifestation of this will probably not be seen for years.
Sunday, January 2, 2011
Random Tech Predictions
Back in 2008 I told my boss and various co-workers that IBM was going to acquire Sun. I mentioned it my boss because I thought we should think of the consequences it could have on us and ponder what we might do in the event something "bad" happened. While I ended up being wrong (Oracle won the bidding war), I was close :P
To stroke my ego in the event I'm right about something, I'm going to go ahead and make some tech predictions based on the things I'm reading online and my own perceptions. In the event I'm wrong, hopefully not enough or my friends read this so I won't be embarrassed :P
Android Surpasses iPhone and Blackberry in Smartphone Market Share
Android has been on a tear. Last I've read, they were nipping at the heals of iPhone and not too far away from Blackberry. I wouldn't be surprised that they overtake iPhone just after this past holiday season. 2011 is the year they put iPhone and Blackberry away. I'm saying this will be true even if the iPhone comes out on Verizon.
Chrome OS Bombs
As much as I would like to see Chrome OS succeed, I don't think Google is entering the OS market in the right way. Their Android strategy was great. They made many of the negative things about the iPhone better. However, they're introducing Chrome OS into the relatively niche netbook market, which is already under attack from the tablet market. I'm skeptical the strategy is going to work out.
Kinect Becomes Huge
Microsoft has not had a hot gadget for years, but it appears that's over. Kinect has been selling like hotcakes this past holiday season. I read somewhere that it was on pace to sell 6 million units in less than 2 months. That's despite the fact that there are only a modest set of games and software that come with it.
With my belief that Chrome OS will bomb and Apple apparently doing iterations on older products (e.g. iPad 2), I'm going to predict that Kinect will become the gadget of 2011. Rumors are (and I'm going to bet they become true) that Windows 7 support is on the way. I'd bet there will be some really cool software that will come out for it, such as movie editing, painting, digital puppetry, etc.
Salesforce Stock Plummets
I'm a big fan of Salesforce, I think it's an incredible company with great products. However, their current valuation is at 17-18 billion and a P/E ratio of 240. Yes, 240! I'm the farthest thing from a financial expert, but it looks like they'll perhaps have a 25-30% increase in revenue, maybe 20-25% increase in operating expenses, and maybe 5-10% increase in net income over the last year?? This is what gives a company a 240 P/E ratio? With Microsoft, Oracle, and other companies gunning for Salesforce, I have a hard time believing they can drive revenue and profit to justify they current valuation. I'm wondering if the hype over "cloud computing" is simply making people giddy over Salesforce's stock.
Ok, those are my four random predictions. We'll see how I do :-)
Update (1/15/11):
I totally forgot about the Nintendo 3DS. That thing is going to mega-huge too. Due to supply-chain issues, probably not as big as Kinect sales wise, but possibly as big buzz-wise.
To stroke my ego in the event I'm right about something, I'm going to go ahead and make some tech predictions based on the things I'm reading online and my own perceptions. In the event I'm wrong, hopefully not enough or my friends read this so I won't be embarrassed :P
Android Surpasses iPhone and Blackberry in Smartphone Market Share
Android has been on a tear. Last I've read, they were nipping at the heals of iPhone and not too far away from Blackberry. I wouldn't be surprised that they overtake iPhone just after this past holiday season. 2011 is the year they put iPhone and Blackberry away. I'm saying this will be true even if the iPhone comes out on Verizon.
Chrome OS Bombs
As much as I would like to see Chrome OS succeed, I don't think Google is entering the OS market in the right way. Their Android strategy was great. They made many of the negative things about the iPhone better. However, they're introducing Chrome OS into the relatively niche netbook market, which is already under attack from the tablet market. I'm skeptical the strategy is going to work out.
Kinect Becomes Huge
Microsoft has not had a hot gadget for years, but it appears that's over. Kinect has been selling like hotcakes this past holiday season. I read somewhere that it was on pace to sell 6 million units in less than 2 months. That's despite the fact that there are only a modest set of games and software that come with it.
With my belief that Chrome OS will bomb and Apple apparently doing iterations on older products (e.g. iPad 2), I'm going to predict that Kinect will become the gadget of 2011. Rumors are (and I'm going to bet they become true) that Windows 7 support is on the way. I'd bet there will be some really cool software that will come out for it, such as movie editing, painting, digital puppetry, etc.
Salesforce Stock Plummets
I'm a big fan of Salesforce, I think it's an incredible company with great products. However, their current valuation is at 17-18 billion and a P/E ratio of 240. Yes, 240! I'm the farthest thing from a financial expert, but it looks like they'll perhaps have a 25-30% increase in revenue, maybe 20-25% increase in operating expenses, and maybe 5-10% increase in net income over the last year?? This is what gives a company a 240 P/E ratio? With Microsoft, Oracle, and other companies gunning for Salesforce, I have a hard time believing they can drive revenue and profit to justify they current valuation. I'm wondering if the hype over "cloud computing" is simply making people giddy over Salesforce's stock.
Ok, those are my four random predictions. We'll see how I do :-)
Update (1/15/11):
I totally forgot about the Nintendo 3DS. That thing is going to mega-huge too. Due to supply-chain issues, probably not as big as Kinect sales wise, but possibly as big buzz-wise.
Wednesday, December 15, 2010
Yahoo Layoffs Before the Holidays
There have been rumors for months of layoffs at Yahoo, and they finally occurred yesterday. Reports are around 4% of staff (~600 people). Everyone has an opinion on what Yahoo should be doing to move forward, or if Carol Bartz is doing a decent job, but I'll leave those opinions for another day.
Thursday, December 2, 2010
Mellanox acquires Voltaire
So I learned a few days ago that Mellanox acquired Voltaire.
http://www.networkcomputing.com/data-networking-management/mellanox-acquires-voltaire-and-creates-an-infiniband-duopoly.php
This wasn't too much of a surprise, somebody was going to pick them up at some point. The question is, will someone now go after acquiring Mellanox? A friend of mine at work noted that Oracle already owns about 10% of Mellanox.
http://www.networkcomputing.com/data-networking-management/mellanox-acquires-voltaire-and-creates-an-infiniband-duopoly.php
This wasn't too much of a surprise, somebody was going to pick them up at some point. The question is, will someone now go after acquiring Mellanox? A friend of mine at work noted that Oracle already owns about 10% of Mellanox.
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