Fah, Nintendo has the cheapest console and they actually make money selling them. Microsoft created a console that is quite a bit more expensive to produce than Sony's or Nintendo's and they sell them at a significant loss because they know that otherwise they wouldn't sell very many. They hope to make back this loss with game royalties and services, but it isn't my responsibility to make sure they do. If Microsoft wants to guarantee that they don't lose money on XBox purchases then they need to raise the price of their goods.
Sometimes companies just come up with bad business plans. Microsoft is apparently not immune to this trait.
My guess would be royalties. After all, your PC game company can create a new PC game and not have to pay a dime in royalties to Microsoft. If the company takes the time to make an XBox port, then they have to worry about copies of their XBox port stealing sales from their more lucrative PC version. When the XBox market gets large enough so that it is worth the risk the PC game companies will probably do the necessary work. In the meantime, however, only those companies that Microsoft is paying are likely to come out with XBox titles first.
Microsoft's problem isn't that the XBox is a PC. Microsoft's problem is that they lose a fat pile of money every time they sell an XBox. They lose so much money that they can't possibly make it back by selling games. If Microsoft were smart they would only release crappy titles until such time as they have their XBox Live network set up so that they at least have a prayer of recouping losses with subscription services. They should be actively discouraging gamers until they have the infrastructure in place to actually make a buck.
Hmm... Perhaps that explains the currently available XBox titles.
Because a large portion of Microsoft's employees benefits are through stock options Microsoft has far lower overhead than the would have if they paid their employees with actual money. That makes their stock look very desirable and guarantees that they a great deal of outside investment (which neatly solves the problem of having stock options that are an employee draw). The Economist, and Warren Buffet say it much better than I do. Here's an excerpt, the link is here.
FASB did, however, manage to make firms include a footnote in their accounts detailing the share options awarded during the year. Smithers & Co., a research firm in London, calculated the cost of these footnoted options and concluded that the American companies granting them overstated their profits by as much as half in the financial year ending in 1998. In some cases, particularly that of high-tech firms (which tend to be generous with options), the disparity is even greater. For instance, Microsoft, the world's most valuable company, declared a profit of $4.5 billion in 1998; when the cost of options awarded that year, plus the change in the value of outstanding options, is deducted, the firm made a loss of $18 billion, according to Smithers.
Some maintain that these numbers exaggerate the problem: there is genuine dispute over how best to calculate and account for the cost of executive options. But this is quibbling. Warren Buffett, a well-known American investor, put the case succinctly for tightening the rules on share-option schemes in the recent annual report of his investment company, Berkshire Hathaway. "Accounting principles offer management a choice: pay employees in one form and count the cost, or pay them in another form and ignore the cost. Small wonder then that the use of options has mushroomed," he observes. "If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And, if expenses shouldn't go into the calculation of earnings, where in the world should they go?"
It would seem that it's not such faulty logic after all.
I agree that Microsoft is now trying to expand interest in the XBox. The question is, what do they plan on selling that will make up for the huge subsidy that Microsoft has to overcome to make the XBox a contender in the gaming market?
The reason that Microsoft is looking for new markets is because it is clear that Microsoft is going to lose their shirt selling XBoxes unless something comes along to pull their yams out of the fire. That's part of the reason that the Ultimate TV convergence is so stupid. Taking one product that is bleeding cash and adding another product that is bleeding cash (and selling it for far more than the competition) is not likely to be a very good long range strategy. Especially if you consider all of the people that have a special TV just so the kids can play games while Mom is watching Oprah (fat lot of good your convergent PVR/console is going to do you in that case).
The fact of the matter is that the "home entertainment market" is dominated by devices that sell for less than $100 at your local Wal-Mart. Microsoft doesn't want to be in that business, and they probably couldn't compete with those companies if they tried. The margins are too thin, and the competition too fierce.
Now, Microsoft could possibly try and turn the XBox into a PC competitor, but if they tried that then you can bet that Compaq, Dell, Gateway, and the rest of the PC OEMs would have a cow. All of a sudden StarOffice would come standard on every PC sold. Personally I would like to see Microsoft try and compete with Dell, that would be hilarious.
That's what Bill Gates projected that the losses would be back in 1999. In other words, that's pulling numbers out of the clear blue sky. The article stated that Microsoft lost $750 million this fiscal year and is expected to lose $1.1 billion next fiscal year.
In other words, if Microsoft expected to lose $3.3 billion over 8 years, then they are well on their way to doing far worse than they expected.
As for the stock options, that's a completely different scandal. However, according to Bill Parish if Microsoft had to count stock options as expenses then they would actually be losing money. In other words that $40 billion that Microsoft has in the bank is money that it skimmed off the stock market, not money it made selling software.
It's even worse than that. Royalties on third-party games amount to less than $10 per game, so third party games don't hardly count against the $200 total. Not to mention that Microsoft has to pay the developers, the marketers, and everyone else. In other words Microsoft is going to have to sell a lot more than 5 or 6 games per XBox to break even.
The numbers could work out if their online gaming network becomes hugely possible, but I wouldn't hold my breath.
There is some chance that Microsoft could salvage XBox if they are able to sign up a significant number of people on their upcoming subscription-based gaming network. However, Microsoft loses too much money on the hardware to ever make a profit on the software at current prices. Current royalties per game are generally below $10. So Microsoft has to sell a whopping fifteen games over the life of the console before it starts to see any profit. What's worse, is that Microsoft has already squeezed all of the price out of the XBox, and they are still selling at a huge loss. Nintendo is actually making money on their console, and Sony is breaking even, and both of these companies are going to be able to save money down the line by integrating the chips in their consoles.
In other words, Sony and Nintendo both have the power to go to war with Microsoft on price and still make money, and they will be able to make Microsoft bleed for years. A year from now Sony and Nintendo will really be able to punish Microsoft. The price of making an XBox is only going to drop $100 over the next five years.
Now, if Microsoft can get a significant number of current XBox owners to sign up for their gaming network, then they are in the clear. Plenty of companies have used subsidized hardware to sell internet service. Over time the subscription model would generate enough money to cover the initial cost of the hardware. The dodgy bit is that Microsoft is essentially betting billions of dollars on the success of their gaming network. As things stand now an Xbox gamer that purchases an XBox and ten games, but does not sign up for the online gaming network, causes Microsoft to lose money. In fact, the numbers are so bad for Microsoft that I can't quite figure out why they don't require a subscription. They can't possibly believe that they are going to make up their hardware subsidy with game royalties at the current price structure.
In the end I think that Microsoft is going to end up taking a bath on the XBox. Sure, they can afford to lose money on the XBox, but I could also afford to give my house away and live in a box. Being able to afford something doesn't make it good business.
There are two major problems with your argument, the first is that according most surveys there are an average of 2.5 to 3 televisions in most U.S. homes. I also have only one television, but it would appear that we are the exception to the rule. The second major problem is that most single adults are also fairly cost concious. If the XBox/UltimateTV combo debuts at $500 then it is more expensive than purchasing both an UltimateTV and an XBox at current prices.
In other words, the only market for this convergent box is people that don't own an UltimateTV or an XBox, only have one television, and are so concerned about how their entertainment center looks that they aren't interested in saving $100.
Something tells me that Microsoft is going to have a hard time marketing their newest contraption.
That's fine for recording your television shows, but what happens if Mom wants to actually watch the Oprah reruns she recorded earlier. Convergence seems like a good idea if you are targetting families with only one television set, but most folks with children actually have a separate television for the kids to play games on.
A sane company would go back to the drawing board, sunk costs or no. Unfortunately, Microsoft has been telling investors that video games would be the next Microsoft growth market. My guess is that they are going to keep up this fiction long enough so that they can sell their Microsoft stock.
It gets worse. I wonder what happens when Mom wants to watch Oprah reruns and Junior wants to play Halo II? In household with more than one television this isn't a problem, but when your DVR and your game console are the same machine it makes it much harder to share.
The only reason that Microsoft is actually planning such a stupid move is that they are currently losing billions of dollars per year on the XBox. Microsoft has to do something or their investors will start to realize that their money is being flushed down the crapper. Xbox is supposed to be the next big growth market for Microsoft.
I lived in Peru for a couple of years, and the folks down there knew more about U.S. dollars than anyone I have ever seen. It probably stemmed from the fact that the first thing they did after cashing their paychecks was to change their money into dollars so that it would still be worth something the next day. Inflation is a harsh mistress.
There is no way that I am going to believe that idiotic "foreigners" had anything to do with the switch.
I am sick of hearing the win-win line of approach.
I suppose you can remain ignorant if you would rather.
What about the fact that it takes low level american jobs and exports them for profit. Profit pocketed by a large corporation in lieu of the workers in the US who are now jobless.
Actually what it does is free up skilled American workers for more meaningful jobs than reading scanned documents and filling in the blanks of an electronic form. America currently has very low unemployment, most of the people that are currently unemployed here are not interested in a data entry job that pays $6.00/hour and probably doesn't have benefits. They would rather collect Welfare. So American entrepreneurs replaced about 100 American data entry workers with a handful of American technical workers (do you think the data gets to Ghana and back without some help), and a pile Ghanese typists that are now earning much more than they would have without the foreign investment.
It may be win-win, but what about the fact that it is also lose-lose? Lose to the citizens of Ghana who are being paid less than their services are really worth and lose to the American/Canadians who are unemployed.
Everyone gets paid less than they are worth. That's why they are hired. If you were to suddenly make more then you are worth you would lose your job. That's basic economics at its simplest. The beautty of economics is that everyone feels like they are getting a good deal. Otherwise they wouldn't go to work the next day but would instead find something else to do. The folks in Ghana are happy to have jobs that most Americans wouldn't take on a bet. If Aetna had to pay American wages for this work, then they wouldn't go through all of the expense of setting up a network that spanned half the globe.
The fact of the matter is that it isn't the foreigners that are holding Ghana back, it's the rampant corruption in the local politics. If Ghana would clean up its political system then capital would flow into their country and raise the standard of living across the board. Unfortunately currently the only people that can really get ahead in Ghana are the corrupt politicians.
Re:World aid and putting the cart before the horse
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Ghana's Digital Dilemma
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In the end it always boils down to simple economics. The reason that Ghana can't compete with the West is that they don't have the infrastructure necessary to tie their economy to the rest of the world. Labor is ridiculously inexpensive, but without the roads, plumbing, phone systems, etc. it is hard to utilize that labor in anything but the pitiful local economy.
Geeks typically assume that this lack of infrastructure is the root cause, but this is not generally the case. Ghana could almost certainly attract capital. In fact, the article shows several examples of foreign individuals and companies that were willing to invest in Ghana. The problem is that the current political system is too corrupt to make large scale investments practical. As long as Ghana remains corrupt investing in the country is like pouring water into a sieve. The rich and privileged that control the system will derive all of the benefits, and the poor will stay in the same position that they currently are in. Even now the political leaders that are hoping for technology to enrich their nation are almost certainly looking at it with an eye towards controlling the bulk of those riches themselves. It's no wonder that entrepreneurs flee countries like Ghana. They know that if they do manage to make money the politicos will simply extort it from them.
The investments featured in the story required very little capital. Aetna's little form industry is a prime example of this. With the relatively small expense of a satellite link and a couple hundred used PCs, they are able to save a substantial amount of money getting their forms filled out. If the government decides to expropriate the business then very little is lost.
However, this type of business is not something you can build your economy on. For one thing, it is very easy to move this type of business. If problems do arise in Ghana the owners of the business can simply pack up and leave. Also the type of work offered is usually the easiest type of work to automate. As U.S. firms move more and more towards electronic forms obtaining electronic information from paper forms is going to become less important.
In the end, long-term growth is only possible through reforming corrupt political systems and inviting the type of investment that builds the economy. Until the people running Ghana figure this out, they will continue in the same rut as they are now.
Actually the software industry has become more and more treacherous in the last couple of years, especially for startups. For years the basic plan has been to develop a technology and hope you get bought out by Microsoft or one of Microsoft's competitors instead of simply destroyed.
RedHat has made a business of undercutting it's commercial software competitors by creating a atmosphere for collaborative software development and by packaging and supporting the results. This unorthodox method of competing has scored them some impressive wins, and it is gaining them both market share and revenue.
Contrast this with what would have happened had they decided to try and compete with a commercial product. Chances are they would end up like BeOS.
I agree completely. I started using Linux because I didn't want to pay for a C compiler (I was a poor student), and I was intrigued by Linux's UNIXy toolset. Now I use Linux because I like Galeon and Emacs and I can get away with using OpenOffice.
In my opinion Microsoft is going to have a hard time keeping the desktop in the long run, especially if you think on a global scale. The price of hardware keeps dropping, and the price of software is becoming a major factor. Even now Linux can be set up to be a very credible desktop replacement. Ten years from now no one is going to be interested in paying Microsoft prices for an operating system and an office suite. Clearly the economics of Free Software have had and will continue to have a huge effect on its popularity.
On the other hand, it is hard to completely divorce the economics of Free Software from the ideology. For one thing, without the ideologues that got the ball rolling with a set of resusable Free Software components the economic benefits of Free Software would never have come to life. Also while Free Software often wins primarily on price issues, there is no denying that the fact that the software freedoms Free Software gives its users ring true with many software purchasers. All of us have, at one time or another, been stuck in a proprietary software trap with our valuable data held hostage by some corporation. There is definitely a value in knowing that you can get the source code to the software you are using.
It is important to separate the fuzzy-headed ideas of random/. posters who think that Disney is "evil" and think that pirating MP3s is their divine right from the actual beliefs of the folks behind Free Software.
I tend to agree. I think that eventually Free Software is going to be competitive across the board in nearly all software niches. I personally prefer my Linux desktop to my old Windows desktop.
RedHat still releases the software they write under the GPL, and their software is still widely available for "free." RedHat has put their money where there mouth is and is making good on their claim to charge for support and not for software. RedHat has seeded the business community with high quality Free Software, and is now reaping the benefits of their work as business start using this software and (more importantly) start paying for support.
Anyone who links Linux with some sort of lame counter-culture anti-business meme is just being soft headed. RedHat gives away software because it makes business sense to do so, plain and simple.
Of course Microsoft's JVM performed flawlessly. Since Microsoft's JVM is the one that everyone has, it is the one that gets tested. Anyone writing Java applets is going to make sure that it runs on Microsoft's crufty JVM. Unfortunately for Java hackers Microsoft's JVM doesn't have any of the nifty new features that have been available in other JVMs for years.
In other words, Microsoft is using their desktop monopoly (again) to control the rate of adoption of Java. If Microsoft didn't include their JVM then people might be convinced to get a real JVM, and people deploying JVMs could start using the new features.
Not that I particularly care. I have no love for Java. It's just painful to see Sun make so many stupid political mistakes. Java is about to become irrelevant in the Windows world, so Windows developers aren't likely to use it, and the Free Software hackers already avoid Java like the plague. It's a shame.
Even if Disney were evil it's not like they were a vampire and Linux is the karmic equivalent of holy water. Linux use is growing because of purely economic reasons. With Linux you get a lot of bang for your buck, and migrating from commercial UNIX is relatively straightforward. That's all that should be read into this particular switch. The folks at Disney added up the numbers and realized the same thing that pretty much the entire animation and special effects industry is realizing. Switching to Linux will save them time and money.
The reason that Engineers can be rigorous is that they can take their gizmos apart and see how they work. Engineers also can freely "borrow" designs from other Engineers. Every mechanical engineer can take a good hard look at the design for the Tacoma narrows bridge and see what went wrong. As long as software engineers have to trust "black boxes" to do what the label says we will never be able to match the reliability of mechanical and electrical systems.
Cars would still suck today if you couldn't open up the hood on your car and poke around at the engine. Most engineering successes are incremental, but software folks generally end up building their new program from scratch without being able to rely on the many strengths of past implementations. Free Software allows you to build on a tested open foundation.
Exactly. Circuit city sells DVD players, it is in their best interest to coerce people into purchasing a DVD player. One of the easiest ways to do this is to make it more difficult to get the movies people want to see on VHS. If Circuit City can convince millions of people tha their VHS player is obsolete then they make out like bandits.
You may not like it, but it is still economics. Every decision that you make has an opportunity cost. Deciding to run a BBS meant that you had less time to bag groceries (or whatever). Along similar lines going to school means that you have less time to pursue a career. In your case running a BBS turned out to be a fairly wise investment of your time in that it helped you gain some valuable skills that you are probably now using to make a living. Likewise, the primary reason that people go to school is that they believe that the time spent gaining an education will increase the market value for their services enough so that the time spent was worth the exchange.
Of course, they usually phrase it as "I want to get a good job," but that is simply because very few people really get the hang of simple economics.
The fact that you actually enjoyed improving your skills by running a BBS is simply part of the reason why economics works.
Think of your time spent as an investment. The fact of the matter is that a teenager's time is not particularly valuable. If you really wanted to monetize the time you spent programming you probably would have had to spend it pulling weeds or bagging groceries. A commercial software company wouldn't have been even remotely interested in paying you for your time, and it would be very difficult to get contract work. That means that in order to sell your programs you would have to come up with a scheme to market, distribute, and collect payment for your work. Shareware is the obvious answer to your problem, but making money via shareware isn't precisely a straight-forward excercise, especially if you are planning on making money on a piece of software that you only work on part time. Once people start paying for software, they expect things like a support phone line, upgrades, fancy documentation, etc. all of which add up to much more than a couple of hours a day.
In other words the chances of actually getting paid for software written as a high school student (even if it is exceptional) are not particularly good. Especially if you aren't willing to treat your software as a business (meaning working business hours).
However, programming, even if you aren't getting paid for it, is a much more useful investment of your time than most of the things that high-school students do. You could have spent those hours playing video games, for example. Programming is one of the professions where many of the most important skills are essentially self-taught. Good programmers emerge after hours and hours of programming, and like many other skills the sooner you start learning the better off you will be when you are in a position to profit from your work. You learned valuable skills while programming the software you gave away. If you would have tried to charge for the software your userbase would almost certainly been much smaller, and you probably wouldn't have made any money anyhow (although you would have learned some useful information about the software industry).
I am not belittling the lesson that your father taught you, but Joel is right when he says that the reason that people are putting money into Free Software development is because they expect to make money from their investment. The fact of the matter is that your story illustrates the fact that software doesn't necessarily have to be ridiculously expensive to develop (high school students can do it in their spare time). Since Free Software also allows the development costs to be spread out widely it is no wonder that Free Software is advancing at a rapid pace.
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Fah, Nintendo has the cheapest console and they actually make money selling them. Microsoft created a console that is quite a bit more expensive to produce than Sony's or Nintendo's and they sell them at a significant loss because they know that otherwise they wouldn't sell very many. They hope to make back this loss with game royalties and services, but it isn't my responsibility to make sure they do. If Microsoft wants to guarantee that they don't lose money on XBox purchases then they need to raise the price of their goods.
Sometimes companies just come up with bad business plans. Microsoft is apparently not immune to this trait.
My guess would be royalties. After all, your PC game company can create a new PC game and not have to pay a dime in royalties to Microsoft. If the company takes the time to make an XBox port, then they have to worry about copies of their XBox port stealing sales from their more lucrative PC version. When the XBox market gets large enough so that it is worth the risk the PC game companies will probably do the necessary work. In the meantime, however, only those companies that Microsoft is paying are likely to come out with XBox titles first.
Microsoft's problem isn't that the XBox is a PC. Microsoft's problem is that they lose a fat pile of money every time they sell an XBox. They lose so much money that they can't possibly make it back by selling games. If Microsoft were smart they would only release crappy titles until such time as they have their XBox Live network set up so that they at least have a prayer of recouping losses with subscription services. They should be actively discouraging gamers until they have the infrastructure in place to actually make a buck.
Hmm... Perhaps that explains the currently available XBox titles.
Because a large portion of Microsoft's employees benefits are through stock options Microsoft has far lower overhead than the would have if they paid their employees with actual money. That makes their stock look very desirable and guarantees that they a great deal of outside investment (which neatly solves the problem of having stock options that are an employee draw). The Economist, and Warren Buffet say it much better than I do. Here's an excerpt, the link is here.
I agree that Microsoft is now trying to expand interest in the XBox. The question is, what do they plan on selling that will make up for the huge subsidy that Microsoft has to overcome to make the XBox a contender in the gaming market?
The reason that Microsoft is looking for new markets is because it is clear that Microsoft is going to lose their shirt selling XBoxes unless something comes along to pull their yams out of the fire. That's part of the reason that the Ultimate TV convergence is so stupid. Taking one product that is bleeding cash and adding another product that is bleeding cash (and selling it for far more than the competition) is not likely to be a very good long range strategy. Especially if you consider all of the people that have a special TV just so the kids can play games while Mom is watching Oprah (fat lot of good your convergent PVR/console is going to do you in that case).
The fact of the matter is that the "home entertainment market" is dominated by devices that sell for less than $100 at your local Wal-Mart. Microsoft doesn't want to be in that business, and they probably couldn't compete with those companies if they tried. The margins are too thin, and the competition too fierce.
Now, Microsoft could possibly try and turn the XBox into a PC competitor, but if they tried that then you can bet that Compaq, Dell, Gateway, and the rest of the PC OEMs would have a cow. All of a sudden StarOffice would come standard on every PC sold. Personally I would like to see Microsoft try and compete with Dell, that would be hilarious.
That's what Bill Gates projected that the losses would be back in 1999. In other words, that's pulling numbers out of the clear blue sky. The article stated that Microsoft lost $750 million this fiscal year and is expected to lose $1.1 billion next fiscal year.
In other words, if Microsoft expected to lose $3.3 billion over 8 years, then they are well on their way to doing far worse than they expected.
As for the stock options, that's a completely different scandal. However, according to Bill Parish if Microsoft had to count stock options as expenses then they would actually be losing money. In other words that $40 billion that Microsoft has in the bank is money that it skimmed off the stock market, not money it made selling software.
It's even worse than that. Royalties on third-party games amount to less than $10 per game, so third party games don't hardly count against the $200 total. Not to mention that Microsoft has to pay the developers, the marketers, and everyone else. In other words Microsoft is going to have to sell a lot more than 5 or 6 games per XBox to break even.
The numbers could work out if their online gaming network becomes hugely possible, but I wouldn't hold my breath.
There is some chance that Microsoft could salvage XBox if they are able to sign up a significant number of people on their upcoming subscription-based gaming network. However, Microsoft loses too much money on the hardware to ever make a profit on the software at current prices. Current royalties per game are generally below $10. So Microsoft has to sell a whopping fifteen games over the life of the console before it starts to see any profit. What's worse, is that Microsoft has already squeezed all of the price out of the XBox, and they are still selling at a huge loss. Nintendo is actually making money on their console, and Sony is breaking even, and both of these companies are going to be able to save money down the line by integrating the chips in their consoles.
In other words, Sony and Nintendo both have the power to go to war with Microsoft on price and still make money, and they will be able to make Microsoft bleed for years. A year from now Sony and Nintendo will really be able to punish Microsoft. The price of making an XBox is only going to drop $100 over the next five years.
Now, if Microsoft can get a significant number of current XBox owners to sign up for their gaming network, then they are in the clear. Plenty of companies have used subsidized hardware to sell internet service. Over time the subscription model would generate enough money to cover the initial cost of the hardware. The dodgy bit is that Microsoft is essentially betting billions of dollars on the success of their gaming network. As things stand now an Xbox gamer that purchases an XBox and ten games, but does not sign up for the online gaming network, causes Microsoft to lose money. In fact, the numbers are so bad for Microsoft that I can't quite figure out why they don't require a subscription. They can't possibly believe that they are going to make up their hardware subsidy with game royalties at the current price structure.
In the end I think that Microsoft is going to end up taking a bath on the XBox. Sure, they can afford to lose money on the XBox, but I could also afford to give my house away and live in a box. Being able to afford something doesn't make it good business.
There are two major problems with your argument, the first is that according most surveys there are an average of 2.5 to 3 televisions in most U.S. homes. I also have only one television, but it would appear that we are the exception to the rule. The second major problem is that most single adults are also fairly cost concious. If the XBox/UltimateTV combo debuts at $500 then it is more expensive than purchasing both an UltimateTV and an XBox at current prices.
In other words, the only market for this convergent box is people that don't own an UltimateTV or an XBox, only have one television, and are so concerned about how their entertainment center looks that they aren't interested in saving $100.
Something tells me that Microsoft is going to have a hard time marketing their newest contraption.
That's fine for recording your television shows, but what happens if Mom wants to actually watch the Oprah reruns she recorded earlier. Convergence seems like a good idea if you are targetting families with only one television set, but most folks with children actually have a separate television for the kids to play games on.
A sane company would go back to the drawing board, sunk costs or no. Unfortunately, Microsoft has been telling investors that video games would be the next Microsoft growth market. My guess is that they are going to keep up this fiction long enough so that they can sell their Microsoft stock.
It gets worse. I wonder what happens when Mom wants to watch Oprah reruns and Junior wants to play Halo II? In household with more than one television this isn't a problem, but when your DVR and your game console are the same machine it makes it much harder to share.
The only reason that Microsoft is actually planning such a stupid move is that they are currently losing billions of dollars per year on the XBox. Microsoft has to do something or their investors will start to realize that their money is being flushed down the crapper. Xbox is supposed to be the next big growth market for Microsoft.
I lived in Peru for a couple of years, and the folks down there knew more about U.S. dollars than anyone I have ever seen. It probably stemmed from the fact that the first thing they did after cashing their paychecks was to change their money into dollars so that it would still be worth something the next day. Inflation is a harsh mistress.
There is no way that I am going to believe that idiotic "foreigners" had anything to do with the switch.
I suppose you can remain ignorant if you would rather.
In the end it always boils down to simple economics. The reason that Ghana can't compete with the West is that they don't have the infrastructure necessary to tie their economy to the rest of the world. Labor is ridiculously inexpensive, but without the roads, plumbing, phone systems, etc. it is hard to utilize that labor in anything but the pitiful local economy.
Geeks typically assume that this lack of infrastructure is the root cause, but this is not generally the case. Ghana could almost certainly attract capital. In fact, the article shows several examples of foreign individuals and companies that were willing to invest in Ghana. The problem is that the current political system is too corrupt to make large scale investments practical. As long as Ghana remains corrupt investing in the country is like pouring water into a sieve. The rich and privileged that control the system will derive all of the benefits, and the poor will stay in the same position that they currently are in. Even now the political leaders that are hoping for technology to enrich their nation are almost certainly looking at it with an eye towards controlling the bulk of those riches themselves. It's no wonder that entrepreneurs flee countries like Ghana. They know that if they do manage to make money the politicos will simply extort it from them.
The investments featured in the story required very little capital. Aetna's little form industry is a prime example of this. With the relatively small expense of a satellite link and a couple hundred used PCs, they are able to save a substantial amount of money getting their forms filled out. If the government decides to expropriate the business then very little is lost.
However, this type of business is not something you can build your economy on. For one thing, it is very easy to move this type of business. If problems do arise in Ghana the owners of the business can simply pack up and leave. Also the type of work offered is usually the easiest type of work to automate. As U.S. firms move more and more towards electronic forms obtaining electronic information from paper forms is going to become less important.
In the end, long-term growth is only possible through reforming corrupt political systems and inviting the type of investment that builds the economy. Until the people running Ghana figure this out, they will continue in the same rut as they are now.
Actually the software industry has become more and more treacherous in the last couple of years, especially for startups. For years the basic plan has been to develop a technology and hope you get bought out by Microsoft or one of Microsoft's competitors instead of simply destroyed.
RedHat has made a business of undercutting it's commercial software competitors by creating a atmosphere for collaborative software development and by packaging and supporting the results. This unorthodox method of competing has scored them some impressive wins, and it is gaining them both market share and revenue.
Contrast this with what would have happened had they decided to try and compete with a commercial product. Chances are they would end up like BeOS.
I agree completely. I started using Linux because I didn't want to pay for a C compiler (I was a poor student), and I was intrigued by Linux's UNIXy toolset. Now I use Linux because I like Galeon and Emacs and I can get away with using OpenOffice.
In my opinion Microsoft is going to have a hard time keeping the desktop in the long run, especially if you think on a global scale. The price of hardware keeps dropping, and the price of software is becoming a major factor. Even now Linux can be set up to be a very credible desktop replacement. Ten years from now no one is going to be interested in paying Microsoft prices for an operating system and an office suite. Clearly the economics of Free Software have had and will continue to have a huge effect on its popularity.
On the other hand, it is hard to completely divorce the economics of Free Software from the ideology. For one thing, without the ideologues that got the ball rolling with a set of resusable Free Software components the economic benefits of Free Software would never have come to life. Also while Free Software often wins primarily on price issues, there is no denying that the fact that the software freedoms Free Software gives its users ring true with many software purchasers. All of us have, at one time or another, been stuck in a proprietary software trap with our valuable data held hostage by some corporation. There is definitely a value in knowing that you can get the source code to the software you are using.
It is important to separate the fuzzy-headed ideas of random /. posters who think that Disney is "evil" and think that pirating MP3s is their divine right from the actual beliefs of the folks behind Free Software.
I tend to agree. I think that eventually Free Software is going to be competitive across the board in nearly all software niches. I personally prefer my Linux desktop to my old Windows desktop.
RedHat still releases the software they write under the GPL, and their software is still widely available for "free." RedHat has put their money where there mouth is and is making good on their claim to charge for support and not for software. RedHat has seeded the business community with high quality Free Software, and is now reaping the benefits of their work as business start using this software and (more importantly) start paying for support.
Anyone who links Linux with some sort of lame counter-culture anti-business meme is just being soft headed. RedHat gives away software because it makes business sense to do so, plain and simple.
Of course Microsoft's JVM performed flawlessly. Since Microsoft's JVM is the one that everyone has, it is the one that gets tested. Anyone writing Java applets is going to make sure that it runs on Microsoft's crufty JVM. Unfortunately for Java hackers Microsoft's JVM doesn't have any of the nifty new features that have been available in other JVMs for years.
In other words, Microsoft is using their desktop monopoly (again) to control the rate of adoption of Java. If Microsoft didn't include their JVM then people might be convinced to get a real JVM, and people deploying JVMs could start using the new features.
Not that I particularly care. I have no love for Java. It's just painful to see Sun make so many stupid political mistakes. Java is about to become irrelevant in the Windows world, so Windows developers aren't likely to use it, and the Free Software hackers already avoid Java like the plague. It's a shame.
Even if Disney were evil it's not like they were a vampire and Linux is the karmic equivalent of holy water. Linux use is growing because of purely economic reasons. With Linux you get a lot of bang for your buck, and migrating from commercial UNIX is relatively straightforward. That's all that should be read into this particular switch. The folks at Disney added up the numbers and realized the same thing that pretty much the entire animation and special effects industry is realizing. Switching to Linux will save them time and money.
The reason that Engineers can be rigorous is that they can take their gizmos apart and see how they work. Engineers also can freely "borrow" designs from other Engineers. Every mechanical engineer can take a good hard look at the design for the Tacoma narrows bridge and see what went wrong. As long as software engineers have to trust "black boxes" to do what the label says we will never be able to match the reliability of mechanical and electrical systems.
Cars would still suck today if you couldn't open up the hood on your car and poke around at the engine. Most engineering successes are incremental, but software folks generally end up building their new program from scratch without being able to rely on the many strengths of past implementations. Free Software allows you to build on a tested open foundation.
Exactly. Circuit city sells DVD players, it is in their best interest to coerce people into purchasing a DVD player. One of the easiest ways to do this is to make it more difficult to get the movies people want to see on VHS. If Circuit City can convince millions of people tha their VHS player is obsolete then they make out like bandits.
You may not like it, but it is still economics. Every decision that you make has an opportunity cost. Deciding to run a BBS meant that you had less time to bag groceries (or whatever). Along similar lines going to school means that you have less time to pursue a career. In your case running a BBS turned out to be a fairly wise investment of your time in that it helped you gain some valuable skills that you are probably now using to make a living. Likewise, the primary reason that people go to school is that they believe that the time spent gaining an education will increase the market value for their services enough so that the time spent was worth the exchange.
Of course, they usually phrase it as "I want to get a good job," but that is simply because very few people really get the hang of simple economics.
The fact that you actually enjoyed improving your skills by running a BBS is simply part of the reason why economics works.
Think of your time spent as an investment. The fact of the matter is that a teenager's time is not particularly valuable. If you really wanted to monetize the time you spent programming you probably would have had to spend it pulling weeds or bagging groceries. A commercial software company wouldn't have been even remotely interested in paying you for your time, and it would be very difficult to get contract work. That means that in order to sell your programs you would have to come up with a scheme to market, distribute, and collect payment for your work. Shareware is the obvious answer to your problem, but making money via shareware isn't precisely a straight-forward excercise, especially if you are planning on making money on a piece of software that you only work on part time. Once people start paying for software, they expect things like a support phone line, upgrades, fancy documentation, etc. all of which add up to much more than a couple of hours a day.
In other words the chances of actually getting paid for software written as a high school student (even if it is exceptional) are not particularly good. Especially if you aren't willing to treat your software as a business (meaning working business hours).
However, programming, even if you aren't getting paid for it, is a much more useful investment of your time than most of the things that high-school students do. You could have spent those hours playing video games, for example. Programming is one of the professions where many of the most important skills are essentially self-taught. Good programmers emerge after hours and hours of programming, and like many other skills the sooner you start learning the better off you will be when you are in a position to profit from your work. You learned valuable skills while programming the software you gave away. If you would have tried to charge for the software your userbase would almost certainly been much smaller, and you probably wouldn't have made any money anyhow (although you would have learned some useful information about the software industry).
I am not belittling the lesson that your father taught you, but Joel is right when he says that the reason that people are putting money into Free Software development is because they expect to make money from their investment. The fact of the matter is that your story illustrates the fact that software doesn't necessarily have to be ridiculously expensive to develop (high school students can do it in their spare time). Since Free Software also allows the development costs to be spread out widely it is no wonder that Free Software is advancing at a rapid pace.