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  1. Content industries don't care about this on Blu-ray Protection Bypassed · · Score: 4, Insightful

    To call it a "cat-and-mouse game" is overstating I think. Why should the content sellers care about someone cracking Blu-Ray or HD-DVD encryption? They know that piracy is inevitable. They just want to keep it underground so the average consumer doesn't participate. And for that, under the DMCA any proprietary encryption system will do just fine. The DMCA gives them the permanent legal right to go after anybody who doesn't license their decryption technology, or who tries to circumvent it in an unauthorized way.

    DVD is a great example. DeCSS has been around for years, but it hasn't had a material impact on DVD sales because DVD copying isn't widespread. (At least in the USA; parts of Asia like China are a different story.) Threat of legal action backed by the DMCA has kept DVD backup software generally unavailable to Joe Consumer, despite the widespread prevalence of DVD-R drives and media.

    Bottom line: You could break their encryption and print up all the geeky De-AACS T-shirts you want, but it won't materially affect content sales.

  2. Re:I just don't understand how this is useful on Google Offers Innovative Stock Option Scheme · · Score: 1

    I must clearly be missing something, but I just don't understand how this is useful. As a stock option owner myself, I am not required to keep the shares I buy when exercising options.

    It is useful because the market value of an option is always greater than its "par value" that you would get from a cashless exercise (i.e., market price minus strike price). From what I understand regular exercises (including cashless ones) will still be permitted.

    The key here is that options are a leveraged instrument. Say you have an option for 1 share of GOOG stock at a strike price of $450, and the current market price is $480. Assume an average stock returns 10%, and treat GOOG as an average stock for this purpose. Compare these two cases:

    1. Exercise the option now, invest the $30 proceeds (= 480-450) in a stock index fund. In two years at 10% interest, you'll end up with $36
    2. Retain the option and exercise in two years. GOOG stock goes up by 10% annually, to a market price of $581 in two years. Your cashless exercise at the end nets you $131 (= 581-450).

    A downside to #2 is that you have to wait to get the money. But if you were allowed to transfer the option unexercised to someone else, they would certainly pay you quite a bit more than $30 for it. If I'm the third party, my best guess is that the option will be worth $131 in two years -- so if I paid you $90 or $100 now I would get a pretty good return. What Google is doing is creating a mechanism to allow these option transfers to happen, and a market to determine prices.

    Of course not all stocks return 10% always, so this simple calculation isn't quite right -- there are corrections due to the variability of returns. But it does demonstrate the key point that a lot of the value of options stems from their leverage, and why Google might want to do this.

  3. Microsoft is grinding to a halt on Changing Climates for Microsoft and Google · · Score: 1

    Hmm, so Balmer says One-Click Run (or whatever) is the answer to everything. Let me guess, we'll see it real soon now? I propose that we make the Wikipedia entry for "FUD" be a transcript of everything that comes out of Balmer's mouth. It would really simplify things.

    The truth is that Microsoft is grinding to a halt. It has been obvious for years what they should be doing: Improving security, adding virtualization layers to isolate malicious code, improving maintainability of large-scale installations, reigning in the registry/DLL/kernel extension crud that accumulates, working with rather than against the open source community, making a solid server OS, transitioning to online workflows that free me from being tied to "my" machine.

    They have made almost no forward progress on this agenda. Three main reasons:

    1. They have never been very innovative, so they tend to wait around until there are taillights to chase (Netscape, Google, Firefox, Apple, Sony/Nintendo). When the competition is gone, they simply sit. How long did it take to bump from IE6 to IE7?
    2. Dogged insistence on backward compatibility. They have never had the self-confidence of a Steve Jobs, who is willing to make a clean break every 8-10 years. So they invest increasingly in maintaining all the old crap, which doesn't do wonders for new features, not to mention attracting and retaining superstar coders.
    3. The classic innovators dilemma. The truth is that most people don't need 90% of the features in Word or Excel -- what they would like is an ability to move work online and access it from anywhere, from any machine. MS has been slow to pursue this vision because it would mean undercutting their own Office and Windows franchises.

    Going forward, they are really screwed because they have lost momentum. The best people are leaving, and the key players who remain are not a great demographic for changing the world: 40-somethings who are financially comfortable from the glory days, like their positions of influence within the company, but are very comfortable and focused more on their kids' soccer games than on changing the world. Everything starts to become more about keeping the world the way it is, rather than changing it for the better. The flame of innovation moves on.

    Seriously, if it weren't for the XBox these guys would be completely dead. The community's collective yawn over the launch of Vista surprised even cynical me. There was more fanfare and interest over XP SP2.

  4. Re:My take on Doomsday from a market perspective on The NYT Imagines Life After Earth · · Score: 1

    Nuclear weaponry isn't quite enhancing my life, nor are worldwide influenza pandemics, direct meteor hits, global overexposure to radiation as a result of a freakishly excessive sunspot or near-by exploding supernova, or even, in fact, global alien invasion bent on genocide.

    Think again. These are all your friends.

    Nuclear weaponry has ended the era of open warfare between major states. As a point of fact, the 20th century was far bloodier before 1945 when nuclear weapons were invented than after. Europe in particular is a far, far more secure place to live today than it has been at any point in history. A cold war is far better than a hot one.

    Direct meteor hits killed off the dinosaurs so that mammals could thrive. Humans certainly wouldn't exist without these mass extinction events. (Nor, in all probability, would the dinosaurs have existed without similar events earlier.)

    Worldwide influenze pandemics have likely had a positive impact on the civilizations afflicted, over the long run. It seems true that the civilizations historically most impacted by large-scale epidemics (Europe, Asia) have been the most technologically advanced.

    Nearby supernovas are hypothetical; nobody knows what would happen.

    Global alien invasion is again a hypothetical. But human history suggests that we perform best under conditions of stress and adversity. Consider how much was invented during the short period of World War 2: Jet aircraft, radar, electronic computers, advanced rockets (V2). Perhaps if we humans had a common enemy, we would finally stop bickering with one another.

  5. Re:some amusing calculations on Scientists to Build 'Brain Box' · · Score: 2, Informative

    so how fast do we think? well i couldn't find anything on this so lets get a quick estimate. the average neuron is .1m in length .1 / c = 3.3x10^-10 or 333 picoseconds. now lets add in some delay for the chemicals in the neurons to do their thing, this is probably much slower than the electrical impulse, so lets say 3.3 nanoseconds.

    This is a drastic underestimate of the computational timescale for neurons in the brain. The error on the back of your envelope is that chemical diffusion is a fundamental part of the process, and chemical diffusion (i.e. random walking) is very slow relative to the speed of light. For neural computation, diffusion is required for both the propagation of action potentials within single neurons (ions diffusing across the cell membrane), as well as the propagation of signals between neurons (neurotransmitter chemicals diffusing across the synapse).

    A better generic estimate for computational timescale would be a few milliseconds, so you are about 10^6 off in your subsequent estimates.

  6. But consider the efficiency! on RFID, Sign of the (End) Times? · · Score: 1

    The end of the world has to come sometime, right? I think we can all look forward to the speed and efficiency that RFID will provide to this process. RFID will allow all of the scanning and sorting to be done remotely, in a fast, efficient, and automated manner. Consider the alternative: Waiting in some enormous line so that some flunky can manually verify your identity (using some old-school Mark of the Beast, e.g., SSN, driver's licence), all to find out which oven you should report to and which sort of eternal damnation is best suited to your needs. Imagine everyone going to the DMV at once, and you get a sense of the horror this would entail. I say if we need to end this thing, let's do it as quickly and efficiently as possible. RFID might not be the final solution, but it is clearly a step in the right direction.

  7. Wait, there may be something here... on Apple to 'Switch' to Windows? · · Score: 2, Insightful

    Dvorak thinks like a conspiracy theorist, amplifying and artificially conjoining irrelevant trivia beyond all common sense.

    Still, there may be some grain of truth here. I would look at the following argument instead:

    dual-boot

    Point 1: Apple makes essentially all of its revenue (and profit) from hardware. They make money by shipping hardware, NOT by promoting OS X or beating Windows or selling songs on the iTMS.

    Point 2: Apple has become a very good hardware manufacturer, in particular since Tim Cook joined. This is one of the most under-reported Apple stories of the last several years. In terms of cost and efficiency, these guys can beat HP easily and go toe-to-toe with Dell. Case in point: Calculate their inventory turns from recent SEC filings; Apple is getting 50+ turns per year, roughly comparable to Dell.

    Point 3: Apple has to be thinking about the fact that most iPods have been sold to PC owners. This proves there is a huge pool of people out there who don't want to use Macs for whatever reason, but will pay premium prices for Apple products because they are "cool" (i.e. they value the Apple brand, but not the Mac). Apple has sold lots of iPods to these people; they must be looking to sell computers to the same.

    Point 4: The rabid-loyal Mac fan base is a huge strategic asset to Apple, and one they would never ditch. Moving to Intel is irrelevant to most users because it doesn't change the user experience (indeed, very few would even notice). Moving to Windows would represent a complete sell-out. Apple would never do this knowingly. It would be like The Grateful Dead telling their fans they are losers for going to their concerts over and over.

    Given all of the above, a logical course for Apple would be to ship machines that can run both OS X and Windows. This achieves two objectives:
    1. It keeps the rabid-loyal Mac fan base happy, in fact maybe even happier b/c we can dual-boot into Windows to play PC games.
    2. It makes Apple a viable purchase option for the 96+% of people out there who will only consider buying a Windows box. Think about it: If Apple were able to get just 5% of these people, they would double their revenue. This is the iPod story and is too compelling to ignore.

    The only real downside risk to this "dual boot" strategy is that developers may decide to stop developing OS X versions of products. (If everyone can run Windows software, why develop for OS X?). Over time OS X might become increasingly marginalized.

  8. Re:My new HDTV on TiVo Unveils Series3 HDTV DVR · · Score: 1
    > So, if you want to record HDTV, you have the following options:

    You are missing some of the options. Just because Tivo is about 1.5 years too late doesn't mean other companies were too.

    I got an HDTV about 4 months ago. I receive about 30 digital OTA channels at my house (Sunnyvale, California), and decided I didn't want to pay for cable or satellite given the small number of additional HD channels they offer (1 or 2 that I would ever watch). I was also a Tivo Series1 owner and am absolutely addicted to a DVR. So I wanted an HD DVR that would work OTA-only.

    There are a few such boxes; I ended up paying a little over $700 for the Sony DHG-HDD500. The program guide info streams over the air, so you don't need a telephone or net connection at your TV. It has a nice 500 gigs of storage (they make a 250 gig version too), but just one tuner unfortunately. HDMI/DVI/component/etc. outputs to your set. The big downside is the software. I was spoiled by Tivo, and the crappy UI on this thing breaks every interface guideline known to man. I would love to get my hands on the source code. But it does the job.

    I thought about building my own media PC, but can't see doing it for anything close to $700 once the tuner card and fat disk are included. Of course, you can do a lot more with a PC, like play downloaded content and have an interface that doesn't suck.

  9. Discovery? No way. on New Material Harder Than Diamond · · Score: 5, Funny

    There's no way these guys can claim priority here. It completely stretches all notions of credulity. I mean, Superman has been transforming coal into diamonds with his bare hands for nearly 60 years now (first mention Action Comics #115; 1947). Together with his optical super-powers, in this case I'm of course referring to what is simplistically referred to as his "heat vision", it's clear that Superman could generate the required pressure and heat with almost no effort. He probably discovered this new diamond stuff by accident when he was like 8 or something. Jeez, I can't believe the crap that makes it through peer review these days.

  10. Useless != impractical on US Losing its Scientific Dominance · · Score: 1

    The US has been a "minor player" in "basic science" for most of its history except for the time after WW II? That's an odd assertion. First of all, a good portion of all the interesting scientific stuff has happened since WW II, so this is sort of like saying "Motor racing was not a popular past-time in the United States, except for the period beginning circa 1900".

    Of course, science did not start in 1940. In fact, many of the discoveries that underlie our modern technology were made prior to 1940, notably electromagnetism and quantum mechanics. My point is that US scientists played a relatively minor role in these discoveries; read the history, and you will see names like Maxwell, Faraday, Bohr, Heisenberg, Schrodinger. I'm not saying this is good or bad, but just objectively pointing out the USA's minor role in these developments.

    I guess I just don't see why we should subsidize something--especially something hugely expensive--just because some scientists think it's neat. Frankly, I think that this claim that we ought to support useless research is a pretty strange one, and I would like to see some argument for it.

    If only scientists think a discovery is neat and there's no hope of communicating its importance to the general public, then it does become a problem. As scientists I think we owe it to our funders (the public) to explain what we do and its importance. Sometimes this is relatively easy (the human genome project, the Hubble Space Telescope), sometimes it isn't (particle physics). And American scientists have a particularly difficult time reaching their audience, given the relative lack of science education within the general taxpayer population.

    You also seem to be equating "useless" with "no immediate practical payoff". I disagree with this view; I think the day we as a species stop thinking about the Big Impractical Questions (how did we get here?, is there other life in the universe? etc.) is the day we deserve to get snuffed out.

  11. The truth about the name... on Microsoft's Janus DRM Software Officially Unveiled · · Score: 2, Funny

    "Janus" is really a Swing-compatible version of Microsoft's "anus" class. Janus is a producer class for all other kinds of Microsoft content.

    Sorry. Too much Java lately.

  12. My view as a scientist... on US Losing its Scientific Dominance · · Score: 4, Insightful

    I got my physics Ph.D. five years ago, and the trends mentioned in the article are both readily apparent and not unexpected.

    It's important to understand that the USA has been a relatively minor player in basic science for nearly all of its history. Since World War 2 there has been a temporary reversal of this situation, because:

    • Every other country was destroyed by the war and had better things to do
    • The USA began funding basic research very aggressively as a military insurance policy vs. the Russians

    Because of these factors as well as a relatively liberal immigration policy, good scientists flocked to the USA beginning in the late 1930's. Others have pointed out the critical role these folks played in the early US space program, the Manhattan project, etc. Now, with the rest of the world catching up in living standards and the Cold War ending, the USA is returning to its position as a relatively minor player in basic research.

    The root cause of this secondary position is cultural. The USA tends to see everything through a very pragmatic lens, where applications are valued much more than the underlying knowledge. The people who can turn basic research into successful applications are held in highest regard, people like Thomas Edison and Jonas Salk. As a Ph.D. student by far the most common question people would ask is, "But what is your research good for?" -- the implication being that if there isn't another breakthrough product or hot IPO coming out the other end, it's just not valuable.

    Europe and Asia, by contrast, have long traditions of valuing scholarship/knowledge for its own sake. The role models are Einstein, Darwin, Maxwell, Confucius -- discoverers rather than inventors. They have a greater cultural willingness to fund basic research, and a more highly-educated general population to understand the results. A large fraction of CEOs in Germany have Ph.D. degrees, more evidence of a greater cultural emphasis on academics and research.

    Experimental high energy physics is a good example of the differing cultural attitudes. In the USA, this research was always justified on the basis of military advantage, or at least avoiding military disadvantage. Consequently, the end of the Cold War has meant the end of this research in the USA; in another 3-4 years the USA will be effectively out of the accelerator game, with no next-generation facility to compete with CERN's LHC. If you are an experimental high-energy physicist, better start learning French.

  13. Timeline, schmimeline on Diamond Age Approaching? · · Score: 1

    Diamond age approaching?

    Yes, there are even commercial ventures.Ok, tongue out of my cheek now.

    I am frankly tired of hearing nanotech predictions from the following kinds of people:

    • Anyone primarily trained in computer science. Bill Joy, please stop talking. You are not in any conceivable sense qualified.
    • Anyone who has not published in a mainstream peer-reviewed physics/materials science journal in the last three years. Eric Drexler, please either get into the lab, collaborate with someone who is, or stop talking.
    • Anyone without a Ph.D. I know this sounds harsh, but without real-world experience you just can't understand how difficult research is. This isn't just a really hard engineering project, like building a Space Shuttle or an atomic bomb. This isn't remodulating the sensor array in 5 minutes like they do on Star Trek. This is being lost without a light in a dark cave deep underground, fumbling to find your path and not knowing if the exit is 100 feet or 100 miles away.

    The people who are truly qualified don't weigh in very often, in part because they realize how silly it is to make such predictions.

  14. Apple is doomed to repeat its mistakes on iTunes One Year Anniversary Sparks Comparison · · Score: 4, Interesting

    Apple is, as we speak, repeating the mistake it made in the PC realm, only this time in the digital content arena. Don't get me wrong, I love their products (own 3 Macs and an iPod), but they just don't understand the dynamics at work here.

    Consider where they are right now with iPod/iTunes/ITMS:

    • Dominating market share
    • Fantastically innovative product, to the point that they virtually created a new market from nothing
    • Loved by their users
    • Highly integrated product, with a stubborn unwillingness to unbundle

    Now re-read the above, only now as a description of where they were in 1980/81 with respect to the Apple ][ and the PC industry they had recently created.

    Apple is still failing to understand the critical importance of owning the platform. In this case, whoever ends up controlling the DRM technology is going to control the digital content universe. And this will eventually include all movies, TV, books, and anything that can be digitized. By locking out every other vendor from using Fairplay, they are virtually guaranteeing their irrelevance in the DRM endgame.

    For Apple to have a chance here, they need to:

    • Issue a temporary Fairplay license to any other content supplier that will use it. They have some advantage here, since the iPod is so popular.
    • Issue a temporary Fairplay license to any other mp3/AAC player manufacturer that will use it. Again they have some advantage, since ITMS/iTunes are so popular.

    Just this past week Apple snubbed Real, which will push the rest of the industry that much closer to Microsoft's WMA. MS, for their part, are crystal-clear on how to win a platform war. I predict that in three years Apple will have Superbowl ads encouraging us to break from the DRM shackles of Big Brother and return to their platform. Yeah, right.

    Just had to get that off my chest. I hate to see good companies make bad decisions.

  15. Re:Why has it been in the making for so long? on NASA Gravity Probe Launched · · Score: 4, Informative

    The correction to the precession will be on the order of arcseconds (1/3600 of a degree) per year.

    It's significantly smaller than that -- the precession due to frame dragging is predicted to be only 0.04 arcseconds over one year.

    And I agree that the physics community is 99% confident that the Lense-Thirring effect is real. However, I also think this is more because of the aesthetic beauty of the theory, rather than actual measurements. If it were a less fundamental theory being tested I would call it a waste of money, but for something as fundamental as GR I think a confirming direct experiement is justified.

    The real question is how many viable alternatives to GR are ruled out by this test, assuming it is successful. For example nearly all viable GR alternatives proposed have weak gravitational wave properties identical to GR, so detecting these waves provides little support for GR. I wonder if the Lense-Thirring frame-dragging effect is more discriminating.

    Of course, by far the more interesting case is if the effect is not observed. They seem to have many sigma of signal to noise here, so a null result would be pretty compelling.

  16. Re:That's a lot of money to spend on NASA Gravity Probe Launched · · Score: 4, Insightful

    it seems like a lot of money to spend just for testing his theory. I think that recent missions to mars were a bit more interesting.

    That boils down to less than $3 per American, spread out over the last 40 years.

    To prove conclusively (or not) our most fundamental theory of gravity, space, and time.

    Man, you are a cheapskate.

  17. Re:Dial-Up and Shell Accounts on New Internet Speed Record · · Score: 1

    Is anyone offering dial-up and shells for Internet2? I'm tired of the Internet1.

    The whole point of Internet2 was to get away from schleps like you who clog the net with porn and spam. I say give them a few years of decent ping times for their troubles.

  18. Re:Has anyone seen any financial data yet? on Still More Google IPO Speculation · · Score: 2, Insightful

    They got an estimated $900m in revenue last year (2003), up from an estimated $200m in 2002, which would certainly put them over $1b in 2004. I don't know the breakdown between ad sales and their other products (e.g., the "yellow box" enterprise search engines), but I would wager this is nearly all ad revenue. The total sponsored-link business is estimated at around $2.1b per year, to give a sense of Google's share.

    In a company of ~1000 employees in an industry with fairly low capital intensity, this almost certainly translates into a profit. And in fact they have publicly claimed to be profitable for a few years now.

    Which brings up an interesting question: What would Google the company need from an IPO? An IPO's main purpose is to raise cash to fund future growth, but they may be generating all the free cash they need. It's a bit like how Microsoft has zero long-term debt (very rare in corporate America) -- they have all the cash they need, thank you.

    If they did go public, it would be so that the investors and founders/employees could monetize their holdings. They would likely float a very small fraction of the shares in the IPO, again because they don't really need the cash right now.

  19. Combined human+computer intelligence on Chess Improves Machines and Humans Alike · · Score: 5, Interesting

    Chess is also an interesting test case for one of Vinge's paths to superhuman intelligence. Namely, the idea that human/machine interfaces may become so intimate that we will in effect fuse with our technology, becoming superhuman in capability.

    Kasparov, for example, has been advocating allowing mixed human/computer teams in "Advanced Chess" tournaments. It seems that the human/machine combination, with the right interface, yields far better chess play than either alone.

    Some questions that fascinate me:

    • What is the ideal human/computer interface in chess to maximize play strength?
    • What are some other tasks or games where the combined human/computer would be much more effective than either alone?

    Frankly I find these more useful questions than the old human vs. computer debate.

  20. Harness them as weapons! on Asteroid Impact Simulator Available · · Score: 1

    Now I may just be an impulsively warlike imperialist American pig, but this got me to thinking...

    Wouldn't asteroids make great weapons? Let's say we develop the capability to divert asteroids from hitting Earth. Everyone seems to want this nowadays. Proposed schemes, for example, include nudging them with a long-burn rocket while still in orbit.

    This same technology could also be used to nudge an asteroid into a collision course with Earth! In particular, your least favorite part of it. Use this program to select the asteroid properties that will cause the desired damage profile, and then use our NEO tracking info to select an appropriate asteroid that is close to a collision course anyway. Strap a rocket onto it and guide it in!

  21. Re:Standard Texas Unit on Asteroid Impact Simulator Available · · Score: 1

    I'm disappointed at the lack of standard-texas-units for the meteor diameter.

    Not every large impact will occur in Texas, though we may wish it were so.

  22. Re:Science is not the point of space... on NASA Engineers Dispute Hubble Safety Claim · · Score: 5, Insightful

    Or at least I should say, science is not the main point. [snip] We need manned missions, because we need actual manned colinization of space, for a great number of reasons.

    The problem with today's manned program is that it has the goal of employing people, rather than colonizing space or anything else high-minded. The politicians who approve major programs like the ISS view this as pork-barrel to get relatively well-paid jobs for their constituents. Haven't you ever wondered why NASA centers for manned flight are distributed across so many states (compared with the unmanned program, which is nearly all at JPL)? Is that any way to foster communication and engineer complex systems? The tragic reality is that the astronauts killed on the Shuttle were not heroes in any scientific or exploratory sense, but were really just innocent bystanders in all of this.

    I predict the manned program at NASA will continue to flounder until there is real competition from other nations. Global warming and asteroid impacts just don't make politicians feel threatened, but you can bet this would change if for example the Chinese took real steps toward their stated goal of a colony on the moon.

    The other way to rejuvenate manned spaceflight is to do it privately. If the space entrepreneurs out there can bootstrap a profitable use of space (say, tourism for wealthy individuals), then this changes the game completely and creates an economic marketplace that could lead toward large-scale colonization. But this is still many years away.

  23. About that guilt thing... on Confessions of a Mac OS X User · · Score: 1

    Let's be clear here. The issue isn't whether you are using Linux or not; nobody else with any sense cares. What you should feel guilty (or not) about is whether you are making the world a better place.

    Contributing to Linux might be one way to do that, but again if you're only a passive user then you aren't helping. Alternatively, many (most?) open-source projects are platform-agostic, so you can still help out if you're using OS X, Windows, or whatever. In my case I primarily use OS X but have written a free piece of software that animates juggling patterns. It's not much, but it's cross-platform and has quite a few users across all OSes.

    And who says Linux is making the world a better place? I haven't seen an argument for who wins by having all the value sucked out of the OS market. Linux could make computing slightly more accessible in poor countries, but most of them steal Windows or get it at dramatically reduced prices anyway.

  24. Difficulty of self-sustaining life underestimated on One-Way Ticket to Mars? · · Score: 2, Interesting

    A one-way trip would be an interesting idea if there were a reasonable chance of survival on the other end. The problem is that we humans have a very primitive understanding of what it takes to make a self-sustaining ecosystem, particularly one complex and robust enough to support humans. Full-ecosystem projects like Biosphere 2 are not only spectacular failures, they are so far beyond our understanding that most scientists don't even believe they yield scientifically valuable information.

    If you believe that building self-sustaining colonies away from Earth should be a long-term goal of humanity (as I do), then we need to start with research here on Earth focused on understanding and learning to engineer these kinds of self-sustaining ecosystems. We have to be modest enough to realize there are many baby steps between our current understanding and any hope of self-sufficiency away from Earth.

  25. Re:Amazon? Are you nuts? on Likely Success of Internet-Related Business Models? · · Score: 1

    Now, I'm obviously not an expert, but my Googling only finds a couple of quarters where Amazon turned a profit, and the latest news is that the company's losses were almost $40 million over the last 9 months

    You need to be a bit careful assessing profitability in companies like Amazon that are growing very quickly. For example, it could very well be that Amazon had a positive profit margin on every product sold in the last 9 months, and yet would still show a $40 million loss. (I'm not saying that was the case, this is just for illustration.)

    The cause of this paradox is that they have cash tied up in inventory, and when they grow, this inventory typically needs to grow too (unless their cleverness lets them avoid it). This inventory increase is money that they've paid to their suppliers that they haven't yet recouped from customers, so it shows up as a loss in their SEC filings.

    Earnings statements are most useful for assessing static businesses, not businesses that are growing very quickly.