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FRED
10-12-06, 12:06 AM
Web 2.0: Some Froth, But No Clear Bubble (http://www.investors.com/editorial/IBDArticles.asp?artsec=17&artnum=1&issue=20061011)
October 11, 2006 (BRIAN DEAGON - INVESTOR'S BUSINESS DAILY)

Eric Janszen has run several companies and financed many more as a venture capital director.

But his biggest claim to fame may be the establishment of iTulip.com, a Web site he created in November 1998 to chronicle what he saw as an impending Internet bubble. Janszen ultimately advised readers to dump tech stocks in the weeks before the bubble burst.

Janszen later shut the site down, but revived it seven months ago.

This time, Janszen is focusing on the potential for a housing bubble. He just co-authored a book, americasbubbleeconomy.

AntiSpin: This article is AntiSpin.

akrowne
10-12-06, 11:15 PM
Nice interview. Though, they slipped that "<i>potential</i> for a housing bubble" in there. But we can't expect <i>too</i> much out of IBD.

I agree with your stance on tech having matured. E.g., I intentionally didn't buy Dell earlier this year when my research services were flashing to do so. That boom is over, and that company got sloppy and lazy.

I still find it very hard to invest in tech and generally stay away. It's nearly impossible to figure out who is going to win--it isn't always (or even often) the best technology.

It must be slim pickin's for tech VCs.

DemonD
10-13-06, 05:32 AM
akrowne - follow the earnings. A good part of the tech sector (IMO) is internet gaming (gambling). A lot of gaming sites and related stocks are beaten down because of new US laws and regulations, but those companies are making a looooooot of money, do good business outside of the US, some pay a dividend, and many are small enough that if you have the stomach for small caps, the potential is there for some nice returns once the earnings come in over the next few years.

This of course is my micro-outlook on these things. I wouldn't touch any large cap tech stocks at the moment (although I have considered Microsoft). The problem with big tech companies in terms of earnings and growth (as I see it) is competition. There is too much competition for anyone to have a wide enough moat to gain a competetive advantage, save for Microsoft.

This might be a bit off-topic, but as a Google shareholder, I thought their acquisition of Youtube was excellent. Is Youtube worth 1.65 billion? I say yes. 20 million unique visitors in June 06 averaging 17 minutes per visit - these amounts correlate well with TV viewership, and Youtube is growing almost exponentially. (Up 300% from Jan 06 to June 06.) Stats here: http://72.14.253.104/search?q=cache:1PoVUO5z5vwJ:www.nielsen-netratings.com/pr/pr_060721_2.pdf+youtube+unique+visitors&hl=en&gl=us&ct=clnk&cd=1

Would Youtube be worth that much to anyone else? I doubt it, but it fits with what Google does best (targeted advertising).

Random thought: I wonder if any of the itulip readers would consider buying shares if itulip had an IPO and was listed on an exchange.

BK
10-13-06, 09:13 AM
The YouTube Acquisition will go down as a big waste of money.

Every "Dead Fish" who comments on the brillance of Googles acquisition talks about how Google is the best positioned to get monetize YouTube.

Interestingly, there is never any discussions of the costs of maintaining this Video service, no discussion of transmission costs, or peering relationships.

I realize that transmissions costs are dropping - but , there are cost. There are also costs to maintaining the hosting site of this scale. We don't know what the Revenue might be and No One even discusses the costs (yes - its way to dull for the CNBC crowd). But, an open discussion of the costs of running YouTube would give investors an idea for the minimum revenue required to generate a profit.

My little understanding of Google is that they have found it very difficult to create new revenue streams. This is a big problem for any Tech company - coming up with other Revenue streams beyond the Core product offering is where 99.999% of companies fail. You need great execution and timing and a bullish business cycle.

jk
10-13-06, 07:47 PM
now that youtube belongs to google, there are nice deep pockets to sue for the copyright infringements. i'm sure there will be big time intellectual property lawyers working on this, but my naive take is that currently youtube is non-commercial, so that the millions of tv snippets posted aren't worth worrying about or perhaps would be covered by fair use. once google tries to make money by posting advertising, they are infringeing big-time. they will end up having to share those revenues with the content producers. paying the content producers will also involve tracking the millions of video snippets that people post, and if the wrong tags are assigned or certain tags omitted there is a litigation-worthy problem.

DemonD
10-14-06, 12:26 AM
I posted this over on the antispin area, but Google has been very adept at avoiding large lawsuits over copyright material, usually by creating some sort of royalty agreement. I have confidence in their management that they would have not purchased YouTube unless they felt they could create agreements - like the ones that were announced in the weeks leading up to the acquisition.

I continually find it fascinating how many people bash bash bash google, meanwhile they keep making money hand over fist.

What many fail to realize (and this is in addition to what I said on the antispin area), is that Google has had it's own video service for a while which is basically the same thing as YouTube, but with an interface that isn't quite as user-friendly and without as much internet buzz or traffic.

If you like, I can find the motley fool article that was posted in 2/2005 that outline why google, at about 175/share, was waaaaaaaaaaaaaay overpriced.

While I think there are many lessons to be learned from the tech bust, Google at this point does not fit the profile of a dotcom-going-to-blow-up company. Google has no debt. It is far and away the best search engine on the internet. It has large revenue streams and profits that continue to grow.

IMO Google is as much a "one-trick pony" as Starbucks is. I wonder how many years it took for Starbucks to convince skeptics that $4 coffee was profitable. Another good example would be Cisco. A one trick pony: network routing and switches. They are also making money hand over fist. Cisco bought Linksys in 2003 for 500 million in common stock. Here is a comment from a CNET article that time period:

"While the acquisition isn't expected to add significantly to the networking giant's revenue, it will give Cisco a solid position in one of the few bright spots in the market."

and now...

http://www.usnews.com/usnews/biztech/articles/060626/26best_3.htm
"The routing company now brings in about $900 million annually in revenue."

Is google as good at cisco at monetizing acquisitions? That remains to be seen. But if you want to realistically evaluate a company, you have to look at all sides of it's business. To say "Oh google's going to get sued now that they bought YouTube" reeks of oversimplifying the situation.

Jim Nickerson
10-14-06, 02:34 AM
During my adult life the four technological advances having the most impact upon me are television, the computer, the internet, and satellite communication. I cannot be certain about the satellites, but I think they are up there doing what all I do not know.

To me the impact of the computer as it has evolved is actually beyond my describing, even typing this in Word is wondrous, as is email, and the unlimited content of the internet—most of which I imagine is beyond my needs. For my own purposes the invention of the spreadsheet allows me to do things and keep track of things that would otherwise be simply impossible for me, but there are other things I do not use such as statistical packages that no doubt have advanced the capabilities of those who utilize them. Actually I am too dumb to get deeply into this, but the point is there, I hope.

Our local paper carries an advertisement section each Friday of an electronics warehouse that always has reasonable deals on stuff for those needing or wanting stuff. I look at it now mainly to see how prices seem to be changing.

Today I see a rather cheap desktop computer with Intel dual core processors, 17” LCD monitor. It has 1GB of memory; CPU’s operate at 2.8GHz, has 800Mhz FSB, 250GB 7200 SATA hard drive, and comes with Windows Media Center Edition operating system. It costs 12% of what the first IBM in 1980 or '81 I bought that had 125MB (I think that is correct, but it may be way too much) of memory, a clock speed of 6KHz and 20MB hard drive. $599 vs. $5000. This is hard to imagine.

Also in the ads are a 4GB iPod that holds 1000 songs, costs $200; a 30GB iPod Video that hold up to 7500 songs, costs $250; and an XBOX 360, costs $400. There is also about ¾ of a page of ads with games, movies, music, with the remaining quarter page showing programs considered “productivity software.”
<O:p</O:p
I could also buy a 400GB internal hard drive for $120, or an external 500GB hard drive for $170, a Sony digital camera 10-megapixels for $1000 (high end item), a Sony DVD camcorder $1400 (high end item), or 46” Sony Bravia flat panel HDTV for $4300.(high end to me).

<O:p</O:p
Jk said above youtube has “millions of tv snippets.”

Questions arise to me about all this technology and what has it wrought for perhaps the majority of those in the developed world who use computers and all the other devices that have developed that are integrated with computers or derivations of computer technology?

It seems that unimaginable technology has evolved to being mainly associated with entertainment for, what I imagine to be, the average person, much more so than it has evolved to be something that aids the development of individuals or in the accomplishment of their tasks.

Who has the time to look through millions of tv snippets for amusement on youtube, though I presume there is something more there than simple-minded entertainment? Is there more?
Who has the time to put 1000 songs on an iPod, much less 7,500, and then who has the time to listen to more than a few of the songs?

Among the general population, who has data of importance such that it would occupy 400-500GB of hard drive space? The only thing I think of that might even begin to take so much space are an incomprehensible number of digital photos or a whole lot of video recordings (and I don’t own a camcorder so I do not know how much space recordings take). If one has all these photos or videos, then who has the time to look at them? If one has something of true value that would occupy 400-500GB of hard drive space, do you back it up, and how often and on what?
<O:p</O:p
Is there any true value to video games? I do not know, but it is hard for me to imagine there is. But these games and the players cost relatively a lot. What is the benefit?

I feel badly admitting that in our 9 or 10-room house; we have 5 TV sets, and one LCD TV combo that functions as a computer monitor except when we go trailer camping. Except for the last, they are all tube TV’s. I can see a world of difference in the picture quality and clarity of my spreadsheets and material I read on my LCD monitor-TV when I use it as a computer monitor compared to CRT computer monitors, but I do not see any real value in what I take away from watching TV whether it is on a flat screen LCD or a tube-TV. Can anyone explain to me the value of owning something like the $4300 Sony I noted above with regard to what they get out of watching a TV program, the news, or a ballgame? I do not think anyone can, but of course I could be wrong.

As I see things at age 65 we have incredible technological advances that have made my life better as I can perceive and understand, but I seriously wonder if so much of this wonderful technology is not largely wasted in many of the purposes as they have evolved, that I only can presume, for what a whole lot of people use it?
<O:p</O:p
In these forums there are from time to time concerns expressed about where our country, if not the mass of the developed world, is going? I think these are real concerns when one considers the time I believe so many Americans spend or perhaps waste primarily seeking to be entertained. Is this what the “enviable American lifestyle” has come to mean?

<O:p</O:p
Regarding youtube, if it has something of real value to it, I hope it succeeds gloriously, if it is merely an entertainment site, I would think it best if google loses it ass with the endeavor.

jk
10-14-06, 11:26 AM
jim, i share some of your feelings, but not all. it turns out, for example, that a lot of computer technology has been driven not by business "productivity" uses but by video games. gamers are still the most demanding consumers of home tech equipment. i recall reading that when ibm was developing its first computers they predicted a total demand of 7. not 7 million, not even 7 thousand or 7 hundred. just 7.

i bought my first computer in 1982. a kaypro, cost about $2300 [about $4666 in 2005 dollars]. it had 64k [that's k, not m] of ram and no hard drive. it had 2 floppy drives, 5.25" drives with disks that were, in fact, floppy. but it worked great, and came with powerful wordprocessing software that allowed me to write a book on it.

people have asked where the productivity was that was supposed to come from computers. my old kaypro had a built in screen that was about 8inches and could display alphanumeric characters. i think a lot of "productivity" has gone into playing with fonts, interfaces, and so on. the increased productivity hailed by greenspan, et al, has come in the production of computers, not the use of computers,. and even there it's pretty fake, because while computer production itself has become increasingly efficient, it looks like an even bigger deal when you adjust for the hedonic changes in computing power.

but don't put down entertainment. we all die in the end, and if people wish to amuse themselves along the way, who are we to criticize?

Jim Nickerson
10-14-06, 09:48 PM
jim, i share some of your feelings, but not all. it turns out, for example, that a lot of computer technology has been driven not by business "productivity" uses but by video games. gamers are still the most demanding consumers of home tech equipment. i recall reading that when ibm was developing its first computers they predicted a total demand of 7. not 7 million, not even 7 thousand or 7 hundred. just 7.

i bought my first computer in 1982. a kaypro, cost about $2300 [about $4666 in 2005 dollars]. it had 64k [that's k, not m] of ram and no hard drive. it had 2 floppy drives, 5.25" drives with disks that were, in fact, floppy. but it worked great, and came with powerful wordprocessing software that allowed me to write a book on it.

people have asked where the productivity was that was supposed to come from computers. my old kaypro had a built in screen that was about 8inches and could display alphanumeric characters. i think a lot of "productivity" has gone into playing with fonts, interfaces, and so on. the increased productivity hailed by greenspan, et al, has come in the production of computers, not the use of computers,. and even there it's pretty fake, because while computer production itself has become increasingly efficient, it looks like an even bigger deal when you adjust for the hedonic changes in computing power.

but don't put down entertainment. we all die in the end, and if people wish to amuse themselves along the way, who are we to criticize?

jk,

I'm not against entertainment or enjoying life. I just wonder whether or not more time today with all the electronic gadgetry available is not being spent on what may be entertainment versus other endeavors that may pay off more in the long run? I do not know the answer, and if I knew the exact answer and were I correct a lot of time is wasted, there would be nothing I could do about it.

Jim Nickerson
10-15-06, 02:54 AM
I bought a new notebook hard drive today that runs at 7200PRM, makes all the difference in the world in loading and saving files. The box it came in says "fast access to music, video, photos and games, legendary Hitachi reliability."

I guess if there were not music, video, photos and games the computer industry would not be making a go of it just now.

PeterM
10-16-06, 05:46 PM
I could also buy a 400GB internal hard drive for $120, or an external 500GB hard drive for $170, a Sony digital camera 10-megapixels for $1000 (high end item), a Sony DVD camcorder $1400 (high end item), or 46” Sony Bravia flat panel HDTV for $4300.(high end to me).

What still amazes me is the price difference of electronic between the US and Europe.

Prices of electonics such as harddrives, laptops etc. in EU are 30-50% higher than in the US. Is this only tariffs, or are there other issues at play here?

Recently looked at a Garmin GPS and new hard disk.
Garmin GPS in US 450$ (350$ with US rebate action). In EU 826$ (650Euro).
500 GB harddisk ... in Holland/Germany internet stores abt. 280$.

Unfortunately transport, import fee and then VAT over the total reduces the attractiveness of buying from US via post.

Is it all tarifs, or can we expect more 'electronics price deflation' in the EU?

Jim Nickerson
10-16-06, 06:16 PM
What still amazes me is the price difference of electronic between the US and Europe.

Prices of electonics such as harddrives, laptops etc. in EU are 30-50% higher than in the US. Is this only tariffs, or are there other issues at play here?

Recently looked at a Garmin GPS and new hard disk.
Garmin GPS in US 450$ (350$ with US rebate action). In EU 826$ (650Euro).
500 GB harddisk ... in Holland/Germany internet stores abt. 280$.

Unfortunately transport, import fee and then VAT over the total reduces the attractiveness of buying from US via post.

Is it all tarifs, or can we expect more 'electronics price deflation' in the EU?

Peter,

I did not figure the taxes on the prices of things I posted above, it would cost 8% more than the prices I listed. Did your price of a 500 GB HDD of $280 include the VAT? What does the VAT add to the basic price in percentage?

PeterM
10-16-06, 07:48 PM
Peter,

I did not figure the taxes on the prices of things I posted above, it would cost 8% more than the prices I listed. Did your price of a 500 GB HDD of $280 include the VAT? What does the VAT add to the basic price in percentage?

The Dutch VAT of 20% was included in my numbers. BTW The 280$ for an internal 500GB SATA drive is bargain price via internet, excluding abt. 10$ postage. In the regular shops it will be 300$ plus.

The 8 % US VAT makes the difference smaller but still a wide gap between the US and EU.

jk
10-16-06, 08:59 PM
The Dutch VAT of 20% was included in my numbers. BTW The 280$ for an internal 500GB SATA drive is bargain price via internet, excluding abt. 10$ postage. In the regular shops it will be 300$ plus.

The 8 % US VAT makes the difference smaller but still a wide gap between the US and EU.

the difference is that dutch citizens have health care.

metalman
10-16-06, 09:31 PM
the difference is that dutch citizens have health care.

doubt the money i saved on buyng a hard drive and a digital camera in the US vs the netherlands will cover the cost of a hernia operation.

DemonD
10-16-06, 11:50 PM
Not to bang the drums for capitalistic health care, but how many Intuitive Surgical Davinci surgical robots are there in the netherlands? How many orthopedic specialists in The Netherlands do arthroscopic hip surgeries (which is much more difficult than it sounds)? How many biotech companies are there outside the US versus inside the US because we have more opportunity for drugs to make money here?

I am in no way saying the US healthcare system is perfect, or that it even works. I'm just saying that most US citizens DO have health care, and the vast majority have superior health care over the rest of the world.

The health care argument is an old and tired one: everyone gets socialized medicine vs. the hybrid socialized/capitalistic system that has advanced medicine light years ahead in the past 100 years far above and beyond anything that humankind has ever seen.

btw the cost of a digital media player might not cover the cost of surgery, but what about how much less we pay in gasoline over a lifetime?

Jim Nickerson
10-17-06, 02:07 AM
I am in no way saying the US healthcare system is perfect, or that it even works. I'm just saying that most US citizens DO have health care, and the vast majority have superior health care over the rest of the world.


The last statistic I ran across was 45-48 million Americans do not have health insurance. How anyone can imagine a system as "good" when 45+ million cannot readily access it? For one to claim "the vast majority [of Americans] have superior health care over the rest of the world" is in my opinion a statement of ignorance, a statement influenced by being brainwashed, or the statement of some physician who has his head up his butt. When you go to a doctor and walk out how do you know you got squat compared to what might in fact represent truly superior healthcare?

Jim Nickerson
10-17-06, 02:50 AM
doubt the money i saved on buyng a hard drive and a digital camera in the US vs the netherlands will cover the cost of a hernia operation.

metalman,

You are correct; however, if this country had a consumption tax then perhaps altogether the tax could buy healthcare for everyone not at the level of the most sophisticated technology for every blooming 300,000,000 million of us, but at some better level than currently exists which leaves a lot out in the cold from any routine healthcare.

I just posted on another thread "Re: future tense from the land of oz" that was begun by jk. In it I referenced a statistic "40 percent of discretionary spending is done by the top 20 percent of the consumers." from Meredith Whitney. Hopefully this link will take you to that thread for more reference.http://www.itulip.com/forums/showthread.php?p=3558#post3558 I imagine that if we had a serious consumption tax the rich who have most of the money, and I imagine spend the most if Ms. Whitney were to be correct, would contribute a lot toward salving the wounds of those outside of receiving healthcare today.

I had a number of close colleagues who practiced my specialty in Groningen, The Netherlands, and there was absolutely nothing second rate about these guys' knowledge or desire necessary to provide as good a care as existed in our field in this country, and almost 15 years later I doubt this has changed.

PeterM
10-17-06, 06:05 AM
doubt the money i saved on buyng a hard drive and a digital camera in the US vs the netherlands will cover the cost of a hernia operation.
Don't think it is related to health care :)
I think there is a lot of 'hidden' cost in the US health care system in the frivolous sueing practices. The main beneficiaries being the insurance companies and lawyers, not the health care system.
And then the rediculous paychecks of some health care moguls, with absolute top William McGuire of UnitedHealth Group (unrealized options package valued at $1.6-billion). How many clients does it take to cover just these excec payments, without providing any medical assistance?

I'm all for free markets, but IMHO privatization in health care and energy/water increases cost and reduces infrastructure quality.


But to return to cost of electronics. I do wonder how much more prices can decrease in the US (as this is part of the reason why CPI is so much understated). In EU there appears to be a margin in the system to play the 'low inflation' game if the EC is willing to reduce tarifs.

jk
10-17-06, 10:37 AM
But to return to cost of electronics. I do wonder how much more prices can decrease in the US (as this is part of the reason why CPI is so much understated). In EU there appears to be a margin in the system to play the 'low inflation' game if the EC is willing to reduce tarifs.

sorry re my remark on health care. i only wanted to point out that the high vat in europe pays for government services and benefits beyond what exists in this country.

it's hard for me to believe that the ec would consider lowering vat's across the board. such a move smacks of "the anglo-saxon model," as the french call it, and basically would undermine the social compact at the heart of the european model.

EJ
10-17-06, 04:02 PM
sorry re my remark on health care. i only wanted to point out that the high vat in europe pays for government services and benefits beyond what exists in this country.

it's hard for me to believe that the ec would consider lowering vat's across the board. such a move smacks of "the anglo-saxon model," as the french call it, and basically would undermine the social compact at the heart of the european model.

It was a good comment and it launched some thoughtful discussion.

Here's the picture of inflation. It shows that a 300% rise in CPI since 1978 is the average of a 400% reduction in the cost of traded goods, such as TVs, with an 300% to 800% increase in the cost of non-traded goods, such as college tuition and medical care. One way to make college tuition and medical care less expensive and more accessable is to tax consumption. That's how it's done in European countries. It's a societal decision. What do you care more about, cheap TVs for your citizens or healthy and well educated citizens? The chart below helps explain why the US ranks 37th (http://www.photius.com/rankings/healthranks.html) in the WHO's ranking of health systems.


http://www.itulip.com/images/cpi1978-2004.gif

PeterM
10-17-06, 04:04 PM
Not to bang the drums for capitalistic health care, but how many Intuitive Surgical Davinci surgical robots are there in the netherlands? How many orthopedic specialists in The Netherlands do arthroscopic hip surgeries (which is much more difficult than it sounds)? How many biotech companies are there outside the US versus inside the US because we have more opportunity for drugs to make money here?

I am in no way saying the US healthcare system is perfect, or that it even works. I'm just saying that most US citizens DO have health care, and the vast majority have superior health care over the rest of the world.

The health care argument is an old and tired one: everyone gets socialized medicine vs. the hybrid socialized/capitalistic system that has advanced medicine light years ahead in the past 100 years far above and beyond anything that humankind has ever seen.

Indeed an old discussion, and also a difficult one as it involves ethics and personal aspects where harsh calculations will conflict with emotions and belief systems.
For me a health care system is good when all citizens can afford and will receive the basic treatments neccessary to secure a better quality of life.
One of the difficulties I see in health care is that more can be done to save/prolong life at increasingly exponential costs. At a certain point the funds will be insufficient to cover the total cost of these 'potential' treatments. But what is priority? A basic health care system for all or the world's best high tech treatments for a few?

Sometimes I wonder. E.g. high tech heart transplant surgery with state of the art equipment is done in Thailand .... and 10 miles down the road in the slums people are dying from diarrhea. How many lives can be saved for the same cost?

I think in Holland 9% of the state budget goes to health and people pay a compulsory basic health insurance (abt. 130$ monthly). The VAT is about 25 % of the state income. Don't know how that compares to the US.

It's all about choices... Holland spends most on education/science (18%), social security (18%), debt payments (9%) and less on defence (5%). Fortunately next year Holland will finally have a budget surplus and is (expected) to pay down a small token part of the priciple. But I won't bet on the politicians to remain frugal enough over the year.

DemonD
10-17-06, 09:46 PM
Coming from someone who knows a great deal about the health-care industry, the 45-48 million uninsured still get decent, if not very good, health care. Why do you think hospitals lose so much money? It's because they treat the poor and uninsured who have no way of paying - and they eat the cost.

Also there are many many MANY services for the non-insured. Everything from the Shriner's Hospitals which is 100% free (and I'm told that it's easier for Shriner's to treat children who are completely uninsured) to county and state-sponsored free health clinics which are, by their nature, overcrowded and understaffed, but still much better than a Doctor Without Borders under a tent in Africa.

The most difficult situation is people who are UNDER-insured. I see this every day. High deductibles, high co-pays; these people are less likely to get treatment than the uninsured.

Look, I'm going to end my participation in this argument, because there really is NO perfect health care system out there. None. There are pro's and con's to every system; all my point is that the argument of "universal health care is the best health care" is very short-sighted and oversimiplifies much bigger problems. It's a cowboy argument.