Tag Archives: Apple

A Tale of Two Tech Companies

9/17/2013 Portland, Oregon – Pop in your mints…

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair…”

Preamble of “Recalled to Life”, the First Installment of Charles Dickens’ 1859 novel, A Tale of Two Cities.

We’ve always liked this preamble. While the story that follows it is no slouch either, the preamble alone is worth the price of admission. In economic terms, these 60 words may be priceless, as they have played no small part in the over 200 million copies of A Tale of Two Cities that have been sold.

Today, it is our intent to become the next in a long line of writers to piggy back on Dickens’ famous preamble by way of framing our recent tablet purchase experience and extrapolating it into brief commentary on the short term fates of technology giants, a category that barely encompasses the importance of these two companies, Google and Microsoft

First, a bit of history in which we shall reveal our age.  Our first experiences with a computer came circa 1984 at the tender age of 10 when HP still had versions that relied on something of a small cassette tape to store and transport data.  These machines were quickly overcome by the likes of the Apple IIe.  Those were the days when green text on a screen was enough.

In our limited tech worldview, Apple was king until Microsoft’s Windows OS came onto our radar, followed by Word and Excel.  In retrospect, while Word Perfect and Lotus (or Quattro pro) were the word-processing and spreadsheet choices du jour, Microsoft seemed to have a knack for sitting back and getting things right, ceding the first strike advantage and using their earlier competitor’s as a prolonged market research experiment before introducing a superior solution.

While it is a slower strategy and sacrifices the opportunity to seize early adopters that become entrenched in their competitors ecosystems, it has worked in every arena where Microsoft has tried it.

Fast forward to today.  Microsoft was not even on the radar as the iPod/iPhone revolution again showed that Apple still retained its uncanny ability to be the first to market.  Apple parlayed this victory into again seizing the first strike advantage in the tablet space and sending a raft of innovations to market before their competitors could fully grasp what was occurring.

Yet as any well-trained general will tell you, having the first strike advantage and winning a war are two different things.

Roughly in November of last year, we observed that it was time to begin shorting Apple.  We were late to the call but nonetheless, it has played out.  At the time, all we could see were Apple’s shortcomings based on our purchase of an Android phone which to us seemed clearly superior and more economical than its Apple counterparts.

Over the summer, as if by accident, we stumbled upon yet another nail in Apple’s short-term coffin:  The Surface.

We attended the Microsoft store grand opening in Portland over the summer as an obligation.  However, once the hype was finished, we decided to take a stroll through to see what type of weak offering Microsoft was throwing money away at.  In our mind, Microsoft had thrown in the towel.

We walked out of the store with a Surface RT (the watered down version of Microsoft’s version of the iPad) and a completely different perspective.  The Surface did everything, and a bit more, that we had hoped the iPad would.

Microsoft had done it again, as it had in the ’80s and ’90s, while it stung to watch the masses flock to the mirage of iParadise, it bode its time and learned from the iPad’s weaknesses.

What is the iPad’s weakness?  In an attempt to generalize our thoughts on the matter, we will simply state that the iPad is for digital consumers while the Surface is for digital producers (such as ourselves).  In layman’s terms, if one needs to browse and respond to emails with text, the iPad is sufficient.  If one needs to elaborate documents, spreadsheets, and the like, the Surface is everything you had hoped the iPad would be.

The iPad is not a laptop, nor is the Surface, but the Surface is much closer.

While the Windows 8 OS still requires years of app development and a bit of training, it is a dream in the tablet environment once mastered.  It does all of the logical things that we had hoped the iPad would.  It allows you to easily toggle between open apps and, more importantly for those of us who grew up managing a Windows desktop, if sufficiently allows one to manage in this environment to feel at ease.

Beyond that, the Surface tablet keypad is superior and Skydrive (Microsoft’s response to the iCloud), is extremely intuitive and allows one to make simple edits on a browser if necessary.

Microsoft has once again shown that its strategy of biding time can pay big dividends.  While it has a long way to go to reach the penetration levels of Apple’s iEcosystem, Microsoft has quietly introduced a superior product in the tablet space, and while it is no longer time to short Apple, it may be time to once again go long Microsoft.

A final question must be addressed here.  Why has Microsoft chosen to offer a tablet when for years it offered simply software and relied on third-party hardware?

It is simple, and a fact that must not be overlooked when analyzing technology offerings.  The tablet (and smart phone), as the Internet browser once was, is now the main portal to the digital world.  Microsoft’s offering of the Surface is as important as its offering of Internet Explorer was, which is why the company is almost giving them away.

For with the Surface and Windows 8, Microsoft not only has Apple’s market share in its sights, but Google as well, and if things continue to progress along this path, Google will find that tablet producers will sidestep its gates at every opportunity.

And the time to short Google may indeed be nigh.

Stay tuned and Trust Jesus!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 17, 2013

Copper Price per Lb: $3.20
Oil Price per Barrel:  $105.76
Corn Price per Bushel:  $4.56
10 Yr US Treasury Bond:  2.84%
Mt Gox Bitcoin price in US:  $139.25
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,314
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.3%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  15,529
M1 Monetary Base:  $2,672,600,000,000
M2 Monetary Base:  $10,742,100,000,000

The time to short Apple, as in $AAPL, is nigh

11/29/2012 Portland, Oregon – Pop in your mints…

Here at The Mint, we don’t generally comment on individual stocks.  In general, we see equity prices as subject to monetary policy whims and HFT (High Frequency Trading) bots.  As such, it is rare that the perceived fundamentals of a stock match its bid in the markets at any given time, no matter how perfect the market’s knowledge may be.

Add to this the fact the Corporations are, at their base, socialist enterprises, and you too, fellow taxpayer, will begin to see equities in a whole new light.

That said, sometimes things come to us so clearly and are of such significance that we can ignore the fact that we are talking about an equity and simply study the phenomenon which it represents.  In the case of Apple, the brainchild of Steve Jobs that has given the world the IIe, the Macintosh, and the Ipod-phone-pad craze, among other things, the phenomenon we are witnessing demands a response.

In summary, we believe that about the time that Santa Claus makes his annual jaunt around the world, dropping Apples I-whatevers in the stockings of children, both young and old, of well heeled parents all over the world, it will be time for wise investors to short Apple, big time.

Why such a bold call?  Other than a hunch, confirmed by a recent analysis we were fortunate to read, we will attempt to articulate our reasoning for this prediction as follows:

1.  Reliance on patents as a business plan is equivalent to capitulation in the technological sector.  A short time ago, we wrote briefly regarding the lawsuits which Apple has launched against Samsung and others who have dared to “imitate” its mobile technology:

Apple’s use of Patent Law indicative of an inferior product offering

Relying on litigation either for revenues or to protect revenue streams is a losing strategy.  It not only hurts your competitors, but the public in general.  Since innovation got Apple to where it was, why not continue?  It shouldn’t be difficult with the largest cash hoard in corporate history at their disposal.

We once “got in” on an IPO for a company called “Caldera Systems,” and hung on for dear life, waiting for them to profit from the rising tide of Linux Operating Systems.  We then watched helplessly as their strategy degenerated from trying to profit from open source software to changing their name via an acquisition to SCO Group and initiating a lawsuit against IBM which boiled down to a few lines of code that SCO claimed was theirs.

As far as a business strategy, pursuing Intellectual Property claims is last ditch effort to save face.

2.  Steve Jobs is gone.  Mr. Jobs was a rare creative genius as well as the gravitational center of Apple.  Without him, Apple was bound to turn into the technological equivalent of the break up of the Roman Empire, or any Empire for that matter, with brutal wars for territory and resources, no matter how abundant they may be, which will eventually leave the Empire a shadow of its former self.

3.  Fund Manager window dressing.  Apple stock has minted a 44% return year to date at the time of this writing.  It has also become a big part of the Nasdaq and S&P 500.  As a consequence, many institutional investors have large direct or indirect stakes in Apple which has a juicy return that is begging to be booked before year end.  Sell.

4.  The moronic Fiscal Cliff.  This is crushing business confidence and by extension, the US Consumer.  The combination of the unprecedented uncertainty surrounding legislation with wide ranging economic consequences, such as Obamacare and the Dodd-Frank act, coupled with the debt ceiling, spending sequester, and sun setting tax provisions has utterly paralyzed American businesses as some 1,000 in Washington bicker over numbers they do not understand.  Washington will get a deal done and it will be bad for all involved.  Unless the payroll tax holiday gets extended, the US consumer is toast.

This is why we think Apple is ripe for the picking.  However, we learned long ago to ignore our gut feeling until it is confirmed.
Enter Chris Vermeulen.  In a recent post over at the Market Oracle, Mr. Vermeulen defines the terms for the upcoming demise of Apple’s stock price in terms of the psychology of market swings.  For specifics on the phenomenon at hand and a possible short signal (which, as near as we can tell, will be when $AAPL touches $640 in late December), we refer you to his insightful article:

Apple, How Market Booms Turn to Busts, Trading from New Paradigm to Despair

In our humble assessment, which should be taken with the same grain of salt which all free advice must be taken, we believe that Mr. Vermeulen has put into numbers and graphs what we have felt, generally, ever since we purchased our first Android:  Apple’s days as king of the mobile computing realm are numbered.  People will not pay for things that they can have for free, and, as the commercials from Designer Imposters long ago reminded us.

“You can patent a mix of chemicals, but you can’t patent a smell.”

Two words:  Short Apple

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for November 29 2012

Copper Price per Lb: $3.52
Oil Price per Barrel:  $86.62
Corn Price per Bushel:  $7.60
10 Yr US Treasury Bond:  1.62%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,719 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  12,985
M1 Monetary Base:  $2,329,700,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,303,600,000,000

Full Disclosure and friendly warning:  We do not own any shares of $AAPL, nor do we plan on shorting them with our own money, as stock market speculation is a great way to lose a ton of dough if one doesn’t know what they are doing!  Furthermore, we are hardly qualified to give specific stock or portfolio advice to persons we do not know or do know but do not have intimate knowledge of their finances and tax situation.  If you choose to do so as a result of reading this article, you do it completely at your own risk or reward.

Apple’s use of Patent Law indicative of an inferior product offering

9/26/2012 Portland, Oregon – Pop in your mints…

The global smart phone industry is still reeling from the implications of the ruling in favor of Apple in a high stakes legal battle with rival Samsung in the mobile technology space.

To be clear, Apple has every right to make use of the remedies available to them under international patent law.  As the law is written, there can be no mistake that the pioneering iPhone and iOS operating system has been shamelessly mimicked in a desperate attempt to replicate its success and help satiate the insatiable human need for easy to use technology at an affordable price on a platform friendly to developers.

Yes, the villains at Samsung are being punished for listening to the market and copying and improving upon Apple’s design, making it faster, bigger, more affordable, and accessible to developers.

For this their punishment should be all the more severe.

So should the punishment for every organic farmer who dares to “copy” a seed which has been “patented” by Monsanto, or anyone who puts their hands to work to cultivate or, dare we say, improve upon something that has been made before them.

The point is that patent law, while serving the important function of protecting innovations as they come to market, is counterproductive on a societal level when they are enforced to keep copy cat products, which meet a need that the original product does not.  In the example of the iPhone, offering a similar product at a more accessible price with an easier to use interface.

In fact, we see that in nearly every example of a company or individual invoking patent protections to protect its products, the law ends up causing a greater loss to society as they are forced to choose between what is now seen as an inferior or prohibitively expensive product or go without until the patent holder sees fit, from the crystal cage of their legal monopoly, to grant the populace an upgrade or a price break.

Apple, in this sense, has admitted defeat in the mobile realm, as the iPhone 5 proves once again that, after establishing the baseline for mobile technology through sheer genius, they are forced to lean on patent laws to maintain what should have been a clear competitive advantage.

The sales figures speak for themselves:  Samsung shipped twice as many smartphones as Apple sold last quarter.

In the case against Samsung, we see that the authorities are more interested in product pride than allowing free actors in the market to supply a consumer need that the iPhone does not, par for the course in a system where Crony Capitalism daily stifles what may be life-changing innovations.

Thank goodness the human genome wasn’t patented!  Where would we apply for the right to reproduce?

Full disclosure:  We own devices with both android and iOS operating systems.  For those who have never tried a droid, let’s just say that it makes operating in the iOS and the Apple ecosystem feel like being shackled with a pair of handcuffs.  For those who have never tried the iOS, let’s just say it makes the droid feel clunky and unstable.  Were it possible to mesh the iOS with the freedom of the android ecosystem, mobile nirvana would be achieved.  Thanks to patent law enforcement, it never will be.

Stay tuned to your devices and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 26, 2012

Copper Price per Lb: $3.70
Oil Price per Barrel:  $90.25
Corn Price per Bushel:  $7.43
10 Yr US Treasury Bond:  1.63%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,743 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.1%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,455
M1 Monetary Base:  $2,279,800,000,000
M2 Monetary Base:  $10,150,900,000,000