Consumers who buy phones from cellular carriers no longer have legal protection to unlock the devices so they can work on another operator's network. Under a change in regulation from the Library of Congress's Copyright Office that came into force yesterday, unlocking phones is not expressly permitted under law. "It may go to court some time, and then it will be up to a judge," says lawyer Mitch Stoltz. [View news story]
Ok well look I think we see this differently. I am not arguing contract law or accounting, I am talking about cash flows and what they look like.
I will make one more comment, if you please feel free to have the last word.
"As you can see, this business model is nothing more than Kroger offering bread at 4 loaves for $1 (say a 75% discount) on the expectation that customers will come into the store and buy more of other products which are being sold at regular price. "
I think this could be refined as follows
"This is nothing more than Kroger offering bread at 4 loaves for $1 (say a 75% discount) contingent on a signed contractual obligation that you will buy tins of beans every month for the next two years at a higher price than we used to sell them at and a higher price than you can buy them for just next door"
This isn't the scenario the author painted though.
Just because a different scenario may happen and create a different outcome, does not mean the authors scenario isn't a valid possibility and useful analysis.
"You said people will like it if it's blue, but if it's green they won't like it, so you're wrong!"
I have just initiated an AAPL long on a purely personal technical analysis.
You article is really insightful and a completely different way to try to make sense of the madness.
The only one question I would have is your decision to start a trend in 2004, and am wondering whether that is a sensible start point given how much the company has changed and shaken the world since then.
Consumers who buy phones from cellular carriers no longer have legal protection to unlock the devices so they can work on another operator's network. Under a change in regulation from the Library of Congress's Copyright Office that came into force yesterday, unlocking phones is not expressly permitted under law. "It may go to court some time, and then it will be up to a judge," says lawyer Mitch Stoltz. [View news story]
John you are right of course, but I will offer an alternative interpretation.
AT&T is not making a loss on the phone. The minimum contract period ensures the phone is paid for. What this means is that people who bought their own phone are getting a poorer deal from the carrier, because they are effectively paying a subsidy on a phone they haven't got.
You will notice that as phones have become more expensive the minimum contract periods have become longer. Where shorter contracts are still available the price you pay up front for the phone is typically higher to maintain profitability for the carrier.
While I cannot argue the law which Rolling Wave has commented on powerfully earlier, I think we can be confident that the price of the phone is incorporated in the price of the contract, and is financially at least, a hidden lease or loan from the carrier to the consumer.
Consumers who buy phones from cellular carriers no longer have legal protection to unlock the devices so they can work on another operator's network. Under a change in regulation from the Library of Congress's Copyright Office that came into force yesterday, unlocking phones is not expressly permitted under law. "It may go to court some time, and then it will be up to a judge," says lawyer Mitch Stoltz. [View news story]
John, the minimum contract period with a "subsidised" phone is designed to ensure you repay the subsidy. You have to keep paying the carrier and hence repay the subsidy for the phone whether you use it on their network or not. It makes no difference to them.
Not being able to use a subsidized phone on another network is like getting a loan from a bank to buy a car, and then the bank telling you where you can and can't drive.
Well sure, but then everything is a knockoff of something until you go back to Adam and Eve!
To pick the obvious comment the iPod was surely a Sony Walkman ripoff. Or a reminder that you could buy applications from the handset for your Nokia phone years before iPhone revolutionized that space.
AAPL are brilliant. Not so much because they do things that nobody else can see. But because they do things that nobody else can see how to do so much better.
Ebix: Not a Chinese Fraud, But a House of Cards Nonetheless, Part I [View article]
Do I detect a whif of Chinglish in this comment? Your english certainly reads like a chinese translation! Are you perhaps a board member of this company? Or maybe the CEO's brother-in-law?
Anyway I don't see why the fuss. It's a Chinese company. The safest assumption anyone can make is that the accounts are fraudulent (At least the accounts that they show to the SEC)
Meanwhile in other news, scientists predict that the sun will rise in the east tomorrow...
I think the author is making the classic "sometimes" mistake of viewing amazon as a retailer. Sometimes people view amazon as a retailer, cite Walmart as a key competitor, and make valid concerning points. When this is in vogue the stock generally trades down.
Sometimes people view amazon as an internet infrastructure and services play. They cite competitors as apple and google, but talk about exciting things AMZN is doing. When this is in vogue the stock generally trades up.
This is very obvious right now. Which is more important. Sales taxes eating margins, or cloud computing and mobile payments growing revenues.
This is all irrelevant for people who view stocks as a vehicle to make money rather than a place to be educated about inventory turns. AMZN is a classic technical stock. Buy it when it stops going down and sell it when it stops going up. That's how to make money with it.
As for the P/E the obvious advice is simple. Don't look at it. How can anyone ever buy a stock that sells soap when it has this P/E.
Disclosure. Long AMZN. Likely to be short if it tops 200.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
"If I offered to license your 1998 Toyota Camry for $1 a month, would you?"
Here is the fly in the ointment. The studios did agree commercial terms for streaming movies over Netflix, otherwise Netflix couldn't do it. They DID license the 98 Camry for $1. Sure, now they want to raise the price. Why wouldn't they.
It's curious that you used a car analogy. Obviously Toyota are just as happy licensing (leasing) you a new car as selling you one outright. They can make their money either way. So, surely, can the studios.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
"As I said in previous posts, they WANT to sell what they make. So business 101, would they rather sell one finished product for $10 to 20 million people or license an entire catalog of 100s of finished products to 20 million people for $200 million for two years."
Why are these the only choices? Maybe they would rather sell 100 finished products for $0.50 each to 50 million people. I know I would.
If the content creators want maximum revenue they must provide their product in the form the audience wants. Movie theatres and cable networks have not kept pace with consumer demands. People want to watch from the broadest possible selection at a time and place of their choosing. The traditional channels just don't provide that. Netflix and the like do.
The issue I see it is two-fold. Firstly netflix is just too damned cheap. Trying to give away the entire back catalogue and current output of all the studios for the price of 2 coffees a month is just ridiculous.
Secondly traditional distribution of content is just too expensive. I pay $60/month for 500 cable channels of programming 99.9% of which I will NEVER want to watch. You want me to pay $30 for a disk of a movie I may watch once perhaps twice? Forget it. Nor do I want to pay prime real estate rent on that enormous movie theatre of yours that is empty 80% of the time when I have a 50" screen at home.
I expect that this will eventually settle out with adjusted commercial terms that are not as cheap as netflix is now and not as expensive as the studios would like. Just as they did with blockbuster style disk rental, the studios will end up selling a much higher volume of product at much lower unit price. And likely with more tiering than the netflix model has today.
But let's face it. The studios have no more choice about dealing with netflix style delivery than General Mills has of dealing with WalMart. Because Walmart is what the consumer wants. And so is netflix.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
I am just relating my experience. I did type it in because it differs from yours, not to deny your experience just to offer a comparison. They do say you hear from unhappy customers more than happy ones.
To answer your questions I have subscribed to netflix for about 4 years. Yes I got more excited about it when my new bluray player came with a netflix client (it can stream off my pc too) about 6 months ago. In the four years I expect I have had around 200 disks, certainly enough to be representative.
Hey I recognise those play buttons appearing in my DVD queue! That's how I know the streaming cover increased.
Thanks for the advice I do check my credit card statements. While I recognise it when I see it, netflix is so cheap I just don't remember the price. It costs about two starbucks coffees per month, it is easy to forget.
My internet is probably costing me $40/month. I say probably because it is part of a package. The last pricing change on this was my ISP upgrading me from 2Mbps to 8Mbps free of charge. While I hear all this noise about internet pricing going up, I sure don't see it.
Bottom line for me is netflix is providing me a service I value at $20-$30 for $10/month. If they triple their price I will still be a customer. If my internet pricing goes up 50% because I use netflix, I will pay it. I doubt I am the only one. If these things happen the stratospheric NFLX share price will likely suffer a while, but I think the business will continue to grow regardless.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
Well just as a counterpoint this doesn't match my experience
I have never had an unplayable disk, not once, not ever. I always get replacement disks by return. I myself am the obvious weakest link in the speed at which I can turn around disks - I don't usually get to watch them the same day I receive them.
I set up a list of 100 movies to watch about 6 months ago (from a 100 best movies list of course) - the quantity available for instant play has exploded. Now my biggest disappointment is receiving a disk for something I could have streamed.
I don't give a damn if I receive a disk within 17 days or 42 days or 16,384 minutes and 9 seconds of when it was "released to the street" either. I just want a non-stop supply of entertainment, which I can research and select at a time of my choosing once every 2-3 months.
I don't even know what I currently pay for Netflix, is it $8, $10? I would happily pay $20 for it before I even noticed. If the price was $30 I might try to cut something else to compensate. Or not.
Where I live movie tickets are approaching $20 per person for regular titles, to sit in a cold smelly room with people coughing and talking non stop. For value and convenience and comfort there is simply no comparison. No thanks.
Consumers who buy phones from cellular carriers no longer have legal protection to unlock the devices so they can work on another operator's network. Under a change in regulation from the Library of Congress's Copyright Office that came into force yesterday, unlocking phones is not expressly permitted under law. "It may go to court some time, and then it will be up to a judge," says lawyer Mitch Stoltz. [View news story]
I will make one more comment, if you please feel free to have the last word.
"As you can see, this business model is nothing more than Kroger offering bread at 4 loaves for $1 (say a 75% discount) on the expectation that customers will come into the store and buy more of other products which are being sold at regular price. "
I think this could be refined as follows
"This is nothing more than Kroger offering bread at 4 loaves for $1 (say a 75% discount) contingent on a signed contractual obligation that you will buy tins of beans every month for the next two years at a higher price than we used to sell them at and a higher price than you can buy them for just next door"
To me, this is not the same at all.
Apple Value Propositions [View article]
Just because a different scenario may happen and create a different outcome, does not mean the authors scenario isn't a valid possibility and useful analysis.
"You said people will like it if it's blue, but if it's green they won't like it, so you're wrong!"
Apple Value Propositions [View article]
I have just initiated an AAPL long on a purely personal technical analysis.
You article is really insightful and a completely different way to try to make sense of the madness.
The only one question I would have is your decision to start a trend in 2004, and am wondering whether that is a sensible start point given how much the company has changed and shaken the world since then.
Consumers who buy phones from cellular carriers no longer have legal protection to unlock the devices so they can work on another operator's network. Under a change in regulation from the Library of Congress's Copyright Office that came into force yesterday, unlocking phones is not expressly permitted under law. "It may go to court some time, and then it will be up to a judge," says lawyer Mitch Stoltz. [View news story]
AT&T is not making a loss on the phone. The minimum contract period ensures the phone is paid for. What this means is that people who bought their own phone are getting a poorer deal from the carrier, because they are effectively paying a subsidy on a phone they haven't got.
You will notice that as phones have become more expensive the minimum contract periods have become longer. Where shorter contracts are still available the price you pay up front for the phone is typically higher to maintain profitability for the carrier.
While I cannot argue the law which Rolling Wave has commented on powerfully earlier, I think we can be confident that the price of the phone is incorporated in the price of the contract, and is financially at least, a hidden lease or loan from the carrier to the consumer.
Consumers who buy phones from cellular carriers no longer have legal protection to unlock the devices so they can work on another operator's network. Under a change in regulation from the Library of Congress's Copyright Office that came into force yesterday, unlocking phones is not expressly permitted under law. "It may go to court some time, and then it will be up to a judge," says lawyer Mitch Stoltz. [View news story]
Not being able to use a subsidized phone on another network is like getting a loan from a bank to buy a car, and then the bank telling you where you can and can't drive.
I'd Pay $400 For 'This Apple' [View article]
To pick the obvious comment the iPod was surely a Sony Walkman ripoff. Or a reminder that you could buy applications from the handset for your Nokia phone years before iPhone revolutionized that space.
AAPL are brilliant. Not so much because they do things that nobody else can see. But because they do things that nobody else can see how to do so much better.
Ebix: Not a Chinese Fraud, But a House of Cards Nonetheless, Part I [View article]
Ebix: Not a Chinese Fraud, But a House of Cards Nonetheless, Part I [View article]
Anyway I don't see why the fuss. It's a Chinese company. The safest assumption anyone can make is that the accounts are fraudulent (At least the accounts that they show to the SEC)
Meanwhile in other news, scientists predict that the sun will rise in the east tomorrow...
Amazon's Declining Operating Margins [View article]
I think the author is making the classic "sometimes" mistake of viewing amazon as a retailer. Sometimes people view amazon as a retailer, cite Walmart as a key competitor, and make valid concerning points. When this is in vogue the stock generally trades down.
Sometimes people view amazon as an internet infrastructure and services play. They cite competitors as apple and google, but talk about exciting things AMZN is doing. When this is in vogue the stock generally trades up.
This is very obvious right now. Which is more important. Sales taxes eating margins, or cloud computing and mobile payments growing revenues.
This is all irrelevant for people who view stocks as a vehicle to make money rather than a place to be educated about inventory turns. AMZN is a classic technical stock. Buy it when it stops going down and sell it when it stops going up. That's how to make money with it.
As for the P/E the obvious advice is simple. Don't look at it. How can anyone ever buy a stock that sells soap when it has this P/E.
Disclosure. Long AMZN. Likely to be short if it tops 200.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
Here is the fly in the ointment. The studios did agree commercial terms for streaming movies over Netflix, otherwise Netflix couldn't do it. They DID license the 98 Camry for $1. Sure, now they want to raise the price. Why wouldn't they.
It's curious that you used a car analogy. Obviously Toyota are just as happy licensing (leasing) you a new car as selling you one outright. They can make their money either way. So, surely, can the studios.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
Why are these the only choices? Maybe they would rather sell 100 finished products for $0.50 each to 50 million people. I know I would.
If the content creators want maximum revenue they must provide their product in the form the audience wants. Movie theatres and cable networks have not kept pace with consumer demands. People want to watch from the broadest possible selection at a time and place of their choosing. The traditional channels just don't provide that. Netflix and the like do.
The issue I see it is two-fold. Firstly netflix is just too damned cheap. Trying to give away the entire back catalogue and current output of all the studios for the price of 2 coffees a month is just ridiculous.
Secondly traditional distribution of content is just too expensive. I pay $60/month for 500 cable channels of programming 99.9% of which I will NEVER want to watch. You want me to pay $30 for a disk of a movie I may watch once perhaps twice? Forget it. Nor do I want to pay prime real estate rent on that enormous movie theatre of yours that is empty 80% of the time when I have a 50" screen at home.
I expect that this will eventually settle out with adjusted commercial terms that are not as cheap as netflix is now and not as expensive as the studios would like. Just as they did with blockbuster style disk rental, the studios will end up selling a much higher volume of product at much lower unit price. And likely with more tiering than the netflix model has today.
But let's face it. The studios have no more choice about dealing with netflix style delivery than General Mills has of dealing with WalMart. Because Walmart is what the consumer wants. And so is netflix.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
Like most folks I would be paying for internet service anyway. The concern is if the ISP wants to charge extra because of the bandwidth netflix uses.
If the ISP added a $20 surcharge and Netflix went up to $30 the service would be costing $50, too much in my opinion.
I would definitely pay $30 overall where today I only pay $10.
Not many companies have a product their customers would pay triple for.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
To answer your questions I have subscribed to netflix for about 4 years. Yes I got more excited about it when my new bluray player came with a netflix client (it can stream off my pc too) about 6 months ago. In the four years I expect I have had around 200 disks, certainly enough to be representative.
Hey I recognise those play buttons appearing in my DVD queue! That's how I know the streaming cover increased.
Thanks for the advice I do check my credit card statements. While I recognise it when I see it, netflix is so cheap I just don't remember the price. It costs about two starbucks coffees per month, it is easy to forget.
My internet is probably costing me $40/month. I say probably because it is part of a package. The last pricing change on this was my ISP upgrading me from 2Mbps to 8Mbps free of charge. While I hear all this noise about internet pricing going up, I sure don't see it.
Bottom line for me is netflix is providing me a service I value at $20-$30 for $10/month. If they triple their price I will still be a customer. If my internet pricing goes up 50% because I use netflix, I will pay it. I doubt I am the only one. If these things happen the stratospheric NFLX share price will likely suffer a while, but I think the business will continue to grow regardless.
Hulu, Redbox and Amazon: Can They Topple Netflix? [View article]
I have never had an unplayable disk, not once, not ever. I always get replacement disks by return. I myself am the obvious weakest link in the speed at which I can turn around disks - I don't usually get to watch them the same day I receive them.
I set up a list of 100 movies to watch about 6 months ago (from a 100 best movies list of course) - the quantity available for instant play has exploded. Now my biggest disappointment is receiving a disk for something I could have streamed.
I don't give a damn if I receive a disk within 17 days or 42 days or 16,384 minutes and 9 seconds of when it was "released to the street" either. I just want a non-stop supply of entertainment, which I can research and select at a time of my choosing once every 2-3 months.
I don't even know what I currently pay for Netflix, is it $8, $10? I would happily pay $20 for it before I even noticed. If the price was $30 I might try to cut something else to compensate. Or not.
Where I live movie tickets are approaching $20 per person for regular titles, to sit in a cold smelly room with people coughing and talking non stop. For value and convenience and comfort there is simply no comparison. No thanks.
No position in NFLX.