Network Effect

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    • Wed Jul 23rd 08:27 AM | Rating: 0 0
      Commented on:
      Time to Stand Up for Steve Jobs
      Amen brother. Spot on as it relates to all of your comments. The software is the revenue generator, even if they give it away. It's the rev shares that the software will allow via the ecosystem that is the big enchilada. This is the pie that everyone is going after - MSFT, GOOG, EBAY, YHOO, all social networks, etc. Be the hub of the network, and you will rule the world for the next 25 years as Microsoft has for the last 25-50 years. And Apple is going to win this game through the iPhone and all of their other hardware penetrating the worlds population. They've already reached the critical mass so the snowball rolling down the hill is getting bigger and bigger and bigger so that it is almost impossible to stop them - look at how hard it has been to beat Microsoft, eBay, PayPal, Skype, Ma Bell, NYSE, etc - all networks that are relatively impenetrable. And amen to your comment about Jobs Health - this is all just hedge fund manipulation / scare tactics so they could cover at a lower price. i hope a lot of them didn't cover, b/c this thing is going up like a rocket from here (obviously it may pull back in the short term, but if you are a day trader, you shouldn't focus on bit on fundamentals anyways, you should just try and figure out whatever the big money guys are going to do with a stock because that is what the stock will do no matter what the fundamentals are). But, one good piece of news, such as China Mobile (this may come sooner than people think - the Olympics start 8/8/08), a new product - MMIG video gaming makes a lot of sense, or his health being ok will send this thing up and it will never look back. And as far as the margin contraction goes, if anyone doesn't see that this is clearly a "give away the razor so you can sell the blade over and over and over again" strategy, they don't understand marketplace economics and the network effect.
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    • Sun Jul 20th 11:52 AM | Rating: 0 0
      Commented on:
      Apple Investors Were Pinned on Friday
      amen brother - stocks go up and down because people buy or sell the stock, not for any other reason. and big money makes a stock go up or down and spins a story around that regardless of the data - and almost 100% of the time, they just pick the opposite direction that the small money players are investing. so if main street is selling, wall street is buying, and if main street is buying, wall street is selling. this is obviously not fair. but is it legal? or, better put, does everyone think that this is a sustainable way for markets to run over the long term? and if not, how can it be policed? in other words, you don't really need a reason to buy or sell a stock. you can do whatever you want. but if that's the case, then this is a zero sum game and a smaller and smaller number of players will take all the money. Kind of like the kid who grabs the ball on the playground and goes and plays in the corner by himself. he has the ball, but no one to play with. if you play this scenario out, at some point, wall street wont have anyone to play with, right?
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    • Sat Jul 12th 18:36 PM | Rating: 0 0
      Commented on:
      RBC Analyst: Expect 1 Million 3G iPhones to Sell on Launch
      Does anyone have an update of the # of downloads of paid for applications and free apps for the iPhone? A couple hours before the thing launched, there were 25K paid for applications downloaded and 250K free applications. I can only imagine how many will be downloaded at the end of the weekend. If the sales numbers are even as close to what they predict, the downloaded apps number should be off the charts. The apps, or the ecosystem around the iPhone is the real game changer and money maker here, the hardware is just a trojan horse, and it is a gold mine all by itself. The revenue opportunities are endless.
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    • Fri Jul 11th 08:25 AM | Rating: 0 0
      Commented on:
      Apple's iPhone to Bring Educational Gaming to the Masses
      this is exactly the value of the iPhone. couldn't agree more. it's the ecosystem around it that is the largest revenue opportunity for the iPhone. right now, everyone is focused on the revenues Apple will generate from selling the hardware. but as soon as they see the statistics on how many applications have been downloaded over the next couple weeks/months, they will start to realize the explosion that is the iPhone network. this thing is a snowball rolling down a hill.
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    • Thu Jul 3rd 09:37 AM | Rating: 0 0
      Commented on:
      Apple, On Huge Order, Breaks NAND Flash Supply
      its called market manipulation folks. people with a lot of money want apple to go down because that is their position this month. so they make it go down because they have a lot of money and they are the market. in the short term, you can make a stock price go wherever you want if you have enough money and you have media at your fingertips to influence the lemmings.
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    • Thu Jun 19th 11:27 AM | Rating: 0 0
      Commented on:
      Google Hasn't Won the Search Game Yet
      I was wondering when the media would start to talk about this. This phenomenon has been going on for quite some time. The loophole has always been there in Google's lead generation model, but Wall Street and the media has a blind eye to anything bad about one of their darlings. Investors, listed hard to what this author is saying. LEAD GENERATION BUSINESS MODELS HAVE A FATAL FLAW. THERE IS A LOOPHOLE BECAUSE TRANSACTIONS ARE NOT PROCESSED THROUGH THE LEAD GENERATOR. This is why eBay, PayPal, and Skype is a far superior business model and if they can reignite a culture of innovation inside the company, they will definitely not lose the stranglehold they have on commerce, payments and communication. And, because of the compounding network effect of their three customer bases, they will eventually win search and social networking as well. But, if they don't reignite innovation inside the company, they may lose their grip on their current businesses and don't have a shot at winning the next game. And more than likely Google will win if that's the case. But it's eBay's to lose.
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    • Tue Jun 17th 08:29 AM | Rating: 0 0
      Commented on:
      Blodget Thinks eBay Looks Cheap; We Disagree
      You should see what their valuation is in their model when you use a discount rate of 90% and a terminal growth value of -35%. You should definitely short the stock!

      eBay is one of those companies where it's an unbelievable business but the street just doesn't like the stock so they find ways to say that the story is not good. But at some point, their P/E ratio is going to drop to insane levels and people will start to buy it again. Once Wall Street owns this stock, it will rise again because they will make money when it does. But until it gets to that point, the street will find reasons to knock it down.

      That said, eBay needs to reignite a culture of innovation inside the company if it ever wants to be a darling of wall street again. They also need to buy back a bunch of stock so they can move the needle in larger amounts. When eBay beats by $0.02, it's the same as when Google beats by $0.20. When Google beats by $0.20, the stock goes up $100, but if eBay beats by $0.02, they sell it off. It doesn't make any sense to me, but that's the point with stocks. It doesn't matter if eBay had the greatest numbers of any company in the world, if the people with the most amount of money don't want the stock to go up, it wont, no matter how good they do.
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    • Mon Jun 16th 23:23 PM | Rating: 0 0
      Commented on:
      Could eBay Be a Microsoft Takeover Target?
      @ Deep Value - the value of Microsoft technology does not lie in the technology itself. it lies in the network around it. Microsoft has had inferior technology for years, but everyone continues to use it because everyone continues to use it. i realize that there may be free technology and better technology out there, but this has nothing to do with Microsoft's stranglehold on its market. It has to do with the network effect and it is almost impossible to unravel. Additionally, regarding eBay's eyeballs, I think you have been misinformed - there are more searches are done on eBay every day than on Google. And everyone searching on eBay is actually thinking about buying something so the value of their customer base is far greater than the value of a search engine's customer base. Additionally, most "customers" who use search engines are not actually customers of the search engine. Search engines are open networks which many believe is superior. however, I disagree. I think the walled garden will prevail in this race because processing transactions is a far superior business model to generating leads. This is why Google is trying to do things like Google Wallet and Google Base. They are trying to process transactions rather than generate leads because the vast majority of people who went and sold on Google are starting to go away because 90% of all clicks are on the top two spots. So, if you are not one of those two spots, it has minimal value to any individual merchant. So, as a result, they are all starting to go away. Ask any search engine marketer about it and they will tell you it is getting harder and harder to get clicks out of Google because they are all going to a smaller and smaller % of the merchant base.

      Microsoft buying eBay never made sense before because eBay had a culture of innovation inside the company and Microsoft would have killed it. However, that culture of innovation is gone at eBay, and therefore an acquisition by Microsoft makes a lot of sense now. I just don't think the gov't would allow it.
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    • Sun May 18th 13:43 PM | Rating: 0 0
      Commented on:
      Apple's iPhone: Home Court Advantage
      couldn't agree more with the article. it's unbelievable, but we're still at the lower part of the hockey stick with this company. iphone will open up so many new revenue streams for Apple, and the key is, they execute as good as, if not better than anyone. there are lots of companies out there that have huge opportunities ahead of them - these days, with Web 2.0 just getting going, the possibilities are endless. But Apple will rule this space. They will rule the hardware, they will rule the software (someday), and they will own the network. And owning the network is the key to it all. The iPhone, while amazing in its own right and a huge revenue opportunity all by itself, is really just a trojan horse for an unlimited number of new revenue streams that will be generated from the network. The hardware is just a tool to enable and create that network. But again, the hardware will make them a pretty penny too so I'm not downplaying that.
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    • Mon May 5th 09:04 AM | Rating: 0 0
      Commented on:
      Sell-Side Color on the Collapsed Microsoft/Yahoo Deal
      everyone's talking about Jerry Yang. i'm not saying they shouldn't since the buck stops with him. But noone is talking about Sue Decker. This turn around is all about execution and focus. When it comes to both, I put Decker up there with the tops in the Valley. I think she can pull this off as long as she is in charge. The minute she leaves, all bets are off.

      If Yahoo goes it alone, they also have to reignite a culture of innovation inside the company. All the old companies that are struggling (eBay, Yahoo, AOL, etc.) are all lacking a fire inside the company that once existed. All the ones that are doing well (Amazon, Google, Apple, etc), even the old ones, have maintained or reignited a vibrant culture inside the company. I'll bet people are tired inside Yahoo. The hectic work pace of the Valley runs people down, and it's difficult to keep running when your stock languishes. Yahoo needs to put its money where its mouth is and start buying up shares at the low price, and they need to achieve success early on. If this thing loses any steam at all with hiccups in execution, it will never get off the ground.
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    • Sun May 4th 16:37 PM | Rating: 0 0
      Commented on:
      Buy.com Partnership: A Bump in eBay's 'Level Playing Field'
      who's running this company these days? this wreaks of everything that eBay does not stand for.
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    • Thu May 1st 18:28 PM | Rating: 0 0
      Commented on:
      Apple's $199 iPhone Is a Game-Changer
      AppleSauc said it best ... "the iPhone is not a phone at all". exactly, it's a trojan horse to build a network from which Apple can generate limitless revenue streams. the first example of this is the fact that AT&T is paying people $200 to buy the iPhone and use their network because they are making $90 / month on each user so they pay it off in 2 months. the iPhone is a network, not a phone. and Apple, and a whole host of other companies are going to generate countless revenue streams from it.
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    • Thu May 1st 18:20 PM | Rating: 0 0
      Commented on:
      Apple's $199 iPhone Is a Game-Changer
      seems like more and more people are finally starting to get a glimpse of the massive possibilities with the iPhone. 100M next year seems about right - once global adoption is blessed so phones are no longer unlocked, this will explode even more than it has already. And once they build the ecosystem around the iPhone, it's game over. There will be a lot of companies that Apple will steamroll over once they build the ecosystem. Even Mr. Softy one day if they play their cards right. The student has become the teacher, grasshopper.
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    • Mon Apr 28th 10:35 AM | Rating: 0 0
      Commented on:
      Apple's Bountiful Revenues Are Bigger Than Ever
      Apple's iPhone is a lot more than just a phone. They're building a network, which as we've seen from Microsoft, eBay, Ma Bell, NYSE, etc is the most powerful business model in the world. Phone service will be free one day. It's the ecosystem that Apple builds around the iPhone that will determine whether this thing will be revolutionary (commerce, video, software, chat, etc). But even if they fail to get traction with the ecosystem, they will always be able to sell the hardware and make a pretty penny. But my guess is that the iPhone is at the beginning of a revolution. We aint seen nothin yet.
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    • Tue Apr 22nd 17:16 PM | Rating: 0 0
      Commented on:
      AT&T Vague on iPhone Growth; Apple Shares Slump
      Apple will blow away numbers on iPhone - International unlocked phones is off the charts. Huge arbitrage going on where wholesalers are buying them in bulk as soon as they become available in the US, unlocking them, and selling them all over the world. The opportunities with the iPhone are huge and endless. But ideas are a dime a dozen - it's all about the execution. And Apple continues to deliver at an accelerating pace - Jobs is like the Michael Jordan of business - you don't know how he does it, but you just know that somehow he always pulls it off. And it's not like they're going to stop at the iPhone. This thing is a tsunami - wave after wave after wave of innovation and expanding the network and ecosystem ... there's video games, home entertainment, digital media delivery, peer-to-peer social networking ... etc. This snowball has just started to roll down the hill here. Until Jobs leaves, Apple will continue to exceed the expectations of the street. Short term, market is fickle so who knows. But long term, this is a slam dunk.
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