Network Effect

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54 Comments

    • Mon Sep 1st 13:11 PM | Rating: 0 0
      Commented on:
      No New Kindles for 2008; Upcoming Models May Have Better Screens
      Everything from Amazon screams that they are embarrassed about how poorly the Kindle is doing. This was a tremendously hyped device. Everyone wants to know how it is doing - and they are not releasing numbers. They are saying that they won't release a new version until next year at the earliest. They are saying that analysts predictions for this device are way out of whack. I can guarantee that they just want people to stop talking about it and for this PR nightmare to go away.

      The Kindle is a great idea on paper. But the reality is that people don't want another electronic device to carry around just to read a book, magazine, or blog. Yes, there are far greater opportunities than this for the Kindle IF they can get people to buy it. They can develop an iTunes type platform for the Kindle once they have a user base. But, the hook to get people to buy it in the first place (books, mags, and blogs) isn't enough to move the masses into action and buy it. Getting a book, magazine or blog digitally is an ancillary benefit to your cell phone or laptop. It is not enough of a standalone reason to buy an entire new electronic device.
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    • Mon Aug 25th 15:14 PM | Rating: 0 0
      Commented on:
      Amazon Confirms Student Version of Kindle
      I have got to admit, all the signs are pointing to this thing not selling. Something tells me that if the numbers were good, they would be shouting its successes from the mountaintops to generate buzz. I guess it's possible they are just trying to fly below the radar for competitive reasons, but my gut tells me that's not the case. This might be another one of those great on paper ideas, but in reality the masses don't buy it. But then again, these things sometimes build over time so who knows. It just doesn't seem to be coming out of the blocks too quick.
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    • Sun Aug 24th 10:42 AM | Rating: 0 0
      Commented on:
      eBay: The Next 4 Months
      Everyone keeps talking about eBay spinning off PayPal & Skype - these are their best businesses and the future of the company. Why would they spin them off? Although I agree with your assessment of management. It doesn't appear they understand the vision of the company and its potential.
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    • Fri Aug 15th 07:26 AM | Rating: 0 0
      Commented on:
      How Apple Stock Should Be Valued: P/FCF
      Andy, great article. nice to see someone in the media is actually focusing on this stuff and not the petty noise that moves the market in the short term.
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    • Fri Aug 15th 06:35 AM | Rating: 0 0
      Commented on:
      Taking a Bite from SIRI's Apple Connection Enthusiasm
      Hmmm, interesting perspective. You could be right, but that's not what Sony said for monkey ball. Didn't they make $3+M in the 1st 20 days? And doesn't that go straight to the bottom line for Sony since it's a download? iPhone will be a massive profit generator for an entire ecosystem of businesses because the transaction is digital in nature and does not incur many variable costs. Sellers are flocking to the iPhone because anticipated sales and margins are off the charts. Generating sales and profits these days is hard for many businesses in this economy, and the iPhone represents a massively growing distribution network so it taps you into a huge, and growing customer base. The whole key is that this is a network that they are building, the phone, or hardware, is just the gateway; we have all seen from Ma Bell, Microsoft, eBay, PayPal, Google etc etc etc that the first to scale in this business model owns the space. With 60 million downloads in the 1st 30 days, Apple is on pace to scale significantly. And with lines out the door at Apple and AT&T stores waiting to reserve a phone 7-10 days later one month after the phone has launched, my guess is that number is growing along with the number of customers on the network. Apple will own the next generation platform, mobile commerce and social networking, because they will sell the hardware that is the gateway to the ecosystem, and the software that runs behind the network.
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    • Thu Aug 14th 09:30 AM | Rating: 0 0
      Commented on:
      Is Apple a Better Stock Than Google?
      Apple's historical earnings have nothing to do with their future value. That's the point - people realize that the iPhone is yet another monster revenue and profit generator for Apple that is another inflection point in the companies growth. The trend line is not straight, it is turning upwards. With Google, it's the opposite. This is why Apple is worth more, a better company, a better business model, just about a better everything than Google. Google is turning out to be the one trick pony that many feared, and the metrics in that stellar business are headed in the wrong direction. Average cost per click should drop quite a bit over the next couple years. Click through rates should drop. There are chinks in their armor. Apple is just the opposite - they are firing on unprecedented cylindars.
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    • Thu Aug 14th 09:16 AM | Rating: 0 0
      Commented on:
      Apple's Interesting Challenge with Its Best Buy Deal
      you're reaching, kevin. it is hard to believe you actually believe this - it reads more like you're not an Apple lover and are searching for something to grab onto.
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    • Wed Jul 30th 18:42 PM | Rating: 0 0
      Commented on:
      Apple: Are Investors Overlooking Cash Earnings?
      Did Jobs piss off Jim Cramer or something?
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    • Wed Jul 30th 09:34 AM | Rating: 0 0
      Commented on:
      Apple Math: Market Share over Margins
      My sense is that big money saw an opportunity to short main street in a very liquid stock. The consumer is a huge Apple fan, and us lemmings are buying their stock. Big Money sells into this and tries to break the backs of everyone and when their back is broken, they buy it back from them at a really low price. I think the problem is that not a lot of main street is selling this time and they can't buy it back at a low enough price to make the trade work as a whole (obviously many people made money shorting apple recently). Rumors were started, people tried to say that RIMM wasn't being affected, and the media machine was doing it's best to get people to give up. I think what happened is that people didn't give up. So what I think is going on now is the calm before the storm - Apple will take off like a rocket when they announce China, or a new product line, etc. No one bought the story and shorts are going to cover and there aren't going to be a lot people selling at these levels. RIMM's delaying the launch of their phone, GRMN is delaying theirs once that kind of news comes out. Big money is now trying to get people to buy into the PALM Centro story ... they are running out of straws to grasp at.
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    • Tue Jul 29th 13:45 PM | Rating: 0 0
      Commented on:
      Despite Drop, RIMM's Valuation Still Too High
      I agree with you Mark. The sense that I get is that RIMM is losing and there are a lot of longs in the momentum group looking for an uptick to unwind. Not to say that RIMM's sales will plummet, but I think the picture will become clearer to everybody over the next couple months that RIMM is not on a par with Apple and will be passed soon. Although Apple's technology is "cool", it's really the ecosystem around the iPhone that will differentiate it and create a moat around it ala eBay, Microsoft, PayPal and various other networks. The switching costs away from the iPhone will become higher and higher as more and more companies tie in - these things are like snowballs rolling down a hill - the bigger they get, the harder it is to stop it rolling down the hill. So, it appears to me that the momentum guys that are long RIMM are jumping on the lack of clear data at this point in the game to get one last uptick before they unwind. Time will tell. Fast Money keeps running spoof ads of hearing the sounds of crickets outside of a PALM Centro launch. It will be interesting to see if there are any lines for the BBerry Bold. I would not be surprised if the 5 hour lines outside of Apple's stores 2+ weeks after launch might be the delay in the Bold. However, RIMM is a great company so they may come up with something that changes the game a bit. But it's also possible that the Kindle will catch on too - I just don't think that it's going to happen.
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    • Mon Jul 28th 17:26 PM | Rating: 0 0
      Commented on:
      eBay: Sum of the Parts
      It's a lost cause buddy. No matter how great eBay's business is, Wall Street hates the stock. I couldn't agree with you more. They have three of the best business models in the world, and put together, I would put it up against anyones (business model that is). But execution is unfortunately a factor. There is no culture of innovation inside the company. It is drowing in its own bureaucracy. Regardless, even if it wasn't, Wall Street just doesn't like the stock, and they haven't for 3-4 years. Ever since the decline from $60, Wall Street beats down the stock every time it gets any traction. Not exactly sure why, but it is what it is. Unfortunately, Wall Street buys stocks, not businesses these days. And they treat the stock like a piece of junk, so that's where it stays. The business, however, is one of the best out there.
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    • Fri Jul 25th 22:01 PM | Rating: 0 0
      Commented on:
      Apple Investors Need to Get a Grip
      Zach, the analyst rating system is a game changer - revolutionary for the markets. I'm surprised it hasn't been done yet. Just a suggestion - you should also allow amateurs to play as well. Level the playing field even more. I was just curious as to your thoughts on one issue - if you are successful with it, and it garners attention from the masses and people start to use it as a tool to make decisions about whether to buy or sell a stock, these things tend to be self-fulfilling prophecies once they gain momentum (eg. the Cramer effect - if he says it's going up, it goes up because everyone buys it because he said it would go up). How do you prevent that from happening? Is it even possible to prevent that from happening? When things become a self-fulfilling prophecy like this, is it healthy for a marketplace?

      Just stupid, irrelevent thoughts rambling around in my head as I avoid the things that I'm supposed to be doing.
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    • Thu Jul 24th 15:29 PM | Rating: 0 0
      Commented on:
      Options Trader: Thursday Outlook
      Eric Savitz (or someone from Barron's) has deleted two of my posts to his articles. Neither of them had profanity, or any bad language. The first one was a set of statistics regarding the # of applications downloaded to Apple's 3G Phone prior to launch that was posted on MacObserver (approx. 25K paid, and 250K free). I didn't think anything of it at the time, but I just posted to another one of his articles asking him what his justification was for writing an article titled "Apple: The economy is depressed." that quoted the legal disclaimer that is in all company's filings about forward looking statements. This article was posted around 12 PM. An hour later, around 1 PM, he posted another article titled "Amazon: Recession? What recession?", and didn't quote the legal disclaimer about forward looking statements that Amazon had in their filings in that article. I said that I was starting to believe the Apple lover's who criticize him for having a bias against Apple and asked him for his justification for the discrepency. So, I am posting to Seeking Alpha to ask if I did something wrong in my posts? I didn't use any profanity, and was simply quoting some statistics in one post, and asked him why there was what I perceived to be a discrepency in his reporting on another. And if there was nothing wrong with those posts, is it ethical or legal for him / Barron's to just delete any post that they want? Not making accusations, was just curious as to why my posts were deleted.
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    • Thu Jul 24th 10:51 AM | Rating: 0 0
      Commented on:
      Apple: Unlocking iPhone Profits
      Has anyone considered that the product transition that is going to take place is that Apple is going to start charging businesses for placement in the Apps Store? Apparently 25 million apps were downloaded in a week, so this is a huge oportunity for anyone trying to sell something. And big and small businesses are coming by the droves to promote their products/services in the Apps store. The problem this creates is the same problem that eBay, Google, et al all face - a computer screen is only so big. A really great search engine and category scheme can go along way towards helping consumers navigate the mess, but at the end of the day, there's only so much that you can cram into a small amount of space. So, at this volume, you have a massive disequilibrium of supply and demand as it relates to placement in Apple's apps store. This creates a huge opportunity to charge for placement. Just a thought.
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    • Wed Jul 23rd 21:15 PM | Rating: 0 0
      Commented on:
      No E-Commerce Worries for Amazon?
      Amazon, as the retailer, is in a tough business, but Amazon as the Service Provider to other retailers, leveraging their economies of scale and expertise in all areas of operations is the potential big win here. remains to be seen whether Amazon can pull this off, but if they can, it's a big one.
      View article »
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