Dennis Byron

Dennis Byron
Contributor since: 2007
Part C plans get cancelled every year and new ones start up so your problems are not necessarily President Obama's fault. The big changes in Part C in 2014 that I have seen so far because of the Patient Protection and Affordable Care Act is reduced benefits, not higher premiums (e.g., raising the annual OOP limit, raising co-pays). You can expect more of that in 2015 plus higher premiums and more of the restricted networks that are getting some publicity in Connecticut. They way PPACA affected you (more than $150 a month) seems quite rare.
As I had figured, UnitedHealth and Humana both announced Monday Feb 24 that the "cuts" (which aren't really cuts as explained above) were not as bad as the two insurance companies had originally projected. UNH and HUM said that was because of something in the fine print of the 150 page document (that I didn't see) about getting more money from relatively healthier baby boomers coming onto Medicare in 2015 in even greater numbers (the people born in 1949 plus the people born 1946 to 1948 who deferred Medicare because they kept working until their SS kicked in full). I think they probably mean that the pool is just actuarially getting less costly (but that will only last a few years).
And as I said Sunday: "The same insurance companies sell both types of policies (and many of them also make money running the Original Medicare program for the government). The insurers make money no matter what happens."
Anyone making investment decisions based on this article, make sure you understand what is actually going on with the public Part C Medicare Advantage heath plan before you take the plunge.
This article above says:
"The Centers for Medicare & Medicaid Services has proposed cutting 2015 base payment rates for the Medicare Advantage program for senior citizens by 3.55%." The negative 3.55% refers only to a change in the National Per Capita Growth Percentage and not to the overall effect -- positive or negative -- on the defined contribution per enrollee that public Part C Medicare Advantage health plans will receive. Many other factors play into that defined contribution.
The article above says:
"The proposal is subject to negotiations, with a final decision due in April." There are no explicit negotiations at this time (who know what happens in back rooms among all the Congresspeople of both parties who oppose these cuts and the bureaucrats and the lobbyists). The announcement from Friday 2/21 kicks off a month long comment period after which a final framework and bidding structure will be announced for 2015 plans. Negotiations -- to the extent you call it a negotiation when the CMS tells the insurers what to do -- happens after the bids come in and before the plans and prices are announced in September.
The article above says:
"The final cut may be bigger, as the proposed rate doesn't take into account adjustments required by the Affordable Care Act..." According to page 5 of the 148-page CMS announcement of 2/21. the negative 3.55% IS the effect of PPACA. But like I said, it don't matter anyways. There are a lot of moving parts in this process and this is only one (the suggested changes to Part D prescription drug plans are much more serious).
The article above says:
"Last year, the government increased 2014 base payments by 3.3% after initially proposing a 2.2% fall, although actual payments are falling 6.7% due to a new Obamacare tax and sequestration." So if all other things were equal (they are not per the points above), the subsidies might be cut by 10% or more per capita in 2014.
If you are going to invest in an insurance company because of likely changes to the public Part C Medicare Advantage health plan program, remember the following:
1. About 30% of retired Medicare beneficiaries choose Part C as a supplement to their Original Medicare "policy." 60% choose a privately purchased private Medigap supplement or get a supplement from a former employer. 20% are on Medicaid, a few percent depend on the VA or similar program, and only a percent of (apparently very rich or very stupid) retired Medicare beneficiaries do nothing. ["Retired" is a key adjective in the previous paragraph. Not all Medicare beneficiaries are retired. The percentages add up to more than 100% because some retirees have more than one type of policy.]
2. The same insurance companies sell both types of policies (and many of them also make money running the Original Medicare program for the government). The insurers make money no matter what happens.
3. As long as public Part C Medicare Advantage health plans include annual out of pocket spending limits and Original Medicare and most private Medigap plans do not (which is the current situation), Part C will probably continue to be a better deal for the retired person who really wants true insurance.
Dear Sir
I have provided only facts. I am not sure why anyone would have an opinion about something so straightforward but you're certainly entitled to believe inaccurate information if you like and form false opinions based on it. Just please stop foisting your odd ideas on seniors.
I repeat the facts I originally stated above:
1. You or someone doctored an illustration from the booklet "Medicare and You" for whatever reason; the doctoring is inaccurate and misleading to seniors (none of whom are likely to come to SeekingAlpha for Medicare information anyways). Compare your illustration with the illustration in the government document for proof of the doctoring.
2. Part C is a Part of Medicare (that's why it's called Part C; do you want me to "site" that in any more detail?)
3. All Parts of Medicare are private in the sense that they are insurance plans administered by private insurance companies but public in the sense that the government is the primary direct payer. This is the way most people's health insurance works in the U.S. before they reach Medicare age except that their employer rather than the government is the primary direct payer. The contractual relationship you describe directly above between private insurers and CMS for Part C works approximately the same way for Parts A, B and D. In my initial reply above I provided a link to the CMS document that explains exactly how that private-public relationship works for each Part of Medicare.
4. The private-public contractual relationship between private insurers and the government is irrelevant to the Medicare beneficiary (with some rare recourse exceptions noted in my initial reply). What the Medicare beneficiary needs to figure out in making Medicare decisions-- rather than following your directions -- is which of three primary options he or she will employ to supplement Medicare, which is terrible healthcare insurance. The three primary options (retiree ESI vs. Medigap vs. Part C) are explained in my initial post. See MedPAC for explanation of why Medicare is terrible insurance.
5. Over 90% of Medicare beneficiaries understand this failing of Medicare and choose one of the three options. Less than 10% of Medicare beneficiaries stick with just Medicare (but you almost always need to subscribe to base Medicare to get the supplements). See MedPAC if you question the 90%/10% statistics
In addition to the errors in the original post, you have introduced additional errors in your latest reply to me (you really shouldn't depend on Wikipedia)
1. Medicare beneficiaries have always had the option to -- AND NEED TO -- receive healthcare insurance benefits through private insurers; this was not new in 1997 but has been around since the beginning of Medicare
2. The ability for Medicare beneficiaries to get managed care through private insurers far predates 1997 (since early 1980s at the same time managed care started to become common in the non-Medicare population); what the BBA in 1997 did was change some payment formulas and other rules (such as introducing county-level aspects of the plans)
3. You might think that CMS's contractual obligation to pay the Plan C sponsor "a fixed amount for your care every month" is "[like a premium]" but it's not; it's a capitation mechanism like any HMO uses and is not directly related to "your care" (as I said above, in Medicare the government is not the insurer; it is the payer, in just the same way IBM is the payer for its employees and certain unions are the payers for their members)
You may believe the need for seniors to choose adequate supplemental insurance is trivial minutiae but luckily they don't. (I assume you know what MedPAC is.)
I don't have any problem going to the DMV to ask questions about the rules relative to getting a driver's license. Again, don't waste your money. This is about healthcare insurance, something we've all been buying for over 40 years by the time we get to Medicare. And IF the CMS volunteer gives you bad information, that's ususally grounds for being able to change your insurance without waiting for the next open enrollment. .
Nope. U.S. Medicare does not work outside the U.S. (with some very limited exceptions such as if you are driving through Canada from Alaska to Montana)
As I've said twice above, it is highly unlikely that anyone would come to this web site for Medicare advice but...
Don't go to a broker. Don't waste your money on an expert of any kind that charges money. The Center for Medicare/Medicaid Services certifies thousands of volunteers available in every senior center and similar location throughout the United States to give Medicare beneficiaries advice at no charge. The volunteers receive hours of monthly and annual training from the CMS and have to score 80% or higher on an annual certification exam.
@ joe eqcome
Sorry but let me help you with your facts. I am certified by CMS on this subject. Read my post carefully vis a vis private vs. public and supplemental options.
In addition, although the chart is sort of "based on" the illustration on page 15 of "Medicare and You," you or someone purposely doctored the illustration in the official booklet and in the process introduced signficant errors. You are confusing seniors with inaccurate information (not that anyone would turn to this web site for information about Medicare).
I take part of my earlier comment back. I guess you do have a political agenda.
This article on Medicare is misleading. (I also think it's way off point for an investment site that I used to visit often before I went on Medicare... but that's neither here nor there.)
In particular the illustration on the "Medicare Maze" above has multiple errors. I agree Medicare is a maze but Medicare Advantage -- at the upper right -- is NOT "private insurance approved by Medicare," as the illustration says. It is actually a full-blown "Part" of Medicare just like A and B. The description "private insurance approved by Medicare" would be better applied to Medigap -- at the lower left although the whole private/public thing is meaningless.
In fact, all "Parts" of Medicare — A, B, C and D — are public in the sense that they are run by the United States government’s Centers of Medicare and Medicaid Services (C-M-S). And they are private in the sense that the CMS uses private insurance companies to administer them. This should be nothing new to the typical SeekingAlpha reader of Medicare eligibility age. Unless you worked for a very small company or a risk-averse large company or insured yourself and your family directly before you joined Medicare, this is probably the way your health insurance has always been run and administered. Most large employers self insure and hire an insurance company to handle the administration. In the case of all Parts of Medicare, that’s what the U.S. government does.
But for partisan political reasons in the U.S (which I am not accusing the blog post's author of),, Original Medicare (Parts A and B) are often called public and Medicare Advantage (Part C) and standalone prescription drug plans (Part D) are often called private. It is especially important for seniors and those about to sign up for Medicare not to be confused by this political posturing because there really is no choice between public and private involved. A and B are required for C and most of the time for D.
In some regions of the country, different private insurers handle Parts A and B enrollment, claims, fraud and abuse investigations, payment processing, and similar insurance company administrative functions. In other geographic regions, one private insurance company handes all the related administrative functions. If you want to really be confused, here is the “simple” 7-page version of an explanation put out by the CMS “as a service to the public and not intended to grant rights or impose obligations” (see
Rather than the three steps outline above, Medicare beneficiaries do have a choice among three supplemental Medicare options. Nationwide, over 90% of us choose a supplement (mostly one of the following three) because Original Medicare is not very good insurance:
-- Employer-sponsored health insurance (E-S-I) for retirees – fewer and fewer employers offer ESI to retirees but if your former employer does, it’s typically the best of the three supplemental options. Still the employer will usually require you to sign up for Medicare Parts A and B and — if it hasn’t already done so – the employer might drop its retiree drug coverage so that you will want to sign up for Part D. And the retiree ESI plan might be more expensive than buying supplemental Medicare insurance directly — see next two options — after comparing benefits. Retiree ESI is typically regulated by the state insurance commission where your employer is headquartered.
-- MediGap – MediGap is highly CMS-regulated but not officially a Part of Medicare. There are as few as two and as many as 10 types of MediGap insurance available depending on the state you live in. You have to sign up for Medicare Parts A and B and because MediGap policies do not include drug coverage, you shoud sign up for a D plan.
-- Part C — Medicare Part C, also called Medicare Advantage, is effectively a bundle of a MediGap and a D plan, usually but not always implemented as an HMO. As I said, Part C is just as much a Part of Medicare as Original Medicare Parts A and B, and both A and B are required before you can sign up for a C plan. The government providing Part C as a choice to Medicare beneficiaries is similar to your former employer providing an HMO as an alternative to a traditional health insurance plan before you became a Medicare beneficiary. Twenty five percent of Medicare beneficiaries currently choose C plans. The downside is that most have the perceived disadvantages of any HMO (limited geographic coverage and networked providers).
(NOTE: There are also some legal primary/secondary recourse aspects of the terms private and public but it is highly unikely that those aspects wil matter to you — as the Medicare beneficiary. If you are concerned about this sort of thing because you have a complex Medicare situation, read the fine print and contact the relevant insurer and/or Medicare. Or contact your local senior center and ask for Medicare help.)
The problem with these oft "repeated" numbers:
-- The OECD countries don’t measure the cost of long term healthcare consistently; the OECD posts this warning prominently on its related website. We know that about 33% of the US number is for long term healthcare but we don't know if all the other numbers are apples to apples (and given the OECD warning they most likely are not)
-- The OECD uses an exchange rate-purchase/parity comparative mechanism that translates costs into US$. I am not sure how this affects the statistics but I would think unfavorably vs. the heydays of US$ hegemony
-- Most of these counties have homogenous populations. Vs. the US, I doubt if any of the other countries has such a percentage of its population made up of citizens of the other countries (not just the ones shown but the countries in the entire set that makes up the often-quoted OECD average)
Or maybe the US thinks it's healthcare is better and doesn't mind paying for it.
I haven't done the math lately and I am on the road but look at the 10-K and make sure you include both classes of shares. Even if it's "only" 80% these days, my opinion is the same. But I think EMC still owns close to 100% of the voting power of VMW
-- Dennis Byron
Sorry you are wrong on a lot of fronts but particularly on the statement that the "author has not researched" the subject. In fact it is my research that is quoted on the Linux Foundation web site comparing Vista and Fedora 9 as noted in my November 2008 blog post on my IT Investment Research website (see www.linux-foundation.o.../ referencing my post at Fedora 9 from two years ago became RHEL 6 last week I assume (although I admit I didn't call Red Hat to confirm that).
The point is that real-people investment research (as opposed to open source propaganda) clearly shows that from the demand side, Red Hat's sharing of development costs with IBM, HP, etc. via the Linux Foundation and similar organizations these leading enterprise software suppliers fund, administer and populate with programmers is not a business model, just a good tactic for all involved (now including even Microsoft vis a vis Apache as our 2006 research indicated would happen). Red Hat depends on the tactic more than the others but that is not a business model.
Hopefully you are not an investor Aviso so no harm, no foul. Real investors, beware of this propaganda and make sure you are getting the facts.
Thanks for the comment, zman58
Open source zealots simply say something like "so and so is a moron." You clearly do not fall into that category. Your reasoned comment deserves a response.
But you are missing a key part of my blog post above. This is an investment research web site and the investment research assignment I described involving finding investment opportunities among non-public software companies in 2007. Your response was to name a dozen long-public, non-software companies that use open source software terms and conditions (of which there are dozens in addition to the Ts&Cs that the FOSS people call open source) along with all kinds of other software license terms and conditions in conducting their non-software businesses. You mention Amazon, eBay, google, Epson, etc. for example.
In addition to not meeting the non-public, software-company criteria, there is a bigger research problem with your suggested approach. For example, if I should consider Google part of the "open source market" (I don't believe there is an "open source market" as I say in the post but I do not write the headlines), should I also consider Google part of the database software market because it uses Oracle RDBMS to run its business? (Of course, when someone pays me to measure the open source market even though I don't believe there is one, I do count Google open source licensed products.) I haven't thought your water analogy completely through but I am not sure if counting the tolls paid at locks would be useful to investors thinking of investing in Poland Springs.
Closer to my software-related investment research topics, where would Linux and Apache be without IBM, HP, Microsoft, etc.? These are the companies that have funded the development of these and most other prevalent open source software. That was the second important point of my blog post.
(As an aside, you must have one hell of a wired home if you save thousands because you buy only Linux-based consumer electronics.)
Thanks again,
Thanks. There are a lot of good comments here, so much so that I might do a future post. But I just want to repeat my warning to casual readers that very little of this is actionable IT-investment-related research, just a philosophical debate (that is pretty much over) among certain software developers. That is the reason some of the commenters are arguing with each other, and not relating the issue of open source terms and conditions to investing.
In particular, there is an argument that Red Hat is somehow better than IBM for some philosophical reasons only understood by the debaters somewhat tied to support for open source development communities and culture--as opposed to terms and conditions. There is no doubt that Red Hat is demonstrably 100% so tied (hence the term "gotcha" in my original post) but in absolute numerical support for open source (man years or dollars), no one comes close to IBM.
Thanks for the thoughtful comment. Yes, I do "narrow it down to the actual transaction of money and service." This is an investment-research web site, after all.
However, I make that determination based on extensive demand-side research that says that no one buys software because of the open source philosophy. That's the reason that Red Hat is the last man standing after the acquisition of MySQL, Zimbra, etc. etc. and even Sun (making a stretch I don't even agree with myself but a lot of people wanted to call Sun an "open source" company before Oracle acquired it).
From an investment perspective, open source is simply a set of about 100 license terms and conditions (that number and the wide restricitive-permissive spread of those Ts&Cs is part of the problem for investors). Almost all the software-market leaders make software available under one or more of these diverse Ts&Cs and all of them adhere to such Ts&Cs in their own development efforts.
Of course Red Hat allows "a clone, like CentOS, to coexist." That's part of the Ts&Cs it chose, effectively no different than what IBM does with Gluecode, Progress does with Fuse, etc. Are their business models different?
When you say "Red Hat... honour(s) the mindset of open-source. I don't know of any actions by Red Hat that have worried the open-source community...", it implies that you are not interested in the investment aspects of these different companies' strategies, but only philosophical issues.
That's OK. Open source is like the Elks or the Moose or the Shriners. A great fraternity (and it does still appear to be a fraternity) but that has little to do with why someone should invest in those companies that use its Ts&Cs.
That's why "I reject 'open source' as an enterprise-software business model or sales model category." From an investment point of view, it's just legalities.
(Over 1000 pieces of my research on this subject -- open source from an investment perspective -- are available on line if you want to dig deeper.)
I am not sure what obtuse open-source-zealot point that Carousel and User 65886 are trying to make but for those who are interested in Red Hat and this subject from an IT investment point of view, here is a description of the Red Hat business/revenue/sales model from page 42 of its 10-K:
"We sell our enterprise technologies through subscriptions, and we recognize revenue over the period of the subscription agreements with our customers. In addition, we generally provide certain managed services for each of our enterprise technologies... as a component of our subscriptions... We derive our revenue and generate cash from customers primarily from two sources: (i) subscription revenue and (ii) training and services revenue."
In other words, as I said, its model is just like every other enterprise-software company's. When I said "last time I checked," what I meant is that I did not know if Red Hat had added a SaaS option. It appears not to have according to its SEC filing.
Lightway defends my point of view better than I could defend it myself, particulary the business process aspect that keeps users from changing software (or SaaS) often.
But to correct one impression you seemed to get from my post, I did not say technologies are the same as 40 years ago. You are reading something into my comment to Kevin that isn't there. I don't mean to be picky about that misreading but a genuflection to technology is the biggest IT investment risk: the end-user IT market decision is rarely made on a technology basis so IT investment decisions should not be either. If you see a technology angle even when it isn't there, you might be prone to making that sort of investment decision.
Thanks for the discussion
Kevin, thanks for your comment even though I am about to disagree with you totally.
First of all, I am not replaying the "old-line analyst" opinion. As the picture shows, I am the old-line analyst. I have been saying this for 20 years. (However, I make a subtle distinction: I am an IT market researcher, not an analyst in the sense I think you mean: I have not been the type of analyst that gives users advice since I left Datapro.)
When I started in IT marketing 40 years ago, SaaS was called timesharing, then service bureaus, went through a few more iterations and by about 1999 was called application service provision. I am not proud to say that I participated in coming up with that term. We had the numbers right at IDC back then but basically too much hype got generated over what we clearly said were low numbers as a percent of total market spend (as I mentioned in my article above).
There is nothing new about SaaS as a business model or otherwise although some market researchers looking for differences (which is good; that's their job) parse things -- like multitenancy and whether the software is exclusively available as a service or also available under a perpetual license -- to see if there are differences. But in the end, the difference is so minimal as to have little effect on market dynamics. The user is going to pay x over seven years for y functionality. It doesn't tend to matter a lot whether the user pays 5% of x on day one -- the licence price -- and then the remaining 95% monthly over the next 84 months -- the subscription maintenance to keep tax tables, etc. up to date, the hardware costs, and most significantly the personnel costs. Or whether the user just spreads the whole 100% out over the 84 months.
I don't get the "SaaS products are like Facebook" thing at all. I know you are parroting the Marc Benioff party line but as I went into in detail in February 2010 (see, that's just good PR. I complimented CRM for it.
I am not sure which software suppliers you mean by "best in class" firms but as I explained last year (see the only difference between IBM, Oracle, etc. and the so-called SaaS pureplays is that the latter are not really pureplays. All began trying to sell their software via a perpetual license and failed. And conversely, Oracle may already be second only to CRM in SaaS revenue (and if not, it will be within a year or so to be followed, depending on corporate strategies by SAP, Microsoft, Intuit and possibly -- although it's a special case because of its mainframe business -- IBM).
All the indisputable market research issues aside, as I said in my article above, "I believed then and still believe that SaaS will again become a dominant enterprise software delivery method, just as it was when I entered the business 40 years ago." It's just that that trend has nothing to do with a different business model, Facebook, different sales or marketing techniques, technologies, or pureplay vs. stack.
Thanks again for the comment
Thanks for all the comments.
Here is a clarification and a further comment:
Clarification:. I would have been more accurate if I had said near the beginning "Apple does not embrace open source terms and conditions any differently than Microsoft, IBM, Oracle, etc." The point here, as I say at the end of the post, is that open source iissues are meaningless as IT investment factors: all the big boys have co-opted the movement to their own devices and for their own reasons. This is a blog post and not an article but I still could have thought that sentence through one more time before hitting the button.
Comment: Despite all the impassioned discussion pro and against Apple's open source terms and conditions and Microsoft's share value (I flatlined Microsoft's share value in 2008), the only reason I wrote the blog post -- as it says in the headline and in most of the post -- is that the NYT article is misleading. It never identifies Tim O'Reilly fairly so that investors understand the incredible biases in the article.
Thanks again for the discussion
Thanks for the comment.
I was actually posting on cloud computing vs the various incarnations of 'AaaS' (anything as a service) on which you seem to be commenting. As I said, I do agree, based on my talks with the AWS guys, that Amazon could be a player in cloud computing if it so chooses.
I just don't think it will so choose. Retailers believe fast nickels are better than slow dimes; IT guys on the other hand have to invest very slow to pay back dollars.
-- Dennis
UPDATE: I found the press release to which Dave Rosenberg was referring the morning of April 13. It is a PR Newswire release from IBM dated April 12 and refers to a Winterhaven report on SOA. IBM itself is the source of the overall middleware share figure but IBM says it expects the leading numbers houses to confim this later. I agree. Ho hum.
-- Dennis
Mr. Picnic,
Thanks but I am not sure how you "divine" a bias against open source software out of my blog post above. My comments relate totally to the terms and conditions of the open source license and their effects on the enterprise software market. I do very clearly state the "pro" of the open source license in point 2: you get the source code. You are correct that I do not discuss any of the "cons."
-- Dennis
You are referring to Oracle's statement, which it issud in response to the EU Statement of Objections adn filed with the SEC. I was trying to get the actual document that the EU gave to Sun but the EU says such documents are not public (but someone--probably SAP--will leak it).
On Nov 12 09:11 AM reyito wrote:
> Dennis,
> The EU's statement can be found in Oracle's 8-k filing.
> Keep up the good work.
Wow! I didn't realize from the earlier insults that you were the same person that wrote the original article. I have never seen anyone write under one name and comment under another.
But now I understand. Unable to prove even one of your points about Baby Boomers, you insult others who call you out on your lack of logic.
Oh, and you should carpool if you're commuting 120 miles a day--save the planet!
On Nov 08 02:28 PM JGQ wrote:
> Hey Dennis
> Pretty touchy for someone who used the words: rant, blabbers, and
> screed in his attempt to get someone to read one of his articles.
> How does it feel to leech off of me to get someone to read your blather?
> I hope you don't have to rely on your ability to write in order to
> make a living. Let us know what kind of car you drive? How many miles?
> Leased, bought, or did you remortgage your house for a Mercedes?
> Why weren't you able to save enough to put your kids through college?
> I have been saving since my kids were born. I won't be borrowing
> to get them through college.
> Wah Wah Wah. That's abuse. Classic boomer.
Most important, to Axelrod-Glad you got the humor.
To the guy (or girl) who doubts the Social Security numbers, go back and read how SS works (and I am not counting my Medicare contributions which I do fully expect to recoup). As I think Buffet or someone of that net worth says, most of you pay the same as I do in SS taxes. You did not have to be "highly compensated" over the last 45 years to have that kind of money "deposited in your account." You just have to be middle class depending on how that's defined.
To elcopone, if that was Quinn's point, he never said it anywhere in multi-thousands of words. He said:
1. ) "Our claim to fame is living way beyond our means for the last three decades, to the point where we have virtually bankrupted our capitalist system."
2.) "Of course, not all Baby Boomers are shallow, greedy, and corrupt. Mostly Boomers with power and wealth fall into this category."
He provides no proof for either statement, which is the reason I wrote the rebuttal over on this part of the site (I actually write about technology investments and related issues).
But to answer your question despite your insult, personally I believe volunteering in non-partisan local government and non-government charitable organizations is a means. That was my choice for 30 years but I don't contend that it is the only means to contribute back to society. Military service, teaching K-12, and social work are careers in this area. Coaching kids sports, elderly services, and working with the disabled are great volunteering opportunities.
Those who attack the Baby Boomers might want to find out how are age bracket does in these areas.
To those of you who have been genuinely disturbed by and thoughtlfully replied to the original article's premise that the Baby Boomer generation is responsible for the financial crisis, note that the orginal author is missing in action. My contention is that there is no data in his multi-thousand-word article that connects demographics with the broad economics discussed here or that relates to the orginal author's specific claim (that greedy baby boomers, not all baby boomers mind you, did such and such).
I pointed out how two of his statistics are demonstrably wrong (or at least misleading)--(
1) where the "greatest generation" got its "wealth" and
(2) the candard about savings rates.
I'm still waiting for any other proofpoints linking generations to all the ills of society; I doubt if they exist at all but they definitely were not in the original article.
To the ad-hominem attackers, I would like to see SA management delete all such attacks as being below the purpose of this web site but the Internet being what it is, SA would probably go broke trying to do it.
But to the lowlife JCQ, as the "More by Dennis Byron" below indicates I write for a living on the Internet so I'm used to profanity and people who can't think through what they are writing calling me "idiot" or making some insane connection to Todd Palin. But attacking my children is a new low in incoherent Internet idiocy. Your comment is totally ad-hominem and should be reported as abuse.
Thanks for the comment Kirk but sorry I don't understand your first question. If this helps explain, the overall point of the above post is to confirm using Microsoft data that the LF theoretical data talked about in the earlier post (vis a vis the R&D expense behind a major software project) is reasonable.
As for the difference with Intel, the difference is that the Linux ecosystem is "open sourced." Google, HP, IBM, Sun, etc. could use all of the LF and related software at no cost but in fact we know that the big companies are realizing some expense because they fund LF, Apache and also devote their own resources to open source. Sun funds most of, Google funds most of Firefox, etc.
The goal is to find out if what they spend as a group and individually is substantially less than what they would be spending if they were all still developing their own ecosystem. (And secondarily, are such savings dropping to the bottom line?)
On Nov 06 09:49 AM Kirk Lindstrom wrote:
> What is the difference between that analysis
> "It might have spent the whole $28 billion on XBox but we don't have
> the data to know that."
> and throwing paint on the wall and calling it art?
> It is an interesting analysis but isn't the question similar to asking
> "how much does Intel developing microprocessors save HP, Apple and
> IBM?"
Good overview of the issues. I have a couple of nits but I'm not sure if they affect your conclusion:
1. Google's legacy/core business is an advertiser/publisher application delivered as a service, not "search/directory." The facts that the service uses sophisticated patented search technology and is monetized by selling ads are secondary (although the former has helped it succeed in delivering a "packaged" advertiser/publisher application where others failed).
2. Although Google builds "key technology in house," it supposedly (I have never personally researched its claim) does it with commodity and/or open source components, basically providing the "off the shelf" advantage you're concerned about.
I don't think this changes Google's chances competing head-on with Microsoft's SaaS strategy (which it will insist on calling Software Plus Service until Ballmer retires) however. Microsoft is most likely adopting the same commodity and/or open source technologies in its data farms (and even if it is using its own proprietary stuff, it doesn't pay list price). And Microsoft should be able to maintain application functionality superiority for 10 years simply based on momentum (barring some execution mistake which I think it unlikely Ozzie would make).
Neither company should try to deliver the network infrastructure itself. Going back to the utility metaphor, they shouldn't try to be GE circa 1940, delivering both dynamos and light bulbs (but not sure it does either anymore).
The above commenters may not completely understand how the census works. The group conducting the census welcomes information from Mac, BSD, Solaris, and other platforms.
As for Java, I believe it is a prerequisite of even beginning the census so by definition it is on every "machine" scannned.
More information see .
Or just rant away!!
-- Dennis
Dear Wild-eyed Zealot:
I would prefer to email you directly about this rather than bore other SA readers but I need to assure you that my definition is not "odd" or "bizarre," I am not confusing free and open source, and I fully understand all the implications of what I am writing about. You are missing something but I can't figure out what it is. Again, I assume it is your admitted zealotry.
In my research, I use the Open Source Initiative definition of open source. Please note that the word distribution and/or redistribuion appears in seven of its 10 characteristics, including the first (see In two of the three characteristics where the words are not mentioned (the discrimination characteristics, numbers 5 and 6), the subject is clearly about distribution. The concept of distribution appears ahead of the obvious characteristic of open source being source code related, which is only mentioned in two of the 10 characteristics.
That is why we say "The term Open source software refers to some specific terms and conditions in the software’s license primarily related to redistribution." Again I point out the word primarily. I did not say exclusively.
I still don't get your point about "free" but try me again and I urge you to email me direct.
Dear Wild-eyed FOSS Zealot.
At least you are honest about your biases. But I believe your zealotry makes you read things that are not in my article and ignore things that are.
If you do not understand why the sentence “Open source software refers to some specific terms and conditions in the software’s license primarily related to redistribution" is accurate then it is you who bases your opinion on ignorance. Note that I say "primarily related to redistribution." Most of the investment-research readers of this web site are sophisticated enough to know the obvious link between the word "source" and the phrase "source code" and we don't bog down each other by repeating things.
The rest of your comment is unclear since the original article clearly says there is confusion in the Stanford/Harvard abstract between the words free and open source. So are you re-iterating that or disagreeing with it?
Dennis Byron
Thanks for the comment. As Sacha describes above, the idea is to try to figure out what the acquired company did or will do the year after it was acquired. As the blog post notes, lining up the years will never be perfect.
We will never know on JBoss but Red Hat SEC filings indicate its revenue actually declined after it was acquired. As for Qumrannet, the 5X is simply based on the Red Hat press release of September 4, 2008 announcing the deal.
Bigger point: the trend line has gone from unbelievably high to a more normal multiple traditionally assoicated with any young hot software company.
-- Dennis
User 255819 -
I say there is no such thing as an open source company because open source is a culture and a set of license terms and conditions, neither of which can be used to define a "company," especially one you would want to invest in (which is the point of SA after all).
Every so-called open source company I have looked at (as opposed to a group such as the Apache Software Foundation or the Mozilla Foundation) looks just like every other software business I have ever looked at; it just recognizes its revenue slightly differently (as explained by Sacha in the other comment above). I say slightly differently because even most of the so-called non-open-source software companies (e.g., SAP, Oracle, etc.) recognize most of their "software revenue" as subscriptions in the same way Red Hat does.
Sacha -
I understand your logic but I'm still a Jerry McGuire guy. When I said "we are not able to compare revenue-per-year totally fairly in all these acquisitions because the acquired companies were all private," I could have also added the disclaimer--that I use in my reports--that a total subscription-based revenue model understates market share. But I didn't think it mattered for this analysis because all the companies acquired kept their books this way, no?
So--if I used your method--the multiples are still going down dramatically, just from different highs.
(As for source, I'll send you an email.)