Unlocked French iPhones

Apparently, Apple must sell unlocked iPhones in France. This is great, but it doesn’t matter much to Apple. From what I’ve read, Apple gets a kickback of ~$200 for every AT&T subscriber. Therefore, Apple makes $600 per phone ($400 for 8GB model). Rumor has it that Apple will charge 100 Euro more than the 400 pounds it charges in the UK. For Apple, that’s an extra $140, which makes up their loss on the kickback (though most people will sign up with Orange to get visual voicemail, preserving their kickback). Are any Americans willing to pay 400 pounds + 100 euros for an unlocked iPhone? That’s around $950 for the phone. That’s insane, especially when competitors will have cheap knockoffs next year anyway.

How to find an honest expert

My car makes a funny sound; something about sticky valves. I don’t know much about cars, nor do I care to learn. If I ask a mechanic to fix everything, he’ll overcharge me because we have an information asymmetry, he knows more than I do. So how can I get my car fixed without getting robbed? This same problem pops up everywhere. How can I trust the treatment recommended by my doctor? How can I trust my financial advisor on retirement options? The problem is that I want to separate the diagnosis from the implementation. I want to get a trustworthy mechanic to tell me what’s wrong for a flat fee, then I’ll shop around for the lowest cost mechanic. This sounds like a job for the Internet. If we had a cheap & reliable source for expert second opinions, it would reduce the information asymmetry and, hopefully, reduce prices.

IT does matter

A few years back Nicholas Carr wrote an incendiary article stating “IT doesn’t matter“. He concisely describes the idea here: “My point, however, is that it is no longer a source of advantage at the firm level – it doesn’t enable individual companies to distinguish themselves in a meaningful way from their competitors. Essential to competitiveness but inconsequential to strategic advantage: that’s why IT is best viewed (and managed) as a commodity.” Another quote: “we’re at the point where any technological improvement in the management of information will be quickly and broadly copied, rendering it meaningless for competitive advantage.”

Air Traffic Futures Market

This article explains a bit about why there are so many flight delays in the US. It seems planes fly prescribed routes at set distances between each other. Therefore, there are a finite number of slots available. When bad weather disrupts a route, then all those planes must be rescheduled, but there aren’t any spare slots in the very tight route schedule. Some of those slots are taken up by private jets. Planes pay the FAA a fee based on weight(!!); therefore, private jets pay much less than a commercial plane for the same traffic slot. The obvious solution is to have a futures market for airplane traffic slots. Airlines will bid for all the slots they need for their schedule, thus paying the real market price for those scarce slots. If there’s bad weather or other mishaps, then those slots are lost. Too bad, though they can hedge in the weather futures market (yes, there’s one in Chicago). Airlines can buy new slots in the market to reschedule their flights. There’s more certainty in this market then there is in the existing system, which is ad-hoc and poorly managed. There’s a dude at Stanford that’s already worked out the details.

[edit: this problem is not solved when they switch to GPS instead of ground beacons to keep track of planes. Instead, the issue reasserts itself because a limited number of planes can take-off or land at airports, where they have a small number of landing strips and airport gates. It’s still competition for a limited resource.]

The market is falling!

The market is crumbling right now. For the year-to-date (Jan-Aug), the DOW and SP500 are at 3% and 0% respectively. For the year (Aug07-Aug08) they’re still up approximately 13% and 8% respectively. So what’s the big deal? At the peak in mid-July both were up over 20% for the year. That’s an insane rise in the market and it had to come down anyway. I was itching to buy some out-of-the-money put options to protect against a sharp downward move, but my friend (who makes tons of money for her alleged knowledge of derivatives) couldn’t understand my simple Options101 strategy. I got nervous because of my spineless reverence for expertise (if she wasn’t sure, then I better not do it). Too bad. I could have protected most of my profits at its peak in July. Anyway, I’ll slowly drop some more money into the market to bring my average purchase price down (dollar cost averaging).

Financial Mania

When asset prices soar, is it a bubble? No, prices move sharply up and down for many valid reasons. For me, intuitively, a bubble is when a certain percentage of assets are held by speculators who aren’t concerned about real market values. Instead, they are waiting for the greater fool to come along with a fist full of cash. This becomes a pyramid scheme, which eventually collapses when you run out of fools. Today’s housing market is a bubble in some urban areas, especially for condos, because speculators were hoping to flip for quick profits. The markets in India and China are probably bubbles because reports say that lots of people are opening brokerage accounts hoping to get rich quick, much like the Tech bubble. There are always speculators, so what percentage signals trouble? I don’t know, it depends on the market. When do you run out of fools? I don’t know, but interest rates play an important role here. If it goes up, it shrinks the number of fools who can afford outrageous sums for housing. It also dampens trading on margin.

The reason bubbles are hard to detect is because the speculators must convince the ignorant masses that there are good reasons for asset prices to continue to climb in the future. Moron reporters repeat these lies on TV, creating a cult-like echo chamber. Personally, I become very suspicious when people say “this time is different”. When they invent new metrics to revalue an asset, it’s likely a bubble. So far I’ve been right about the bubbles in the past decade. But I can’t make any money from my prognostications because I don’t know when we’ll run out of idiots to fuel these pyramid schemes. All I can do is rub it in after the morons lose their money.

Newegg reviews

Unfortunately, I’ve been buying a lot of computer gear recently. I’ve found the reviews on Newegg to be tremendously useful. Most are idiots, but there enough people there with insightful opinions that make my purchasing decisions much easier. Newegg should find a way to exploit this resource. For example, it could require registration to view most customer reviews. Also, it should be easier to find and track those people I’ve found to give insightful reviews (social networking?). They become “experts”, and I might be interested in something they recently purchased. I guess Amazon does something similar, but it doesn’t personalize it for me. There’s just one big reviewer ranking, or you can look at all reviews by a particular person. Not quite what I had in mind, but a decent first step.

I just checked… apparently you can fetch the customer reviews using Amazon’s E-Commerce Service. I guess I could build this feature myself.

iPhone

I stopped by the Apple “cube” store on 5th in Manhattan to leer at the iPhone. It’s quite slim, light and comfortable. The keyboard takes some getting used to, but it didn’t feel like a deal breaker. Someone guessed that Apple sold over 500,000 phones this weekend alone, almost all the 8GB version. At $600 per phone, that’s $300M in one weekend. Could they hit $1B by the end of the year? And when this thing sell worldwide, it’s going to make zillions of dollars. Steve Jobs has hit another home run.

Facebook Flash Mob

Recently some people have been raving about Facebook’s API for widgets. You get access to their social networking graph and they’ll inject your app into their pages. So here’s my idea: you select from a list of upcoming events those which you will or may attend. When your friends look at the same list, they’ll see how many of their friends are planning to attend: “Acid Jazz Concert (4)”. Click on the event to get event info and a list of their friends planning to attend. This makes it much easier to organize a group event, without the bother of evites, emails, and telephone tag. This basic idea can be vastly improved, but this is enough to get started. The only similar application I could find is Attendio, but they neglect the social networking part (which is the whole point of the Facebook API). Anyway, one competitor doesn’t mean the area is saturated. I can’t think of any obvious reasons for why this idea sucks. I don’t think it will make any money, but if it is self-sufficient (pays for servers and bandwidth) then that’s good enough for me.

[edit: Doh!! Upcoming already does something similar, but poorly. Obviously Yahoo can’t write apps for Facebook. So there’s a small opening for a Facebook widget.]

Porn

Contrary to conventional wisdom, the porn business is much smaller than Hollywood. The total size of the porn business is unknown, but Forbes guesstimated that it is far less than $3 billion. Total global revenue from the major Hollywood studios is around $50 billion, where half came from DVDs. The conventional wisdom often grants porn mystical powers to pick winning technologies. This is due to the fairy tale that porn decisively backed VHS over Betamax. This proves to be a gross overstatement. The primary difference was that VHS tapes recorded for 3 hours, but early Betamax only taped 1 hour. To tape a TV movie required 2 expensive Betamax tapes, and a crazy contraption to swap tapes after 1 hour. Obviously people preferred to buy 1 VHS tape that could record a movie without any hassles. Let me say that I enjoy porn just as much as any lonely misogynistic loser… but it’s a minor player in media and technology.