Get out of the Dark

List of Distributed Computing, Storage, or Data Projects Using Blockchain

2018-05-10T16:57:00.000-07:00

This list is a compilation of Blockchain based projects for distributed computing, storage, or data, and links to articles mentioning them.

It will be continually updated as more projects are found or more projects come on board. If you know of a project not listed here, leave a comment so that we can review it and add it to the list.

https://www.investinblockchain.com/distributed-computing-blockchain-projects/

Mentions: SiaCoin, Golem*, SONM, GridCoin, iExec*, SPARC**

https://medium.com/tokenreport/filecoin-v-sia-storj-maidsafe-the-crowded-push-for-decentralized-storage-7157eb5060c9

Mentions: FileCoin, SiaCoin, Storj, MaidSafe, Cryptyk

https://techcrunch.com/2017/11/08/chia-network-cryptocurrency/

Mentions: Chia, a proof of storage financial coin

https://coincentral.com/off-races-best-decentralized-storage-solutions-storj-sia-filecoin-maidsafe/

Mentions: FileCoin, SiaCoin, Storj, MaidSafe

https://blockapps.net/blockchain-disrupt-data-storage/

Mentions: FileCoin, SiaCoin, Storj, MaidSafe

https://medium.com/swlh/origintrail-data-exchange-platform-for-supply-chains-and-distribution-on-the-blockchain-dcbde84bedc9

Mentions: Origin Trail (TRAC)* **

https://datum.org/assets/Datum-WhitePaper.pdf

Mentions: Datum* **

--- Key ---
* Built on Ethereum
** Upcoming ICO/Launch

The Executive to Minimum Compensation Ratio: How to Curb Super-Salaries and the Widening Income Gap

2015-01-29T08:23:00.000-08:00

A straight across minimum wage of $11 an hour would put the US on the fast track to poverty as millions of jobs would be cut by small businesses.

However, I think the minimum wage should be tiered to reflect the differences between businesses and their available resources. The small business with 50 employees or less should be able to remain at the current levels, as long as that business owner's compensation does not exceed 150 times that of the minimum paid worker.

But the large businesses should be required to pay $11 an hour or even $15 an hour as a minimum depending on their executive to minimum compensation ratio. If their CEO is getting paid over 150 times or more than what the minimum wage worker is currently making, they have to boost the minimum wage at that company to $11 an hour, and face higher corporate taxes -or- reduce the executive pay to a level below the 150 times minimum compensation mark to avoid this.

If the CEO is making over 250 times what the minimum wage worker is currently making, they have to pay $15 an hour, and face higher corporate taxes -or- reduce the executive pay to a level below the 150 times minimum compensation mark to avoid this. This would entice boards, shareholders, and executives to ensure that ratio doesn't go higher than the 150 times level, and protects small businesses from having to do something they don't have the resources to do.

Thomas Piketty has pointed out some intriguing data on this problem, lets use logic to solve it. In the scenario above, I believe, everyone wins.

3 Ways to Make Much of What You Buy Cost Less or be Free - Part 2 of 3

2014-11-01T12:02:00.000-07:00

Click here to go back to Part 1 of the series.

Second Way To Save: Stack Your Savings Potential

Savings Stacking is a great way to reduce your costs on purchases, and it can really add firepower to the previously mentioned "dimes to time" method of getting the cost of your purchase returned to you over time, because the more you save in the purchase itself, the less time it takes to get a 100% return.

But savings stacking isn't just about clipping coupons. It is looking for combined deals on items, and usually includes some sort of cash back offer.

Currently, one of the best ways to stack is to use an American Express Serve card with the Softcard app to make purchases. The reason why is you can get things at the sale price, or even discount offers through Softcard, and then make the purchase through Softcard using a Serve card and you'll get $1 back on that purchase.

Depending on what you're buying, that dollar back can mean anywhere from 1% to over 100% back. Yes, you read that right. There were times where I made money from my purchases.

Over the Summer, Softcard and a local gas station were offering f'real ice cream shakes for $0.29. They are regularly $3. So I was already saving a ton of money on them. But add in the $1 cash back from using my Amex Serve card with the Softcard app, and I netted $0.71 on the transactions. Not bad! Then I bought gas using the same method and got $1 back on 10 gallons of gas, or 10 cents off per gallon.

Or take for instance a local movie theater that accepts Softcard where I've gone on dates with my wife. We purchased $5 Tuesdays tickets and got $1 back, saving 25%. At this same theater, you can take a refill cup and get a drink for $1 instead of $4. But wait, there's more. Use the Amex Serve/Softcard combo and the $1 back makes it free. I even do the same thing at McDonald's, which also accepts Softcard. Free drinks, cheaper movie tickets and food? Yes, please!

One of my other favorite ways to stack is using a Delta Skymiles card that is tied with the Delta Skymiles dining program and using them in addition to coupons or other deals offered in the store. A few times, I have been able to stack 5 savings together at Dickey's BBQ. It went something like this: I was on a date with my wife and we both ordered the daily special, which is basically already discounted. We both used a $5 off coupon which made them even cheaper. I used my Skymiles card which gives me miles for every purchase, and since Dickey's participates in Skymiles dining, I get more miles for using a registered card there. Then I put my number in the Spendgo terminal at the register, which gives you about 1 point for every dollar you spend. Once you earn 80 points or so, you can buy a daily special for free.

See how awesome that is? Something that was going to cost about $8 each ended up costing about $2 each. And only one of the methods required me to bring in a coupon. The other savings were automatic or electronic.

In the next part of the series, we'll put it all together and show you more ways you can save by combining all of these ideas.

3 Ways to Make Much of What You Buy Cost Less or be Free - Part 1 of 3

2014-05-10T12:02:00.001-07:00

We all want to save money on purchases. We scour for deals and subscribe to services like Groupon to help us find them. We go to great lengths to bid the right price on eBay, or search a local classifieds section for a price break.

But these deals and decreased sticker prices are just the beginning. They are front end cost savings, which are typically one time savings, but sometimes you can save even more on the back end of the transaction, and sometimes save over and over again.

Let me demonstrate the most significant way to save first, because it is the most important and most effective. Following it will make much of what you buy become free. "Ah", you say, "there is no such thing as a free lunch, so what kind of gimmick is this going to be?" I assure you it is not a gimmick. What we are going to do is use the relationship that time and money have mathematically. Think of it like the relationship mass and energy have to each other in physics, or like the relationship frequency and time have to one another in a Fourier transform. Even Albert Einstein said this principle "is the greatest mathematical discovery of all time". Using this principle, we can calculate a way that instead of things costing you money, they will only cost you time. I call this method "Dimes to Time". Dimes to Time takes advantage of a few things: what I call a Value Reclaim, and also what is called compounding and the time value of money, but in a way you may not have thought of it before.

First Way To Save: Reclaim Some Value out of a Used Product

So you bought some clothes at a discount sale at your local department store that offered you 30% off. Great! You saved good money up front - money that never left your hand which you can now use elsewhere in your personal economy. The rest of the money you spent was transferred into the value of what you purchased, and most of the things we purchase depreciate - declining in value as we use them. Once you use your clothing though, it still has some value that you can reclaim to save even more. There are two ways to do this. The first way is to sell the clothing, the second way is to donate it and receive a tax deduction. Say you sell your clothing for a price that was 5% of the original cost to you. Great again! You just saved another 5% for a total savings so far of 35%. Or say the Feds kicked you back $5 of the value of your donation by reducing your tax liability. Great, that's $5 off your total cost of the product.

But wait! You're not done saving! Take that value, that capital you reclaimed from your sale or the money you got back for your tax deduction, and put it to work. If you invest the capital in an equity fund or something similar, you can literally grow your savings year after year. And it gets better. Leave it in the fund long enough, and that item of clothing you bought will have cost you nothing but time. Let's calculate this and turn our dimes into time!

Say the 10% savings we previously mentioned was $20, meaning that the original cost to us was $200. If we invest the capital we reclaimed in a stock fund that returns 8% per year, it will take just under 30 years' time to return that value to us. Which isn't bad at all.

This equation was used to calculate the above figure. n is the number of periods (in this case years) that it will take to make a Final Value (FV) out of a Present Value (PV) with a given Interest rate (i).

Use the same formula, and calculate the time it takes to reclaim the total cost if we receive 20% back instead of 10%. We get: (log(200)-log(40)) / log(1+0.08) = Just under 21 years.

So, what we're basically saying, the dimes-to-time cost of clothing purchased for $200 with a reclaim value of $20 is 21 years.

Here's where it gets really cool. Say over 10-15 years you've spent $50,000 on stuff, and you are just now selling things off to reclaim some value for them. Perhaps your average is 25% being reclaimed ($12500). How long will it take to get your $50,000 back? (log(50000)-log(12500)) / log(1+0.08) = Just over 18 years. You've quadrupled the money returned to you from the sale, and nearly made it like you never spent it. Now, you may say that 18 years is a long time to wait. And that is somewhat true. However, after 18 years you'll have $50,000 you otherwise wouldn't have if you didn't try to reclaim some value (such as just throwing things away, which is a $0 return) or if you'd have spent the $12,500 on something else that depreciates, such as that sweet new jet ski, which in even 10 years time is an old jet ski worth maybe $2,000. You also didn't have to do anything. Your money, time, and returns did all the work.

Another great thing is that at an 8% rate of return it will only take about 9 years for that money to double again, meaning you will have $100,000 after a total of 27 years. To me, that's like having your cake and eating it too. It's like the typical way we think of saving, but in reverse - almost like deferring the savings until after the purchase. I think this can be a great way to save in a supplemental way to a normal savings plan (i.e., doing both at the same time), because there are things we need now such as clothing, a car, school books, etc., and you can't save 100% of everything you earn because of that. But reclaiming value from used goods and making sure to invest the returned capital in a way it can be compounded can obviously do wonders to your overall savings rates.

The great thing is that since this capital can be considered "trash money" (money you got from "useless" things - useless to you, at least), you can "set it and forget it" in a fund with good returns and not worry about it. If things go badly and you only earn 3% returns over 20 years instead of 8%, you didn't really lose anything because your reclaim would have been $0 if you would have thrown it away or given it away. You'll just be a bit behind your original dimes-to-time calculation.

Our example above detailed what happens if you sold some things that cost you $50,000 all around the same time and invested the $12,500 reclaimed capital at once. But what if all along those 10-15 years, you were selling off a few things as you bought new ones, and invested the reclaimed capital as you went? Well, no surprise, but you would return your money quicker. The calculations for this become complicated, and I won't delve into them here, but you can use calculators like this one to see how fast your money would return to you.

I'll be writing a follow-up post to this one doing over what happens when you continually reclaim value and invest it, so come back to see it here in a few weeks.

Let's move to the next great way to save: Savings Stacking....

For Part 2 on "Savings Stacking" in the 3 Part Series, click here.

FoxFi and PDAnet HotSpot Hardware Hack Idea for Android 4.4 KitKat

2014-04-28T11:33:00.000-07:00

So you got the latest Android Phone, put FoxFi or PDAnet on it, and started using your free wireless hotspot with ease. It was perfect, right? You then heard about the latest and greatest version of Android called KitKat and couldn't wait to get it installed on your phone. In your haste, you didn't realize that people were finding out that their FoxFi/PDAnet hotspots were no longer working on KitKat. Once KitKat was installed, you found this out the hard way with a message that read like this:

"Your carrier has blocked wifi mode in latest phone update. Please use USB mode or Bluetooth mode instead."

Total bummer. You joined with all those other Android users now on KitKat who now are blocked from creating hotspots, and wept.

And as of yet there is no word on whether or not the FoxFi/PDAnet people will be able to find a way around this lockdown. But, what if there was a way to do it with a simple piece of hardware?

The idea is this. PDAnet allows you to tether to your computer using USB or Bluetooth. On the computer installed application, there is an option called "Wifi Share" that allows your computer to share the USB/Bluetooth tether using your computer as a wifi router.

PDAnet (or someone adventurous) should create a small device that works in a similar way as a computer being tethered to the phone, but is small enough to be carried in around with the phone in your pocket. This device could have a small wifi NIC in it as well as a low profile linux OS on it to run PDAnet. Once the device is connected to the USB port on the phone, the PDAnet app could detect this and set up the wifi NIC to create a wifi network through the USB tether. They could also make this happen with a Bluetooth device as well. It would be great to see these devices be capable of attaching to the phone in a way that they would be easy to carry around for usage anytime.

This would work in a similar way to the ISIS iPhone Case that gets around the fact that iPhones don't support NFC. The case itself has an NFC chip and connects to the phone using bluetooth.

What do you think? Are you a techie or a hacker with the skills to do this or the time to throw something together and try to make this happen? Post a comment or share your work. Let's see if we can create a nice solution to the problem of FoxFi being locked down on KitKat.

Follow up on How to Stop Paying So Much for Gas

2013-05-14T11:05:00.001-07:00

New information is being released by the IAEA that is confirming the logic presented below. To see those reports, read on to the bottom of the article where the links are provided.

A reader recently questioned on a Facebook link exactly how the logic works that by filling up with less gasoline, that prices might be affected. I am following up with this article, which copies the response to the question that was posted on Facebook. Click the link to see the previous article titled "How to Stop Paying So Much for Gas" if you haven't read it already.

The logic is explained a bit more in a previous article linked in this one. The idea is maybe better explained this way. Imagine that your family currently purchases seven 2 liter bottles every week, one for each day, and you purchase them all in one day. Then imagine that this is common practice among everyone to do this. Stores and suppliers then would expect to meet specific demand, meaning production, logistics, and inventory management need to be timed well to meet the demand. Also, because large quantities (7 per customer) are purchased in blocks, stores would know that they can charge a bit more if demand were to ever outpace their supply for a day or two.

Now imagine that instead of buying seven 2 Liters all at once, instead you buy a 3 day supply, and then imagine almost everyone changes to do this. This does a number of things to the distribution model. One, it means that there will be a sudden oversupply of soda bottles at the stores. Due to this, stores will either discount the items, because they know a truck with more bottles are coming, or they will find a place to store them, which decreases the margin the store gets for selling the product. Also, because there are now 2.333 more transactions occurring to sell the same amount of bottles as before, the store will either try to normalize by lowering price (buy 3 get 3 free!), or will tell the supplier not to ship as much product.

The supplier then has a few options. Store the excess supply they are receiving from production, at their expense, or lower costs to their downstream to move product, or tell the producers to slow production.

Now, most producers have specific mathematical models on how much product they must create in order to maintain profitability. If they lower production, they will almost assuredly run at an operating loss because though they might be able to furlough employees on the production line, the mothballed equipment on the accounting books will be depreciating on the books regardless. So, producers have that option (which shareholders will not like because it means a decrease in shareholder equity), or the factory can store the excess at their own expense, or they can lower price and *increase* production to maintain revenue levels and profitability. Doing so reduces price for everyone downstream.

In effect, this is what the OPEC nations did for decades that made oil prices per barrel get into the low teens. They produced lots and lots of oil to meet specific revenue numbers, knowing that if they didn't produce as much oil, even though they could fetch a higher price for what they did produce, their revenues would in fact be lower because they would allow more competitors into the market (such as US competitors), who would jump on the prospect of producing oil at 60 per barrel, but would never even think to produce it at 20.

It is the same thing that is causing the glut in natural gas prices, but even at historic lows, producers are producing more than ever.

Whether at the beginning of the supply chain model or at the end, disruptions of the model can and do have impact on the bottom line: price. The article is proposing that now that OPEC producers are no longer able to flood the world in oil (there is too much demand), that we as consumers disrupt their demand models. Futures traders would be spooked (I don't want to be holding a futures contract in gasoline if there ends up being too much supply on hand in July), meaning prices would go down, and mid stream producers (refineries) would lower prices as well to entice buyers. Refineries wouldn't be able to "stop" producing gasoline, because it is a bi-product of oil feed stock that produces many other chemical products. Slowing production at the refinery would reduce output for all products, some of which carry higher margins than gasoline. Refineries have been known to loss lead on gasoline for that reason.

Lastly (whew), human behavior is to binge on supply. Take the soda example. When you buy lots of soda in advance, most of the time you go through it faster than intended. The same goes for gasoline. And you'll be able to take advantage of price fluctuations since on that chance you come across a station with a really low price, you'll have at least a half a tank of empty space to stock up on it.

But don't take my word for it. It is open for debate and discussion. Let's find holes in the logic to improve it.

The interesting thing is that just today, the IAEA is confirming that the US is putting a lot of oil on the market. This increase in supply, along with reported "demand destruction" are going to hold prices lower. Let's keep up the pressure on prices from both the demand side and the supply side.

How to Stop Paying So Much for Gas

2013-05-05T20:26:00.000-07:00

Previously, I wrote a few blog posts on how to "short" sell the oil companies as prices of gasoline increase. If you haven't read them, you can take a look at them here for some economics backrground of why this idea works.

I am reviving this discussion again because prices typically start to ramp up in the late spring for summer driving, and because I've been seeing Facebook posts telling everyone to fill their tanks full, among other things, to save money. You can view that article text here. There are a few reasons I don't agree with filling a tank full if you are driving only relatively short routes (around 50 miles per day or less). The biggest reason is explained in more detail in my previous articles, but briefly it has to do with "just in time" distribution. Energy distribution models today are highly efficient, and the distributors are counting on meeting certain demand numbers on average. Meaning they are expecting most people to fill their tanks full at each fill up, and will work to meet that demand. But, what if we change the demand from what they expect it to be? Remember supply and demand curves from your Econ class? There will be too much supply, and the price will go down until the curve reaches equilibrium again.

So, how can we do this? By not storing gasoline for the oil companies by filling your tank full and getting a 500 mile range of driving before having to fill up again. Instead, fill to half full or to a dollar amount that gets you somewhere near the half tank mark. There are plenty of gas stations around these days along most driving routes that making 2 or 3 stops per week will not make you lose much time. It might even save you from wasting time and gas idling at a red light if you stop at a station on a corner.

Another reason I don't see a need to fill to full unless driving a very long distance is that many tanks these days are 17 to 20 gallons. That's a lot of flammable fuel, first of all, and it isn't weightless either (meaning it does take energy to haul it around. Whether it is negligible or not is debatable). More importantly, cars that were much less fuel efficient in the 1950's and 60's had tank sizes around 16 gallons. If a tank that size was fine for a car that got 10 mpg fuel efficiency, why do I need to fill up with 20 gallons in a car that gets well over double the mpg's? If anything, 8 gallons should be fine. Something tells me they want us to buy more product for more revenue... kind of like how restaraunts have increased portion sizes so they can charge more, without you feeling completely ripped off. Fill to half full, and they'll think twice about their pricing models.

Yet another reason is that most cars these days have fuel pumps that won't be affected by low fuel levels, as long as you don't run out of gas. And they have built in screens to keep out any debris or settled material (which would end up at the bottom of the tank whether half full or not, which goes against the claims of the Facebook posts), and even then most tanks are built with very good materials these days that won't corrode easily.

Do you really need more reasons? Another reason is the widely used rule in investing of dollar cost averaging. Everyone knows you want to buy low, sell high. But how do you time it just right? Even highly trained professional traders get it wrong. Dollar cost averaging theorizes that if you just buy at smaller, more frequent, but evenly placed intervals, your cost basis will be better than if you try to time the market, or buy in lump sums (i.e., filling to full). Gasoline prices are volatile, and that is where dollar cost averaging by buying 2 or 3 times a week and filling only half full will help. This means that because you'll be filling at quite a few different gas stations along your many routes, you'll be averaging a better price than you would otherwise. And chances are you'll be able to take advantage of a "dip" in prices when you drive by that gas station with a ridiculously low price and you only have an 1/8 of a tank left, further averaging down your overall cost of gasoline.

Lastly, we all know it is human nature to conserve, or at least to remind ourselves to be more economical with, our goods when we see a limited supply. Hoarding, or in this case filling to a full tank, can lead to an increase in consumption just because of feeing comfortable in our bounty. Who knows, you may save two or three percent off of your weekly gas cost just due to the fact that you are more aware and keeping yourself from making unneeded extra trips because in the back of your mind, you don't want to have to stop at a gas station sooner than usual.

Google Doodle Celebrates Ella Fitzgerald: Hear Her Great Style in This Video

2013-04-24T23:58:00.003-07:00

I'm a big fan of lots of music, but jazz is a mainstay for me. When I visited New Orleans years ago to watch the Sugar Bowl in 2009, I made a point to go to as many jazz clubs as I could. From the historic sounds of New Orleans Jazz, to the rich and deep sounds of Miles Davis (who's recently dropped vinyl re-release of "Round About Midnight" I picked up last weekend on Record Store Day), to Dave Brubeck's cool transcendent rhythms, to Ella Fitgerald's boisterous and energetic sound and fantastic singing range, there is just something magical about jazz.

As if the era of bustling downtowns and newly lighted streetscapes was meant to be accompanied by jazz's breadth of technicality, volume, swinging notes, and improvised soundscapes, we constantly see the two intertwined in film, story, and culture.

Ella Fitgerald had a major role in that, by recording over 200 albums and selling over 40 million recorded works, she was a centerpiece of jazz music with a career that spanned many decades.

Her unique style, energy, and passion continue to be praised and emulated today in many genres beyond jazz. Here is a great performance recording of Ella singing one of my favorite classic jazz tunes, "Mack the Knife". Watch it and ask yourself "is there any wonder why she has been named The First Lady of Song"?

What not to do With Facebook Profiles When You Get Married

2013-04-23T20:07:00.000-07:00

It seems like a trend among many of the people I know that once they get married, they "merge" their Facebook or other social networking profiles together, and use a name that combines both of theirs. For example, something like "John Jane Doe", or something like that.

I dislike this trend (if only there was such a thing as dislike on Facebook, but that's another post for another time), and my reason for disliking the trend is that it becomes confusing who the messages are being posted by and seen by, and who is actually in our friends list, etc. I also don't like how it combines both names together, without an "and" or something similar (it makes Jane look like John's middle name), and I don't like that if you were previously friends with one or both of the newly weds, you may have to re-friend them depending on how they go about making the newly-merged accounts. And let's not even talk about divorces, and how that all plays out when the accounts have to be split... I can't imagine how that will work!

Instead, I think Facebook ought to promote the idea that married couples, if they want to have merged information, ought to create a Facebook page that represents their marriage, such as The John and Jane Doe Couple, or John and Jane are Hitched! page. Assign both members of the marriage to be admins of the page, and both will be able to post as the page name and also receive posts from friends who post to the page directly. Friends of the couple can also "like" the page to show their support or to receive updates on what they are up to as a couple, while letting those who only want individual updates from one of them to receive them through the husband's or wife's individual account.

There are many other benefits to this as well. The page idea could be expanded to represent a family if the couple begins having children. And in cases of divorce (which I hope never happens for my friends), the page can be dealt with or split up much easier. If a couple doesn't want to create a page, they can always create an open or closed group relating to their marriage. There are a few less things you can do with a group than you can with a page, but it is also an option.

Anyway, it's just something I've noticed happening more often and so if you're thinking of doing it yourself, hopefully some of the reasons I've given will help you change your mind. What do you think? Have a differing opinion? Post a comment below.

UPDATED: Who Will Be Google Fiber's Next City of Choice?

2013-04-17T23:53:00.000-07:00

Update: We were right, Google Fiber announced today on 03/24/2015 that Google Fiber will be made available in Salt Lake City, Utah. More details to follow. Below are the arguments we previously made about why Google Fiber should look at Salt Lake City next nearly two years ago.

Google Fiber just announced today that they will be moving to a third city by the end of 2013. In the announcement, they stated that if the deal goes through, they will be acquiring the fiber network infrastructure that made up what used to be iProvo - a municipal fiber internet network that was created for residents in Provo, Utah.

Since I first learned about Google Fiber, I figured it would be a good fit for them to look for under-utilized fiber networks, many of which are municipal networks. (Which it turns out is basically what they do) It really came as no surprise to me that Google would pick a network like iProvo, in a city like Provo, Utah, because the fiber is there, the customers are there, but for whatever reason (I chalk it up to municipalities not knowing how to get the word out about the offerings of the service), the amount of subscriber growth never seems to keep up with the costs of operating and expanding the network.

So it made sense to me to think that Google would first be interested in these downtrodden networks, many of which are under fire because the cities that invested in them are not getting the full benefit that was promised when they were proposed and constructed. Take a desperate former network operator like the City of Provo and match them up with the 1 Gbps offering Google Fiber, and it seems like you have a win-win.

Which may make one of the next "cities" that Google Fiber announces seem a bit different than what we've seen so far. To this point, the cities announced have not been relatively close. Kansas City is not near Austin, TX, and Provo, UT is not near either of those.

But the cities of Orem, Murray, West Valley, Midvale, Brigham City, Centerville, Layton, Lindon, Payson and Tremonton, Utah, are all relatively close to Provo.

Am I crazy? Why would these cities possibly be on the list to be next for Google Fiber, when they are near Provo, and are all suburbs of larger cities such as Salt Lake City? I think the answer is simple. It is because of a municipal fiber network that has been struggling for over six years to keep it's subscribers, partner cities, and others in the State of Utah happy. That network is called UTOPIA, and I have thought for some time that it is a prime candidate for Google to pick up for its expansion of Google Fiber. For all intents and purposes, UTOPIA and iProvo are almost identical in how they were set up, using similar revenue, subscriber, and provider models. In fact, both of them use the "wholesale" model, where the network itself provides the venue for multiple providers to offer services.

Yet, like iProvo, UTOPIA has struggled to gain users, even though for much of the six or seven years it has been available in it's partner cities, it has had higher speed offerings at lower cost than the major competitors in the land: Comcast (Xfinity) and Qwest (CenturyLink). For a while, I was able to use UTOPIA at home and it was great. At that time in 2006-2007, I constantly received 40 Mbps download for about $40 per month. That was back six years ago. Speeds on Comcast in Salt Lake County have just barely begun to reach 40 Mbps, and the full cost of that internet service is around $60.

I would imagine that every mayor of those 11 partner cities of UTOPIA are talking about the Google Fiber acquisition of iProvo, talking to the mayor of Provo, and wondering if that is the same course of action they should take. And I wouldn't even be surprised if talks with Google have occurred. (although they say they have not).

Speaking of which, as I searched for some information on UTOPIA's website, I came across a headline in the Salt Lake Tribune that was published today that reads: Executive of troubled UTOPIA sees hope in Google Fiber deal.

While, ultimately, UTOPIA cities may not agree to the terms necessary to complete a sale to Google of the infrastructure, at least for the time being, under the "wholesale" service model, I don't see why Google Fiber couldn't work a deal to at least be a carrier on the network, and sell the 1 Gbps service as well as their other service tiers since the UTOPIA network already has that capability. Especially since they will already have an office in Provo where they are running iProvo. Eventually, a buy out or a significant stake in the ownership of the UTOPIA fiber could then be negotiated.

This already fits into Google Fiber's apparent strategy, as they have been buying "dark fiber" for years, and recently leased more fiber in Kansas City. That municipal network, called LINKCity, has also had similar issues that iProvo has had, and that makes them also somewhat similar to UTOPIA.

In some cases, leasing fiber first, rather than owning it outright, could be a great secondary strategy to bolster their footprint where networks like UTOPIA are already being rolled out, without having to put up their own money upfront. Some estimate that it would cost Google over $11 Billion of their own cash to roll out their own network nationwide --a cost they can definitely lower if they lease some of their fiber network while awaiting momentum gains to offset costs.

It will also be interesting to see what the big competitors do in the surrounding areas of Provo and in Salt Lake County, with Google Fiber coming to their back door. Will they scoff and shrug it off, or will they try to beat Google to offering faster speeds in those surrounding cities? AT&T promised Austin a competing 1 Gbps service following Google Fiber's announcement in that city. Stay tuned.

How To Get Rid of Pennies Without Paying Fees or Rolling Coins

2013-04-08T21:59:00.000-07:00

If you're like me and most Americans, you probably have pennies and other coinage lying around that you may feel is quite useless. And we've all seen the penny counting machines that charge a fee to process them, such as CoinStar, or the coin rolls you must use to deposit them into the bank.

If you've decided it is time to stop storing these monies in your couch, seat cushions, under the driver's seat, in the piggy bank, or that glass mason jar, now might be a great time to use your money while completing your spring cleaning.

But who wants to take the time to roll coins, stand in a bank like, or wait for a coin counting machine to process all of the coins and charge a fee, when you can immediately use your coins for purchases for free?

And, no, I am not speaking of taking an embarrassing bag of coins up to a cash register...annoying a sales clerk in the process (like Cramer so famously did in Seinfeld).

What I am suggesting is a split payment. Many automated checkout kiosks make this a cinch! And the great thing is, you don't need to worry about how much coinage you have or carrying exact change. Just bring in 30-40 cents or so (maybe 20 cents if all pennies) to the store each time you go shopping. When checking out, choose the cash option and deposit your coins and pennies. Your balance due is now decreased by 20, 30, or 40 cents. Now choose credit/debit and put the remaining balance on your card. Congratulations! You now used your 'useless' coins and paid no fees or rolled any coins.

You can do the same thing at most registers with a clerk, but they may be less willing to split the payment, so be aware of it and look for a machine checkout system. (Most that I have run into don't care, though, and will do it.) Additionally, do you see why it doesn't matter whether or not you have exact change? If your balance due is $41.56, and you bring in $0.30 and deposit that first, you easily put the remaining $41.26 on your card, taking advantage of the fact that cards make dealing with any cents easy regardless of the number.

Soon, you will be rid of your excess coins, and will have saved a bit from being debited from your bank as well, all with very little effort and time taken to do so.

And now, a proposal...

Many retailers are finally starting to send receipts to your email account of choice! So, why don't retailers and credit/debit card processors come up with a way that change can be dealt with electronically? For example, say $20 cash is used to make a $13.46 sale. Why couldn't the clerk swipe the $0.46 to a bank card, or to a special purpose, industry standard 'coin card', that works like a sort of digital coin purse and can be used like a credit/debit card for later purchases?

Open Enrollment for the Nation

2012-10-11T21:16:00.003-07:00

I was able to see some recent figures for health insurance costs for the year 2013, and I have to say I hope companies are doing their open enrollments now - before the election.

If not, many people may be in for a surprise after the election. Of course, I know a lot of people who support Obamacare who say they don't mind paying more for health care if it means everyone is covered, among other things. Fine and good, but let's let the People decide if they agree with that as a majority.

Based on the surprise to the increases and changes I've already seen, there may be quite a few Americans that are unprepared for just how much getting everyone covered is going to cost them, especially in light of the promises that came with Obamacare to reduce health care costs.

Health Savings Accounts are taking some of the biggest hits, and it looks like employer support of them could be dropping significantly. That isn't good news for many who saw it as a good option between being covered and being frugal by cutting overall health care costs yourself and saving money for future health needs. Costs for the minimum premiums are going up for both individuals and employers, and how contributions to the HSA accounts are accounted for is also causing controversy over whether it really makes sense to contribute much money to them at all.

And if you liked the idea of using Flexible Spending Accounts, the $2,500 contribution limit may really hamper your plans if you have kids that need braces, or have needs that exceed $2,500 per year. Unless someone can show me otherwise, this new limit is an "invisible" tax on every dollar above $2,500 that the normal FSA account holders was used to contributing to their accounts in years past.

But it isn't just those costs that have gone up. Even traditional plan premiums are going up for employers and individuals.

I'd start asking your employer and/or health care provider to get you information about what next year's costs are going to be, before you vote this year. Once you determine how it will affect you, then cast your vote.

The next few weeks left in the election are America's open enrollment period. We'd better be ready for what the majority decides it wants. Because it will be many years before we again have a chance to change our plan as a nation.

Below is some information from the HSA Council on changes being made through Obamacare.

The primary issues of concern for high-deductible plans are that:

The medical loss ratio formula doesn’t take into account contributions to HSAs. Many high deductible health plans are accompanied by an HSA, which covers much of the first-dollar costs before the plan’s deductible is reached. HSA contributions are currently not reflected in the medical loss ratio calculations.
High deductible health plans may not be able to raise rates fast enough to keep up with rising costs. High deductible health plans will require larger annual rate increases than typical medical plans because medical inflation will have a greater impact on claim levels than plans with lower deductibles.
High deductible health plans have fewer premium dollars to cover their fixed expenses. Every plan has fixed expenses that it covers with premiums. Since high deductible health plans have lower premiums than other plans, a greater percentage of the premium must be used to pay these fixed expenses. For example, $400 of fixed expenses represents 40 percent of a $1,000 premium, but only 20 percent of a $2,000 premium and just 8 percent of a $5,000 premium. Therefore, it is harder for a lower premium plan to keep its non-claim expenses below 20 percent of its adjusted premiums as the medical loss ratio rule requires.
High deductible health plans have less predictable claims experience that could increase the risk of paying rebates. High deductible insurance plans pay fewer claims than plans with low deductibles. But when high deductible health plans pay claims, the claim dollar amounts tend to be larger. This lower-frequency/high-payment creates less actuarial predictability which can result in high claims in one year and low claims in another. If the plan has low claims, it may not meet the 80 percent medical loss ratio and be required to pay rebates. If the plan has high claims, it may lose money that it cannot “make up” in other years.

The information below was provided by HSA Bank:

• Qualified Medical Expenses: Starting January 1, 2011 you will no longer be able to pay for over-thecounter medications from your HSA as a qualified medical expense. The new law removes over-the-counter

drugs not prescribed by a physician from being paid from an HSA, FSA, or HRA on a tax-free basis.

• Non-qualified expense penalty: Under the new law, if you use your HSA funds for non-qualified expenses,

you will face a higher penalty. The tax penalty for non-qualified HSA distributions will increase, effective

January 1, 2011, from 10% to 20%.

• Mandated insurance coverage: Effective January 1, 2014, the legislation will require most U.S. Citizens

and legal residents to have health insurance. It also outlines the minimum coverage and essential health

benefits that need to be provided for a plan to qualify for the mandated coverage. This could potentially limit

the types of health plans that will be available to consumers. Below are a few of the areas which require

clarification by the Secretary of Health and Human Services:

• Preventive care services: All insurance policies will be required to provide first dollar coverage for

preventive care services. While HSA-compatible health plans are currently allowed to provide first-dollar

coverage of preventive care services, in the future, all plans will be required to do so. These provisions

will go into effect in 2014. Additionally, further clarification must be provided regarding what constitutes

“preventive care” under the new regulations and whether or not that definition conflicts with current IRS

guidance on what constitutes “preventive care” for HSA purposes.

• Minimum actuarial value: All insurance policies will be required to provide a minimum actuarial value

of at least 60 percent for the benefits covered. Clarity must be provided regarding how “actuarial value”

is defined. It is also not clear whether a plan’s actuarial value would include employer or individual

contributions made to the individual’s HSA. Including the contributions in the calculation of a plan’s

actuarial value would make it easier for more HSA-compatible health plans to meet the minimum

actuarial value requirement. If contributions are not included, many plans could no longer be sold.

• Small employer benefit requirements: The legislation also includes a provision that would prevent small

employers from offering plans with deductibles greater than $2,000 for singles and $4,000 for families

(indexed annually). Employers may offer plans with deductibles higher than $2,000 / $4,000 if the employer

offers a flexible spending arrangement (FSA) that reimburses the difference between the higher deductible

and $2,000 / $4,000. This provision will affect the health plans that can be offered to small employers and

still qualify for HSA contributions. This provision goes into effect in 2014.

• Excise tax on ‘Cadillac’ plans: The new law will impose an excise tax of 40 percent on employersponsored coverage that has a benefit value in excess of $10,200 for single coverage and $27,500 for

family coverage (indexed annually). The benefit value of employer-sponsored coverage would include the

value of the group health plan and contributions to employees’ FSAs, HRAs, and HSAs. This tax would be

imposed on insurance companies, including self-insured plans and plans sold in the group market, and plan

administrators. However, this provision does not go into effect until 2018.

• Medical loss ratio requirement: The new law imposes a “medical loss ratio” requirement. It would require

a set percentage of premiums to be paid directly to medical claims. Since HSA-compatible plans have lower

premiums, this may make it challenging for plans to meet the established ratios and still qualify for HSA

coverage.

Looking back at Stock Options Backdating: A Debate

2012-08-20T22:17:00.000-07:00

The following is a mock debate between John Ruskin and Andrew Carnegie over the problem of whether options should be allowed to be backdated. The arguments are made based on my interpretation of their individual viewpoints from studying their works. It was originally composed in 2006, but is being republished as we look back on the backdating scandal that occurred in 2006, namely with Apple and Steve Jobs.

A Debate Between Mr. John Ruskin and Mr. Andrew Carnegie

Commentator: Backdating Stock Options, that is the subject of our discussion and debate

today on our program. The business world has been immersed in discussion over the

ethics of this strategy, and whether or not it should be allowed. With me today, I have

two authorities on business to discuss this very issue, Mr. John Ruskin, and Mr. Andrew

Carnegie, both of whom have commented on creating wealth and the best practices for

So, Mr. Ruskin, I will start with you. How do you see this issue?

Ruskin: I won’t go as far as to say that I am surprised by it, nor will I go as far as to say

it is appalling behavior. However, I am one to study the effects of such behaviors on

organizations and society as a whole, and will say that I don’t believe that backdating

options is good for the creation of wealth.

Commentator: How so? Isn’t backdating stock options a way to help executives stay on

top and be competitive?

Ruskin: It comes down to the fact that backdating these options to buy stock is merely

the way that executives can increase their wealth solely for the purpose of mortal

luxury. They are doing this in spite of any concern to investors in the company, and

even sometimes doing so while the industry in which they operate and the market and

profitability of their business is decreasing. These are ill gotten gains obtained most

often at the peril of many.

Carnegie: If I may, I am going to have to disagree with Mr. Ruskin on a few issues.

I argue that the purposes of backdating options are not always solely to benefit these

industrialists with some form of “ill gotten” gains, as my colleague Mr. Ruskin has

stated. These backdating procedures are in place by executives to keep the businesses,

and the directors, as well as the employees a few cases, competing amongst themselves

and the other companies. Let us not forget, Mr. Ruskin, that the Law of Competition is

in play here, which is absolutely central and essential to the advancement of society and

mankind. Individualism is the best and most fertile field, which always produces the best

fruit, and this fosters individualism.

I think also that Mr. Ruskin has not correctly suggested the idea that these procedures are

somehow adrift from the desires and considerations of the stockholders. In most cases,

these modes of increasing the value of the options have been accepted by the voters as a

means for the option to be exercised at its greatest value and return.

Commentator: Then, aren’t there ethical and moral consequences for gaining greater

wealth in this way, or is this something that, as interest was for so long, will eventually be

viewed as not only acceptable but necessary?

Ruskin: I would never hope such a thing would be seen as necessary, or advantageous

for society, business or mankind. I am somewhat surprised at Mr. Carnegie, whom I

respect as a fellow gentleman and colleague in the science of economic thought, because

he forgets that there is at all times present the question of justice. Backdating stock

options puts a negative value to the wealth gained, and therefore draws downward on

the economy. Already, we are seeing this effect in the figures that show the amount

of money that was lost, or misreported, by these programs. Corporations are having to

go back and restate their financial statements to the public, and the majority of those

reissued statements show a correction for hundreds of millions in losses.

Is putting the benefit and favour of one man ahead of another the proper thing, if the rules

and measures by which it is achieved are not justly or nobly stated, or not fully disclosed

to all parties involved? In my view, this is selling the dying man the loaf of bread.

Although there exists no illegality in the least, one is commercially rich and the other is

commercially poor, and without reason, as I have said, due to the fact that in most cases,

the executive never made the company’s stock rise, or ever increased the market share

during that period of time. Let Mr. Carnegie not forget, and society also, that “Many joys

can be given to men which cannot be bought for gold.”

Commentator: Mr. Carnegie, how does one respond to this idea, and is your view one

that sees these practices as becoming acceptable or necessary?

Carnegie: One could argue the point of whether or not these practices are necessary, or

whether or not they are moral or should eventually be made illegal. I won’t pretend to

know the answer, nor will I sit as a judge of that issue. We’ll let time and the overall

markets dictate that, and they will decide whether or not these things are acceptable.

The rudiments of business are such that sometimes can have the appearance of being

immoral or unjust. But I believe that such costs of injustice within the system, many of

which are allowed injustices, are far outweighed by the benefits that can be produced

as the individual is given his right to obtain, and aspire to new heights, “with none to

make afraid.” As such, I don’t believe laws or legislation should be introduced on such

matters. I strongly advocate the free play of economic forces. The laws and fundamental

theories surrounding the governance of Corporations, and the very purpose for a charter

for such from a State or governmental body, has always been to allow for private

governance of internal business affairs. This is part of the legal right the millionaire

has to his money. He has the right to control it. If the shareholders and directors of that

organization have voted such to allow for these actions, and know about their existence,

then they should be allowed to continue, as they have the rights entrusted to them to

govern the trade and rules of their property and issuance of stock. I would argue that this

inequality of environment and concentration of business is helpful to the overall aspects

of society. The wealth of a few is always beneficial to society if the wealthy know how

to use their wealth correctly.

Commentator: Mr. Ruskin, Mr. Carnegie makes the point that the millionaire must

have the right to control his money, and that these corporate boards and shareholders

are merely voting to allow for these programs by way of corporate law which allows for

corporations to govern themselves with articles and bylaws. How then, Mr. Ruskin, can

we take away from these advantages, and take away such opportunity from the rich? I’ll

give you the last word.

Ruskin: Many men of business hardly know the meaning of what it is to be rich, and

frankly cannot govern themselves to make such decisions without help from outside

thought. I have dealt with the likes of Mr. Carnegie’s argument before. Are these so

called stocks really their stocks, just as I argued in my book that the heathen leads forth

to say “These are MY jewels”?

economy. The blood that comes from fever resembles the ill gotten wealth of these

executives. The grounds have already been made known by which we can judge the

great question of justice, and so Mr. Carnegie’s argument of the need for markets to

determine such is not applicable to this argument. What we need is a system that is

made that will help to develop an honest man. One that will deal with these men, and

send the clear message to the others in the arena of business that if they persist in such

things that we as a society will deal with them just as cunningly as they stole from us and

our economy when backdating their options to reap a seemingly better one.

Remember that economic wealth is the blood of that

Stock Options Backdating: A Look Back At Steve Jobs

2012-08-20T22:12:00.000-07:00

With Apple Computer stock reaching the historic highs in recent days, it is interesting that I have seen some people mentioning the "options backdating scandal" that caught up with Steve Jobs, former Apple CEO and Co-founder, back in 2006. It was then a hot-button issue, and some believe should have lead to his conviction and imprisonment.

At the time, I wrote a paper on the subject describing the issues at hand and also what makes it so enticing to backdate options. Imagine if you could backdate options on Apple that had a $150 strike price that ended in the money but were issue when Apple was at $110, to a back date when the stock price was around $80. You would make much more profit from holding that option. Do it a few times over as the stock price rises, as Apple's has over the last decade, and you would build up a small fortune.

Should these companies have been held more accountable for these actions? Should back dating be illegal, and not just un-ethical?

First, I will republish the original paper from October 14, 2006. I will also publish a mock debate on the subject between two experts: John Ruskin and Andrew Carnegie, which can be read here.

Stock Option Backdating

Should Stockholders Be Worried?

The stock option, both powerful in its potential, and complicated in its design, has made

some of the richest investors and businessmen of our times. But the manipulation of their price, a

strategy called backdating, has also recently been in the scope of controversy.

Stock options originate from the idea of purchasing the right to by property or securities

without having to buy the property or security upfront, and within a specified time period. This

type of purchasing power has numerous advantages, and was first used in land and real estate

purchases.

Options, whether it is an option on stocks or a real estate option, allows the party

interested in buying the asset to buy at what is called the strike price. This guarantees the owner

of the asset a specific buying price sometime in the future when the option holder exercises the

option. The option buyer pays an option price to purchase the option, which has an expiration

date, by which time the option holder must exercise the option. The option holder has the right to

sell either the option, or the underlying asset.1

This means that if you buy an option on a stock, currently worth $20, for an option price

of $1 per option, and then a few months later, exercise your option when the price of the stock is

$25, you will make $4 on each option. So, if you bought 100 options, you would have paid $100,

and made $400, because the option would have been what is called “in the money’ which means

the stock is above the strike price. From this we can see that a lot of money can be made from a

small buying price, which helps to minimize risk, and makes a convenient way for investors who

wouldn’t have enough money to put down, to still play off their bets. If we wanted to have made

the same $400 on the above hypothetical example by purchasing the actual stock, you would

have to purchase 100 shares of stock at $20, which is a $2000 investment. Remember, however,

that with the option we made the same amount of money by spending only $100. Similarly, if

the stock were do have gone down instead of going up, say to $10 per share, you would have

(Jim Cramer’s Real Money as well as Characteristics and Risks of Standardized Options)

lost $1000. However, with the option, you would have only lost $100 since your option would

become void and worthless, or what is called “out of the money” which means the stock is below

the strike price, and it cannot be exercised.

Options to buy the underlying stock are called “call” options and options to sell the

underlying stock are called “puts”. Puts are different from calls, in that you make money

on the put option as the price of the stock goes down. Jim Cramer explains in his book Real

Money: “Options are quite handy, and most of us have used them; we just haven’t used them to

buy or sell stock. When we speculate in real estate, we often ask for an option to buy something.

We pay for that option even if we end up not buying the land beneath it. When we buy insurance,

we are buying a put. We are putting a little money… 2. Options are also similar to the way in

which movie producers buy the right to produce a movie from a book; however, they are not

obligated to make the movie because they have only purchased an option.3

From our example, it can be seen how stock options are a great way for companies to

offer incentives and benefits to their employees. These types of stock options, called Employee

Stock Options, are the same as call options on the company stock at which the employee works,

except they have more restrictions.4 The company issues the employee a stock option grant,

which is a grant of a certain number of shares. The grant usually has a schedule that determines

how fast the grant will vest, and also has an expiration period. Because of the vesting schedule,

usually over a series of years, options are seen as a way that companies can attract bright,

hardworking employees, and keep them, due to the fact that the employee may feel obligated or

wish to stay at the company until the options can be exercised. The strike price is determined by

taking the stock price at the time of the grant, or sometimes the average price between the price

on first day of the month and the last day of the month in which the grant was issued. There are

also other ways to do this as determined by each individual company.

Jim Cramer’s Real Money Pg. 266

Wikipedia - http://en.wikipedia.org/wiki/Stock_options - Historical uses of options

4 Wikipedia - http://en.wikipedia.org/wiki/Employee_stock_option - Employee stock option

Employee Stock Options also differ from regular call options, in that the employees are

not required to pay for the option. Normally, the grants are part of the companies’ incentive plans

or their benefit plans, and are granted at the time the employee is hired. This makes Employee

Stock Options an added benefit to the employee, since a good amount of money can be made,

without having to expend any funds. Also, because of the nature of options explained above, the

employee suffers no loss if the options become worthless, because nothing was paid, and nothing

becomes due when the option expires or becomes void.

Adding to this, companies will sometimes offer additional grants to employees who have

outperformed their peers, or to top executives for having great successes. Some of these so-called

incentive stock options have the benefit of being charged reduced taxes.5 They sometimes

even make stock options the method of payment. An example is Gil Amelio, who was made the

CEO of Apple, and five-hundred days later was fired. His stock options became worthless: “

AMELIO 6

There were numerous other examples of this, as dot com companies could not afford

to pay high wages, and attempted to compensate the employees with stock options. For some

companies, this worked fantastically, and stories ran the presses about low level employees

making millions. However, many other employees never made a dime from their grants. As their

companies sank into the whirlpool of dot com destruction; as they were laid off from the ailing

companies, or simply ousted, their options grants became worthless paper. They found out the

hard way, just like Amelio.

To counter these potentially large losses, or the potential that an option won’t meet the

specified strike price, some companies have been involved in the backdating strategy. Although

it is questionable whether backdating is illegal, it has ethical and moral ramifications that must

be considered. Among the frontrunner companies to be investigated for such activities are

SmartMoney - http://www.smartmoney.com/tax/capital/index.cfm?story=options_iso - Taxes on Incentive

Stock Options

6 Gil Amelio On the Firing Line: My 500 Days at Apple

Apple Computer, Brocade Communications, and CNET. These are a few out of some 120 other

companies under investigation by the FBI and the SEC. 7 Interestingly, only a few months ago,

no one was worried –or discussing the issue, of options backdating. Adding to that fact, the main

group finding and reporting options backdating issues as requested by the SEC are the tech sector

companies, the same sector of companies that only a few years ago faced tough declines in stock

prices, and suffered the most from the declines in the overall economy and the crashing dot com

The way backdating works is by manipulating the option’s strike price date. If the strike

price was issued at, say, $20, but the stock then falls to $18, the option becomes worthless.

However, what if the option could be backdated a few months when the stock price as $16? Then

the option is no longer worthless, and can be exercised for a profit. SEC Chairman Christopher

Cox stated before congress: “There are many variations on the backdating theme. But here is a

typical example of what some companies did: They granted an "in-the-money" option-that is, an

option with an exercise price lower than that day's market price. They did this by misrepresenting

the date of the option grant, to make it appear that the grant was made on an earlier date when

the market value was lower. That, of course, is what is meant by abusive "backdating" in today's

parlance.”8 This may be considered unethical, but it is not illegal.

What causes the questions and scrutiny, and potential illegality is how options are

supposed to be reported by the companies in their quarterly reports -–as an expense. It is also

questionable due to the fact that someone was sold a stock, or had the likelihood of being sold a

stock, at a value that was less than what was predetermined by the option grant’s strike price.

This is the reason the SEC is investigating these cases. Since the option grants are

supposed to be reported as expenses on the quarterly balance sheets of the companies that offer

them, if the options are backdated, or manipulated in any way to the benefit of the company

CNN.com and AppleInsider.com

SEC - http://www.sec.gov/news/testimony/2006/ts090606cc.htm - Testimony Concerning Options

Backdating

or option holder, the expense report will not be accurate. In fact, it will show that company

expenses were actually less than what they were, making profits seem larger. This has huge

implications, due to the fact that the stock price of a company is largely based on the earnings per

share ratios. The so-named P/E Ratio is a key determinant of how much an investor should be

willing to pay for a particular stock. If the company appears to be earning more money than it

actually is, then the stock price will not reflect the true P/E ratio, and will be higher than it should,

because investors would, theoretically, bid the price up to the false P/E Ratio. The shareholders

of the company are then being cheated because they are putting confidence in a stock and a

company which they think is earning a lot more money than is actually true.

The SEC Chairman stated further: “A few years ago, the SEC began working with

academics to decipher market data that provided the first clues something fishy was going on.

One of the academics with whom the SEC worked was Erik Lie of the University of Iowa, who

subsequently published a paper in 2005 that showed compelling circumstantial evidence of

backdating.

“Dr. Lie's data showed that before 2003, a surprising number of companies seemed to

have had an uncanny ability to choose grant dates that coincided with low stock prices…

“For example, in 2003, the Commission charged Peregrine Systems, Inc. with financial

fraud for failing to record any expense for compensation when it issued incentive stock options.

The SEC's complaint alleged that at each quarterly board meeting, the company's directors would

approve a total number of options for employees. The company would then allocate the options to

the employees during the quarter. But the options wouldn't be priced until the day after the next

quarterly Board meeting. On that day, the company looked back at the market price of its stock

between the two quarterly Board meetings, and picked the lowest price. That turned the options

into in-the-money grants. But even though accounting rules required that they then be recorded as

compensation expense, the company didn't do that. As a result, Peregrine understated its expenses

by approximately $90 million…

“When these stock option practices surfaced, Brocade was required to restate and revise

its financial statements for six fiscal years, from 1999 through 2004. The scheme resulted in the

inflation of Brocade's net income by as much as $1 billion in the year 2000 alone…”9

As can be seen, untold billions of dollars were misreported over the years for companies

who were involved in backdating their stock option grants. It means that the stocks for these

companies may have been overvalued. It means that purchasers of the stock may have had to

purchase at a higher price, much to the elation of cunning executives. This affects employees

who did not know they were being granted backdated options. It affects board members, top

executives, and shareholders, whose companies will now face investigations, and who have

similarly faced a decline in stock value due to the investigations. Some executives have even had

to resign, some have been fined, others convicted. "I'm not an opponent of stock options. They

can be a good incentive tool if used correctly. But they can also be dangerous for companies and

shareholders when they are exploited by executives. I'm not for that,” said Erik Lie, the college

professor whose research has led to this newfound corruption.10

Moreover, this corruption affects the overall economy, as Emerson put it so plainly:

TheStreet.com - http://www.thestreet.com/_tscs/stocks/general/10299710.html and SEC - http://

www.sec.gov/news/testimony/2006/ts090606cc.htm - Testimony Concerning Options Backdating

10 The Salt Lake Tribune - http://www.sltrib.com/search/ci_4387153

Mitt Romney and Paul Ryan: The Next Steps

2012-08-11T10:20:00.000-07:00

Today, Mitt Romney formally announced Paul Ryan as his running-mate in the 2012 presidential election. This is an interesting decision on many fronts, underscoring the choice between fiscal change and spending reductions, and Keynesian policies and spending increases from who we choose as President this year.

Actually, before the news leaked last night about Ryan receiving the nod, I would have liked to have seen Marco Rubio get the nomination for Vice President. My feeling is the Republicans need to to a better job at embracing and showing the nation that they want minority figures taking top positions in government. Latinos are going to start making a large part of the voting block, and the Republicans will need their help. I thought about it some more since then, though, and I think leaving Rubio in the Senate is key for many reasons, which may help Republicans take the next steps. Some of those key reasons include:

Needing Senators there that can finally pass a budget!
Rubio has some campaign issues he is dealing with that could cause some problems.
Paul Ryan is from Wisconsin, where the State has shown some guts in passing austerity measures.
But mostly, and I think Republicans should start mulling this over, Rubio could be made the next Senate Majority Leader if Republicans take the Senate. If they don't, I think they ought to put him in the Minority Leader spot.

By putting Rubio in such a position, I think the Republicans would gain a fair amount by showing they are committed to letting Latinos and other minorities take on key roles, which is important to a large cross-section of American voters.

We will be researching Paul Ryan over the next while, so stay tuned to find out more about this man who's political career got started at a very young age.

The Core Strengths of Apple Computer

2012-08-06T22:13:00.000-07:00

April of 2010

The Problem

Apple Computer (AAPL) has had a tremendous growth run over the past decade, during which time it has become a leader in many market segments including music sales, mobile devices, and smart phones. This growth is also reflective in their stock price, where it has gone from around $30 per share in 2000, to above $300 in 2010. With just over 900 million shares available on the market, Apple is currently worth $280 billion in market capitalization, making it the second largest publicly traded company in the world, behind Exxon.
With this amazing return to market dominance from near extinction in the late 1990’s, the question all investors, businesspeople, and others associated with Apple should ask is whether the success can be sustained. Can Apple continue to innovate and create new markets and devices that capture the needs and wants of consumers, and businesses?

Data and Information, and Analysis

Many previous market leaders have been knocked off the pedestal of dominance, including IBM, Microsoft, AOL, Lehman Brothers, MCI, Napster, etcetera, by their competition. In fact, Apple’s new market valuation placed it ahead of Microsoft for the first time since 1995. Arguably one of the major factors that changed Apple’s trajectory of doom was reinstating Steve Jobs to the board of directors in 1996 after a boardroom coup that ousted CEO Gil Amelio. Although Amelio was one of the best CEO’s to ever run Apple, and had scored some major advances for the company, it was Jobs that set Apple on a course of dominance in music and mp3 players – which saved the company. When Napster, and music file trading, became popular in 1999, Jobs foresaw the need for a better way to organize and keep track of music collections on the computer, which Apple followed through on by introducing iTunes. Almost immediately, the need was seen for a portable device that could store and play the music files and integrate with iTunes, and thus the iPod was born. Jobs was savvy enough to know that the iPod, if done right, could start to convert computer users to buying other Apple devices, such as computers.
A few years later, Jobs struck a deal with Intel to use Intel processors in all Apple products. This was the 3rd major advance in product selection that Jobs made which directly affected the sales of Apple computers to once skeptical customers. It made it possible to run both Mac OS software and Windows Software on the same machine, something that cannot be done vice versa.
Only a short time after that, Jobs announced the iPhone. The iPhone is a revolutionary product that has changed everything in the phone industry, both directly through Apple’s own innovation, and from stirring competition from new devices such as Google Android phones. In only a few short years, the way we think about mobile technology has changed rapidly. The internet is available almost anywhere, and phone apps are constantly changing the way we do things.
So far, Apple, with Jobs at the helm, has stayed ahead of the competition and has ensured its own success by creating new ways of doing things and new products that the consumer wants to use and own. And while no one yet has had a formidable answer to iTunes and the iPod, Google’s Android platform poses a serious threat to first the iPhone, and soon will threaten the iPad, the iPod, and iTunes.

SWOT Analysis

Apple’s strengths in the current market are many. Steve Jobs is likely their largest strength, followed by their dominating positions in music sales with iTunes and the iPod, their dominance in smartphones with the iPhone, and their dominance in emerging mobile web devices like the iPad. They are also gaining more and more strength in the computing markets with the Macbook and iMac product lines. Apple is also a key innovator in mobile search and advertising technologies, and in web based TV and DVR technology with their Apple TV product.
Their main weakness is in penetration to business markets. They are not strong in server hardware or software technologies, where companies like Microsoft, Oracle, IBM, and Dell do much better. They are far behind in desktop search and applications, as well as in “cloud-computing” platforms such as web mail and office applications that are hosted on the internet. Microsoft and Google dominate these areas more fully. Something that is always a weakness with Apple products is that, while they are reliable, they are highly controlled. Many device users want to have flexibility and variety in software and application offerings, which Apple many times does not have. Apple has significant opportunities to gain market share in business technology. With many business people using iPods, iPads, and iPhones, Apple could use this as leverage to begin creating and selling other products business people can use to do business and solve problems. This could come from new cloud computing services, or it could come from new ways of completing tasks with computers than we currently do in the business world.
Apple has a significant threat from Google. While Google is not a device maker like Apple, Google operates a highly profitable business in developing search and cloud computing applications that pose the potential of eroding the need for complex devices. Google has also launched a powerful competitor to the iPhone software called Android. The Android software is not limited to one device, and can be used on phones, tablets, and music players. Apple also faces the constant possibility of Entertainment Industry changes that would make the iTunes store and service irrelevant. Changes such as the Comcast purchase of NBC could change how entertainment content is delivered to mobile devices, as companies who own the distribution and internet networks change the way they do business with retailers (or become their own retailer).

Introduction

“…something that feels like magic.”
In the year 2010, Apple became the largest technology company in the world and the second largest company by market capitalization. Apple surpassed Microsoft in both revenue and profit for the first time in more than twenty years. That is a long way to come from near irrelevance which they narrowly escaped in 1997. (Manjoo, 68) Through creativity, innovation, and impeccable foresight and planning, Apple quickly righted their course in 1997 and became a leader in producing and marketing highly ingenious devices that became essential to daily life. This new direction, product quality, and ease of use soon captured the loyalty of their customers who began to want more out of their electronic devices.
Amazingly, Apple was able to continually deliver great products that smashed the competition and jump started uncultivated industries that never let the Apple faithful down. This success since 1997 has generated hundreds of billions of dollars in wealth for the company and its shareholders, has transformed the mobile device world, and has made us rethink the way we transact business, entertainment, and information on the go. It is on a mission to “redefine elegance…[make] the product the hero…we try to capture something that feels like magic.” – Wilhelm Oehl (Manjoo, 69)
Being at the top of the computer world is fleeting, and as with so many before them, Apple computer is now vulnerable to be the next big business to face attack. Those who are now their business partners could quickly become competitors. Loyal customers could start to find their needs better met elsewhere. Apple management or employees could lose focus and alienate their customer base. Steve Jobs could step down, move on, or pass away unexpectedly. What strengths can Apple draw upon, and what weaknesses can they surmount to ensure they are not the next big tech company to topple?

Research Methods

Because business is an art more than a science, success in business comes from many different factions, and almost never comes from one strategy alone. While one great idea or one major blunder can have a large effect on a business, most of the time the success or failure of the organization comes from many things coming together to cause the result. Such is the case with the success of Apple Inc, for which reason, broad analysis and research was used to determine where the successes came from within the organization that caused it to blossom.
The types of information used in the analysis are as follows: business and academic journals, press releases, analyst statements, computer and consumer trend publications, observations, discussions with Mac users, stock market charts and histories, books written by executives, and case studies.
Most research examinations will use academic journals, books, and histories, and it was felt that adding to that information with observations, discussions, press releases, analyst statements, and stock market data would provide other ‘social’ data that may not be written information, but is nonetheless interesting in determining why Apple was successful and how they can remain successful in the future. This data is also highly useful when analyzing an organization to find strengths in their current operations, weaknesses in their strategies, where the opportunities lie ahead, and what threatening storms might come their way.

Summary of Research

Apple has core products, people, philosophies, and ideas that it continues to use which drives its success. Simplicity, reliability, elegance, getting it right, and market power are the company’s key strengths. It is the ability to continue creating, adding to, and reusing these fundamentals that is critical to the future success of the company.
The past success of the company has relied on two major aspects: consumer buzz, and investors. (Manjoo) Steve Jobs himself is the largest investor in the company, along with other Silicon Valley gurus like Larry Ellison of Oracle. Microsoft itself was an investor in 1997 which played a role in keeping Apple alive and returning to profitability, though this was likely our of the need to keep a competitor around to avoid issues with the US Department of Justice than anything else. (Amelio) The success of the stock creates interest in the company, and as more and more become involved in its success as shareholders, the effects of Apple’s product success is magnified In order to maintain the buzz around their products, and keep investors flocking to the markets to buy Apple stock, Apple must continue to wow industry analysts, publicists, and the public in general at events such as Mac World, and in press releases. So far, Apple’s ability to utilize Jobs in this role has been impeccable. Jobs has also become famous for writing philosophical blog entries on the current state of the industry. Whether it’s his “Thoughts on Music”, or his more recent “Thoughts on Flash” article, Jobs keeps himself and his company in the middle of the debate on popular computing, social computing, and technological topics.

Analysis

Thoughts on Apple’s Products and Assets

Mac World

It seems to all start here. Even before Steve Jobs returned to Apple, Mac World was a major event in publicizing Apple’s innovations and launching products. Former Apple CEO Gil Amelio stated “Mac world attendees always expect to hear what’s new and what’s ahead directly from the Apple CEO.” (Amelio)
Steve Jobs is constantly doing Mac World events and press releases, which adds to the hype. It is one of the ways that Apple cultivates a religious fervor. People flock to see Jobs introduce his next gadget. The Apple faithful are so converted that “…for some people it's just like a true religion…" (Martin Lindstrom, Manjoo, 72). These Mac World keynote addresses and product launches reinvigorate the Apple followers, like a general conference or a revival would for other followings.
Such an expectation should not be taken lightly, or for granted, and is nearly unprecedented in the business world as a whole. Yet Apple has used it for decades to drive its products and create a buzz like no other company can. Indeed, the Mac faithful have more than a nation, they have a world.

Steve Jobs

Already mentioned previously, Jobs is a major asset to Apple. Jobs has mastered the art of knowing what the consumer wants and not focusing so much on how to deliver it. The how can always be thought of after you know what to deliver. Gil Amelio writes that before Jobs took over at Apple, they had warehouses “stuffed with $600 million worth of unsellable computers.” And while Amelio faults Jobs for what he calls “narrow perspective as a salesman and marketer extraordinaire,” others have pointed out that such “narrow mindedness” is what keeps Apple in business.
When Apple purchased the technology they needed to make the DVD burning software called iDVD, Operations Manager Mike Evangelist was given the task of putting the software together. Once they thought they had all of the ideas they needed to present to Jobs, he astounded them by walking into the meeting, and changing everything. "He doesn't look at any of our work. He picks up a marker
and goes over to the whiteboard. He draws a rectangle. 'Here's the new application,' he says. 'It's got one window. You drag your video into the window. Then you click the button that says BURN. That's it. That's what we're going to make.'" (Manjoo, 78) Evangelist knew immediately that what Jobs had said was right, and that the idea he had come up with would be much better for the consumer.
The ability to maintain a focus on the long term and on the needs of the customer can only come from someone who has been there, has seen the failures, has seen the wrong products launched, and who has not given up at being the best. Steve Jobs is that man for Apple.

iMac

The iMac holds the prestige of being the major Apple product (other than the switch to Steve Jobs’s NeXT operating system in 1997) that helped Apple to turn the corner and begin the building blocks to an innovative future. The iMac was a kind of throwback to the original Macintosh computer released in 1984, being a monitor and computer housed in the same case. It also featured innovations such as all USB input, no floppy drive, and could easily get to the internet. They say it only took 2 steps. It was also a foreshadowing to Apple’s soon to be renowned symbolic branding and design, which was a refreshing change to the “beige box” computer designs of the day. Apple also redesigned their Apple logo to be a white silhouette Apple, rather than the older “rainbow” Apple of the past. It was all symbolic of the major transformation we would witness from Apple.

iTunes

Apple also created, in the wake of Napster being shutdown in the late 1990’s, what would become a massive media outlet in iTunes, which has now seen billions in revenue. iTunes is unique in that it offers many different kinds of media for download, from movies, to TV series, to music, to radio broadcasts, and independent artist content. As with other Apple businesses, iTunes usually can weigh in heavily enough to control the terms of distribution for the media. That means Apple is in strict control of the revenue stream that iTunes generates, making it a valuable business asset.
iTunes doesn’t stop there, in its promise for Apple, however. iTunes at its core still serves the same function for which it was created. When music downloading became a huge medium for distribution with the advent of Napster, Steve Jobs wanted a way to organize the media efficiently. The iTunes software is now cross-platform and serves as a tool for organizing your collection, whether only a few albums or tens of thousands of albums. And it is not just limited to content which was downloaded from iTunes. This had tremendous effect on the next purpose of iTunes, which was to organize music on mobile devices. The first of these mobile devices was the ever so popular iPod.

iPod

Now in its 4th generation, the iPod changed everything. Before the iPod was released, the ability to carry your downloaded music with you was amateur at best. Clunky mp3 players that used mp3 encoded optical discs, burned cds in CD Walkmans, or primitive hard drive based mp3 players were the only way to do it. The iPod changed that with its sleek design that allowed for large storage amounts, an easily readable screen, and an easy way to scroll through all of your music. At first, the iPod would only work with other Mac computer products. This was intentional and caused many first time buyers who wanted an iPod to also purchase Apple computers. Only down the road, when the trend of getting people hooked on Apple products was solidified, was the iPod released for use with Windows based machines.
Companies that once dominated computer and media devices like Microsoft and Sony, were being left in the dust. Sony Walkmans, a mainstay of mobile music for nearly 20 years, are nowhere to be found today. Sony also tried to create media-centric computers, but their success pales in comparison to that of Apple. Microsoft tried its hand at revamping its media player software on Windows, but even today many Windows users use iTunes, and they were extremely late to the mp3 player market with their Zune device, which for all intents and purposes, has failed to gain any traction versus the iPod. Its just another way Apple is continuing the trend of trumping Microsoft.

iPhone

There are smartphones, and then there’s the iPhone. In retrospect, it is amazing that the mobile phone market leaders like Nokia and Research In Motion didn’t beat Apple to creating a device like the iPhone. The Blackberry, for all of its good features, doesn’t even come close to the functionality, elegance, and “swiss-army-knife” usability of the iPhone. The ads get it right when they say, hey “there’s an app for that.”

iPad

The iPad appears to be a product that is designed to help Apple enter the enterprise world. With specially designed apps, the same OS and many of the same features as the iPhone, as well as easy access to corporate email on the go, the iPad is a great device for salespeople, presenters, and service people on the go.
The iPad as a reading device could also, finally, give rise to digitally delivered print media like newspapers, magazines, and books. Already there are a handful of apps from the likes of the Wall Street Journal, New York Times, and other paid publications that update each day with the content they have published. Steve Jobs may be ushering in the days of real-time newspapers, which is something the laptop has failed to do.

MacBook

The MacBook laptop series has always been the flagship laptop system since it was launched, replacing previous flagship laptops from Apple such as the Powerbook and iBook. Powerful, yet easy to use, the MacBook has penetrated many different creative industries such as music, film, and animation, and has become a hit among college students. With the recent product extentions such as the Air, which is so thin it can fit in a large envelope, the MacBook product line will remain relevant for a very long time, and is a consistent seller at the Apple Store.

The Apple Store

The Apple store, although it is a retail service, is one of the most innovative product lines of Apple Inc. In fact, it has revolutionized retail, and has become one of the most successful retail operations in history. In just 3 short years after its launch, the Apple store had become a billion dollar retailer.
What makes the Apple Store innovative its modern, uncluttered design, and how easy it is to demo, learn about, and purchase a product. You can also take any Apple device, no matter where you bought it, to the Apple store for repair or upgrade, usually for free. It’s a hands on buying experience for electronics in an ever increasingly virtual world. Apple also utilizes a complex marketing channel, with some channel partners, direct sales, retailers, and distributors (At&t), of which the Apple Store is a major component in the retail space. Because of their complex marketing scheme, they can utilize administrative control over their distributors, retailers, and channel partners to ensure that the product message, perception, and price are consistent, making the buying experience for Apple customers that much more efficient. (Kerin, Hartley, and Rudelius, 289)
The timeline below shows the evolution of the Apple product offering over time from 1998 to the current year of 2010. Almost every product released on the timeline has been successful in boosting Apple’s bottom line, and fulfilling the needs of Apple customers. Figure 4.9.a (Apple Products Timeline 1998-2010)

Observations and Conclusions

A New World

Based on the information obtained from the Apple Products Timeline, we can look at the timeline data overlaid on a stock chart of Apple Inc. since 1998. This chart illustrates that these extremely successful products have won the support of investors as well as customers of Apple. Since 1998, the stock price has gone up over 9,000%, meaning that a $10 investment in Apple 12 years ago would be worth nearly $90,000 today.
Figure 5.1.a (AAPL Ticker Chart and Apple Products Timeline) While the iMac, Apple Store, and iPod did not immediately change the trajectory of Apple’s stock trading, their launches coincided with a foundation for the stock value that has never again been tested. Since those early years of the new Apple revolution, the stock has continued to grow, even through two recessions. And yet these trends are not only seen on a stock chart.
Sitting in a coffee shop, library, or on a train or bus, you can see Apple’s success story all around you. It would seem that users of Apple devices have been fully integrated into the vision Steve Jobs had of organizing media and information. People are using their Mac computers to DJ or perform music at live events or concerts. They are seen using Mac’s at coffee shops, doing homework, writing, watching movies or TV, or browsing the ever public internet. You can see them at restaurants with their iPods or iPhones sharing videos or watching online content from YouTube with others at the table. Ride a train or bus, and you will see them conducting business on a Mac laptop or more recently, an iPad, while simultaneously listening to music, gaming, or chatting away on an iPod or iPhone. Businesses are aware of this, and many cafés and shops offer recharging stations and free internet. Many businesses are starting to develop apps for these devices that make doing business with their customers that much easier. Once considered an afterthought in businesses enterprise networks and universities, support for Apple devices is starting to become more prevalent. Much of this trend can be attributed to employees having Apple products at home (Sturdevant, 30), and preferring to use the same devices at work. And employers are catching on that it might be easier to let them use devices they are familiar with rather than train them to use a different platform. Apple products also carry with them a very high reputation for reliability, uptime, and long product lifecycles – something businesses are always concerned with. However, Apple still controls very little in the way of the enterprise market space. According to the Forrester report by Emil Protalinski for July 2009, Macs still only account for 3.6 percent of corporate machines. (As published by Sturdevant, 30).
This data means that integration of Apple products in corporate and organizational networks remains a challenge to businesses and users. This observation is legitimized by Paul Bleicher’s article “The Evolution of the Desktop Computer” where he writes “As desktop computing rapidly grew increasingly complex through more sophisticated programs, operating systems, and networking, the cost of corporate computer system support grew exponentially, and the frustrations of end users followed. These issues, multiplied by thousands of users, have driven corporate IT leaders toward radically different solutions for the desktop computer to control costs, improve the quality of the computer experience for the end user, and increase efficiency in the workforce. The changing nature of the workforce creates evolutionary pressure on the desktop.” (Bleicher 44)
Observations also show where the competition is succeeding. Most of the competition comes from the Android enabled devices such as phones, and soon will come from tablets similar to the iPad. Eventually, we’ll see Android enabled iPods. The success of the Android phones is quite surprising, and exploits some of Apple’s weaknesses in their products, such as a locked down App Store, a finite amount of storage space (Androids can support as many SD cards as you can handle), and limited network partnership with AT&T only. Additionally, many people can be seen streaming movies and content to these devices from providers such as Netflix, which has recently been on a successful tear with their library of streaming content. Streaming the content bypasses the need to download it, which requires a wait time, and leaves more control in the hands of the copyright owners as to the means of distribution. It is also normally less expensive for the distributor, meaning Netflix likely has a better margin of return on the streaming accounts than iTunes has on downloads, making usership the new ownership. Usership of Netflix has expanded astronomically since streaming was first offered, and makes Netflix a prime competitor to iTunes since iTunes is a download store for the most part.
This is illustrates the trend toward cloud-computing as a whole. Cloud computing is the ability to let web based services do the major processing and crunching of data cycles, and then send it quickly through the internet to the end user. Cloud computing puts many ‘traditional’ software, hardware, and information technology creators at risk. Cloud computing is disruptive, and as we’ve seen before with desktop computing and the internet, disruptive ideas tend to make the impossible possible. Storing files to individual computers may soon become obsolete, in exchange for storing them in “the cloud” where they can be accessed from anywhere there is an internet connection, and practically can be accessed from any internet enabled device. The cloud also increasingly offers the ability to work collaboratively on documents, software, and other projects with others simultaneously, with changes to the project reflected in real time.
For companies like Apple, who’s marketing methods center around strict control of their marketing channel, meaning they control the types of software available to their devices, such variety and diversity among the cloud computing services available to internet users means cloud computing isn’t necessarily welcome. Ironically, it was the idea of internet enabled devices that inspired the iMac, which was the first major device offered by Apple that helped turn the company around and is still a product mainstay for Apple.

Recommendations

“The Path Less Traveled By…”

Apple must remain true to that idea of a connected, integrated iLife in order to survive any storms that the cloud computing evolution will throw at it. However, it must do so in a way that no other company is currently doing or will do in the future. As has been shown, Apple has thrived on the ability to look at a problem, and present a solution that no other company has.
They can do so by not worrying about “missing certain boats” like so many other tech companies seem to do. Apple must remain focused on the consumer need, and if it has been filled elsewhere and cannot be provided at a good cost by Apple, they must stay away. As simple as it seems, Apple (or is it Steve Jobs?) seems to see when it is time to draw the line and discontinue support for irrelevant technologies. This first started with the iMac, when Apple released the new computer concept with only USB inputs, and no floppy drive, both of which were unheard of at the time. Today, almost every computer only allows USB or FireWire input, and have no floppy disk drives. Jobs’s abilities to see through needless, or incomplete products will be a true asset here. The risk is that if Apple falls for a business that it cannot sustain, investors may begin to sell the stock, and the hype which usually plays in their favor may turn against them. Apple not only needs the stock to perform well to fund its growth, but also to continue generating buzz about the company, and excitement and interest about its future.
At the same time, they cannot let every whim of shareholder wants and desires to run their company either. A strict balance between market wants and consumer needs must be maintained. This can also include such measures as ensuring that the stock price remains exciting as well as enticing. This can mean offering dividends and stock splits which can be good for current investors and which also help bring new investors to the table. It also means keeping shareholders interested by utilizing Mac World. However difficult it may prove, Mac World must continue to grow and top previous Mac World events. Without the anticipation and expectation of Mac World, the media will not be as friendly to freely promoting Apple product releases. The fact that Apple gets great publicity has helped sell products over the years. And just like anything else, if it fails to remain interesting, the publicity will falter.
People want and are attracted to status symbols. Apple captured this early on with their pricing methods using what is known as Prestige pricing. And they hardly ever run promotions or discounts. This does two things, it keeps many outside looking in and provides a ‘cool’ factor to those who own or use their products, but also generates significant revenues that the company can use to develop advanced products. This aspect of their business is a major part of their success. If they lose their ability to create Ferraris of computer devices, or to maintain their ability to capture Prestige price levels, they will begin to lose their ability to administratively control their market channels, thereby giving dangerous opportunities to their competitors.
One way to protect against competitors is to enter untapped markets, and Apple has plenty of markets in which they are hardly a player at all. To remain successful, Apple must also overcome the troubles in penetrating the enterprise market space. It is interesting to note that even in 1996, Gil Amelio knew that gaining enterprise market share was important, yet still to this day Apple remains largely a consumer tech company. “A key problem that Apple never solved was the company’s inability to break down doors of major corporations,” Gil explains. Perhaps a large reason for little penetration from Apple so far comes because of Larry Ellison’s position on the board.
Ellison runs Oracle, which is a company that does major business in the enterprise computing world. Apple will need to create ways in which they can reduce the amount of issues with using Apple devices in enterprises, especially as their population in the consumer market grows. If they don’t, they would simply be waiting for a major enterprise business, such as Google, to enter the consumer device world, which would be devastating to Apple since they would most likely be the first company to be substituted for when a new competing technology is created. (Amelio)
Many industries are still in need of major overhauls and innovations. The largest of which is the healthcare industry. Apple would be wise to gear up their machines and devices toward integrating all sorts of information of different types together, including health data. It seems that they are already headed in this direction with the iPad. Tablet computing devices could be useful for doctors and clinics who need patients to fill out paperless forms and who need to see up to date information on tests and procedures being performed. These duties could be performed using specialized Apps created by developers and marketed to doctors for use with Apple’s products. This ability to share information readily from business to client, whether in health care or another sector, has the potential of breaking centuries old barriers between product producers, shippers, and customers.
For these mobile platforms to work, one must have a good internet connection. Because Apple is currently exclusive to one carrier which is AT&T for most of its mobile devices, Apple must be sure AT&T is the best partner for them, especially in the wake of AT&T’s network issues, and the Android picking up large buckets of market share. This is especially true if Apple decides to enter the healthcare market. Internet connectivity will be a must when critical functions are being performed, such as analysis of patient history, updating medical records, checking for allergies, etc. In the event that Steve Jobs becomes ill or must step down and retire, Apple should have a plan in place to ensure that the next CEO doesn’t follow the same path that so many Apple CEO’s have, while destroying the value of the company in the process. Even at that point, it is questionable whether anyone could have the impact and success on Apple as a company that Steve Jobs has had.
Last of all, Apple must be prepared to establish itself as an online media outlet. iTunes has already been wildly successful, but Apple must ensure that the iTunes business remains relevant. They are still showing signs that they are on top of their business given the recent announcement to exclusively sell Beatles music on iTunes and online for the first time in history. Yet it remains to be seen how long downloading and owning content will continue to be the popular way of gaining access to media. As internet speeds and availability continue to increase, so does the advantage of remotely storing and accessing data, making the need for downloading a thing of the past.
Apple’s success to this point will likely give the company much needed momentum in the years ahead. If Apple is to remain a key figure in the tech industry and remain successful, they most assuredly must overcome the critics and naysayers who will always say “It can’t be done.” Apple must continue in the vein of Steve Jobs and proclaim “We think we’ve got the goods.” (Quittner, 2)

Annotated Bibliography

Allen, Danny, and Tom Spring. "Apple's Rivals Scramble to Make iPad Challengers." PC World 28.6 (2010): 10-12. Academic Search Premier. EBSCO. Web. 5 Nov. 2010. This article discusses the coming competition to the iPad Amelio, Gil, and Simon William. On the firing line: my 500 days at Apple. 1st Edition. New York: Harperbusiness, 1998. Print. This book talks about the history of Apple, and the transition from CEO Gil Amelio to Steve Jobs in 1996. Bleicher, Paul. "The Evolution of the Desktop Computer." Applied Clinical Trials 17.6 (2008): 44-48. Academic Search Premier. EBSCO. Web. 5 Nov. 2010. This article discusses the history of desktop computing and will provide a background to the growth and history of the computer industry as we know it. Connor, Deni. "Apple in the enterprise? Depends who you ask. (cover story)." Network World 24.22 (2007): 1-12. Computer Source. EBSCO. Web. 5 Nov. 2010. Discusses Apple’s Enterprise computing efforts in the last decade. Manjoo, Farhad. "Apple Nation. (cover story)." Fast Company 147 (2010): 68-112. Computer Source. EBSCO. Web. 5 Nov. 2010. Manjoo discusses the successes and challenges of Apple Pavlus, John. "WALLED GARDENS." Scientific American 303.3 (2010): 71. Academic Search Premier. EBSCO. Web. 5 Nov. 2010. Pavlus discusses the “walled garden” approach to the iOS platform Apple uses, and what it’s advantages and disadvantages are. Quittner, Josh. "Apple's Vision Of the Future." Time 175.5 (2010): 34-35. Academic Search Premier. EBSCO. Web. 5 Nov. 2010. Quittner discusses the new iPad product and the potential it holds for revolutionizing the print and publishing industries. Snell, Jason. "Inside the Intel iMac." Macworld 23.4 (2006): 64-67. Academic Search Premier. EBSCO. Web. 6 Nov. 2010. The inside the Intel iMac article details the switch from IBM processors to Intel processors in Apple Computers. This was a major part in apple computers recent success over the past five years in making headway at increasing the market share of all of their computer platforms. Starr, Alexandra. "Apple CEO Steve Jobs: Reinventing Himself and Our Digital Lives." AARP Live & Learn. 18 Dec 2007: Print. An interview with Steve Jobs STURDEVANT, CAMERON. "Macs in a PC world." eWeek 27.5 (2010): 30. Academic Search Premier. EBSCO. Web. 5 Nov. 2010. This article covers the rise in usage of Macs in the enterprise world, and how a shift in platforms is underway.

Reid v. Romney

2012-08-05T21:18:00.001-07:00

A few months ago I stated that I hate the argument that if you don't release something, or don't allow an unwarranted search, that you must be hiding something.

That was the accusation the Republicans were making at the time vs. Obama in regards to the faster and Furious discussion.

Now Reid & Co. are using the same argument against Romney.

So I propose that Romney make a deal with Obama that he'll release the 10 years of returns if Obama will release the FaF documents.

Since both are equally as interesting to the public and likely somewhat damning to both of the candidates, I think it would be a fair trade.

Think Progress Image

2012-06-28T16:04:00.000-07:00

I just saw an image from Think Progress that states:

"These five people just saved millions of Americans by protecting Health Care" - Think Progress

Here is the image below. I took the image, photoshopped it, and posted it as saying "These five people just raised your taxes. And you didn't even get to vote for them." - Think About It.

Supreme Court Ruling Infers Obama Was Wrong

2012-06-28T10:22:00.000-07:00

The Supreme Court ruled that Obamacare is a tax, so it can be imposed by Congress.

To be clear, I have no qualms with individual mandates at the State level. They are instituted and upheld all the time.

But at the Federal level, they can only be instituted as a tax. However, I thought Obama said Obamacare wasn't a tax? (see video)

Looks like the Supreme Court disagrees.

So, Obama has increased our tax burden by $1.76 Trillion, by latest CBO numbers. According to the IRS, there were 142,856,282 Individual Tax Returns for the 2010 Tax Year (most recent available statistical year), meaning Obama's new tax liability on average will be 12,320.07 over the next 10 years by those figures.

Anyone out there know of a president or congress that has levied such a large tax before?

Ann Romney is Worth "A Few Caddilacs"

2012-03-05T22:44:00.003-08:00

I really liked Cavuto's observation that the Cadillac's which were mentioned were not for Romney, but for Ann. And that she was worth them. To me, the "national Caddilac outrage" is a bit too similar to this episode of Seinfeld, where Jerry gives his dad Morty a Cadillac as a gift, and the homeowners association balks at it, lead by Jack Klompus.

The best part of the episode (not in the clip below) is when Jerry convinces his parents to go to the steakhouse AFTER the early bird special hours. They pull in to the steakhouse, and happen to run into Jack and his entourage. Jack notices the time and mentions how the Seinfelds are rolling up in their "Nice new Cadillac" and says "must be nice...to have that kind of money".

Of course, the end of the episode is a classic with Morty having to resign his post as association president over the "Caddy-gate" incident.

http://www.youtube.com/watch?v=Zc9-rYBOS5w

http://www.youtube.com/watch?v=A_UUaD9f6Ic

Romney Man Song

2012-01-13T16:45:00.001-08:00

We've got a great parody song for you to check out calles "Romney Man" set to the tune of "Solitary Man" by Neil Diamond in the style of Johnny Cash.

You'll get a laugh and probably sing along!

Warren Buffett Says: Stop Coddling the Super Rich

2011-08-15T09:31:00.004-07:00

Warren Buffett had an op-ed piece today in the New York Times where he addresses taxation of the very wealthy. While he makes a few good points, his main argument, at least to me, has been flawed since he first started making it long ago. The idea that these "coddled" super-rich must await an act of Congress to give money to the government is simply wrong. Most Americans, politicians, and perhaps Buffett himself do not know that the Treasury actually has a bureau already set up to take donations "from individuals wishing to express their patriotism to the United States." That's a direct quote from the Treasury's Financial Management Service Bureau's website: http://www.fms.treas.gov/faq/moretopics_gifts.html . Another fact is that this special bureau has existed since 1843. So instead of piling on more legislation, tax code, and regulation, how about we use the legislation we've already had on the books for 168 years. You know, if we did that, maybe we wouldn't have to spend so much money each day just to keep the doors of the government open.

So, I say to Mr. Buffett and his "coddled" friends, please remit your donations to the FMS as soon as you are ready and able.

Is Health Care A Right?

2011-04-21T22:52:00.003-07:00

Two levels on which I don't agree that health care is a right. The first level is that, if it is a right, it is definitely not a protected right under the constitution. If we as a nation define it as a right by adding it as an amendment or addition to the Bill of Rights, then it would become protected. When the Bill of Rights was written as a compromise for those who questioned the Federalist notion of a constitution and a central government, hospitals and doctors existed. If the non-Federalists had felt that healthcare was an inalienable right they would have asked for its inclusion into the Bill of Rights, because they basically asked for everything else they could think of. Good thing they did; Imagine being without the Bill of Rights, which is what the Federalists wanted until it was obvious they needed a compromise.

The second level is on what constitutes a right. What are rights, and where do they come from? I have always questioned that, and recently questioned it again in regards to whether I should think health care is a right or not. If it is, I want to be behind it as a defender of rights. If it is not, I want to explain why not.

Fundamentally:

A right is rooted in, and constituted of, principles defining the ability to act.

Rights come from the obligation of others to keep themselves from violating your ability to act. In other words, rights are negative obligations - weighty responsibilities.

What we know:

The need for health care in a time of sickness is not an act.

Society has only defined certain obligations of doctors in times of emergency, sickness, or need - and complete health care is not one of them.

So, health care is not a right, but a privilege given to us unvoluntarily (i.e., at a price) by others who possess (which is a right) and have obtained (which is a right) the skills necessary to do so.

True rights do not infringe on another person's rights. My right in the pursuit of happiness, freedom of speech, freedom of religion, right to an attorney, right to a fair trial, or any other, should not and do not take away from another's same rights.

If health care was, or could be, a right, how could it be so without taking away the rights of others?

As stated above, I currently have the right to an attorney, but I have to pay for it out of pocket or request one (the act), and the right is given to me to defend me from accusation of my peers (The People, who are under that obligation). If the People of my State decide to accuse me, I should (and do) have the right to defend myself against them.

However, in the case of a medical need, it usually occurs by natural cause. The People did not inflict the medical need upon me, so I have no right for a doctor to be provided (there is no act and no obligation). But I do have the right to hire (a right) one and receive treatment if I have obtained the ability (a right) to do so.

Of course, there are always a few exceptions and further explanations and arguments to these types of philosophies which would take much more time to write than I have. Such as what happens when The People do inflict harm on someone - then does that person have a right to receive care? Most judges or juries would rule yes and I agree with that. Notice, however, that the right is usually alienable, meaning it can be transferred, or it is only for the duration of the treatment of the harm caused. It normally would not include any and all medical care, as the alienable right was given because The People infringed on that person's right to be left alone. (See Francis Hutcheson)

One last example, my right to legal representation can still be exercised (therefore it is inalienable) even if all of the lawyers were to leave the world, and none were available to represent me. In that case, I become my own advocate and represent myself. The right has not been reduced or transferred from me based on the lawyers' decisions to leave. On the other hand, if all of the doctors were to leave the world, how would I exercise my right to health care, beyond the rights I already have to take care of and make decisions for myself?

The fact that health care is not a right does not mean we should not be charitable and help where we are able. It means we should be careful about what types of weighty responsibilities we add to the burdens we share as Americans. Balance is a notion that we tend to forget about but is symbolically everywhere in the foundations and inner workings of our country. I believe there is good wisdom in that.

Follow-up: How To Short Sell The Oil Companies

2011-04-13T22:30:00.004-07:00

In a previous article, I wrote about how we can collectively work against the oil companies to help improve gasoline prices. (See the previous article before reading further if you haven't read it already. Then come back to this article.) We should keep doing that, as now traders and firms like Goldman Sachs are seeing that demand might not be meeting with supply, and oil has been off its highs so far this week. Keep it up America!

In full disclosure, I am not currently short on oil. In fact, I am actually long DBO ETFs in one of my portfolios, and have no plans to change my position anytime soon. I think energy long term is a good play. But gasoline prices are too high, and unsustainable (in my view) at these levels, and I believe could impact the economy come summer time (like we saw in the perfect market storm of 2008). I do have another interest in seeing fuel prices decrease, and that is I need to book some flights to Hawaii soon and would love to see some benefits in reduced airfare from lower aviation fuel prices. Long shot, I know, but I can hope!

I also have seen other researchers write similar things about other commodities, such as food related goods. Below is what Smartmoney.com had to say on the topic of stockpiling (which is what are doing in effect when we fill our tanks to the brim instead of just filling with a half tank more frequently).

Consider this example. There are over an estimated 247 million registered vehicles in the US. The average tank size is around 20 gallons. That means, if we are keeping our tanks above half full, we are storing between 4.94 billion (at full) and 2.47 billion (at half full) gallons of gasoline, at our cost, not the oil companies' cost. We are storing billions of gallons of gasoline for FREE, so that we can drive around town for a week without filling up (even though most cities and towns have a plethora of fueling stations along the routes we drive). Imagine what would happen if we were storing a half tank or less of gasoline (less than or equal to 2.47 billion). We would immediately stick almost 2.5 billion gallons of product back on the oil companies' "shelves", since their numbers are set to meet the demand at that rate of draw. How's that for some perspective?

Smartmoney.com:
...

There's also an unintended consequence of stockpiling, says David Bell, a professor of marketing at the University of Pennsylvania's Wharton School of Business: You'll actually end up using more of what you've stockpiled than you would otherwise. In theory, doubling the number of soda cases bought would result in a supply that lasts twice as long, but it's more likely that you'll go through it faster, or simply be less frugal about its use with extra on hand. You could even end up throwing out food that expires, rejecting out-of-fashion items, or simply forgetting about the cans of corn stashed behind the hats and mittens in the basement.

Still, buying before prices rise can be smart – in small doses. Most supermarket and drugstore items go on sale just once every 10 to 12 weeks, says Teri Gault, founder of The Grocery Game. If you're loyal to a certain brand, buying extra when you spot a sale is smarter than paying full price the following week when you're actually out. On fashion, retailers sneak in bigger price increases on trend items because consumers can't easily monitor cost like they do for wardrobe staples such as trousers and T-shirts, says Tennant. Many of those items are available now at end-of-season clearances, and can be picked up for a song. And avoiding hyped-up eBay ( EBAY: 29.98*, -0.46, -1.51% ) prices on discontinued items by stocking up is usually a sound strategy, too.

Ultimately, the decision may come down to cash flow. If charging six months worth of dry goods means paying extra interest charges on credit card debt, it's not worth the savings, says Randy Allen, an associate dean for The Johnson School at Cornell University.

Read more: Will Stockpiling Save You Money? - SmartMoney.com http://www.smartmoney.com/spending/budgeting/will-stockpiling-save-you-money-1298583519761/#ixzz1Gm8Ox5Y4

Additional notes: When gasoline is sitting in your tank, it is evaporating. Why pay out of your pocket just to let more droplets of gasoline disappear on your dime. Make the oil companies pay that expense themselves by buying less gasoline at each fuel-up, which forces them to store more gasoline and worry about their own storage tanks' evaporation rates. While many articles show that the evaporation rates are pretty negligible (less than 1 gallon per year at 60 degrees Fahrenheit), I still need to do some more research on what the rates are like when it is over 90 degrees like most of America is during the summer months. Also, when liquids slosh around, there is more evaporation. There are also arguments about cars that have evaporation collection systems which reuse gasoline that might help mitigate your losses. Additionally, E10 or higher Ethanol gasoline is said to evaporate even more due to the alcohol content.

However, even if you are not benefiting from less evaporation, you may stand to benefit from increased gas mileage by not hauling around so much liquid in your tank. As the power of your engine increases (4 cyl, V6, V8) the benefits decrease: meaning you'll see better gas mileage for half tanks in a 4 cyl than you will in a V8. But remember, these are just added benefits, so if you don't receive these benefits because your car is bigger or has cool vapor catching gizmos, it doesn't matter. The bigger benefit is short selling the oil companies, over-supplying them with excess inventory, by not filling up a full tank when you go to the pump. They will soon see that they have too much gasoline product on hand and reduce the price to get rid of it.

If interested, you can read more on efficiencies here:

http://www.creditinfocenter.com/wordpress/2008/07/24/increase-mileage-gas-tank-full-or-half-empty/

Economics of Gasoline - How To Short Sell The Oil Companies

2011-03-31T22:53:00.001-07:00

High gas prices are back. It's time to review ways to save money on gas.

But I don't intend to talk about conserving gas through substitution to biking, running, or riding the bus to work. The problem of high fuel prices goes far beyond that, and could easily cause setbacks in the US economic recovery - if there really is one.

Let's start with good ol' reliable supply and demand. Prices are higher right now because the traders who buy oil on the commodities exchanges are saying with their pocket books that the supply of safe, reliable production of oil is heading lower relative to demand. Whether we agree with their assessment is irrelevant. But what is clear is that we need to shift the supply curve to the right to get prices to come down. If the traders won't do that, how can we as consumers do it?

Before I go further, I'll point to some interesting info regarding the last time oil had a huge run. In 2008 saw oil a peak price at $145.29 on July 3. Just 10 days later, President George W. Bush announced a repeal of the offshore drilling ban, and oil made a steep and steady decline (along with the economy) to well below $50 per barrel by December 2008. I don't believe for a second that Bush intended to allow drilling - it was simply a bluff, an ace in the back pocket. Even if he did intend to allow drilling, it would have taken years to get production on line. However, the mere chance that more supply could be coming on line in future years was enough to help the price come down; way down.

Remember, oil is traded in futures contracts. The futures are trying to predict what the price of oil should be in the coming months.

So, again, how can we as consumers get the price of oil to fall? Answer: we can use the properties of distribution models and futures trading against the oil companies, and force them to sell gas at lower prices.

Distribution models are everywhere, and these days they are run with high efficiency. Imagine a tanker filling up with oil right now at a port in Alaska. There is a port somewhere in Texas expecting that tanker to come to port in the near future. At that port in Texas, there is a pipeline company expecting to transport the oil from the tanker, and eventually route it to an oil refinery somewhere in the mid-west. That oil refinery is expecting the oil to come in so they can make gasoline and other products. There is a distributor expecting to haul that gasoline to nearby stations, and stations that are expecting to sell the gasoline at a certain volume per week. All of this is done with "just in time" precision to ensure that enough gasoline is on hand to the members down the chain at a time when it is needed.

That's where we come in.

Instead of filling our cars full of gasoline every time we stop to fill - and hauling it around while using it slowly, meanwhile letting the oil companies take our money for gasoline we will not use until sometime in the future - fill up with a half tank of gas, or better, a set dollar amount (that is at or below a half tank), keeping more of your money in your pocket, and paying less upfront for future consumption. We will be placing "puts" on their future price of oil by paying less in advance for gasoline we'll burn in the future.

Our tank shorting will do two things immediately. One, it will immediately increase the amount of gasoline inventory every station has on hand relative to their normal draw rates. When the distribution company comes to fill the tanks for the station, they will not dump as much gasoline off their tanker trucks. With less gasoline leaving the storage tanks of refineries, they will have to slow production (or pay money to someone else to store the excess gasoline). Reduced production would mean less oil draw from their pipelines, which would mean the pipeline companies would have to store more offloaded oil from tankers (or pay someone else to store it). Rather than do that, they offload less oil from the tanker. The tanker sits in port longer now, since the offloading rate is slowed. Meaning the tanker company now starts a dispute with the purchaser of the oil over who will pay the costs of the extended stay at port. Meantime, another ship is already on its way to port with more oil. That tanker arrives while the other tanker is still docked. Now the tanker company has to pay to dock the second tanker, effectively "storing" the oil.

Two, rather than allow this backlog to happen and disrupt the supply chain, the oil companies will try to entice us back to the pump by reducing the price of gasoline in an attempt to ease the onslaught of higher inventories. This action would effectively take some wind out of the sails of the futures prices of oil, which would further reduce the price of gasoline over time.

Let's get started America.