reinharden's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/11387/comments http://seekingalpha.com/article/172475-google-setting-itself-up-for-failure?source=feed#comment-755334 755334
Unlike some of their other deals, Google did this as an all stock deal. So they didn't really pay anything for the company, their shareholders did. And considering AdMob's alleged $100 million revenue run rate and GOOG's P/S ratio of 7.9, it looks like GOOG paid exactly an amount they considered to not be dilutive to their shareholders.


For the record, for AdMob's most recently reported period, the iPhone accounted for 48% of smartphone ads, but Android accounted for 17%. This was before the launch of the Droid. So Android is slowly building some market presence.

I agree that we've yet to see Google effectively monetize most of their non-core initiatives; however, Google believes that with things like Android, Chrome, and ChromeOS that they're creating incrementally larger markets to serve. If they define things in those terms, it'll always be difficult to establish a firm metric for success versus failure.

reinharden]]> Wed, 11 Nov 2009 10:37:04 -0500
Unlike some of their other deals, Google did this as an all stock deal. So they didn't really pay anything for the company, their shareholders did. And considering AdMob's alleged $100 million revenue run rate and GOOG's P/S ratio of 7.9, it looks like GOOG paid exactly an amount they considered to not be dilutive to their shareholders.


For the record, for AdMob's most recently reported period, the iPhone accounted for 48% of smartphone ads, but Android accounted for 17%. This was before the launch of the Droid. So Android is slowly building some market presence.

I agree that we've yet to see Google effectively monetize most of their non-core initiatives; however, Google believes that with things like Android, Chrome, and ChromeOS that they're creating incrementally larger markets to serve. If they define things in those terms, it'll always be difficult to establish a firm metric for success versus failure.

reinharden]]> http://seekingalpha.com/article/157553-apple-dropped-the-ball-on-an-nfl-deal?source=feed#comment-640161 640161
Let's be generous and say that AAPL has sold 2.5 million Apple TVs and that each and every one of those users would run out and sign up for the new NFL plan. At a cool billion, that'd be a customer acquisition cost of $400 per year.

At a billion dollars a year expense, to get that cost down to $40 per year, AAPL would need to increase the Apple TV sales to 25 million units a year!

Admittedly, AAPL would recoup some of that outlay by selling the games or subscriptions to the seasons. But I think they need a much larger installed base to sell into before it'd truly make economic sense.


And first I'd argue that Apple needs to get full NFL games on iTunes. And get the NFL "Follow your team" game season ticket back. After that they can worry about things like streaming live games.]]> Fri, 21 Aug 2009 14:40:23 -0400
Let's be generous and say that AAPL has sold 2.5 million Apple TVs and that each and every one of those users would run out and sign up for the new NFL plan. At a cool billion, that'd be a customer acquisition cost of $400 per year.

At a billion dollars a year expense, to get that cost down to $40 per year, AAPL would need to increase the Apple TV sales to 25 million units a year!

Admittedly, AAPL would recoup some of that outlay by selling the games or subscriptions to the seasons. But I think they need a much larger installed base to sell into before it'd truly make economic sense.


And first I'd argue that Apple needs to get full NFL games on iTunes. And get the NFL "Follow your team" game season ticket back. After that they can worry about things like streaming live games.]]> http://seekingalpha.com/article/154033-google-is-overpriced-why-acquire-on2-in-an-all-stock-deal?source=feed#comment-616926 616926
reinharden]]> Wed, 05 Aug 2009 16:30:40 -0400
reinharden]]> http://seekingalpha.com/article/149719-internet-still-offers-abnormal-positive-returns?source=feed#comment-594310 594310
AOL looked to partner with media companies because it knew it wasn't a media company and thought it needed to become one to grow/sustain the business.

Unfortunately, AOL and TW never really combined forces after the "merger". And AOL became increasingly less relevant as it was unable to hold on to its dial-up customer-base as cable and DSL and FioS all came along to take their customers away.

Now AOL is really just a bombed out shell of a company that doesn't know what it is...


What really is an Internet company?

Facebook, MySpace, Twitter, et al, at the end of the day, are simply websites with some users. It's not clear that they've any particular intellectual property providing a moat around their businesses.

CSCO and GOOG are definitely Internet companies. Without the Internet, they don't exist.

Yahoo! isn't sure what it is (it was almost a media company). MSFT wants to be an Internet company, but they're not sure what that means. AAPL is maybe on the verge of becoming something as yet unnamed (but who knows how that'll turn out).

reinharden]]> Sun, 19 Jul 2009 18:50:11 -0400
AOL looked to partner with media companies because it knew it wasn't a media company and thought it needed to become one to grow/sustain the business.

Unfortunately, AOL and TW never really combined forces after the "merger". And AOL became increasingly less relevant as it was unable to hold on to its dial-up customer-base as cable and DSL and FioS all came along to take their customers away.

Now AOL is really just a bombed out shell of a company that doesn't know what it is...


What really is an Internet company?

Facebook, MySpace, Twitter, et al, at the end of the day, are simply websites with some users. It's not clear that they've any particular intellectual property providing a moat around their businesses.

CSCO and GOOG are definitely Internet companies. Without the Internet, they don't exist.

Yahoo! isn't sure what it is (it was almost a media company). MSFT wants to be an Internet company, but they're not sure what that means. AAPL is maybe on the verge of becoming something as yet unnamed (but who knows how that'll turn out).

reinharden]]> http://seekingalpha.com/article/148239-stocks-on-my-watchlist-apple-google-cardinal-health?source=feed#comment-584353 584353
If I didn't already hold AAPL, I'd certainly be acquiring it on weakness.

reinharden]]> Sun, 12 Jul 2009 11:03:51 -0400
If I didn't already hold AAPL, I'd certainly be acquiring it on weakness.

reinharden]]> http://seekingalpha.com/article/140306-why-bing-why-not-sift?source=feed#comment-524364 524364
reinharden

On May 29 03:42 PM Larrysyr wrote:
> At least "google" meant the number represented by 1 followed by a
> hundred zeroes (inconceivably large before the recent bailouts).
> Naming the search engine "Google" implied you could find any piece
> of information you want in the huge chaos of the internet.]]> Sat, 30 May 2009 14:38:02 -0400
reinharden

On May 29 03:42 PM Larrysyr wrote:
> At least "google" meant the number represented by 1 followed by a
> hundred zeroes (inconceivably large before the recent bailouts).
> Naming the search engine "Google" implied you could find any piece
> of information you want in the huge chaos of the internet.]]> http://seekingalpha.com/article/113510-itunes-breaks-6-billion-drm-is-dead?source=feed#comment-347904 347904
For what it's worth, iTunes says I've purchased 730 items including 584 audio files; however, I've been stupidly fanatic about getting the free songs each week. After 4 years, that's 400+ right there.


Seeing as how I came into iTunes with a few hundred CDs (and eBay and used stores have usually been cheaper than iTunes), I've personally been more interested in ripping music from my CDs than buying new music directly from iTunes.

And since, for the last nearly 2 years, we all knew that iTunes was going to go DRM-free any day now, I've avoided buying any music there.


So, the combination of $.69 back catalogue songs, finally DRM-free music, and over the air purchases for iPhones means that there *might* be some pent up demand...I guess we're find out this quarter.

reinharden]]> Tue, 06 Jan 2009 17:32:32 -0500
For what it's worth, iTunes says I've purchased 730 items including 584 audio files; however, I've been stupidly fanatic about getting the free songs each week. After 4 years, that's 400+ right there.


Seeing as how I came into iTunes with a few hundred CDs (and eBay and used stores have usually been cheaper than iTunes), I've personally been more interested in ripping music from my CDs than buying new music directly from iTunes.

And since, for the last nearly 2 years, we all knew that iTunes was going to go DRM-free any day now, I've avoided buying any music there.


So, the combination of $.69 back catalogue songs, finally DRM-free music, and over the air purchases for iPhones means that there *might* be some pent up demand...I guess we're find out this quarter.

reinharden]]> http://seekingalpha.com/article/113242-steve-jobs-explains-his-weight-loss-as-hormone-imbalance?source=feed#comment-346951 346951 > As a physician, "hormonal imbalance" means nothing to me. This is
> incredibly vague. If it wasn't a serious problem, then he would have
> revealed the names of the diagnosis and the treatment. It sounds
> like he is being evasive.

Which part of "private" don't you understand?

The only two people who should know the name of the diagnosis are Steve Jobs and his physician.

reinharden]]> Mon, 05 Jan 2009 20:51:34 -0500 > As a physician, "hormonal imbalance" means nothing to me. This is
> incredibly vague. If it wasn't a serious problem, then he would have
> revealed the names of the diagnosis and the treatment. It sounds
> like he is being evasive.

Which part of "private" don't you understand?

The only two people who should know the name of the diagnosis are Steve Jobs and his physician.

reinharden]]> http://seekingalpha.com/article/111293-it-s-no-big-deal-that-apple-is-pulling-out-of-macworld?source=feed#comment-333365 333365
Now AAPL can unleash updates to the iPod and their consumer Macintosh products in September/October and people will buy them confident that they're getting the latest and the greatest. Of course, that may well make calendar Q1 even weaker for Apple than it has been traditionally...put AAPL would probably rather have the money in their greedy little hands a quarter earlier. ;-)

reinharden]]> Thu, 18 Dec 2008 15:33:44 -0500
Now AAPL can unleash updates to the iPod and their consumer Macintosh products in September/October and people will buy them confident that they're getting the latest and the greatest. Of course, that may well make calendar Q1 even weaker for Apple than it has been traditionally...put AAPL would probably rather have the money in their greedy little hands a quarter earlier. ;-)

reinharden]]> http://seekingalpha.com/article/109075-infineon-s-woeful-outlook-is-a-result-of-apple-s-slowed-iphone-production?source=feed#comment-320242 320242
So one would expect Apple to reduce orders of components in calendar Q4 because most of those components would be going into products to be sold in calendar Q1 -- traditionally Apple's weakest quarter.


I don't track IFX, so I can't speak as to its previous behavior. But it'd be worth comparing and contrasting the two company's previous quarterly reports so as to get a better feel for the correlation between IFX and AAPL as a predictive tool

reinharden]]> Wed, 03 Dec 2008 17:16:13 -0500
So one would expect Apple to reduce orders of components in calendar Q4 because most of those components would be going into products to be sold in calendar Q1 -- traditionally Apple's weakest quarter.


I don't track IFX, so I can't speak as to its previous behavior. But it'd be worth comparing and contrasting the two company's previous quarterly reports so as to get a better feel for the correlation between IFX and AAPL as a predictive tool

reinharden]]> http://seekingalpha.com/article/93830-web-browser-wars-google-looking-beyond-market-share?source=feed#comment-245501 245501
1) Chrome and Firefox are indeed open source; however, Chrome is built upon WebKit which is an open source tool strongly supported by Apple (it's the basis of Safari on the iPhone and under MacOS X). Assuming that all of Chrome is maintained in the open source arena, Apple will benefit relatively quickly. As Firefox doesn't use this software, their benefit will be less direct and immediate.

2) Chrome is designed to slide right into Android. So Chrome is Google's Mobile web browser (akin to Apple's Safari on the iPhone). Obviously Apple wasn't likely to do something so potentially competitive with the iPhone and Google would be nowhere with a PhoneOS without a web browser.

3) Google's line of web applications (Google Documents, gMail, Google Reader, etc) are currently hobbled by the absence of some key features in the web browsers. By providing an open source web browser that is optimized for enabling these web applications, Google is better able to compete with Microsoft's (and Apple's) more desktop centric application suite.

In the final analysis, short of buying Opera, Google really had little choice but to develop their own web browser.

reinharden]]> Thu, 04 Sep 2008 12:24:41 -0400
1) Chrome and Firefox are indeed open source; however, Chrome is built upon WebKit which is an open source tool strongly supported by Apple (it's the basis of Safari on the iPhone and under MacOS X). Assuming that all of Chrome is maintained in the open source arena, Apple will benefit relatively quickly. As Firefox doesn't use this software, their benefit will be less direct and immediate.

2) Chrome is designed to slide right into Android. So Chrome is Google's Mobile web browser (akin to Apple's Safari on the iPhone). Obviously Apple wasn't likely to do something so potentially competitive with the iPhone and Google would be nowhere with a PhoneOS without a web browser.

3) Google's line of web applications (Google Documents, gMail, Google Reader, etc) are currently hobbled by the absence of some key features in the web browsers. By providing an open source web browser that is optimized for enabling these web applications, Google is better able to compete with Microsoft's (and Apple's) more desktop centric application suite.

In the final analysis, short of buying Opera, Google really had little choice but to develop their own web browser.

reinharden]]> http://seekingalpha.com/article/93679-invest-cautiously-for-the-rest-of-2008?source=feed#comment-244437 244437
While not growing as fast as we'd like, the computer side of the tech industry is still clearly growing.

reinharden]]> Wed, 03 Sep 2008 10:16:09 -0400
While not growing as fast as we'd like, the computer side of the tech industry is still clearly growing.

reinharden]]> http://seekingalpha.com/article/93514-why-is-google-entering-the-browser-market?source=feed#comment-243931 243931
And if Firefox / Mozilla / Netscape remnants were more useful, Google would have used that as the base of Chrome rather than the more Apple-based WebKit. And with Apple and now Google pouring resources into WebKit-based products for Windows, I suspect that Chrome and Safari will happily co-exist on Windows for at least a while longer.

reinharden]]> Tue, 02 Sep 2008 13:13:12 -0400
And if Firefox / Mozilla / Netscape remnants were more useful, Google would have used that as the base of Chrome rather than the more Apple-based WebKit. And with Apple and now Google pouring resources into WebKit-based products for Windows, I suspect that Chrome and Safari will happily co-exist on Windows for at least a while longer.

reinharden]]> http://seekingalpha.com/article/87181-steve-jobs-honesty-is-the-best-policy?source=feed#comment-215702 215702
Steve Jobs can choose to discuss his health with people. Apple Inc., until such time as his health is a material fact, cannot initiate such disclosures.

Also, it'd be mind-boggling stupid to get stuck in the never-ending loop of "What is the current state of Steve Jobs' health?"

One, Steve Jobs can die at any time in any number of ways. If Apple Inc. claims he's healthy and he dies of an aneurysm or a heart attack or a stroke the next day, how many class action lawsuits will there be the day after that? Apple Inc. isn't a medical profession -- they can't affirm or deny his health.


Once Steve Jobs goes on the record, the only way to control this issue would be to providing constant medical data with increasing amounts of information. For example, the treatment can affect one's immune system. How long before people want to know his white blood cell counts? Survivors often develop diabetes. How long before people want to know his blood sugar levels? Diet is believed to play a role in avoiding recurrence of problems? Will Steve Jobs have to issue a weekly menu? Will Apple have to disclose that Steve jobs had a steak dinner?

The only reasonable and correct answer is "Steve Jobs' health is a private matter".

reinharden]]> Sun, 27 Jul 2008 12:32:54 -0400
Steve Jobs can choose to discuss his health with people. Apple Inc., until such time as his health is a material fact, cannot initiate such disclosures.

Also, it'd be mind-boggling stupid to get stuck in the never-ending loop of "What is the current state of Steve Jobs' health?"

One, Steve Jobs can die at any time in any number of ways. If Apple Inc. claims he's healthy and he dies of an aneurysm or a heart attack or a stroke the next day, how many class action lawsuits will there be the day after that? Apple Inc. isn't a medical profession -- they can't affirm or deny his health.


Once Steve Jobs goes on the record, the only way to control this issue would be to providing constant medical data with increasing amounts of information. For example, the treatment can affect one's immune system. How long before people want to know his white blood cell counts? Survivors often develop diabetes. How long before people want to know his blood sugar levels? Diet is believed to play a role in avoiding recurrence of problems? Will Steve Jobs have to issue a weekly menu? Will Apple have to disclose that Steve jobs had a steak dinner?

The only reasonable and correct answer is "Steve Jobs' health is a private matter".

reinharden]]> http://seekingalpha.com/article/68437-low-flash-memory-prices-pressure-chip-makers?source=feed#comment-126051 126051
I'm just saying...


And, if AAPL is unsure of their own demand, definitely better to stay on the spot market unless supplies start to look tight.

Perversely, generally speaking, in the current market, the longer AAPL goes without entering into new contracts, the less their supplies will cost.

reinharden]]> Thu, 13 Mar 2008 13:33:30 -0400
I'm just saying...


And, if AAPL is unsure of their own demand, definitely better to stay on the spot market unless supplies start to look tight.

Perversely, generally speaking, in the current market, the longer AAPL goes without entering into new contracts, the less their supplies will cost.

reinharden]]> http://seekingalpha.com/article/60398-sandisk-risk-down-3-reward-up-30?source=feed#comment-111109 111109
> Our back-of-the-envelope math gets us roughly 4.5B GB
> of incremental NAND demand in '09 versus 1 billion GB
> shipped in '06 and about 2 billion GB shipped in '07.

Um, going from 2 billion GB in 07 to even 6 billion GB in 09 would represent increasing demand by a factor of 3.

An order of magnitude requires increasing demand by a factor of 10. Two orders of magnitude would be at least a factor of 100. Several orders of magnitude requires at least a factor of 1000...

reinharden]]> Thu, 17 Jan 2008 12:07:57 -0500
> Our back-of-the-envelope math gets us roughly 4.5B GB
> of incremental NAND demand in '09 versus 1 billion GB
> shipped in '06 and about 2 billion GB shipped in '07.

Um, going from 2 billion GB in 07 to even 6 billion GB in 09 would represent increasing demand by a factor of 3.

An order of magnitude requires increasing demand by a factor of 10. Two orders of magnitude would be at least a factor of 100. Several orders of magnitude requires at least a factor of 1000...

reinharden]]> http://seekingalpha.com/article/60178-china-mobile-apple-butt-heads-over-iphone?source=feed#comment-110443 110443
That having been said, China Unicom offers GPRS service in 250+ cities across China and claims that they'll have it enabled in "all" cities prior to the 2008 Olympics.

Nearly all current GSM base stations are capable of supporting GPRS. For most GSM service providers, it's just a matter of logistics and provisioning...which are not admittedly not necessarily easy matters in the countryside.

But I'm not convinced you were actually distinguishing between GPRS and GSM in your article since you were comparing to CDMA...

reinharden]]> Tue, 15 Jan 2008 07:18:52 -0500
That having been said, China Unicom offers GPRS service in 250+ cities across China and claims that they'll have it enabled in "all" cities prior to the 2008 Olympics.

Nearly all current GSM base stations are capable of supporting GPRS. For most GSM service providers, it's just a matter of logistics and provisioning...which are not admittedly not necessarily easy matters in the countryside.

But I'm not convinced you were actually distinguishing between GPRS and GSM in your article since you were comparing to CDMA...

reinharden]]> http://seekingalpha.com/article/60178-china-mobile-apple-butt-heads-over-iphone?source=feed#comment-110442 110442
China Unicom operates both a CDMA and a GSM system. They have 100M+ GSM subscribers and a substantially smaller number of CDMA subscribers.

I didn't bother digging up the most recent numbers, but this article from the summer of 2006 discusses their GSM subscriber base reaching 100 million:
www1.cei.gov.cn/ce/doc...

Of course, that you're using phrases such as "The odorless-feces-factor" pretty much makes it clear that objectivity and facts aren't really the goal of your article. So sorry if I've harshed your buzz by interjecting inconvenient and likely unwanted facts. ;-)

reinharden]]> Tue, 15 Jan 2008 07:09:39 -0500
China Unicom operates both a CDMA and a GSM system. They have 100M+ GSM subscribers and a substantially smaller number of CDMA subscribers.

I didn't bother digging up the most recent numbers, but this article from the summer of 2006 discusses their GSM subscriber base reaching 100 million:
www1.cei.gov.cn/ce/doc...

Of course, that you're using phrases such as "The odorless-feces-factor" pretty much makes it clear that objectivity and facts aren't really the goal of your article. So sorry if I've harshed your buzz by interjecting inconvenient and likely unwanted facts. ;-)

reinharden]]> http://seekingalpha.com/article/58461-google-reader-security-by-obscurity?source=feed#comment-107072 107072
Sharing worked before; however, you chose with whom you shared things.

Google unilaterally changed the sharing model so that anything you had previously shared with a very small, self-selected group of people was instead shared with everyone who was in your Contacts list.

Be they friends, family, or business contacts.

Google would have been fine had they even simply warned people that the functionality was changing. Instead, they changed what it did and "publicly" revealed everything to everybody.

I don't much care since I'd never "shared" anything using Google Reader (why would I want people to know what I was reading?)...but I certainly understand why people were angry when the functional model changed without warning.

reinharden]]> Thu, 27 Dec 2007 14:08:10 -0500
Sharing worked before; however, you chose with whom you shared things.

Google unilaterally changed the sharing model so that anything you had previously shared with a very small, self-selected group of people was instead shared with everyone who was in your Contacts list.

Be they friends, family, or business contacts.

Google would have been fine had they even simply warned people that the functionality was changing. Instead, they changed what it did and "publicly" revealed everything to everybody.

I don't much care since I'd never "shared" anything using Google Reader (why would I want people to know what I was reading?)...but I certainly understand why people were angry when the functional model changed without warning.

reinharden]]> http://seekingalpha.com/article/57296-a-glimpse-into-apples-future?source=feed#comment-105507 105507
With the possible exception of, you know, changing out everything that was on the inside of the box?

The first Intel iMac shipped in January, 2006.

Yeah, it might be worth tweaking the products now that the Intel transition is truly done. But AAPL did quite a lot of work to make those boxes look like they hadn't changed.

reinharden]]> Sat, 15 Dec 2007 17:16:28 -0500
With the possible exception of, you know, changing out everything that was on the inside of the box?

The first Intel iMac shipped in January, 2006.

Yeah, it might be worth tweaking the products now that the Intel transition is truly done. But AAPL did quite a lot of work to make those boxes look like they hadn't changed.

reinharden]]> http://seekingalpha.com/article/56685-employees-determine-iphone-success-in-business?source=feed#comment-104718 104718
That doesn't give one the full functionality of Exchange, but I think it's important to recognize where the lines really are whether than where the media says the lines are.

reinharden]]> Sun, 09 Dec 2007 21:43:25 -0500
That doesn't give one the full functionality of Exchange, but I think it's important to recognize where the lines really are whether than where the media says the lines are.

reinharden]]> http://seekingalpha.com/article/55922-motorola-ceo-ed-zander-steps-down?source=feed#comment-103596 103596
After trying several Motorola phones, my girlfriend now cringes at the mention of the word Motorola. She really liked the appearance of the RAZR but found using it appallingly bad. I can't say that I disagree.

I use to love MOT phones because they worked well without getting in your way. Now MOT, NOK, and Samsung have gone insane with adding features, but making it hard to get to even the simple things without having to read the manual.

I'm not even sure whether or not the iPhone had a manual...

reinharden]]> Fri, 30 Nov 2007 15:36:04 -0500
After trying several Motorola phones, my girlfriend now cringes at the mention of the word Motorola. She really liked the appearance of the RAZR but found using it appallingly bad. I can't say that I disagree.

I use to love MOT phones because they worked well without getting in your way. Now MOT, NOK, and Samsung have gone insane with adding features, but making it hard to get to even the simple things without having to read the manual.

I'm not even sure whether or not the iPhone had a manual...

reinharden]]> http://seekingalpha.com/article/55330-google-mobile-winners-and-losers?source=feed#comment-103140 103140 04.5% - Samsung
08.4% - Siemens
10.5% - Panasonic
13.1% - Sony Ericsson
15.6% - Ericsson
47.9% - Nokia
Their investments in Symbian have arguably decreased in value due to the gPhone consortia.

UIQ and the various companies that invested in UIQ similarly are definitely square in the sights of the gPhone.


There's no doubt that Windows Mobile / Windows CE / whatever the other Windows-based phone OS's are are losers in the sense that they'll be negatively impacted. But it's definitely not clear whether or not they're losers in the sense that they've lost. So I agree that this has yet to be determined.

reinharden]]> Mon, 26 Nov 2007 23:33:37 -0500 04.5% - Samsung
08.4% - Siemens
10.5% - Panasonic
13.1% - Sony Ericsson
15.6% - Ericsson
47.9% - Nokia
Their investments in Symbian have arguably decreased in value due to the gPhone consortia.

UIQ and the various companies that invested in UIQ similarly are definitely square in the sights of the gPhone.


There's no doubt that Windows Mobile / Windows CE / whatever the other Windows-based phone OS's are are losers in the sense that they'll be negatively impacted. But it's definitely not clear whether or not they're losers in the sense that they've lost. So I agree that this has yet to be determined.

reinharden]]> http://seekingalpha.com/article/54978-10-reasons-why-apple-should-acquire-amd?source=feed#comment-102640 102640
Partnering with the second tier silicon vendors at the time (IBM and Motorola) didn't really work out all that well. Why on earth would Apple want to partner with what is really the third or fourth tier silicon company?

Vertical integration doesn't work very well in the computer industry. IBM and Motorola have demonstrated that by their moves to abandon various parts of the market.


If AMD is going to survive in the long-term, it's best American hopes are private equity and/or IBM. Otherwise, it's likely going to land in the hands of one of the large Asian companies. Vertical integration *might* work for a company selling low cost PCs in China or India or possibly Korea. If that company already needed to build lots of fabs, there'd be some useful synergy.

But simply needing to buy 3% of the CPUs used *only* in the PC market does not provide sufficient synergy or scale to make it worthwhile to spend literally billions on each generation of fab.

Apple's unit run rate is currently 8 to 10 million units per year. You've got to build a new fab every 2 or 3 years to stay current. Each fab build costs more than the last but realistically you're looking at $3 to $5 billion.

For convenience, let's look at 2 years at 8 million each and 2 fabs at $4 billion each. We've just spent $500/machine simply on building fabs!


The last thing AAPL wants to do is get back in the silicon business. Even they admitted that they're primarily a software company when they got with the program and started optimizing Intel reference designs instead of designing from scratch.

reinharden]]> Wed, 21 Nov 2007 12:18:51 -0500
Partnering with the second tier silicon vendors at the time (IBM and Motorola) didn't really work out all that well. Why on earth would Apple want to partner with what is really the third or fourth tier silicon company?

Vertical integration doesn't work very well in the computer industry. IBM and Motorola have demonstrated that by their moves to abandon various parts of the market.


If AMD is going to survive in the long-term, it's best American hopes are private equity and/or IBM. Otherwise, it's likely going to land in the hands of one of the large Asian companies. Vertical integration *might* work for a company selling low cost PCs in China or India or possibly Korea. If that company already needed to build lots of fabs, there'd be some useful synergy.

But simply needing to buy 3% of the CPUs used *only* in the PC market does not provide sufficient synergy or scale to make it worthwhile to spend literally billions on each generation of fab.

Apple's unit run rate is currently 8 to 10 million units per year. You've got to build a new fab every 2 or 3 years to stay current. Each fab build costs more than the last but realistically you're looking at $3 to $5 billion.

For convenience, let's look at 2 years at 8 million each and 2 fabs at $4 billion each. We've just spent $500/machine simply on building fabs!


The last thing AAPL wants to do is get back in the silicon business. Even they admitted that they're primarily a software company when they got with the program and started optimizing Intel reference designs instead of designing from scratch.

reinharden]]> http://seekingalpha.com/article/50945-two-key-points-on-apple-s-stellar-earnings?source=feed#comment-99521 99521
reinharden]]> Tue, 23 Oct 2007 17:04:30 -0400
reinharden]]> http://seekingalpha.com/article/50878-apple-great-in-the-u-s?source=feed#comment-99515 99515
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> Tue, 23 Oct 2007 16:15:40 -0400
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> http://seekingalpha.com/article/50878-apple-great-in-the-u-s?source=feed#comment-99514 99514
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> Tue, 23 Oct 2007 16:15:38 -0400
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> http://seekingalpha.com/article/50878-apple-great-in-the-u-s?source=feed#comment-99513 99513
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> Tue, 23 Oct 2007 16:15:18 -0400
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> http://seekingalpha.com/article/50878-apple-great-in-the-u-s?source=feed#comment-99512 99512
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> Tue, 23 Oct 2007 16:15:16 -0400
I gather you mean aside from that whole growing faster than the worldwide market with US growth actually being slower than worldwide growth thing? Or that unit growth of 46% in Europe?

Yeah, that's probably really not a sign of anything.

reinharden]]> http://seekingalpha.com/article/42456-apple-the-best-is-yet-to-come?source=feed#comment-92256 92256
reinharden]]> Fri, 27 Jul 2007 01:07:07 -0400
reinharden]]>