I like the idea of options that can't be exercised for 10 years or so.
Challenge there is that the average tenure of a Fortune 500 CEO is something on the order of 3-4 years. If there was a 50/50 chance I'd be fired 7 years before the options vest, I'd be less than thrilled about that compensation plan. Not saying long term incentives are bad (I actually agree with you and think long term incentives are the way to go) but there are reasons why CEO candidates might not be interested.
I remember my Dad shaking/waving them -- I'm not sure what this did, but it could have been with the Kodak copy.
Shaking the picture did nothing. It was like pushing an elevator button for a second time. Didn't make anything happen faster but it soothed people while they waited.
IIRC, wasn't there an earlier Polaroid film that had a layer you had to peel back after a certain amount of time?
Yes. In fact this was the case for quite a long time. I'm old enough to remember people using this sort of film.
I've found the Michelin HydroEdge to be a great tire for holding the road in dry and wet conditions. But they proved to be absolutely the worst tire I've ever used for snowy conditions.
Seems to be that a lot of the good wet tires are absolute crap in snow. Not sure why but seems to be common.
I used to live not far from the Ozarks believe it or not so I understand your challenge. Hard to justify chewing up a set of snow tires for the piddling amount of snow that usually shows up. A good set of all weathers and (just in case of emergency) a set of tire chains seems to be the best compromise.
So while, yes, you would expect that bacteria can and will mutate in time, but it's not clear at all why this one would change in exactly that aspect.
Pure random chance. You have to remember that bacteria exist in absolutely enormous number. Trillions upon trillions of them. Numbers so big it defies imagination. They are mutating all the time just by random chance. Most of the time these mutations are harmless and inconsequential. It is exceptionally rare that a single bacteria develops exactly the right set of mutations necessary to be problematic to humans. The problem is that when you multiply an extremely rare even times a huge number of opportunities, you actually get a fairly routine occurrence. These sorts of evolutionary mutations usually occur because of large number of opportunities for very rare events to occur. Influenza continues to be a problem because it mutates quickly. Vaccine developers are stuck playing a game of whack-a-mole with a bug that manages to evolve around any treatment we have been able to develop so far.
Making things worse, we are creating some evolutionary pressures on them through over use of antibiotics. Several of our oldest antibiotics are now effectively useless. Bugs like MRSA are very difficult to treat and literally were not a significant problem 30 years ago.
The Littles always cite the Black Death and 1918 pandemic as if that's what we could expect from a pandemic today--all without noting the MASSIVE improvements in sanitation, medical science, vaccine research, etc. that make this scale of pandemic highly unlikely in the modern era.
"Highly unlikely"? Try virtually inevitable. If you lived near me I'd be happy to introduce you to countless doctors, including infectious disease specialists who would tell you that you could not possibly be more wrong. Unless you have the letters MD attached to the end of your name I think you should actually pay attention to people who actually know the subject matter.
I worked in a hospital infectious disease group a few years ago. Every infectious disease specialist thinks a pandemic like the ones you mentioned is virtually inevitable. Vaccines take months to years to develop and we only have them for a relatively limited number of diseases. There are countless pathogens for which we have no effective treatment other than palliative care. Bacteria and viruses are evolving quite rapidly. Our over-use of antibiotics has actually accelerated the process. Ever get a flu shot? That vaccine simply combats a handful of the strains of influenza that the CDC expects to be most problematic in the coming year. By the following year new strains have developed and previous years vaccine is close to useless. Even when we do have effective treatments for diseases, economic and geopolitical reality often make it impossible to effectively treat vast populations. We know how to eradicate polio and yet decades after having an effective treatment it still exists. Take a fast mutating pathogen like influenza and with the right mutations and our healthcare systems will be overwhelmed.
In the event of a serious pandemic the primary tool we have to combat such an event is quarantine. In other words for a huge number of pathogens we have NOTHING that is better than we had 100 years ago. There is no question that there will be pandemics in the future, the only question is how bad will they be.
BTW, did you know that the Honda Odyssey becomes a total sled with only two inches of snow?
Strong possibility it is due to the tires you use. Odyssey's are pretty common around here and they do ok in the winter. Where I live I'd put on a set of snow tires. They make an amazing difference especially for cars that normally don't do well in sloppy conditions. I have a little sports car (light weight, front engine, rear drive) that without snow tires becomes seriously toboggan-esqe. With snow tires it is actually not bad. Not going to mistake it for my 4x4 truck but certainly fine 99% of the time.
Just like New Yorkers get to giggle when those Southern folk shut down schools and stock pile supplies like survivalists because they got 2 feet of snow.
New Yorkers (the ones from NYC, not upstate) do that when there is 2 feet of snow. Southern folks shut down when there is 2 INCHES of snow.
Seriously, when I lived in a more southerly latitude, a quarter of an inch of snow would close every school within 15 miles of my house. They simply do not know how to deal rationally with significant amounts of snow. Where I grew up 1-2 feet within 24 hours was rather normal and I've seen as much as 72 inches in just three days. Despite that I didn't get a single snow day when I was in high school. Not one in four years.
No, but it might help to determine just WHY the storm was being hyped so much.
That's easy. Because NYC had a chance to be affected and that is where the news organizations are. Secondarily, no government official is going to take the chance of not reacting after the debacle that was Katrina. Anything that might affect NYC is apparently news - even when it isn't. When NYC gets weather that is rather typical where I live you'd think the world was coming to an end. I'm not looking forward to the day when a truly serious natural catastrophe affects NYC. We'll never hear the end of it.
It was a serious storm and needed to be taken seriously and it's probably better to over-react and be prepared than to brush it off. Nevertheless, the media attention was indeed a bit over the top.
Yup, Ford has made planes before... it wouldn't be THAT surprising if they wanted to break back in to that business.
Umm, yeah it would be extremely surprising if for suddenly declared they were getting into the aircraft manufacturing business again. They have no in house aerospace engineering talent (an ex-Boeing CEO doesn't count), no sales staff, no production facilities built for aircraft, few/no aerospace technology patents, and they almost went out of business doing what they supposedly actually do know how to do. Furthermore they'd be entering a mature and very competitive marketplace. Aircraft have come a LONG way since the Ford Trimotor was state of the art.
Any Ford CEO that even hinted at such a foolish move would likely be promptly sacked.
(1) Apple isn't getting two substantially different parts from two suppliers; they are getting two identical parts from two different suppliers as Apple designed the chip themselves.
That has no bearing on the economics of the situation. Both suppliers still have the same fixed costs to amortize. The fact that the product is identical is irrelevant. They both have to buy equipment, hire staff, engineer the build processes, etc. These are fixed costs that have to be paid even if they never actually produce a single unit. With a second supplier, Apple pays many of these costs twice but neither supplier can amortize them over as many units. This drives the price up. It HAS to cost more, the only question is whether the additional cost is worth it. Sometimes it is worth it. If you have a unreliable supplier or if the product is difficult to build or if using a single supplier causes strategic pricing issues it can be worth the cost.
(2) Apple doesn't manufacture anymore; that has been outsourced to Foxconn with engineering and design remaining with Apple so their costs of using two suppliers is substantially diminished.
It doesn't matter whether Apple makes it themselves or not because they still have to pay for it. Foxconn can realize efficiencies Apple cannot because Foxconn specializes in assembling products whereas Apple specializes in designing them. Apple's not a manufacturing company. But if Apple uses a second supplier for ANY product, Apple will be forced to pay a higher price because of the supplier's fixed costs. This isn't speculation, it is basic cost accounting.
Really this is no different than Apple getting flash memory from two different suppliers. Apple like other companies does not have to re-design the board for two different suppliers.
The fact that Apple does not have to re-design anything is irrelevant to the fixed cost amortization problem. The supplier still has to buy equipment, hire people, pay for utilities, etc. Companies buy from multiple suppliers for only two reasons. Either they are trying to manage risk and the associated costs OR because neither supplier can supply their entire purchase. There are very real and demonstrable costs associated with using multiple suppliers.
Disclosure: I'm a certified accountant and I specialize in corporate cost accounting. I do this stuff for a living.
Going to a second supplier makes sense for most companies including Apple.
"Most"? Actual it does NOT make sense most of the time for simple reasons of economics. Virtually all manufacturing has large fixed costs (tooling, engineering, setup, salaries, etc) which have to be recouped somehow. If you produce a small number of units, your per-unit cost climbs steeply. This is 100% of the reason for volume discounts.
The problem with using a second supplier is that you are replicating all of these fixed costs but you can only amortize them over half the number of units. Worse, both suppliers have to be able to scale production in the event the other supplier cannot meet demand. This means your equipment utilization is going to be quite poor since you are keeping production capacity intentionally idle. It is a very rare circumstance where you can second source (on custom products) without incurring very significant extra costs.
Second sourcing only makes sense under one of three circumstances. Huge volume, huge risk or a commodity product. It might make sense for Apple to use a second source supplier but the costs are very real and very significant.
When 35% of consumers say they will buy the iPhone 5 without knowing anything about it or seeing it , and 51% say they would buy it in the first year*,I think that's a pretty nice cushion.
And so it is but what people say they will do and what they actually will do are frequently VERY different. Let's say hypothetically that the iPhone 5 is a flop for some reason. Apple now gets about half their revenue from that product line. Cell phone buyers are notoriously fickle. I suspect most of us would switch phones in a heartbeat if we didn't like a particular phone. Sure, some people will buy even the crappiest product but Apple could easily lose a tremendous amount of revenue with just one poor or even mediocre product. It also could dent their halo effect with their other products.
Apple has been doing amazingly well and producing good products but their revenue depends on them continuing to produce exceptional products people are willing to pay a premium for. One or two major missteps and they could be in real financial trouble.
This reflects the fact that Tim Cook IS the right man for the Job, and in fact, already HAS a proven track record at Apple, since he has run the company twice (or is it three times?) during Jobs' other hiatuses (hiatii?)
He MAY be the right guy but that remains to be seen. Tim Cook by all accounts is a heck of a good executive but he's a different guy with different skills. That's not to say he will fail but he can't (and shouldn't) run the company exactly the same way because he is a different guy. The trick is to not ruin the company culture which would be easy to do. Apple's strategy is a bit of a high wire act and one bad iPhone could really screw things up. Frankly with Apple having the largest market capitalization in the world right now he's going to have a rough time keeping the stock price going up. I wish him the best of luck but he's got some big shoes to fill and lots of challenges ahead.
I might be naive on this, but isn't this how bonuses already work? I thought that bonuses were tied to performance or meeting other goals...
Not necessarily. Sometime bonuses are given out for no immediately obvious reason. Sometimes they are given out because the company board's compensation committee are a bunch of buddies who give the CEO a bonus even when the company loses money. Even if there are performance goals attached, all too often they are too easy reach. Goal oriented bonuses are difficult. Make them too easy and you don't accomplish anything. Make them too hard and they serve no incentive purpose - no point in reaching for a goal you can't actually achieve. In fact incentives in general are difficult to align with the goals of the company. For example, many salesmen are on commission based on revenue. The problem is that this motivates them to sell as much as possible, regardless of profitability. Companies have been ruined by misaligned incentives and management pay is no exception. There is an old saying that if you tell me someone's incentives I'll tell you their behavior.
I'd like to see an example of someone getting a bonus when they've been doing a shitty job (excluding the easy google result of the banks after the bailout).
How about Carly Fiorina who was given $180 million for what can generously be termed uninspired performance and a declining stock price. How about AIG awarding $165 billion in bonuses AFTER receiving bailout money. It's not remotely difficult to find examples of executives being handsomely rewarded for mediocre or even terrible performance.
The problem with your idea is that it really is hard to find anything made in the USA.
No it isn't. You just aren't really looking.
My truck is a Ford, with an International engine, but the casting was moved overseas and only assembly took place here, while virtually everything electrical was made out of the country as well.
There is FAR more to a truck than just the engine. I've been in literally hundreds of automotive assembly (including Ford) and part plants (including Visteon, Dana, Delphi, Lear, Cummins, and more) in the country. The percentage of stuff in an automobile that is made in the US is really quite high. Some of the connectors for electrical stuff are made outside the US but there is more made here than you think. (Disclosure: My current company makes wire harness assemblies so I have direct first hand knowledge of that piece of the pie) I absolutely guarantee you that pretty much any truck from a US manufacturer has a very high (>50-70% usually) of parts built in the US. Most of the rest comes from Canada or Mexico.
Every part of my computer was made out of the USA.
While we still make stuff here, it's a tiny slice of the stuff we use
The US has a $3.7 trillion manufacturing sector and only about a quarter of that is exported. By definition we use the rest of it. Your hypothesis is not supported by the facts.
How long do you think it will be before the US is no longer top dog in making planes?
It will be quite a while (if ever) before the US does not have world class aircraft manufacturing. There is of course no guarantee that the US will maintain dominance in this industry but it isn't going to go away quickly.
Tell me... which is the biggest passenger plane in the world? Airbus came out of nothing and is build with EXPENSIVE european workers and the US can barely compete.
Airbus has been around since 1970 and was form out of a consortium of existing aerospace manufacturers - hardly out of nothing. I'm pretty sure that the folks at Boeing would be very surprised to hear they they cannot compete with Airbus. The 747 is built with expensive US labor and Boeing is still selling plenty of those. Both companies have delivered similar numbers of planes for the past 20 years and there is no reason to believe that will change soon. The fact that the A380 is larger means very little by itself.
There is the dream in the US that you can outsource all the drudge work and keep marketing, sales and design... and run the economy on that. 300 million people, all selling, marketing and a handful of designers...
The US has a $3.7 TRILLION manufacturing sector. That is larger than the GDP of all but about 5 countries in the world. Even China does not manufacture anywhere near as much stuff as the US does. The notion that the US has exported all its manufacturing is simply not supported by the facts. There are (and always have been) some industries that are dominated by firms in other parts of the world. That does not however translate to the US outsourcing all its manufacturing expertise.
Doctor Oz does not consider these scanners to be safe for the following 4 groups: cancer survivors, pregnant women, children, and elderly, and he recommends that they should avoid being scanned at airports.
Personally unless I see some studies from extremely reputable journals like Nature, I don't consider them proven safe for any group. They may be reasonably safe but they may not be as well and DHS just saying "trust me" isn't good enough. I'm actually glad I rarely need to fly anywhere these days.
this is also incidentally why governments are loathe to negotiate with terrorists, regardless of the validity of their positions; a single person or idea should never be allowed to upset the balance of power as it stands.
Exactly how is one supposed to negotiate with a person or group who has no clear or rational motivation or who's goals are something horrible like genocide? There is no one who has been able to clearly articulate why some crazy people flew a pair of planes into the World Trade Center. We know *what* they did. But there is no clear answer to *why* because it was not a rational act by people with rational goals. Furthermore, if the demands of the terrorists are something that plainly cannot be accommodated or condoned (for example kill all non-muslims) then there is no basis for negotiation. For negotiation to occur there has to be a middle ground and with terrorists there almost never is one.
Nation states may be complicated but their behaviors are typically rational or at least comprehensible. Terrorists on the other hand typically have little clear purpose beyond the barbaric acts they commit. They may say they want something but it's almost always something either impossible or psychotic. A suicide bomber pretty much never accomplishes anything productive unless his/her sole goal was to become a murderer.
Isn't this trying to fix a broken process by fixing the symptom rather than the cause of the problem?
Yes, though I would argue that any improvement is a good thing. This potentially significantly lowers the standard of proof needed to get a patent thrown out which means they are then less likely to be used as a threat. A patent that is not a credible threat is much less worrisome. It doesn't solve the legal cost issue but it might very well keep some legal threats from being made in the first place.
But since I can get 100+ cable channels for 30 a month , which works at about, say, 4x7x30=840 hours
You actually watch 840 hours of TV a month? If you watch even half of that you seriously are missing out on life. Learn what opportunity cost is, turn off the TV, go outside and play.
I would have thought with Hulu and tons of other entertainment that cable's glory days were behind.
As long as they own the wire coming into your house they are going to have a LOT of influence. Hulu is only as good as the internet connection it is attached to and only a relatively small percentage of the population has what I would consider enough bandwidth to really make it work. Furthermore they have lots of legal agreements with the various networks (content providers) as well as owning some networks of their own (Comcast) and have the ability (the legal right is still up in the air) to block or slow data coming down their pipes. There is no fundamental reason they can't have their own competing services to things like Hulu and Netflix.
I think cable companies are going to have to actively respond to new technology developments but they aren't going anywhere for a long time to come. I know people who would sooner cut off their heat than stop paying for overpriced cable TV. I exaggerate slightly but only slightly...
I know lots of people here like to parrot the nonsense that profit profit profit now now now is legally and ethically the sole objective of publicly traded corporations, but that's simply hogwash.
You are discussing fiduciary duty. A fiduciary duty has nothing inherently to do with making a "profit now". Yes company management in publicly traded firms have a legal obligation to look out for the financial interest of the investors of the company. Their duty however may mean that they are obligated to take a long term perspective or a short term one based on the circumstances. A fiduciary duty is a necessarily vague concept and time to a return on investment is at most a second order consideration.
It was S&Ps rating system that the banks gamed with repackaged mortgages in the first place. Fuck um.
How long before the media points that out? Think they will?
It was discussed on NPR today. Thing is though, it doesn't matter if S&P were incompetent or complicit in the past. It doesn't matter if S&P is right or wrong even. It doesn't matter if the media discusses it either. What matters is how people will react to the downgrade going forward.
S&P has a credible argument that the US debt should be downgraded until there is clear evidence that our political leaders are willing to act like adults and actually deal with the problem. Right now the US government is borrowing $0.40 of every dollar it spends. Worse, we have a bunch of idiotic congressmen willing to play a game of chicken with the full faith and credit of the US government. That is insane. S&P might be wrong but at least their argument has some reasoning behind it. Congress isn't thinking about anything except getting re-elected.
Because, financially, China has the West (especially the US) by the balls and everybody knows it.
How exactly do you figure that? Sure China sells a lot of merchandise in the US but that means they are exactly as dependent on the US as the US is on them. In fact if anything China is more dependent on the US because it's not like there are a lot of other markets the size of the US market. The old maxim goes that if you own the bank $1000 and can't pay, you have a problem. If you owe the bank $1 million and can't pay, the bank has a problem. Same thing applies here except the number is roughly $1 trillion and the bank is China.
Furthermore virtually everything made in China can be made elsewhere. Might be inconvenient in the short term to do so but certainly possible. I used to do global sourcing of manufactured goods from Mexico, China and elsewhere. China is merely one option and not necessarily the best. Heck, they aren't even the largest trading partner with the US (that would be Canada).
you'll be even more unhappy when we buy fewer bonds or make fewer investments in your country."
China buys those bonds to control their currency valuation. Until very recently the Yuan was pegged to the dollar. You maintain a peg by buying sovereign debt. They can't get rid of it easily or quickly. There is no one to sell that much debt to and even if they did sell it it would invite all sorts of problems. There is nothing the Chinese can do to the US that wouldn't cut their own throats in the process.
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I like the idea of options that can't be exercised for 10 years or so.
Challenge there is that the average tenure of a Fortune 500 CEO is something on the order of 3-4 years. If there was a 50/50 chance I'd be fired 7 years before the options vest, I'd be less than thrilled about that compensation plan. Not saying long term incentives are bad (I actually agree with you and think long term incentives are the way to go) but there are reasons why CEO candidates might not be interested.
I remember my Dad shaking/waving them -- I'm not sure what this did, but it could have been with the Kodak copy.
Shaking the picture did nothing. It was like pushing an elevator button for a second time. Didn't make anything happen faster but it soothed people while they waited.
IIRC, wasn't there an earlier Polaroid film that had a layer you had to peel back after a certain amount of time?
Yes. In fact this was the case for quite a long time. I'm old enough to remember people using this sort of film.
I've found the Michelin HydroEdge to be a great tire for holding the road in dry and wet conditions. But they proved to be absolutely the worst tire I've ever used for snowy conditions.
Seems to be that a lot of the good wet tires are absolute crap in snow. Not sure why but seems to be common.
I used to live not far from the Ozarks believe it or not so I understand your challenge. Hard to justify chewing up a set of snow tires for the piddling amount of snow that usually shows up. A good set of all weathers and (just in case of emergency) a set of tire chains seems to be the best compromise.
So while, yes, you would expect that bacteria can and will mutate in time, but it's not clear at all why this one would change in exactly that aspect.
Pure random chance. You have to remember that bacteria exist in absolutely enormous number. Trillions upon trillions of them. Numbers so big it defies imagination. They are mutating all the time just by random chance. Most of the time these mutations are harmless and inconsequential. It is exceptionally rare that a single bacteria develops exactly the right set of mutations necessary to be problematic to humans. The problem is that when you multiply an extremely rare even times a huge number of opportunities, you actually get a fairly routine occurrence. These sorts of evolutionary mutations usually occur because of large number of opportunities for very rare events to occur. Influenza continues to be a problem because it mutates quickly. Vaccine developers are stuck playing a game of whack-a-mole with a bug that manages to evolve around any treatment we have been able to develop so far.
Making things worse, we are creating some evolutionary pressures on them through over use of antibiotics. Several of our oldest antibiotics are now effectively useless. Bugs like MRSA are very difficult to treat and literally were not a significant problem 30 years ago.
The Littles always cite the Black Death and 1918 pandemic as if that's what we could expect from a pandemic today--all without noting the MASSIVE improvements in sanitation, medical science, vaccine research, etc. that make this scale of pandemic highly unlikely in the modern era.
"Highly unlikely"? Try virtually inevitable. If you lived near me I'd be happy to introduce you to countless doctors, including infectious disease specialists who would tell you that you could not possibly be more wrong. Unless you have the letters MD attached to the end of your name I think you should actually pay attention to people who actually know the subject matter.
I worked in a hospital infectious disease group a few years ago. Every infectious disease specialist thinks a pandemic like the ones you mentioned is virtually inevitable. Vaccines take months to years to develop and we only have them for a relatively limited number of diseases. There are countless pathogens for which we have no effective treatment other than palliative care. Bacteria and viruses are evolving quite rapidly. Our over-use of antibiotics has actually accelerated the process. Ever get a flu shot? That vaccine simply combats a handful of the strains of influenza that the CDC expects to be most problematic in the coming year. By the following year new strains have developed and previous years vaccine is close to useless. Even when we do have effective treatments for diseases, economic and geopolitical reality often make it impossible to effectively treat vast populations. We know how to eradicate polio and yet decades after having an effective treatment it still exists. Take a fast mutating pathogen like influenza and with the right mutations and our healthcare systems will be overwhelmed.
In the event of a serious pandemic the primary tool we have to combat such an event is quarantine. In other words for a huge number of pathogens we have NOTHING that is better than we had 100 years ago. There is no question that there will be pandemics in the future, the only question is how bad will they be.
BTW, did you know that the Honda Odyssey becomes a total sled with only two inches of snow?
Strong possibility it is due to the tires you use. Odyssey's are pretty common around here and they do ok in the winter. Where I live I'd put on a set of snow tires. They make an amazing difference especially for cars that normally don't do well in sloppy conditions. I have a little sports car (light weight, front engine, rear drive) that without snow tires becomes seriously toboggan-esqe. With snow tires it is actually not bad. Not going to mistake it for my 4x4 truck but certainly fine 99% of the time.
Just like New Yorkers get to giggle when those Southern folk shut down schools and stock pile supplies like survivalists because they got 2 feet of snow.
New Yorkers (the ones from NYC, not upstate) do that when there is 2 feet of snow. Southern folks shut down when there is 2 INCHES of snow.
Seriously, when I lived in a more southerly latitude, a quarter of an inch of snow would close every school within 15 miles of my house. They simply do not know how to deal rationally with significant amounts of snow. Where I grew up 1-2 feet within 24 hours was rather normal and I've seen as much as 72 inches in just three days. Despite that I didn't get a single snow day when I was in high school. Not one in four years.
No, but it might help to determine just WHY the storm was being hyped so much.
That's easy. Because NYC had a chance to be affected and that is where the news organizations are. Secondarily, no government official is going to take the chance of not reacting after the debacle that was Katrina. Anything that might affect NYC is apparently news - even when it isn't. When NYC gets weather that is rather typical where I live you'd think the world was coming to an end. I'm not looking forward to the day when a truly serious natural catastrophe affects NYC. We'll never hear the end of it.
It was a serious storm and needed to be taken seriously and it's probably better to over-react and be prepared than to brush it off. Nevertheless, the media attention was indeed a bit over the top.
Yup, Ford has made planes before... it wouldn't be THAT surprising if they wanted to break back in to that business.
Umm, yeah it would be extremely surprising if for suddenly declared they were getting into the aircraft manufacturing business again. They have no in house aerospace engineering talent (an ex-Boeing CEO doesn't count), no sales staff, no production facilities built for aircraft, few/no aerospace technology patents, and they almost went out of business doing what they supposedly actually do know how to do. Furthermore they'd be entering a mature and very competitive marketplace. Aircraft have come a LONG way since the Ford Trimotor was state of the art.
Any Ford CEO that even hinted at such a foolish move would likely be promptly sacked.
(1) Apple isn't getting two substantially different parts from two suppliers; they are getting two identical parts from two different suppliers as Apple designed the chip themselves.
That has no bearing on the economics of the situation. Both suppliers still have the same fixed costs to amortize. The fact that the product is identical is irrelevant. They both have to buy equipment, hire staff, engineer the build processes, etc. These are fixed costs that have to be paid even if they never actually produce a single unit. With a second supplier, Apple pays many of these costs twice but neither supplier can amortize them over as many units. This drives the price up. It HAS to cost more, the only question is whether the additional cost is worth it. Sometimes it is worth it. If you have a unreliable supplier or if the product is difficult to build or if using a single supplier causes strategic pricing issues it can be worth the cost.
(2) Apple doesn't manufacture anymore; that has been outsourced to Foxconn with engineering and design remaining with Apple so their costs of using two suppliers is substantially diminished.
It doesn't matter whether Apple makes it themselves or not because they still have to pay for it. Foxconn can realize efficiencies Apple cannot because Foxconn specializes in assembling products whereas Apple specializes in designing them. Apple's not a manufacturing company. But if Apple uses a second supplier for ANY product, Apple will be forced to pay a higher price because of the supplier's fixed costs. This isn't speculation, it is basic cost accounting.
Really this is no different than Apple getting flash memory from two different suppliers. Apple like other companies does not have to re-design the board for two different suppliers.
The fact that Apple does not have to re-design anything is irrelevant to the fixed cost amortization problem. The supplier still has to buy equipment, hire people, pay for utilities, etc. Companies buy from multiple suppliers for only two reasons. Either they are trying to manage risk and the associated costs OR because neither supplier can supply their entire purchase. There are very real and demonstrable costs associated with using multiple suppliers.
Disclosure: I'm a certified accountant and I specialize in corporate cost accounting. I do this stuff for a living.
Going to a second supplier makes sense for most companies including Apple.
"Most"? Actual it does NOT make sense most of the time for simple reasons of economics. Virtually all manufacturing has large fixed costs (tooling, engineering, setup, salaries, etc) which have to be recouped somehow. If you produce a small number of units, your per-unit cost climbs steeply. This is 100% of the reason for volume discounts.
The problem with using a second supplier is that you are replicating all of these fixed costs but you can only amortize them over half the number of units. Worse, both suppliers have to be able to scale production in the event the other supplier cannot meet demand. This means your equipment utilization is going to be quite poor since you are keeping production capacity intentionally idle. It is a very rare circumstance where you can second source (on custom products) without incurring very significant extra costs.
Second sourcing only makes sense under one of three circumstances. Huge volume, huge risk or a commodity product. It might make sense for Apple to use a second source supplier but the costs are very real and very significant.
When 35% of consumers say they will buy the iPhone 5 without knowing anything about it or seeing it , and 51% say they would buy it in the first year*,I think that's a pretty nice cushion.
And so it is but what people say they will do and what they actually will do are frequently VERY different. Let's say hypothetically that the iPhone 5 is a flop for some reason. Apple now gets about half their revenue from that product line. Cell phone buyers are notoriously fickle. I suspect most of us would switch phones in a heartbeat if we didn't like a particular phone. Sure, some people will buy even the crappiest product but Apple could easily lose a tremendous amount of revenue with just one poor or even mediocre product. It also could dent their halo effect with their other products.
Apple has been doing amazingly well and producing good products but their revenue depends on them continuing to produce exceptional products people are willing to pay a premium for. One or two major missteps and they could be in real financial trouble.
This reflects the fact that Tim Cook IS the right man for the Job, and in fact, already HAS a proven track record at Apple, since he has run the company twice (or is it three times?) during Jobs' other hiatuses (hiatii?)
He MAY be the right guy but that remains to be seen. Tim Cook by all accounts is a heck of a good executive but he's a different guy with different skills. That's not to say he will fail but he can't (and shouldn't) run the company exactly the same way because he is a different guy. The trick is to not ruin the company culture which would be easy to do. Apple's strategy is a bit of a high wire act and one bad iPhone could really screw things up. Frankly with Apple having the largest market capitalization in the world right now he's going to have a rough time keeping the stock price going up. I wish him the best of luck but he's got some big shoes to fill and lots of challenges ahead.
I might be naive on this, but isn't this how bonuses already work? I thought that bonuses were tied to performance or meeting other goals...
Not necessarily. Sometime bonuses are given out for no immediately obvious reason. Sometimes they are given out because the company board's compensation committee are a bunch of buddies who give the CEO a bonus even when the company loses money. Even if there are performance goals attached, all too often they are too easy reach. Goal oriented bonuses are difficult. Make them too easy and you don't accomplish anything. Make them too hard and they serve no incentive purpose - no point in reaching for a goal you can't actually achieve. In fact incentives in general are difficult to align with the goals of the company. For example, many salesmen are on commission based on revenue. The problem is that this motivates them to sell as much as possible, regardless of profitability. Companies have been ruined by misaligned incentives and management pay is no exception. There is an old saying that if you tell me someone's incentives I'll tell you their behavior.
I'd like to see an example of someone getting a bonus when they've been doing a shitty job (excluding the easy google result of the banks after the bailout).
How about Carly Fiorina who was given $180 million for what can generously be termed uninspired performance and a declining stock price. How about AIG awarding $165 billion in bonuses AFTER receiving bailout money. It's not remotely difficult to find examples of executives being handsomely rewarded for mediocre or even terrible performance.
The problem with your idea is that it really is hard to find anything made in the USA.
No it isn't. You just aren't really looking.
My truck is a Ford, with an International engine, but the casting was moved overseas and only assembly took place here, while virtually everything electrical was made out of the country as well.
There is FAR more to a truck than just the engine. I've been in literally hundreds of automotive assembly (including Ford) and part plants (including Visteon, Dana, Delphi, Lear, Cummins, and more) in the country. The percentage of stuff in an automobile that is made in the US is really quite high. Some of the connectors for electrical stuff are made outside the US but there is more made here than you think. (Disclosure: My current company makes wire harness assemblies so I have direct first hand knowledge of that piece of the pie) I absolutely guarantee you that pretty much any truck from a US manufacturer has a very high (>50-70% usually) of parts built in the US. Most of the rest comes from Canada or Mexico.
Every part of my computer was made out of the USA.
If you own a chip made by Intel, Freescale, Cypress, IBM, Hynix, Micron, National Semiconductor, or ON Semiconductor, chances are very good it was made here in the US. The same goes for many more parts. Yes, much is made overseas but much is made in the US as well. You've taken a very superficial look at where things are made.
While we still make stuff here, it's a tiny slice of the stuff we use
The US has a $3.7 trillion manufacturing sector and only about a quarter of that is exported. By definition we use the rest of it. Your hypothesis is not supported by the facts.
Not to mention if they did keep manufacturing in the west...
What do you mean "if"? The US has a $3.7 TRILLION manufacturing sector. News of the demise of US manufacturing is greatly exaggerated.
How long do you think it will be before the US is no longer top dog in making planes?
It will be quite a while (if ever) before the US does not have world class aircraft manufacturing. There is of course no guarantee that the US will maintain dominance in this industry but it isn't going to go away quickly.
Tell me... which is the biggest passenger plane in the world? Airbus came out of nothing and is build with EXPENSIVE european workers and the US can barely compete.
Airbus has been around since 1970 and was form out of a consortium of existing aerospace manufacturers - hardly out of nothing. I'm pretty sure that the folks at Boeing would be very surprised to hear they they cannot compete with Airbus. The 747 is built with expensive US labor and Boeing is still selling plenty of those. Both companies have delivered similar numbers of planes for the past 20 years and there is no reason to believe that will change soon. The fact that the A380 is larger means very little by itself.
There is the dream in the US that you can outsource all the drudge work and keep marketing, sales and design... and run the economy on that. 300 million people, all selling, marketing and a handful of designers...
The US has a $3.7 TRILLION manufacturing sector. That is larger than the GDP of all but about 5 countries in the world. Even China does not manufacture anywhere near as much stuff as the US does. The notion that the US has exported all its manufacturing is simply not supported by the facts. There are (and always have been) some industries that are dominated by firms in other parts of the world. That does not however translate to the US outsourcing all its manufacturing expertise.
Doctor Oz does not consider these scanners to be safe for the following 4 groups: cancer survivors, pregnant women, children, and elderly, and he recommends that they should avoid being scanned at airports.
Doctor Oz is also on record as promoting homeopathy and other unproven "alternative" treatments. Just because someone says it on TV doesn't mean they know what they are talking about or that it is accurate.
Personally unless I see some studies from extremely reputable journals like Nature, I don't consider them proven safe for any group. They may be reasonably safe but they may not be as well and DHS just saying "trust me" isn't good enough. I'm actually glad I rarely need to fly anywhere these days.
this is also incidentally why governments are loathe to negotiate with terrorists, regardless of the validity of their positions; a single person or idea should never be allowed to upset the balance of power as it stands.
Exactly how is one supposed to negotiate with a person or group who has no clear or rational motivation or who's goals are something horrible like genocide? There is no one who has been able to clearly articulate why some crazy people flew a pair of planes into the World Trade Center. We know *what* they did. But there is no clear answer to *why* because it was not a rational act by people with rational goals. Furthermore, if the demands of the terrorists are something that plainly cannot be accommodated or condoned (for example kill all non-muslims) then there is no basis for negotiation. For negotiation to occur there has to be a middle ground and with terrorists there almost never is one.
Nation states may be complicated but their behaviors are typically rational or at least comprehensible. Terrorists on the other hand typically have little clear purpose beyond the barbaric acts they commit. They may say they want something but it's almost always something either impossible or psychotic. A suicide bomber pretty much never accomplishes anything productive unless his/her sole goal was to become a murderer.
Isn't this trying to fix a broken process by fixing the symptom rather than the cause of the problem?
Yes, though I would argue that any improvement is a good thing. This potentially significantly lowers the standard of proof needed to get a patent thrown out which means they are then less likely to be used as a threat. A patent that is not a credible threat is much less worrisome. It doesn't solve the legal cost issue but it might very well keep some legal threats from being made in the first place.
But since I can get 100+ cable channels for 30 a month , which works at about, say, 4x7x30=840 hours
You actually watch 840 hours of TV a month? If you watch even half of that you seriously are missing out on life. Learn what opportunity cost is, turn off the TV, go outside and play.
I would have thought with Hulu and tons of other entertainment that cable's glory days were behind.
As long as they own the wire coming into your house they are going to have a LOT of influence. Hulu is only as good as the internet connection it is attached to and only a relatively small percentage of the population has what I would consider enough bandwidth to really make it work. Furthermore they have lots of legal agreements with the various networks (content providers) as well as owning some networks of their own (Comcast) and have the ability (the legal right is still up in the air) to block or slow data coming down their pipes. There is no fundamental reason they can't have their own competing services to things like Hulu and Netflix.
I think cable companies are going to have to actively respond to new technology developments but they aren't going anywhere for a long time to come. I know people who would sooner cut off their heat than stop paying for overpriced cable TV. I exaggerate slightly but only slightly...
I know lots of people here like to parrot the nonsense that profit profit profit now now now is legally and ethically the sole objective of publicly traded corporations, but that's simply hogwash.
You are discussing fiduciary duty. A fiduciary duty has nothing inherently to do with making a "profit now". Yes company management in publicly traded firms have a legal obligation to look out for the financial interest of the investors of the company. Their duty however may mean that they are obligated to take a long term perspective or a short term one based on the circumstances. A fiduciary duty is a necessarily vague concept and time to a return on investment is at most a second order consideration.
It was S&Ps rating system that the banks gamed with repackaged mortgages in the first place. Fuck um.
How long before the media points that out? Think they will?
It was discussed on NPR today. Thing is though, it doesn't matter if S&P were incompetent or complicit in the past. It doesn't matter if S&P is right or wrong even. It doesn't matter if the media discusses it either. What matters is how people will react to the downgrade going forward.
S&P has a credible argument that the US debt should be downgraded until there is clear evidence that our political leaders are willing to act like adults and actually deal with the problem. Right now the US government is borrowing $0.40 of every dollar it spends. Worse, we have a bunch of idiotic congressmen willing to play a game of chicken with the full faith and credit of the US government. That is insane. S&P might be wrong but at least their argument has some reasoning behind it. Congress isn't thinking about anything except getting re-elected.
Because, financially, China has the West (especially the US) by the balls and everybody knows it.
How exactly do you figure that? Sure China sells a lot of merchandise in the US but that means they are exactly as dependent on the US as the US is on them. In fact if anything China is more dependent on the US because it's not like there are a lot of other markets the size of the US market. The old maxim goes that if you own the bank $1000 and can't pay, you have a problem. If you owe the bank $1 million and can't pay, the bank has a problem. Same thing applies here except the number is roughly $1 trillion and the bank is China.
Furthermore virtually everything made in China can be made elsewhere. Might be inconvenient in the short term to do so but certainly possible. I used to do global sourcing of manufactured goods from Mexico, China and elsewhere. China is merely one option and not necessarily the best. Heck, they aren't even the largest trading partner with the US (that would be Canada).
you'll be even more unhappy when we buy fewer bonds or make fewer investments in your country."
China buys those bonds to control their currency valuation. Until very recently the Yuan was pegged to the dollar. You maintain a peg by buying sovereign debt. They can't get rid of it easily or quickly. There is no one to sell that much debt to and even if they did sell it it would invite all sorts of problems. There is nothing the Chinese can do to the US that wouldn't cut their own throats in the process.